https://www.miningweekly.com
Exploration|Gold|Mining|PROJECT|Projects|Sustainable|Underground|Operations
Exploration|Gold|Mining|PROJECT|Projects|Sustainable|Underground|Operations
exploration|gold|mining|project|projects|sustainable|underground|operations

Fresnillo reports rise in profitability, despite Covid-19 impact

28th July 2020

By: Donna Slater

Features Deputy Editor and Chief Photographer

     

Font size: - +

Higher gold and silver prices, along with higher volumes of zinc and lead sold, contributed to a 5.3% year-on-year increase in Mexico-based precious metal miner Fresnillo's revenue to $1.12-billion for the six months ended June 30.

The miner has declared an interim dividend of $16.9-million, equating to $0.023 a share.

"The combination of higher commodity prices and lower costs has resulted in a significant rise in profitability during the first half.

"Our performance improvement initiatives we have set out in previous reports are having a positive impact. We remain committed to delivering a sustainable improvement in our operating performance and maintaining the momentum in the improvement plan into the second half," comments CEO Octavio Alvídrez.

Gross profit for the period was $321.2-million, up 56.3% from the corresponding period in 2019. This includes a $65.1-million benefit from the positive impact of the reassessment of the recoverable gold inventories on the leaching pads at the Herradura mine.

The miner’s operating profit was $216.9-million, while earnings before interest, taxes, depreciation and amortisation was $469.9-million – representing year-on-year increases of 232.1% and 52.6%, respectively.

Profit before income tax of $127.9-million was up 136.6%, and included the adverse effect of the Silverstream valuation of -$31.8-million and foreign exchange losses of $41-million.

Profit for the period, however, decreased by 20.3%, to $56.5-million, as a result of the adverse effect of the 21.9% devaluation of the Mexican peso against the dollar on deferred taxes.

Basic and diluted earnings a share from continuing operations were down by 7.4% to $0.088c apiece, while earnings a share prior to the Silverstream valuation effect were adjusted to $0.188c apiece, up 40.5%.

Cash generated from operations, before changes in working capital increased by 44.3%, to $456.2-million.

Fresnillo has a strong balance sheet with cash and other liquid funds, as at June 30, of $514.7-million, up from the $336.6-million held as at December 31, 2019.

OPERATIONS & OUTLOOK

In terms of operations, Fresnillo reports a 2.7% year-on-year decrease in interim silver production (including Silverstream), mainly as a result of the expected lower ore grade at Saucito.

Interim gold production decreased by 11.8% year-on-year, as a result of a lower volume of ore processed at Herradura and Noche Buena, primarily owing to a six-week suspension of mining activities related to Covid-19 restrictions. These were mitigated by the ability to process inventories on the leaching pads and stockpiled material through the dynamic leaching plants.

First-half by-product lead and zinc production increased by 19.6% and 16.4%, respectively, mainly resulting from higher ore grades at Fresnillo, Saucito and Ciénega.

In terms of its outlook, Fresnillo is retaining its initially revised consolidated production guidance, with total gold production guidance being decreased to between 785 000 oz and 815 000 oz.

This reduction is the result of the Covid-19 operational restrictions at the Herradura district in the second quarter of the year.

Total silver production guidance (including Silverstream) remains within the range of 51-million to 56-million ounces.

Exploration expenses are expected to be reduced to about $120-million, from the previously budgeted $135-million, reflecting the miner’s limited ability to explore certain prospects as a result of travel restrictions related to Covid-19 guidelines.

Similarly, capital expenditure is anticipated to reduce to $525-million, mainly as a result of the deferral of expenditures at the Juanicipio project and San Julián.

"Production at our underground mines remains broadly in line with plan, despite a reduction in the number of workers on site.

"The impact on our openpit gold mines has been greater, as mining activities had to cease for around six weeks, although processing continued. However, mining has now restarted and activities are ramping up. I am also pleased our development projects continued to make progress," says Alvídrez.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

Comments

Showroom

Multotec
Multotec

Multotec, recognised industry leaders in metallurgy and process engineering help mining houses across the world process minerals more efficiently,...

VISIT SHOWROOM 
VEGA Controls SA (Pty) Ltd
VEGA Controls SA (Pty) Ltd

For over 60 years, VEGA has provided industry-leading products for the measurement of level, density, weight and pressure. As the inventor of the...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.174 0.212s - 108pq - 2rq
Subscribe Now