TIDMFRES
RNS Number : 9678E
Fresnillo PLC
24 October 2018
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
24 October 2018
Production Report
for the three months ended 30 September 2018
Overview
-- Quarterly silver production of 15.5 moz (including
Silverstream), up 6.3% vs. 3Q17 due to the contribution of the new
Pyrites Plant, higher ore grades at Fresnillo, Herradura and
Ciénega, and higher volumes of ore milled at San Julián phase II.
3Q18 production in line with 2Q18.
-- Year to date silver production (including Silverstream) of
46.3 moz, up 8.5% vs. YTD17 mainly as a result of the start of
operations at San Julián JM (Phase II) in July 2017.
-- Quarterly gold production of 225 koz, down 3.5% vs. 3Q17 as a
result of higher than normal speed in the recovery rate at the
leaching pads in 3Q17 and the lower grade and volume of ore
deposited on the pads at Herradura in 3Q18.
-- Quarterly gold production down 3.7% vs. 2Q18 mainly due to a
lower speed in the recovery rate at the leaching pads at Herradura
in 3Q18, and the lower ore grade and recovery rate at Noche
Buena.
-- Year to date gold production of 690 koz, up 1.7% vs. YTD17
mainly due to higher ore grade at Saucito and a higher volume of
ore processed at Noche Buena.
-- Full year consolidated production guidance has been revised
marginally: total gold production to 920 - 940 koz (previously 900
- 930 koz) and total silver production to 62.0 - 64.5 moz
(previously 64.5 - 67.5 moz) including Silverstream due to
continued challenges at the Saucito and Fresnillo mines, which are
currently being addressed.
Octavio Alvídrez, Chief Executive Officer, said:
"Gold production continues to beat expectations and we are once
again revising our guidance upwards following another strong
quarter, in particular at our Saucito and Noche Buena mines where
volumes exceed targets. Though silver production is up against all
comparable periods, we are revising full year silver guidance
following continued challenges at the Fresnillo and Saucito mines.
These are world class, tier one silver assets, and we remain both
determined, and confident, given the actions we are taking, that we
will deliver a better performance in the last quarter and in
2019.
In line with our strategy, we continue to conservatively invest
in the business to deliver sustainable growth and returns to
shareholders. The Pyrites Plant in the Fresnillo district, which
will improve overall recoveries of both gold and silver from the
Fresnillo and Saucito mines, is progressing well. The first stage
of the project, the leaching plant at Saucito, is now ramping up
and already making a contribution to overall production. We expect
to complete construction of phase 2, the flotation plant at the
Fresnillo mine, by the end of 2019. We look forward to this project
making a positive impact on performance."
Total Production
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Silver (koz) 14,738 13,529 8.9 14,459 43,432 39,281 10.6
-------- -------- --------- -------- -------- -------- ---------
Silverstream
(koz) 796 1,084 -26.6 884 2,865 3,376 -15.1
-------------- -------- -------- --------- -------- -------- -------- ---------
Total Silver
(koz) 15,533 14,613 6.3 15,343 46,297 42,657 8.5
-------------- -------- -------- --------- -------- -------- -------- ---------
Gold (oz) 225,202 233,311 -3.5 233,841 690,501 679,081 1.7
-------------- -------- -------- --------- -------- -------- -------- ---------
Lead (t) 13,076 12,472 4.8 13,223 37,928 35,318 7.4
-------------- -------- -------- --------- -------- -------- -------- ---------
Zinc (t) 22,935 17,688 29.7 22,014 63,989 46,413 37.9
-------------- -------- -------- --------- -------- -------- -------- ---------
Silver
Quarterly silver production (including Silverstream) increased
6.3% vs. 3Q17 due to the contribution of the new Pyrites Plant,
higher ore grades at Fresnillo, Herradura and Ciénega, and higher
volumes of ore milled at San Julián phase II compared to 3Q17 when
San Julián phase II production was still in the ramp-up phase.
These increases were partially offset by the lower ore grades at
Saucito and San Julián Veins (Phase I), and a lower Silverstream
contribution as a result of lower ore grade.
Quarterly silver production increased 1.9% vs. 2Q18 mainly due
to the ramp up of the first phase of the new Pyrites Plant
following its commissioning at the end of 2Q18 and to a lesser
extent, a higher ore grade at Herradura and higher volumes of ore
processed at San Julián Veins (Phase I).
Year to date silver production (including Silverstream)
increased 8.5% vs. YTD17 mainly as a result of the start of
operations at San Julián JM (Phase II) in July 2017. This was
partially offset by a lower Silverstream contribution and lower ore
grades at Fresnillo, Saucito and San Julián Veins (Phase I).
Despite the above increases against all comparative periods,
third quarter silver production was not as high as anticipated due
to the lower than expected ore grade at Saucito and slightly lower
than expected ore throughput and ore grade at Fresnillo. As a
result, total silver production guidance for the full year has been
revised to 62.0 - 64.5 moz (previously 64.5 - 67.5 moz).
Gold
Quarterly gold production decreased 3.5% vs. 3Q17 primarily due
to higher than normal speed in the recovery rate at the leaching
pads in 3Q17, and the lower volume of ore processed at Herradura.
The lower ore grade and recovery rate at San Julián Veins (Phase I)
also contributed to the decrease in gold production. These
decreases were mitigated by a higher recovery rate and volume of
ore processed at Noche Buena and a higher ore grade at Saucito.
Quarterly gold production decreased 3.7% vs. 2Q18 due to lower
speed at the rate of recovery at the leaching pads in 3Q18 at
Herradura, the lower ore grades and recovery rates at Noche Buena
and at San Julián Veins (Phase I). These factors were mitigated by
higher ore grades at Saucito and Ciénega.
Year to date gold production increased 1.7% vs. YTD17 as a
result of the higher ore grade at Saucito and a higher volume of
ore processed and increased ore grade at Noche Buena. This was
partially offset by the expected lower ore grade at San Julián
Veins (Phase I).
Gold guidance was revised upwards to 920 - 940 koz (previously
900 - 930 koz) following strong performances at our Saucito and
Noche Buena mines.
By-products
Quarterly by-product lead production increased 4.8% vs. 3Q17
primarily due to the higher ore grade at Saucito. This more than
offset the lower ore grades and recovery rates at both Ciénega and
San Julián JM (Phase II).
Quarterly by-product lead production remained at similar levels
vs. 2Q18 (-1.1%).
Year to date by-product lead production increased 7.4% vs. YTD17
due to the contribution of San Julián JM (Phase II), higher ore
grade at Fresnillo and higher volume processed and recovery rate at
Saucito. This was partially offset by the lower ore grade at
Ciénega.
Quarterly by-product zinc production increased 29.7% vs. 3Q17 as
a result of higher volume of ore processed and improved ore grades
and recovery rates at Saucito and San Julián JM (Phase II), higher
ore grade at Fresnillo and higher recovery rates at Ciénega.
Quarterly by-product zinc production increased 4.2% vs 2Q18 as a
result of a higher recovery rate and ore grade at Ciénega and
higher recovery rates at Saucito. These factors were partly offset
by the lower recovery rate at San Julián JM (Phase II).
Year to date by-product zinc production increased 37.9% vs.
YTD17 due to the contribution of San Julián JM (Phase II) following
its commissioning in July 2017 and, to a lesser extent, higher ore
grades at Fresnillo and Saucito and increased recovery rates at
Saucito.
Fresnillo mine production
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 613,794 596,544 2.9 620,906 1,872,110 1,855,036 0.9
-------- -------- --------- -------- ---------- ---------- ---------
Production
-------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 3,745 3,516 6.5 3,793 11,873 12,446 -4.6
-------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 10,469 8,819 18.7 10,953 31,853 29,547 7.8
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 4,917 4,905 0.2 5,052 15,752 15,058 4.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 8,096 7,368 9.9 7,979 24,941 22,002 13.4
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 211 202 4.4 211 218 227 -4.1
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 0.68 0.61 11.5 0.70 0.68 0.65 5.3
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.89 0.91 -1.7 0.90 0.93 0.90 4.2
-------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.81 1.70 6.4 1.74 1.82 1.66 9.9
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Quarterly silver production increased 6.5% vs. 3Q17 mainly as a
result of the higher ore grade from the San Alberto area and to a
lesser extent, higher volume of ore processed due to increased long
drilling activities at the Candelaria area.
Quarterly silver production remained broadly flat vs. 2Q18
(-1.3%), marginally impacted by a lower volume of ore
processed.
Year to date silver production decreased 4.6% vs. YTD17 due to
the lower ore grade. As initially reported in 2Q18 Production
Report, this was due to the limited access to higher ore grade
areas resulting from contractor-led ongoing delays in development
and preparation.
As previously reported, a new contractor has now begun
operating, and this is expected to increase future development
rates. Following the review of the maintenance programme, further
efficiencies to improve equipment availability were identified,
making additional equipment purchases unnecessary.
Third quarter silver production was lower than previosuly
anticipated as a result of the lower than expected ore throughput
and ore grade extracted in some areas of the mine. To address this,
an infill drilling programme has commenced with the aim of
enhancing the accuracy of the geological model, providing greater
certainty in short term production estimates.
Expected silver ore grade for the full year remains at 215-225
g/t.
Quarterly by-product gold production increased 18.7% and 7.8%
vs. 3Q17 and YTD17 respectively mainly as a result of the higher
ore grades and increased recovery rates. Quarterly gold production
decreased 4.4% when compared to 2Q18 due to lower ore grade and ore
processed.
Quarterly by-product lead production decreased 2.7% vs. 2Q18 as
a result of lower ore grade and volume of ore processed.
Year to date by-product lead and zinc production increased 4.6%
and 13.4% respectively vs. YTD17 as a result of higher ore
grades.
Quarterly by-product zinc production increased 9.9% vs. 3Q17 as
a result of higher ore grade and ore processed.
Saucito mine production
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 713,441 693,269 2.9 711,463 2,098,449 2,031,639 3.3
-------- -------- --------- -------- ---------- ---------- ---------
Production
-------- -------- --------- -------- ---------- ---------- ---------
Silver (koz) 4,897 5,016 -2.4 5,162 14,890 15,837 -6.0
-------- -------- --------- -------- ---------- ---------- ---------
Gold (oz) 23,558 18,490 27.4 22,722 63,160 52,349 20.7
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Lead (t) 5,791 4,368 32.6 5,327 14,301 13,810 3.6
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (t) 7,909 5,357 47.6 7,549 19,374 15,418 25.7
-------- -------- --------- -------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- ---------- ---------- ---------
Silver (g/t) 250 264 -5.3 260 257 283 -9.3
-------- -------- --------- -------- ---------- ---------- ---------
Gold (g/t) 1.34 1.12 19.5 1.25 1.24 1.09 13.0
-------- -------- --------- -------- ---------- ---------- ---------
Lead (%) 0.95 0.76 25.4 0.86 0.80 0.81 -2.0
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Zinc (%) 1.61 1.26 28.4 1.64 1.41 1.26 12.3
--------------- -------- -------- --------- -------- ---------- ---------- ---------
Quarterly silver production decreased 2.4% and 5.1% vs. 3Q17 and
2Q18 respectively due to the lower than expected ore grade at two
high grade stopes in the upper levels of the mine. As at the
Fresnillo mine, an infill drilling programme has commenced to
increase the accuracy of the geological model to address these
grade issues.
Year to date silver production decreased 6.0% vs. YTD17 as a
result of the lower than expected ore grade at high grade stopes in
the upper levels of the mine, the increase in dilution and reduced
stope preparation of the mine. This was mitigated by the higher
volume of ore processed.
Expected silver ore grade for the full year continues to be in
the range of 255-265 g/t.
Quarterly and YTD18 by-product gold production increased 27.4%
and 20.7% vs. 3Q17 and YTD17 respectively principally due to a
higher ore grade, increased volume of ore processed and higher
recovery rate.
Quarterly by-product gold production increased 3.7% vs. 2Q18 as
a result of higher ore grade which offset the lower recovery
rate.
Quarterly by-product lead and zinc production increased 32.6%
and 47.6% respectively vs. 3Q17 mainly as a result of higher ore
grade, and to a lesser extent higher recovery rates and volume of
ore processed.
Quarterly by-product lead production increased 8.7% vs. 2Q18 as
a result of a higher ore grade. Year to date by-product lead
production increased 3.6% vs. YTD17 as a result of higher volume of
ore processed and recovery rate, offsetting the lower ore
grade.
Quarterly by-product zinc production increased 4.8% vs. 2Q18 as
a result of the higher recovery rate. Year to date by-product zinc
production increased 25.7% vs. YTD17 as a result of higher ore
grade, higher recovery rate and to a lesser extent, volume of ore
processed.
Pyrites Plant (Phase I)
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 63,336 0 N/A 11,745 75,081 0 N/A
------- ------ --------- ------- ------- ------- ---------
Production
------- ------ --------- ------- ------- ------- ---------
Silver (koz) 434 0 N/A 73 507 0 N/A
------- ------ --------- ------- ------- ------- ---------
Gold (oz) 1,418 0 N/A 186 1,604 0 N/A
--------------- ------- ------ --------- ------- ------- ------- ---------
Ore Grades
------- ------ --------- ------- ------- ------- ---------
Silver (g/t) 423 0 N/A 452 428 0 N/A
------- ------ --------- ------- ------- ------- ---------
Gold (g/t) 2.9 0 N/A 3.4 3.0 0 N/A
------- ------ --------- ------- ------- ------- ---------
Production at the leaching plant of the Pyrites Plant at Saucito
continued to ramp up during the period, contributing 434 koz of
silver and 1,418 oz of gold. In the first months of operation, the
plant has been mainly processing iron concentrate from the
inventory stock pile with high silver content which had been
produced from the iron flotation circuit during the past 18 months.
Once this stock pile is depleted, lower ore grade material will be
processed in 2019 and thereafter. Minor adjustments are being made
to fine tune the grinding process and further improve
efficiency.
Ciénega mine production
YTD YTD
3Q 18 3Q 17 % change 2Q 18 18 17 % change
Ore Processed
(t) 332,493 326,381 1.9 330,879 983,378 963,062 2.1
--------------- -------- -------- --------- -------- -------- -------- ---------
Production
--------------- -------- -------- --------- -------- -------- -------- ---------
Gold (oz) 18,214 17,395 4.7 16,689 51,281 53,753 -4.6
--------------- -------- -------- --------- -------- -------- -------- ---------
Silver (koz) 1,539 1,335 15.3 1,518 4,296 4,122 4.2
-------- -------- --------- -------- -------- -------- ---------
Lead (t) 1,105 1,537 -28.1 1,352 3,792 4,787 -20.8
--------------- -------- -------- --------- -------- -------- -------- ---------
Zinc (t) 1,889 1,682 12.3 1,231 4,125 5,711 -27.8
-------- -------- --------- -------- -------- -------- ---------
Ore Grades
-------- -------- --------- -------- -------- -------- ---------
Gold (g/t) 1.79 1.75 2.4 1.65 1.70 1.84 -7.7
-------- -------- --------- -------- -------- -------- ---------
Silver (g/t) 169 148 13.5 166 159 157 1.5
-------- -------- --------- -------- -------- -------- ---------
Lead (%) 0.57 0.72 -19.8 0.67 0.64 0.76 -16.0
-------- -------- --------- -------- -------- -------- ---------
Zinc (%) 0.95 0.95 0.4 0.77 0.81 1.04 -21.6
--------------- -------- -------- --------- -------- -------- -------- ---------
Quarterly gold production increased 4.7% vs. 3Q17 as a result of
a higher ore grade due to lower dilution, and a higher volume of
ore processed resulting from a more efficient maintenance programme
that has reduced the average maintenance downtime and thus
increasing equipment availability.
Quarterly gold production increased 9.1% vs. 2Q18 mainly as a
result of the higher ore grade driven by a reduction in the
dilution.
Year to date gold production decreased 4.6% vs. YTD17 as a
result of a lower ore grade due to depletion of higher gold ore
grade veins at las Casas-Rosario, Taspana and Jessica areas. This
was mitigated by the higher volume of ore processed and the higher
recovery rate.
Quarterly silver production increased 15.3% vs. 3Q17 as a result
of a higher ore grade due to increased access to higher silver ore
grade areas at Taspana and Rosario and to a lesser extent, the
higher volume of ore processed. When compared to 2Q18, quarterly
silver production increased 1.4% as a result of a slightly higher
ore grade and volume of ore processed, which offset the lower
recovery rate.
Year to date silver production increased 4.2% vs. YTD17 as a
result of higher volume of ore processed due to the previously
mentioned improvement in the maintenance programme and a higher ore
grade.
Expected gold grade for 2018 is now at 1.7 g/t and expected
silver ore grade continues to be around 160 g/t.
By-product lead production decreased against all comparative
periods as a result of lower ore grade and recovery rates,
mitigated by a marginally higher volume of ore processed.
Quarterly by-product zinc production increased 12.3% vs. 3Q17 as
a result of higher recovery rate, and to a lesser extent, higher
volume of ore processed. Quarterly by-product zinc production
increased 53.4% vs. 2Q18 as a result of higher recovery rate and
higher ore grade. Year to date by-product zinc production decreased
27.8% vs. YTD17 as a result of lower ore grade and recovery
rate.
San Julián mine production
YTD
3Q 18 3Q 17 % change 2Q 18 YTD 18 17 % change
Ore Processed Phase
I Veins (t) 332,836 333,674 -0.3 289,775 933,353 948,097 -1.5
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Ore Processed Phase
II JM (t) 561,808 448,150 25.3 540,261 1,633,528 448,150 264.5
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Total production
at San Julián
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (oz) 19,452 23,460 -17.1 20,097 59,341 64,501 -8.0
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (koz) 3,626 3,498 3.7 3,533 10,726 6,477 65.6
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Production Phase
I Veins
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (oz) 18,458 22,493 -17.9 19,584 57,153 63,534 -10.0
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (koz) 1,347 1,495 -9.9 1,263 4,054 4,473 -9.4
-------- -------- --------- -------- ---------- -------- ---------
Production Phase
II
JM
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Gold (oz) 994 967 2.8 513 2,188 967 126.3
--------------------- -------- -------- --------- -------- ---------- -------- ---------
Silver (koz) 2,279 2,004 13.7 2,270 6,672 2,004 232.9
-------- -------- --------- -------- ---------- -------- ---------
Lead (t) 1,263 1,661 -24.0 1,493 4,083 1,661 145.8
-------- -------- --------- -------- ---------- -------- ---------
Zinc (t) 5,041 3,282 53.6 5,254 15,548 3,282 373.7
-------- -------- --------- -------- ---------- -------- ---------
Ore Grades Phase
I Veins
-------- -------- --------- -------- ---------- -------- ---------
Gold (g/t) 1.84 2.12 -13.1 2.12 1.97 2.16 -8.9
-------- -------- --------- -------- ---------- -------- ---------
Silver (g/t) 137.19 148.09 -7.4 144.58 146.53 158.50 -7.6
-------- -------- --------- -------- ---------- -------- ---------
Ore Grades Phase
II
JM
-------- -------- --------- -------- ---------- -------- ---------
Gold (g/t) 0.11 0.13 -17.6 0.07 0.09 0.13 -32.7
-------- -------- --------- -------- ---------- -------- ---------
Silver (g/t) 155.54 169.26 -8.1 156.71 153.03 169.26 -9.6
-------- -------- --------- -------- ---------- -------- ---------
Lead (%) 0.40 0.52 -23.3 0.42 0.41 0.52 -21.6
-------- -------- --------- -------- ---------- -------- ---------
Zinc (%) 1.33 1.13 18.0 1.26 1.30 1.13 15.1
-------- -------- --------- -------- ---------- -------- ---------
San Julián Veins (Phase I - Veins System)
Quarterly silver production decreased 9.9% vs. 3Q17 as a result
of the lower ore grade due to the depletion of the higher grade
areas and, to a lesser extent, lower recovery rate.
Quarterly silver production increased 6.7% vs. 2Q18 as a result
of the higher volume of ore processed now that sufficient water
volumes are available (after a shortage of water as reported in the
Q2 Production Report). This positive effect was partly offset by
the lower ore grade and recovery rate.
Year to date silver production decreased 9.4% vs. YTD17 as a
result of lower ore grade and lower volume of ore processed.
The expected silver ore grade for the full year 2018 is in the
range of 150-160 g/t.
Quarterly and YTD18 gold production decreased 17.9% and 10.0%
vs. 3Q17 and YTD17 respectively, mainly as a result of a lower ore
grade due to the depletion of higher ore grade veins.
Quarterly gold production decreased 5.7% vs. 2Q18 as a result of
lower ore grade and an increase in inventory levels during 3Q18 as
opposed to a reduction in inventory levels during 2Q18 when there
was a shortage of water supply. This was mitigated by an increase
in the volume of ore processed.
Expected average gold grade for the full year 2018 remains
unchanged at 1.9-2.1 g/t.
During the period, the Group successfully concluded the
indigenous consultation required to obtain the permits for the
construction of a water reservoir that will provide a consistent
source of water. Permits have been granted and the construction of
this facility, which is expected to take one year, has begun.
San Julián (Phase II - JM disseminated ore body)
Quarterly and year to date silver production increased vs. 3Q17
and YTD17 respectively as a result of higher volumes of ore
processed following the start of operations at San Julián JM (Phase
II) in July 2017. This offset the lower ore grade.
Quarterly by-product gold production slightly increased 2.8% vs.
3Q17 as a result of higher volume of ore processed, offsetting a
lower ore grade.
Year to date by-product gold production increased vs. YTD17 as a
result of the ramp-up of operations, which more than compensated
for the lower ore grade and recovery rate.
Quarterly gold production increased significantly vs. 2Q18 due
to higher ore grade, recovery rate and higher volume of ore
processed.
Expected silver ore grade for 2018 continues to be in the range
of 145-155 g/t.
Quarterly by-product lead production decreased 24.0% and 15.4%
vs. 3Q17 and 2Q18 respectively as a result of lower ore grades and
recovery rates. Year to date lead production increased due to
higher volume of ore processed, which was partly offset by the
lower ore grade and recovery rate.
Quarterly and year to date by-product zinc production increased
vs. 3Q17 and YTD17 respectively driven by the higher volume of ore
processed, ore grades and recovery rates. Quarterly by-product zinc
production decreased 4.1% vs. 2Q18 due to a lower recovery
rate.
Herradura total mine production
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 5,859,579 6,337,573 -7.5 5,605,427 17,449,647 19,653,734 -11.2
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Total Volume
Hauled (t) 29,718,422 33,433,070 -11.1 33,560,118 97,432,307 95,404,767 2.1
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Production
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (oz) 109,630 131,738 -16.8 117,886 352,759 355,747 -0.8
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (koz) 492 157 213.4 363 1,097 380 188.7
----------- ----------- --------- ----------- ----------- ----------- ---------
Ore Grades
----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (g/t) 0.76 0.75 1.0 0.76 0.73 0.68 7.6
----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (g/t) 3.05 1.20 152.9 2.60 2.50 1.01 147.8
----------- ----------- --------- ----------- ----------- ----------- ---------
Quarterly gold production decreased 16.8% vs. 3Q17 as a result
of: i) a higher than normal speed in the recovery rate due to new
layers at the leaching pads which allowed for a rapid decrease in
inventories in 3Q17 compared to 3Q18 where normal conditions
prevailed; and ii) the lower grade and volume of ore deposited at
the leaching pads in 3Q18 resulting from heavy rains causing
haulage equipment to temporarily be stopped. These adverse effects
were mitigated by a higher ore grades which were processed at the
dynamic leaching plant. The heavy rains have continued in October,
temporarily impacting operations at the Merrill Crowe plant as
electric lines were affected.
Quarterly gold production decreased 7.0% vs. 2Q18 as a result of
the lower speed of the rate of recovery at the leaching pads in
3Q18 when ore was deposited in a phase of the leaching pads with
higher altitude increasing the residence time of the solution in
the pads. This adverse effect was mitigated by the higher volume of
ore processed.
Year to date gold production remained at similar levels, down
0.8% vs. YTD17 due to a lower volume of ore processed, mitigated by
a higher ore grade and recovery rate.
Expected gold ore grade for the full year continues to be c.
0.75 g/t.
Noche Buena total mine production
3Q 18 3Q 17 % change 2Q 18 YTD 18 YTD 17 % change
Ore Processed
(t) 4,834,512 4,362,684 10.8 4,550,915 13,800,217 13,375,504 3.2
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Total Volume
Hauled (t) 20,489,682 20,918,713 -2.1 22,073,319 63,084,240 64,274,348 -1.9
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Production
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (oz) 42,460 33,409 27.1 45,308 130,503 123,184 5.9
--------------- ----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (koz) 5 6 -16.7 18 42 20 110.0
----------- ----------- --------- ----------- ----------- ----------- ---------
Ore Grades
----------- ----------- --------- ----------- ----------- ----------- ---------
Gold (g/t) 0.52 0.53 -0.9 0.54 0.53 0.51 2.5
----------- ----------- --------- ----------- ----------- ----------- ---------
Silver (g/t) 0.05 0.07 -34.4 0.18 0.14 0.08 70.5
----------- ----------- --------- ----------- ----------- ----------- ---------
Quarterly gold production increased 27.1% vs. 3Q17 as a result
of higher speed of recovery due to the ore's composition and the
higher volume of ore processed. Quarterly gold production decreased
6.3% vs. 2Q18 as a result of lower speed of recovery and, to a
lesser extent, lower ore grade. These factors were partially offset
by the higher volume of ore processed.
Year to date gold production increased 5.9% vs. YTD17 due to
higher volume of ore processed and higher ore grade.
Expected gold ore grade for the full year is 0.50 g/t.
Update on development projects
Pyrites Plant at the Fresnillo mine
The first stage of the Pyrites Plant project (leaching plant at
Saucito) was completed in Q2. The 14,000 tpd tailings flotation
project to process the historical and ongoing tailings from the
Fresnillo mine continued with further progress in the detailed
engineering and the modelling of the structure of different areas.
This project is expected to be concluded by the end of 2019. This
facility is expected to incur a capex of US$51.4 million, which is
part of the total US$155 million capex authorised for this
project.
Second Dynamic Leaching Plant
Construction of the second line of the dynamic leaching plant
was completed in 2Q18.
Final tests at the second line of the Dynamic Leaching Plant at
Herradura continued during the period. However, the process took
longer than expected due to some minor technical adjustments and
the heavy rains which further complicated the commissioning
activities. Commercial production is now expected to begin in 4Q18.
This US$110 million project will process high ore grade material
from the Herradura pit.
Update on exploration
During 3Q18, 172,000 metres of drilling were completed at our
operating mines mainly to convert resources into reserves, and
113,000 metres were carried out at exploration projects. The
cumulative drilling achieved in the first nine months of 2018 is
427,000 metres at the operating mines and 294,000 metres at the
exploration projects.
Presently 11 areas are in drilling and interesting results were
obtained at the Herradura, Fresnillo and Guanajuato districts.
Mapping and sampling have been intensified in the mining districts
controlled by Fresnillo to generate new targets and areas with
potential. Exploration teams are working out of the Hermosillo,
Chihuahua, Zacatecas, Toluca, Lima-Peru and Santiago de Chile
offices in selected areas of favorable silver-gold belts in Mexico,
Peru, Chile and Argentina.
Juanicipio
The project is in the final stages of its approval process, with
discussions currently focused on the construction agreement. The
project is expected to be fully approved before year end and orders
for long term delivery equipment are ready to be placed.
Safety Performance
We are pleased to announce that during the quarter there were no
fatal accidents. We continue to reinforce our safety measures
throughout the Company, with our management systems and
organisational programmes centered on personnel safety. We remain
committed to our zero fatalities target.
There will be a conference call for analysts and investors on
Wednesday 24th October at 9:00am (London time). The dial in details
are as follows:
UK: +44 (0) 808 109 0700
Standard International Access: +44 (0) 20 3003 2666
Participant password: Fresnillo
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), one development project - the Pyrites Plant at
Fresnillo, 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 and 700 thousands
hectares in Peru.
Fresnillo plc has a strong and long tradition of exploring,
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 news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
DRLFZLBLVBFXFBF
(END) Dow Jones Newswires
October 24, 2018 02:00 ET (06:00 GMT)
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