JOHANNESBURG (miningweekly.com) – The world’s number one silver producer, Fresnillo, on Wednesday said its first-quarter silver production was in line with expectations, while it reported higher-than-expected gold output, owing to the start-up of a new mine.
The Mexico-focused miner produced 9.8-million ounces of silver during the quarter, including the Silverstream contract. It stated that production was on target despite a decrease of 2.9% when compared with the same quarter in 2011.
Quarterly gold production improved by 26.3% to 121 792 oz, when compared with the same period of 2011, mainly owing to increased throughput at the Saucito, Ciénega and Herradura mines and on the back of a 42.3% spike in gold production from the Fresnillo mine.
The full-year production guidance of 41-million ounces of silver and 460 000 oz of gold remained unchanged, but investment research firm UBS said it expected upside from the gold target of 460 000 oz if Fresnillo continued to mine the higher-grade areas.
CEO Jaime Lomelín said the highlight of the quarter was the completion and commissioning of the company’s new gold mine at Noche Buena, in the Herradura district.
“We are particularly pleased that this was accomplished on time and within budget,” he said in a statement.
Commercial production at Noche Buena started in March and the mine was expected to produce about 42 000 oz of gold a year once it reached full capacity, which was expected by the end of this year.
To date, Noche Buena had produced 2 227 oz of gold.
Meanwhile, the miner pointed out that the decline in silver grades at the Fresnillo mine was partly offset by the ramp-up of production at its Saucito silver, gold, lead and zinc mine.
“Earnings estimates have been left broadly unchanged as the surprise in gold this quarter was offset by lower grades at Fresnillo mine,” UBS said.
Quarterly by-product lead production increased by 19.4% to 6 265 t, while zinc production increased by 18.1% to 6 925 t over the first quarter of 2011, and was achieved as a result of higher ore grades, recovery rates and tons milled at the Fresnillo mine and increased volumes of ore milled at Saucito.
Further, the LSE-listed miner said construction of the dynamic leaching plant at Herradura remained on track to become operational by 2013. The $106.8-million project was expected to process high-grade ore from the Herradura and Soledad-Dipolos pits, which would increase gold production by an average of 51 000 oz/y from 2013 to 2020.
“Owing to the possible expansion of the Centauro pit, the site for the new leaching plant will be relocated without significant delays and additional costs. This represents a step forward to consolidate Fresnillo's position as a significant gold producer in its own right,” Lomelín said.