TIDMFRES
RNS Number : 7276C
Fresnillo PLC
24 January 2018
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
24 January 2018
Fourth Quarter Production Report
for the three months ended 31 December 2017
Overview
-- Record annual silver production of 58.7 moz (including
Silverstream) up 16.6% vs. 2016, in line with guidance primarily as
a result of the first complete year of San Julián (phase I)
operating at full capacity and the start-up of operations at San
Julián (phase II)
-- 4Q17 silver production of 16.0 moz (including Silverstream)
up 20.3% vs. 4Q16 due to the start-up of operations at San Julián
(phase II)
-- Quarterly silver production increased 10.5% vs. 3Q17 due to
the first complete quarter of San Julián (phase II) operating at
full capacity, higher ore grade at Fresnillo and higher volume of
ore processed at Saucito
-- Annual gold production of 911.1 koz exceeded guidance
principally as a result of the full year operations at San Julián
(phase I). Gold production slightly decreased -2.6% vs. 2016 due to
the expected lower reduction of gold inventories and the
anticipated lower ore grade deposited at the leaching pads at
Herradura
-- Quarterly gold production of 232 koz decreased -13.4% vs.
4Q16 due to a lower reduction of gold inventories at Herradura
2018 Outlook
-- Silver production expected to be in the range of 67 to 70 moz
including the Silverstream, in line with our long term guidance
-- Gold production expected to be in the range of 870-900 koz
-- Fresnillo set to increase throughput and silver ore grades
-- Start-up of the first stage of the Pyrites Plant with
tailings from the Saucito mine expected to be processed in 2Q18.
Historical and ongoing tailings from the Fresnillo mine will also
be processed at this plant once the project is completed in
2019
-- Start-up of the 2(nd) Dynamic Leaching Plant at Herradura
(Centauro Extension project), due to be commissioned in 2Q18
-- 2018 exploration budget of approximately US$200 million
(including capitalised exploration expenses)
Octavio Alvídrez, Chief Executive Officer, said:
"I am pleased to report that Fresnillo has delivered a strong
performance in 2017. Record silver production of 58.7 moz was in
line with guidance following the first complete year of San Julián
(phase I) operating at full capacity and the start of operations at
San Julián (phase II). These major projects were once again
delivered on budget reflecting our disciplined approach to
investment.
"At the Fresnillo mine we increased silver production, though
the turnaround plan is not yet complete. We have implemented a
number of measures which resulted in increased access to the
Candelaria and San Alberto areas which have improved throughput and
silver ore grade at the mine. During the year ahead, we will remain
focused on increasing throughput and ore grade at Fresnillo.
"We also achieved a solid gold production performance, exceeding
our forecast range, due to the positive contribution from San
Julián (phase I). Gold production was down marginally on 2016 as
expected, as a result of the lower reduction of gold inventories at
Herradura.
"We are making good progress with our development projects.
Construction of the Pyrites Plant project continued while further
progress was achieved at the Dynamic Leaching Plant at Herradura.
We expect to commission both projects in 2018 and to see them
contribute to our 2018 production.
"As always, safety is our priority and I am delighted to report
an improvement in safety performance across the business, as a
result of a number of initiatives established to further strengthen
the safety culture at our mines.
"Looking ahead, our 2018 gold production is anticipated to be in
the range of 870-900 koz whilst silver production is expected to be
between 67-70 moz."
Total Production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
-------------- -------- -------- --------- -------- -------- -------- ---------
Silver
(koz) 14,957 12,247 22.1 13,529 54,238 45,677 18.7
-------------- -------- -------- --------- -------- -------- -------- ---------
Silverstream
(koz) 1,059 1,069 -0.9 1,084 4,435 4,625 -4.1
-------------- -------- -------- --------- -------- -------- -------- ---------
Total
Silver
(koz) 16,015 13,316 20.3 14,613 58,673 50,303 16.6
-------------- -------- -------- --------- -------- -------- -------- ---------
Gold (oz) 232,051 268,104 -13.4 233,311 911,132 935,513 -2.6
-------------- -------- -------- --------- -------- -------- -------- ---------
Lead (t) 12,836 13,003 -1.3 12,472 48,153 48,144 0.0
-------------- -------- -------- --------- -------- -------- -------- ---------
Zinc (t) 18,852 16,989 11.0 17,688 65,266 56,845 14.8
-------------- -------- -------- --------- -------- -------- -------- ---------
Silver
2017 silver production (including Silvertream) increased 16.6%
vs. 2016 mainly as a result of the full year of San Julián (phase
I) operating at full capacity and the start-up of operations at San
Julián (phase II). A higher volume of ore processed at Fresnillo
and higher ore grades at Ciénega and San Ramón also contributed to
the increase in silver production. This was partially offset by the
expected lower ore grade at Saucito. In addition, the Silverstream
contributed less (-4.1%) to silver production due to a lower silver
ore grade at Sabinas.
Quarterly silver production (including Silverstream) increased
20.3% vs. 4Q16 as a result of the start of operations at San Julián
(phase II) and the higher ore grade at Fresnillo due to access to
high grade veins at the San Alberto and San Carlos areas. This
increase was partially offset by the lower ore grade at San Julián
(phase I).
Quarterly silver production increased 10.5% vs. 3Q17 due to the
first complete quarter of San Julián (phase II) operating at full
capacity, higher ore grade at Fresnillo and higher volume of ore
processed at Saucito. This was partially offset by the lower ore
grade at Ciénega and the lower contribution from the
Silverstream.
In 2018, silver production is expected to be in the range of 67
to 70 moz with the rise in production driven by the first year of
full operations at San Julián (phase II), the increase in ore
throughput from Fresnillo and the start-up of operations at the
Pyrites Plant.
Gold
Annual gold production of 911 koz slightly decreased as
anticipated (-2.6%) when compared to 2016. However this exceeded
the guidance of 870-900 koz as a result of the better that expected
full year of operations at San Julián (phase I) and the start of
operations at San Julián (phase II). These positive effects were
offset by: i) the expected lower reduction in gold inventories at
Herradura and the lower ore grade of mineral deposited at the
leaching pads vs. 2016, and ii) the lower speed of recovery at
Noche Buena due to a longer leaching process.
Quarterly gold production decreased -13.4% vs. 4Q16 principally
due to a lower reduction in inventories at Herradura, as well as
lower grades at Saucito and San Julián (phase I). This reduction
was partially offset by a higher speed of recovery at Noche
Buena.
Gold production for the fourth quarter remained at similar
levels to 3Q17 as a higher speed of recovery at Noche Buena and a
higher volume of ore processed at Ciénega offset the lower grades
at Herradura and San Julián (phase I).
In 2018, gold production is anticipated to be within the range
of 870-900 koz as no gold inventory reduction is expected at the
leaching pads at Herradura. However, this adverse effect will be
offset by the start of the second line of the Dynamic Leaching
Plant at Herradura (Centauro Extension Project).
By-products
Annual and quarterly by-product lead production remained at
similar levels to 2016. 4Q17 lead production increased (+2.9%) vs.
3Q17 as a result of a higher ore grade at Fresnillo and San Julián
(phase II) operating for the full quarter. This more than
compensated for the lower ore grade at Saucito.
Annual by-product zinc production increased 14.8% vs. FY16 as a
result of the start-up of operations at San Julián (phase II) and a
higher ore grade and volume of ore processed at Fresnillo.
Quarterly by-product zinc production increased 11.0% vs. 4Q16 as
a result of the contribution from the new San Julián (phase II),
partially offset by the lower ore grade at Saucito.
Quarterly by-product zinc production increased 6.6% vs. 3Q17 as
a result of San Julián (phase II) operating at full capacity for
the quarter and a higher ore grade at Fresnillo which was partially
offset by the lower ore grades at Ciénega and Saucito.
Fresnillo mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Processed
(t) 592,358 595,963 -0.6 596,544 2,447,394 2,373,092 3.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Production
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(koz) 4,066 3,847 5.7 3,516 16,512 15,865 4.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 9,237 10,678 -13.5 8,819 38,784 42,421 -8.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 5,455 5,766 -5.4 4,905 20,514 21,326 -3.8
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 8,019 7,718 3.9 7,368 30,021 25,898 15.9
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(g/t) 236 221 6.6 202 229 227 1.3
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 0.64 0.73 -12.8 0.61 0.64 0.73 -11.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 1.01 1.05 -3.4 0.91 0.92 0.99 -6.7
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.94 1.78 8.5 1.70 1.72 1.56 10.7
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Full year silver production increased 4.1% when compared to
2016. This was as a result of higher volumes of ore processed from
the Candelaria and San Alberto areas and to a lesser extent, the
higher ore grade resulting from access to certain high grade veins
at San Alberto and San Carlos after the measures taken to solve
certain operational issues.
2017 silver production was below guidance principally as a
result of limited access to higher ore grade areas due to the
delays in development, lower productivity from on site contracting
personnel and mining equipment failures which impeded long-hole
drilling activities. Fresnillo is implementing a decisive plan to
stabilise the mine's ore grade and throughput. This includes: i)
accelerating the development of deeper ramps; ii) preparation of
stopes; iii) improving equipment maintenance; iv) operation of the
vertical conveyor reducing truck haulage; and iv) tightening
supervision to improve contractors' performance.
The Company has hired two new contractors, which together with
the operational changes described above, we expect will result in
an increase in the development rate.
These measures are starting to produce results. Grades for 2017
were marginally above our revised guidance of 220-225 g/t and we
expect the silver ore grade to be around 235 g/t in 2018.
Quarterly silver production increased vs. 4Q16 due to the higher
ore grade resulting from
the implementation of the turnaround plan and better contractor
performance at the development areas.
When compared to the previous quarter, 4Q17 silver production
increased 15.6% primarily as a result of the higher ore grade
(+16.7%) resulting from regaining access to high grade veins at San
Alberto and San Carlos.
Annual and quarterly by-product gold production decreased vs.
2016 and 4Q16 mainly as a result of lower ore grade. 4Q17 gold
production increased 4.7% vs. 3Q17 as a result of the higher ore
grade.
2017 by-product lead production decreased when compared to 2016
as a result of a lower ore grade which was partially offset by the
higher volume of ore processed. Quarterly by-product lead
production decreased vs. 4Q16 due to the lower ore grade and
recovery rate.
Quarterly by-product lead production increased 11.2% vs. 3Q17 as
a result of a higher ore grade.
Annual by-product zinc production increased 15.9% vs. 2016 as a
result of the higher ore grade and increased volume of ore
processed. Quarterly by-product zinc production increased vs. 4Q16
as a result of a higher ore grade. Similarly, by-product zinc
production for 4Q17 increased vs. 3Q17 as a result of a higher ore
grade, which was offset by the lower recovery rate.
For 2018, lead and zinc ore grades are expected to be 0.96% and
1.77% respectively.
Saucito mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Processed
(t) 722,237 709,261 1.8 693,269 2,753,876 2,635,093 4.5
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Production
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(koz) 5,378 5,336 0.8 5,016 21,215 21,946 -3.3
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 17,599 25,160 -30.1 18,490 69,948 86,198 -18.9
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 3,903 5,802 -32.7 4,368 17,714 20,935 -15.4
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 4,930 7,379 -33.2 5,357 20,348 23,498 -13.4
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(g/t) 271 287 -5.6 264 280 303 -7.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 1.08 1.53 -29.0 1.12 1.09 1.39 -21.2
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.66 1.02 -34.8 0.76 0.77 0.93 -17.2
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.06 1.68 -36.8 1.26 1.21 1.49 -18.9
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Annual silver production decreased when compared to the same
period 2016 as a result of the expected lower ore grade due to: i)
the higher grade development ore from the West and Central areas at
the Jarillas vein extracted in 2016; and ii) the restricted access
to high grade sectors in the Jarillas West area resulting from the
anchoring activities to avoid rock instability. The latter was the
main reason for not reaching the silver ore grade guidance of 290
g/t.
A higher volume of ore processed from the Mezquite and Saucito
veins partially offset the expected lower annual silver ore
grade.
In 2018, the expected silver ore grade will be around 285 g/t
due to the regained access to higher ore grade areas at the
Jarillas West zone now the rock stability issue has been
resolved.
Quarterly silver production remained at similar levels vs. 4Q16
as a higher recovery rate and higher volume of ore processed offset
the unfavorable effect of a lower ore grade. Quarterly silver
production increased 7.2% vs. 3Q17 as a result of a higher volume
of ore processed due to the additional ore mined from development
areas and a higher ore grade.
Annual and quarterly by-product gold production decreased when
compared to 2016 primarily as a result of a lower ore grade which
was partially offset by the higher volume of ore processed.
Similarly, quarterly by-product gold production decreased -4.8% vs.
3Q17 as a result of a lower recovery rate and ore grade. This
reduction was partially compensated for by the higher volume of ore
processed. The gold grade for 2018 is expected to increase to 1.2
g/t.
Annual by-product lead production decreased vs. 2016 as a result
of lower ore grade and to a lesser extent, lower recovery rate
which were partially offset by the higher ore processed. Quarterly
by-product lead production decreased vs. 4Q16 and 3Q17 due to the
lower ore grade.
Annual and quarterly by-product zinc production decreased vs.
2016, 4Q16 and 3Q17 as a result of the lower ore grade.
Ciénega mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Processed
(t) 339,347 327,416 3.6 326,381 1,302,409 1,274,939 2.2
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Production
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 18,194 17,583 3.5 17,395 71,947 72,851 -1.2
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(koz) 1,272 1,298 -2.0 1,335 5,394 5,131 5.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 1,541 1,435 7.4 1,537 6,328 5,883 7.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 1,336 1,892 -29.4 1,682 7,048 7,450 -5.4
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 1.76 1.74 1.4 1.75 1.82 1.84 -1.1
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Silver
(g/t) 137 143 -3.8 148 151 143 5.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.70 0.66 5.2 0.72 0.74 0.68 9.5
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 0.81 0.99 -18.1 0.95 0.98 1.00 -2.7
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Full year gold production slightly decreased when compared to
2016 due to the expected lower ore grade as higher ore grade veins
at this mine are depleted. However, this was partially offset by
the higher volume of ore processed resulting from improved
equipment availability following the efficiencies achieved in the
maintenance programme. Quarterly gold production increased vs. 4Q16
and 3Q17 as a result of an increase in the volume of ore
processed.
In 2018, the average gold ore grade is expected to remain stable
at 1.8 g/t.
Annual silver production increased when compared to 2016 as a
result of the higher ore grade at Taspana and San Ramón which more
than exceeded the silver ore grade guidance of 140 g/t. Taspana is
an area located 3 km away from the main Ciénega mine and its
contribution is expected to continue rising in the future, thereby
becoming another satellite mine.
The 2018 average silver ore grade is expected be around 160 g/t
as further development takes place at the Taspana and San Ramón
veins. Additionally, a higher volume of ore processed also
contributed to the increase in silver production.
Quarterly silver production decreased slightly vs. 4Q16 and 3Q17
as a result of a lower ore grade offset by the higher volume of ore
processed.
Annual and quarterly by-product lead production increased when
compared to the corresponding periods of 2016 as a result of a
higher ore grade and volume of ore processed which offset the lower
recovery rates.
Full year and quarterly by-product zinc production decreased
when compared to the same periods of 2016 and 3Q17 due to the lower
recovery rate and lower ore grade.
Herradura total mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Ore Processed
(t) 6,373,732 6,325,705 0.8 6,337,573 26,027,466 25,158,600 3.5
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Total Volume
Hauled (t) 34,620,672 29,821,575 16.1 33,433,070 130,025,439 118,841,295 9.4
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Production
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Gold (oz) 117,891 148,549 -20.6 131,738 473,638 520,366 -9.0
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Silver (koz) 172 173 -0.6 157 551 638 -13.6
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Ore Grades
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Gold (g/t) 0.68 0.68 -1.1 0.75 0.68 0.71 -4.4
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Silver (g/t) 1.28 1.13 13.6 1.20 1.07 1.16 -7.1
--------------- ----------- ----------- --------- ----------- ------------ ------------ ---------
Full year gold production decreased -9.0% vs. 2016 due to: i)
the expected lower reduction in gold inventories at the leaching
pads compared to the larger reduction in inventory levels during
2016; and ii) the expected lower ore grade of mineral deposited at
Herradura. These factors were partially offset by the higher volume
of ore processed. For 2018, the average gold ore grade is expected
to be around 0.75 g/t.
When compared to 4Q16, quarterly gold production decreased
-20.6% as a result of the lower reduction in gold inventories.
Quarterly gold production decreased when compared to the
previous quarter (-10.5%) as a result of the expected lower ore
grade in the mined area, in line with the mining plan.
Noche Buena total mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Ore Processed
(t) 4,445,313 4,380,536 1.5 4,362,684 17,820,817 17,431,718 2.2
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Total Volume
Hauled (t) 20,921,652 20,521,024 2.0 20,918,713 85,233,001 81,422,716 4.7
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Production
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (oz) 49,098 41,769 17.5 33,409 172,282 182,280 -5.5
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (koz) 12 11 9.1 6 31 33 -6.1
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Ore Grades
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (g/t) 0.54 0.53 1.3 0.53 0.52 0.51 2.5
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (g/t) 0.14 0.14 1.5 0.07 0.10 0.11 -13.4
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Annual gold production decreased -5.5% when compared to 2016 as
a result of the lower overall speed of recovery due to the ore
processed from a new zone where the recovery process is slower due
to the ore's kinetic characteristics. This was partially offset by
the higher volume of ore processed due to the optimisation of the
haulage routes resulting in shorter distances and to a lesser
extent, a higher ore grade. Quarterly gold production increased
17.5% vs. 4Q16 and 47.0% vs. 3Q17 as a result of higher overall
speed of recovery.
In 2018, the average ore grade is expected to be around 0.48
g/t.
San Julián mine production
4Q 4Q 3Q YTD YTD
17 16 % change 17 17 16 % change
--------------- -------- -------- --------- -------- ---------- -------- ---------
Ore Processed
Phase I
Veins (t) 325,032 301,235 7.9 333,674 1,273,129 423,069 200.9
--------------- -------- -------- --------- -------- ---------- -------- ---------
Ore Processed
Phase II
JM (t) 496,907 - N/A 448,150 945,057 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Production
Phase I
Veins
--------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (oz) 19,248 24,365 -21.0 22,493 82,782 31,397 163.7
--------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (koz) 1,462 1,581 -7.5 1,494 5,936 2,066 187.3
--------------- -------- -------- --------- -------- ---------- -------- ---------
Production
Phase II
JM
--------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (oz) 784 - N/A 967 1,750 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (koz) 2,595 - N/A 2,004 4,598 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Lead (t) 1,937 - N/A 1,661 3,598 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Zinc (t) 4,567 - N/A 3,282 7,849 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Ore Grades
Phase I
Veins
--------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (g/t) 1.92 2.67 -28.2 2.12 2.10 2.47 -14.9
--------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (g/t) 153.43 181.33 -15.4 148.09 157.21 172.46 -8.8
--------------- -------- -------- --------- -------- ---------- -------- ---------
Ore Grades
Phase II
JM
--------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (g/t) 0.11 - N/A 0.13 0.12 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (g/t) 190.32 - N/A 169.26 180.33 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Lead (%) 0.51 - N/A 0.52 0.52 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
Zinc (%) 1.23 - N/A 1.13 1.18 - N/A
--------------- -------- -------- --------- -------- ---------- -------- ---------
San Julián (Phase I - veins)
Full year silver production at San Julián Veins (phase I)
increased significantly over 2016 as a result of the first complete
year operating at full capacity and reaching a milling capacity of
over 3,800 tpd. However, quarterly silver production decreased
-7.5% vs. 4Q16 as a result of the lower ore grade which was
partially offset by the higher volume of ore processed.
Silver production for 4Q17 slightly decreased (-2.2%) vs. 3Q17
as a result of the lower recovery rate and volume of ore processed,
which was partially offset by the higher ore grade.
In 2018, silver ore grade is expected to average around 150
g/t.
Annual gold production at San Julián Veins (phase I) increased
significantly over 2016 as a result of the first complete year
operating at full capacity and due to the optimisation of the
leaching process. These factors offset the lower ore grade
processed due to the depletion of higher ore grades at the Atanasio
and Emiliano veins which contained higher gold grades.
Quarterly gold production decreased 21.0% vs. 4Q16 as a result
of the lower ore grade, however, this was partially offset by the
higher volume of ore processed and a higher recovery rate.
Quarterly gold production decreased -14.4% when compared to 3Q17
due to lower ore grade and a lower recovery rate caused by a
reduction in oxygenation at the agitation area. This issue is
expected to be resolved in January 2018 through the installation of
a new agitation tank providing additional oxygen to the
process.
Gold ore grade is expected to average 1.7 g/t in 2018.
San Julián (Phase II - JM disseminated ore body)
Quarterly silver production increased vs. 3Q17 (29.5%) due to
the higher ore grade, ore processed and recovery due to the first
complete quarter operating at full capacity.
Quarterly gold production at San Julián JM (phase II) decreased
vs. 3Q17 as a result of lower ore grade due to the depletion of
high gold ore grade from the stock pile and a lower recovery
rate.
Quarterly by-product lead production increased 16.6% vs. 3Q17 as
a result of a higher recovery rate and volume of ore processed.
Quarterly zinc production increased 39.2% vs. 3Q17 as a result of a
higher recovery rate, ore grade and volume of ore processed.
In 2018, San Julián JM (phase II) gold ore grade is expected to
average around 0.10 g/t and silver ore grade to be around 185
g/t.
Update on development projects
Pyrites Plant
Construction of the Pyrites Plant in the Fresnillo district
remains on track. The leaching plant is expected to be commissioned
in 2Q18 and will process tailings from the Saucito mine while the
historical and ongoing tailings from Fresnillo are expected to
start being processed in 2019.
Further progress was achieved with the construction of the
vertical mills and the electrical installation in the milling
building.
The plant is expected to improve overall recoveries of both gold
and silver by processing historical and ongoing tailings from the
Fresnillo and Saucito mines.
This US$155 million project is expected to contribute an annual
production of c. 3.5 moz of silver and c. 13 koz of gold once it
reaches full capacity in 2019.
Second Dynamic Leaching Plant
Construction of the second line of the Dynamic Leaching Plant at
Herradura is on track and on budget. The project will enable
sulphides occurring deeper in the pit to be processed more
efficiently. The construction of the crushing building is now
complete.
The US$110 million project is expected to be commissioned in
2Q18 extending the life of mine at Herradura to 12 years with an
average life of mine annual gold production of 390 koz.
Juanicipio
Progress at the Juanicipio project continues on track and we
expect to conclude the updated feasibility study in 1Q18.
Update on exploration
In 4Q17, 116,000 metres of drilling was completed at our six
operating mines and 98,000 metres were drilled at 19 of our
exploration projects. The cumulative drilling for the year at our
operating mines and exploration projects was 494,000 and 398,000
metres respectively. Resources were increased at all the mines and
at the Guanajuato, San Juan and Candameña projects. The audited
results will be published in 1Q18. Our regional offices in Mexico,
Peru and Chile are currently evaluating several new areas with
potential.
Safety Performance
We are pleased to report that there were no fatal accidents at
our operations during the fourth quarter of 2017. Safety remains
our main priority and we continue to reinforce our safety measures
in order to fulfil our zero fatalities commitment on an ongoing
basis.
Full Year Financial Results
Fresnillo will announce its full year 2017 results on 27(th)
February 2018.
For further information, please visit our website
www.fresnilloplc.com or contact:
Fresnillo plc Tel: +44 (0)20 7399
London Office 2470
Gabriela Mayor, Head
of Investor Relations
Patrick Chambers
Mexico City Office Tel: +52 55 52 79 3206
Ana Belem Zárate
Powerscourt Tel: +44 (0)20 7250
Peter Ogden 1446
About Fresnillo plc
Fresnillo plc is the world's largest primary silver producer and
Mexico's largest gold producer, listed on the London and Mexican
Stock Exchanges under the symbol FRES.
Fresnillo plc has seven operating mines, all of them in Mexico -
Fresnillo, Saucito, Ciénega (including the San Ramón satellite
mine), Herradura, Soledad-Dipolos(1) , Noche Buena and San Julián
(phase I and II), two development projects - the Pyrites Plant, and
second line of DLP at Herradura, and four advanced exploration
projects - Orisyvo, Juanicipio, Las Casas Rosario & Cluster
Cebollitas and Centauro Deep, as well as a number of other long
term exploration prospects. In total, Fresnillo plc has mining
concessions covering approximately 1.8 million hectares in
Mexico.
Fresnillo plc has a strong and long tradition of mining, a
proven track record of mine development, reserve replacement, and
production costs in the lowest quartile of the cost curve for
silver.
Fresnillo plc's goal is to maintain the Group's position as the
world's largest primary silver company, producing 65 million ounces
of silver per year by 2018, having already surpassed the gold
target of 750,000 ounces.
(1) Operations at Soledad-Dipolos are currently suspended.
Forward Looking Statements
Information contained in this announcement may include
'forward-looking statements'. All statements other than statements
of historical facts included herein, including, without limitation,
those regarding the Fresnillo Group's intentions, beliefs or
current expectations concerning, amongst other things, the
Fresnillo Group's results of operations, financial position,
liquidity, prospects, growth, strategies and the silver and gold
industries are forward-looking statements. Such forward-looking
statements involve risk and uncertainty because they relate to
future events and circumstances. Forward-looking statements are not
guarantees of future performance and the actual results of the
Fresnillo Group's operations, financial position and liquidity, and
the development of the markets and the industry in which the
Fresnillo Group operates, may differ materially from those
described in, or suggested by, the forward-looking statements
contained in this document. In addition, even if the results of
operations, financial position and liquidity, and the development
of the markets and the industry in which the Fresnillo Group
operates are consistent with the forward-looking statements
contained in this document, those results or developments may not
be indicative of results or developments in subsequent periods. A
number of factors could cause results and developments to differ
materially from those expressed or implied by the
forward-looking
statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity
prices, changes in regulation, currency fluctuations (including the
US dollar and Mexican Peso exchanges rates), the Fresnillo Group's
ability to recover its reserves or develop new reserves, including
its ability to convert its resources into reserves and its mineral
potential into resources or reserves, changes in its business
strategy and political and economic uncertainty.
LEI: 549300JXWH1UV5J0XV81
This information is provided by RNS
The company news service from the London Stock Exchange
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January 24, 2018 02:00 ET (07:00 GMT)
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