TIDMFRES
RNS Number : 0011M
Fresnillo PLC
25 April 2018
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
25 April 2018
First Quarter Production Report
for the three months ended 31 March 2018
Overview
-- Quarterly silver production of 15.4 moz (including
Silverstream), up 14.0% vs. 1Q17 mainly due to the contribution
from San Julián JM (phase II).
-- Quarterly silver production decreased 3.7% vs. 4Q17 mainly
due to the lower volume of ore processed and ore grade at
Saucito.
-- Quarterly gold production of 231.5 koz, up 4.1% vs. 1Q17
mainly due to the higher contribution from Herradura.
-- Construction of the Pyrites plant in the Fresnillo district
remains on track with the leaching plant at Saucito due to be
commissioned in 2Q18.
-- The commissioning of the second line of the Dynamic Leaching
Plant (DLP) at Herradura is expected at the end of 2Q18.
-- Outlook unchanged: on track to achieve 2018 production
guidance of 67-70 moz silver, (including Silverstream) and 870-900
koz gold.
Octavio Alvídrez, Chief Executive Officer, said:
"Fresnillo has started the year well and delivered a solid
operating performance during the period. In particular, first
quarter silver production rose to 14.2 moz, driven by the positive
contribution from the new San Julián JM (phase II) mine. I am also
pleased to report a positive quarter at the Fresnillo mine driven
by better access to the Candelaria and San Alberto areas as planned
which improved throughput at the mine.
We achieved a solid gold production performance during the
quarter, up 4.1% versus 1Q17, driven by strong results at the
Herradura mine.
We continue to make good progress with our key development
projects. Both the Pyrites plant and the second Dynamic Leaching
Plant projects have advanced on time and on budget. We expect to
commission both projects during the second quarter and for them to
make a positive contribution to full year production in 2018.
Overall, we remain confident in the outlook and today reiterate
our full year production guidance.
Sadly, in the first quarter 2018, a fatal accident of one of our
contractors occurred at the Saucito mine due to the lack of
adherence to our safety policies. We continue to reinforce our
safety measures for all our workforce in order to fulfill our zero
fatalities commitment".
Total Production
1Q 18 1Q 17 % change 4Q 17
Silver (koz) 14,235 12,424 14.6 14,957
-------- -------- --------- --------
Silverstream (koz) 1,186 1,105 7.3 1,059
-------------------- -------- -------- --------- --------
Total Silver (koz) 15,421 13,529 14.0 16,015
-------------------- -------- -------- --------- --------
Gold (oz) 231,458 222,290 4.1 232,051
-------------------- -------- -------- --------- --------
Lead (t) 11,629 11,461 1.5 12,836
-------------------- -------- -------- --------- --------
Zinc (t) 19,040 13,806 37.9 18,852
-------------------- -------- -------- --------- --------
Silver
Quarterly silver production (including Silverstream) increased
14.0% vs. 1Q17 primarily as a result of the start of operations at
San Julián (phase II) in July 2017; San Julián is now operating at
full capacity. This was partially offset by lower production at
Saucito due to a lower ore grade.
Compared to the previous quarter, silver production (including
Silverstream) decreased 3.7% as a result of: i) lower volume of ore
processed and ore grade at Saucito due to ground instability
temporarily restricting access to high grade areas of the Jarillas
vein which is now resolved, and ii) the lower ore grade at San
Julián JM (phase II) due to ground instability in certain areas
temporarily preventing access. These factors were mitigated by the
higher volume of ore processed from Fresnillo due to increased
access to the Candelaria and San Alberto areas and a higher
contribution from the Silverstream.
Our 2018 silver production target of 67-70 moz silver (including
Silverstream) remains on track, driven by increased production from
San Julián's (phase II) first year of full operations, the start-up
of the Pyrites plant and the increased contribution from
Fresnillo.
Gold
Quarterly gold production increased 4.1% vs. 1Q17 as a result of
the continued drawdown of inventories and higher ore grade at
Herradura and, to a lesser extent, the start of operations at San
Julián JM (Phase II - mid July 2017). This was partly offset by the
lower overall speed of recovery and volume of ore processed at
Noche Buena, lower recovery rate at Saucito, and lower ore grades
at Ciénega and San Julián Veins (Phase I).
Quarterly gold production remained broadly flat vs. the previous
quarter (-0.3%) as a result of the higher speed of recovery at
Herradura and increased volume of ore processed at Fresnillo
offsetting the unfavorable effect of the lower speed of recovery at
Noche Buena and lower ore grade at Ciénega.
Our 2018 gold production target of 870-900 koz gold remains on
track.
By-products
Quarterly by-product lead production slightly increased 1.5% vs.
1Q17 mainly as a result of San Julián JM (phase II) beginning
operations in July 2017 and subsequently operating at full capacity
and, to a lesser extent, the higher ore grade at Fresnillo. This
was partly offset by the lower ore grades at Saucito and
Ciénega.
Quarterly by-product lead production vs. the previous quarter
decreased 9.4% as a result of the lower ore grade and volume of ore
processed at Saucito and the lower ore grade and recovery rate at
San Julián JM (phase II).
By-product zinc production increased 37.9% vs. 1Q17 as a result
of San Julián JM (phase II) being in operation, and a higher ore
grade, recovery and volume of ore processed at Fresnillo. These
were partially offset by lower ore grades at both Saucito and
Ciénega and a lower recovery rate at the latter.
Quarterly by-product zinc production remained at similar levels
vs. 4Q17 as a result of higher ore grade and volume of ore
processed at San Julian JM (Phase II) and increased throughput and
recovery rate at Fresnillo, offsetting the lower ore grade,
recovery rate and volume of ore processed at Saucito.
Fresnillo mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed (t) 637,410 613,012 4.0 592,358
-------- ------------------ --------- --------
Production
-------- ------------------ --------- --------
Silver (koz) 4,336 4,439 -2.3 4,066
-------- ------------------ --------- --------
Gold (oz) 10,431 11,325 -7.9 9,237
------------------- -------- ------------------ --------- --------
Lead (t) 5,783 5,170 11.9 5,455
------------------- -------- ------------------ --------- --------
Zinc (t) 8,866 6,707 32.2 8,019
-------- ------------------ --------- --------
Ore Grades
-------- ------------------ --------- --------
Silver (g/t) 232 245 -5.2 236
-------- ------------------ --------- --------
Gold (g/t) 0.66 0.74 -11.1 0.64
-------- ------------------ --------- --------
Lead (%) 1.00 0.92 8.7 1.01
-------- ------------------ --------- --------
Zinc (%) 1.90 1.57 21.0 1.94
------------------- -------- ------------------ --------- --------
Quarterly silver production slightly decreased vs. 1Q17 as
expected due to the higher ore grade areas being processed in the
first quarter 2017. This was mitigated by the higher volume of ore
processed as a result of increased access to the Candelaria and San
Alberto areas.
Quarterly silver production increased 6.6% vs. the previous
quarter due to the higher volume of ore processed.
Quarterly by-product gold production decreased 7.9% vs. 1Q17
mainly as a result of lower ore grade. When compared to 4Q17,
by-product gold production increased 12.9% as a result of the
higher volume of ore processed and ore grade.
Quarterly by-product lead production increased 11.9% vs. 1Q17 as
a result of higher ore processed and ore grade. When compared to
4Q17, by-product lead production increased due to a higher volume
ore processed.
Quarterly by-product zinc production increased 32.2% vs. 1Q17 as
a result of higher ore grade, recovery rate and higher ore
processed. When compared to the previous quarter, zinc by-product
production increased 10.6% as a result of higher ore processed and
recovery rate.
Saucito mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed (t) 673,545 670,914 0.4 722,237
-------- ------------------ --------- --------
Production
-------- ------------------ --------- --------
Silver (koz) 4,832 5,147 -6.1 5,378
-------- ------------------ --------- --------
Gold (oz) 16,880 17,964 -6.0 17,599
------------------- -------- ------------------ --------- --------
Lead (t) 3,183 4,754 -33.0 3,903
------------------- -------- ------------------ --------- --------
Zinc (t) 3,916 5,139 -23.8 4,930
-------- ------------------ --------- --------
Ore Grades
-------- ------------------ --------- --------
Silver (g/t) 260 279 -6.8 271
-------- ------------------ --------- --------
Gold (g/t) 1.12 1.12 0.1 1.08
-------- ------------------ --------- --------
Lead (%) 0.57 0.87 -34.9 0.66
------------------- -------- ------------------ --------- --------
Zinc (%) 0.96 1.26 -23.7 1.06
------------------- -------- ------------------ --------- --------
Quarterly silver production decreased 6.1% vs. 1Q17 due to the
lower ore grade resulting from ground instability temporarily
restricting access to a high grade area of the Jarillas vein. This
has since been resolved and by year end, we expect to recover the
production lost as a result. Similarly, quarterly silver production
vs. 4Q17 decreased 10.1% as a result of a lower volume of ore from
development areas being processed and a lower ore grade due to the
aforementioned factor.
Quarterly by-product gold production decreased 6.0% vs. 1Q17 as
a result of a lower recovery rate. When compared to the previous
quarter, by-product gold production decreased 4.1% as a result of
lower volume of ore processed which was mitigated by the higher ore
grade.
Quarterly by-product lead production decreased vs. 1Q17 and 4Q17
mainly as a result of lower ore grades.
Quarterly by-product zinc production decreased vs. 1Q17 as a
result of the lower ore grade. When compared to the previous
quarter, by-product zinc production decreased as a result of lower
ore grade, ore processed and recovery rate.
Ciénega mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed (t) 320,006 313,920 1.9 339,347
------------------- -------- ------------------ --------- --------
Production
------------------- -------- ------------------ --------- --------
Gold (oz) 16,377 17,453 -6.2 18,194
------------------- -------- ------------------ --------- --------
Silver (koz) 1,239 1,328 -6.7 1,272
-------- ------------------ --------- --------
Lead (t) 1,335 1,536 -13.1 1,541
------------------- -------- ------------------ --------- --------
Zinc (t) 1,006 1,960 -48.7 1,336
-------- ------------------ --------- --------
Ore Grades
-------- ------------------ --------- --------
Gold (g/t) 1.66 1.89 -12.2 1.76
-------- ------------------ --------- --------
Silver (g/t) 141 160 -12.2 137
-------- ------------------ --------- --------
Lead (%) 0.67 0.78 -14.4 0.70
-------- ------------------ --------- --------
Zinc (%) 0.72 1.07 -32.9 0.81
------------------- -------- ------------------ --------- --------
Quarterly gold production decreased 6.2% vs. 1Q17 as a result of
a lower ore grade due to a temporary access delay to higher ore
grade areas mainly at the Taspana satellite mine and the Rosario
Transversal development works. Notwithstanding, lost production is
expected to be recovered over the course of the year. This decrease
in gold production was mitigated by a higher recovery rate.
Quarterly gold production decreased 10.0% vs. 4Q17 as a result of
lower ore processed and lower ore grade due to the previously
mentioned factor.
Quarterly silver production decreased vs. 1Q17 for the reasons
previously described. When compared to the previous quarter, silver
production decreased 2.6% as a result of the lower ore processed
which was mitigated by a higher ore grade.
Quarterly by-product lead production decreased 13.1% vs. 1Q17 as
a result of a lower ore grade. When compared to the previous
quarter, by-product lead production decreased 13.3% as a result of
lower volume of ore processed, ore grade and recovery rate.
By-product zinc production decreased 48.7% and 24.8% vs. 1Q17
and 4Q17 respectively as a result of lower ore grades and recovery
rates.
San Julián mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed Phase
I Veins (t) 310,742 306,082 1.5 325,032
--------------------- -------- -------- --------- --------
Ore Processed Phase
II JM (t) 531,459 - N/A 496,907
--------------------- -------- -------- --------- --------
Production Phase
I Veins
--------------------- -------- -------- --------- --------
Gold (oz) 19,111 20,129 -5.1 19,248
--------------------- -------- -------- --------- --------
Silver (koz) 1,445 1,386 4.3 1,462
-------- -------- --------- --------
Production Phase
II
JM
--------------------- -------- -------- --------- --------
Gold (oz) 680 - N/A 784
--------------------- -------- -------- --------- --------
Silver (koz) 2,123 - N/A 2,595
-------- -------- --------- --------
Lead (t) 1,328 - N/A 1,937
-------- -------- --------- --------
Zinc (t) 5,252 - N/A 4,567
-------- -------- --------- --------
Ore Grades Phase
I Veins
-------- -------- --------- --------
Gold (g/t) 1.97 2.18 -9.7 1.92
-------- -------- --------- --------
Silver (g/t) 158.35 156.68 1.1 153.43
-------- -------- --------- --------
Ore Grades Phase
II
JM
-------- -------- --------- --------
Gold (g/t) 0.09 - N/A 0.11
-------- -------- --------- --------
Silver (g/t) 146.64 - N/A 190.32
-------- -------- --------- --------
Lead (%) 0.40 - N/A 0.51
-------- -------- --------- --------
Zinc (%) 1.31 - N/A 1.23
-------- -------- --------- --------
San Julián Veins (Phase I)
Quarterly silver production increased 4.3% vs. 1Q17 as a result
of a higher recovery rate due to the optimisation of the plant
process, higher volume of ore processed and a higher ore grade.
Quarterly silver production remained at similar levels vs. 4Q17
(-1.2%).
Quarterly gold production decreased 5.1% vs. 1Q17 as a result of
the expected lower ore grade which was mitigated by the higher
recovery rate. Quarterly gold production vs. 4Q17 remained at
similar levels (-0.7%).
San Julián (Phase II - JM disseminated ore body)
Quarterly silver production decreased 18.2% vs. 4Q17 as a result
of a lower ore grade due to ground instability in certain areas
temporarily preventing access. This resulted in the extraction of
ore from lower grade areas of the mine as well as processing ore
from the development stockpile, extracted during the pre-operative
period. This factor has the potential to impact Phase II from April
to May though we expect production to recover by 3Q18 and for
budgeted production to be met by year end.
Quarterly gold production decreased 13.2% vs. 4Q17 as a result
of lower ore grade which was mitigated by the higher volume of ore
processed.
Similarly, quarterly lead production decreased 31.4% vs. the
previous quarter as a result of the lower ore grade and recovery
rate which was mitigated by a higher volume of ore processed.
Quarterly zinc production increased 15.0% vs. 4Q17 due to the
higher ore grade and volume of ore processed.
Herradura total mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed (t) 5,984,641 6,764,370 -11.5 6,373,732
--------------------- ----------- ------------------ --------- -----------
Total Volume Hauled
(t) 34,153,768 30,908,154 10.5 34,620,672
--------------------- ----------- ------------------ --------- -----------
Production
--------------------- ----------- ------------------ --------- -----------
Gold (oz) 125,243 107,742 16.2 117,891
--------------------- ----------- ------------------ --------- -----------
Silver (koz) 241 118 104.2 172
----------- ------------------ --------- -----------
Ore Grades
----------- ------------------ --------- -----------
Gold (g/t) 0.68 0.63 6.9 0.68
----------- ------------------ --------- -----------
Silver (g/t) 1.86 0.95 95.0 1.28
----------- ------------------ --------- -----------
Quarterly gold production increased 16.2% vs. 1Q17 due to an
increase in the inventory reduction at the leaching pads which
resulted from an intensive targeted irrigation programme and, to a
lesser extent, a higher speed of recovery at the DLP. This increase
was partially offset by a lower volume of ore processed.
Quarterly gold production increased 6.2% vs. 4Q17 as a result of
the increase in inventory reduction mentioned above which was
partially offset by the lower volume of ore processed.
Noche Buena total mine production
1Q 18 1Q 17 % change 4Q 17
Ore Processed (t) 4,414,790 4,613,684 -4.3 4,445,313
--------------------- ----------- ------------------ --------- -----------
Total Volume Hauled
(t) 20,521,239 20,918,657 -1.9 20,921,652
--------------------- ----------- ------------------ --------- -----------
Production
--------------------- ----------- ------------------ --------- -----------
Gold (oz) 42,735 47,678 -10.4 49,098
--------------------- ----------- ------------------ --------- -----------
Silver (koz) 19 7 171.4 12
----------- ------------------ --------- -----------
Ore Grades
----------- ------------------ --------- -----------
Gold (g/t) 0.52 0.51 2.8 0.54
----------- ------------------ --------- -----------
Silver (g/t) 0.22 0.09 138.6 0.14
----------- ------------------ --------- -----------
Quarterly gold production decreased vs. 1Q17 as a result of the
expected lower overall speed of recovery from the leaching pads
(increase in inventories) and the lower volume of ore
processed.
Similarly, gold production decreased 13.0% vs. 4Q17 as a result
of the expected lower speed of recovery from the leaching pads
(increase in inventories) and lower ore grade.
Update on development projects
Pyrites Plant
Construction of the Pyrites plant in the Fresnillo district
remains on track. The leaching plant at Saucito is expected to be
commissioned in late 2Q18 and will process tailings from the
Saucito mine and its current stockpile while the historical and
ongoing tailings from the Fresnillo mine are expected to start
being processed in 2019.
The Company expects to conclude tests for the vertical mills and
agitation tanks during May 2018.
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
We expect to commission the second line of the Dynamic Leaching
Plant (DLP) at Herradura by the end of 2Q18. This project will
enable sulphides occurring deeper in the pit to be processed more
efficiently. We expect to continue testing the electrical,
instrumentation and control installation over the next two
months.
At the time of analysis, this US$110 million project was
expected to extend the life of mine at Herradura to 12 years with
an average annual gold production of 390 koz over the life of
mine.
Juanicipio
Work to progress the Juanicipio project remains on track. The
joint venture partners are working collaboratively and currently
reviewing an advanced draft of the feasibility study. Once the
final report is completed, the project will be submitted for Board
approval. There are no changes to the project delivery
timeline.
Update on exploration
In 1Q18, 111,258 metres of drilling was completed at our
operating mines with the aim of converting resources into reserves.
Ore shoots were extended near the Fresnillo mine and east of the
Ciénega mine. At exploration projects, 79,626 metres of drilling
was carried out across 15 projects with interesting results at San
Julián South, Guazapares, San Juan and Guanajuato.
Through mapping and sampling, we have located new areas in the
Fresnillo, San Julián and Guanajuato districts that merit drill
testing. Exploration teams working out of the Hermosillo,
Chihuahua, Zacatecas, Toluca, Lima-Peru and Santiago de Chile
offices have identified several new areas with gold and silver
potential that are now under evaluation. Additional staff have been
hired to help with the permitting processes in addition to
supporting the Company's community relations activities.
Safety Performance
As previously mentioned during our 2017 Preliminary Results, we
deeply regret the fatal accident of one of our contractors at the
Saucito mine as a result of the lack of adherence to our safety
policies. We continue to reinforce our safety measures throughout
the Company, with our management systems and organisational
programmes focused on personnel safety. We remain committed to our
zero fatalities target on an ongoing basis. Safety remains our main
priority.
There will be a conference call for analysts and investors on
Wednesday 25th April at 9:00am (London time). The dial in details
are as follows:
UK: +44 (0) 808 109 0700
USA: +1 866 966 5335
Mexico: +1 866 966 8830
All other locations: +44 (0) 20 3003 2666
Participant password: Fresnillo
A replay of the call will also be available for seven days after
the event. The replay can be accessed via the following
details:
Replay dial-in number: +44 (0) 208 196 1998
Replay PIN: 4302051#
For further information, please visit our website
www.fresnilloplc.com or contact:
Fresnillo plc Tel: +44 (0)20 7399 2470
London Office
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 1446
Peter Ogden
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
END
DRLDZLFLVZFXBBZ
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April 25, 2018 02:00 ET (06:00 GMT)
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