TIDMFRES
RNS Number : 6866T
Fresnillo PLC
22 July 2020
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
22 July 2020
SECOND QUARTER PRODUCTION REPORT
FOR THE THREE MONTHSED 30 JUNE 2020
Octavio Alvídrez, Chief Executive Officer, said:
" In the past few months, above all our focus has been on the
health of our employees, contractors and our local communities
during this global pandemic. I would like to thank them again for
their diligence, care, hard work and for the speed with which they
have adapted to the changes to the working environment we have had
to make. The health of our teams remains our priority and we
continue to implement a range of hygiene, social distancing,
testing and monitoring measures to ensure the safety of our
people.
Despite these challenges, I am pleased to report resilient
production performance with further progress made on our mine
improvement initiatives. As a result, we are maintaining our silver
guidance for the full year, though we have reduced our gold
guidance due to COVID-19 related working restrictions mainly at our
Herradura and Noche Buena mines which have impacted production
volumes. Our development projects remain on track, with the Pyrites
Plant and optimisation of the beneficiation plant, both at
Fresnillo, due for completion in the second half of the year while
Juanicipio also remains on schedule. In the face of an
unprecedented health crisis, this has been a positive quarter for
Fresnillo, a testament of the excellent commitment of our people
and the strength of our operations".
COVID-19 UPDATE
Our priority has always been the well-being of our workforce and
the communities in which we operate. The COVID outbreak has clearly
shown how important this commitment is. We closely monitored the
spread of the outbreak and implemented a range of safety measures
across our business, following guidelines in accordance with the
World Health Organisation and Mexican authorities. This included
stringent monitoring & hygiene, temperature screening, social
distancing, and working from home for all office-based colleagues,
as well as supporting education campaigns across our local
communities. Those measures are on-going and we remain vigilant to
any localised increase in COVID cases.
The impact of the pandemic varied across our operations,
depending on specific measures and working restrictions implemented
by local governments in response to the evolution of the COVID
outbreak in each region. We have, for example, seen more stringent
working restrictions in our open pit mines, located in the north of
Mexico, than those implemented in our underground mines in the
centre of the country. This has impacted processing volumes at our
Herradura and Noche Buena gold mines in particular. Fresnillo
maintains an open dialogue with government officials at both the
Federal and local level to continue monitoring the virus. More
detailed mine by mine commentary is provided below.
TOTAL PRODUCTION
HIGHLIGHTS
Silver
-- Quarterly silver production of 13.6 moz (including
Silverstream), up 2.8% vs. 1Q20 driven by a higher ore grade at
Fresnillo and, to a lesser extent, higher ore grade at Ciénega
.
-- Quarterly silver production (including Silverstream), down
5.7% vs. 2Q19 due to the expected lower ore grade at Saucito, and
to a lesser extent, lower ore grade at San Julián Disseminated Ore
Body (DOB) and lower volume of ore processed and ore grade at San
Julián Veins.
-- First half silver production of 26.8 moz (including
Silverstream), down 2.7% vs. 1H19 due to the expected lower ore
grade at Saucito, and to a lesser extent, a lower contribution from
the Silverstream and a lower volume of ore processed at San Julián
Veins, mitigated by a higher ore grade at Fresnillo.
Gold
-- Quarterly gold production of 184.4 koz down 6.4% vs. 1Q20,
primarily due to a lower volume of ore processed at Herradura as a
result of COVID-19 related restrictions, mitigated by the ability
to continue processing inventories both, on the leaching pads and
the dynamic leaching plants (DLP's).
-- Quarterly and first half gold production decreased 16.7% and
11.8% vs. 2Q19 and 1H19 respectively due to a lower volume of ore
processed at Herradura and Noche Buena, for the same reasons as
described above.
By-Products
-- Quarterly by-product lead and zinc production increased 16.4%
and 18.0% respectively vs. 1Q20, driven primarily by higher ore
grades at Fresnillo.
-- Quarterly by-product lead and zinc production increased 24.1%
and 29.4% vs. 2Q19 respectively due to higher ore grades at
Fresnillo and Saucito, as well as a higher volume of ore processed
at the latter, offset by a lower ore grade at San Julián (DOB).
-- First half by-product lead production increased 19.6% vs.
1H19 due to higher ore grades at Fresnillo, Saucito and
Ciénega.
-- First half by-product zinc production increased 16.4% vs.
1H19 due to higher ore grades at Fresnillo, Saucito and Ciénega,
offset by a lower ore grade at San Julián (DOB).
2Q20 1Q20 % Change 2Q19 % Change 1H20 1H19 % Change
Silver (koz) 12,944 12,547 3.2 13,636 -5.1 25,491 26,009 -2.0
-------- -------- --------- -------- --------- -------- -------- ---------
Silverstream
(koz) 648 681 -4.9 782 -17.1 1,328 1,548 -14.2
-------- -------- --------- -------- --------- -------- -------- ---------
Total Silver
(koz) 13,592 13,228 2.8 14,418 -5.7 26,819 27,557 -2.7
-------- -------- --------- -------- --------- -------- -------- ---------
Gold (oz) 184,356 196,963 -6.4 221,307 -16.7 381,319 432,417 -11.8
-------- -------- --------- -------- --------- -------- -------- ---------
Lead (t) 16,180 13,905 16.4 13,039 24.1 30,085 25,164 19.6
-------- -------- --------- -------- --------- -------- -------- ---------
Zinc (t) 26,726 22,655 18.0 20,654 29.4 49,381 42,406 16.4
-------- -------- --------- -------- --------- -------- -------- ---------
DEVELOPMENT PROJECTS
-- During the second quarter, the pace of progress at Juanicipio
slowed due to COVID-19 restrictions. Nevertheless, the overall
development timetable currently remains unchanged with development
ore due to be processed through the Fresnillo plant in the coming
weeks at an average rate of 16,000 tonnes per month and the
Juanicipio processing plant expected to be commissioned mid-2021.
Mine development continued, and we expect the first production
stope to be fully prepared by the end of 3Q20.
-- Construction of the Pyrites plant (phase II) in the Fresnillo
district advanced and remains on track and on budget. As a direct
result of COVID-19 related disruption, there could be a possible
delay in final inspections by the authority, which could defer
start-up of commercial production from 3Q20 to 4Q20.
-- Fresnillo flotation plant optimisation to cope with higher
content of lead and zinc is progressing according to plan and is
expected to be concluded on time by 2H20.
2020 OUTLOOK
Despite the uncertainty, 2020 silver production guidance remains
in the range of 51 to 56 moz (including Silverstream) while gold
production is now expected to be in a range of 785 to 815 koz
(previously 815 to 900 koz) as a result of COVID-19 related
disruption.
INTERIM RESULTS
Fresnillo will announce its 2020 Interim Results on 28(th) of
July 2020.
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)7793 858 211
Peter Ogden
MINING OPERATIONS
FRESNILLO MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H20 1H 19 % Change
Ore Processed
(t) 596,115 598,790 -0.5 619,852 -3.8 1,194,905 1,194,199 0.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,611 3,145 14.8 3,455 4.5 6,756 6,407 5.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 10,828 8,781 23.3 13,489 -19.7 19,609 24,935 -21.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 6,860 4,617 48.6 5,233 31.1 11,477 8,769 30.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 10,978 6,758 62.4 6,710 63.6 17,737 11,957 48.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 209 183 14.1 192 8.8 196 187 4.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.79 0.65 21.1 0.90 -12.8 0.72 0.86 -16.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.33 0.95 40.2 0.97 36.1 1.14 0.85 33.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.55 1.69 50.8 1.60 59.4 2.12 1.46 45.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production was up 14.8% vs. 1Q20 as a result of
a higher ore grade due to a combination of incremental improvements
achieved following the implementation of our action plan, as set
out at the end of last year and further described below.
Quarterly silver production increased 4.5% vs. 2Q19 driven by a
higher ore grade for reasons mentioned above, offset by a lower
voume of ore processed due to workforce constraints resulting from
the COVID-19 contingency.
First half silver production increased 5.5% vs. 1H19 due to the
higher ore grade, as we continue to implement our action plan.
Our performance improvement plan, as set out on the Capital
Markets Day in December 2019, continues to be implemented, focusing
on controlling dilution, enhancing blasting and drilling techniques
to cope with the narrower veins. All the long haul drilling stopes
have now been scanned. Further, intiatives to increase efficiency
and reduce downtime have been advanced, with semi-automatic
drilling machines now operating.
Development rates remained at a similar level vs. 1Q20, with an
average of 3,183m per month in 2Q20 (1Q20: 3,200m per month),
despite a reduction in the number of contractors and employees on
site while they self isolated in accordance to COVID-19 guidelines.
During the first half, development rates increased 6.3% (3,190m per
month) vs. 1H19 (3,000m per month) as a result of the ramp up of
the tunnel boring machine and the new contractor hired at the end
of 2019. With these measures and assuming COVID-19 evolution does
not worsen, we remain confident of hitting our expected development
rates of 3,400m per month by the end of 2020.
Quarterly by-product gold production increased 23.3% vs. 1Q20
driven by a higher ore grade.
Quarterly and first half by-product gold production decreased
19.7% and 21.4% vs. 2Q19 and 1H19 respectively due to lower ore
grades and to a lesser extent, lower recovery rates.
The silver ore grade for 2020 continues to be in the range of
185-200 g/t, while the gold ore grade is estimated to remain around
0.7 g/t.
SAUCITO MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Ore Processed (t) 715,338 670,047 6.8 662,023 8.1 1,385,385 1,327,673 4.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 4,098 4,043 1.3 4,507 -9.1 8,141 8,840 -7.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 20,398 21,176 -3.7 17,987 13.4 41,574 36,716 13.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 6,255 5,717 9.4 4,562 37.1 11,972 10,439 14.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 8,842 8,902 -0.7 5,941 48.8 17,744 15,052 17.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 207 214 -3.4 242 -14.6 210 243 -13.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.15 1.27 -9.1 1.15 0.5 1.21 1.14 6.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.04 0.99 4.9 0.83 26.2 1.02 0.93 9.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.82 1.86 -2.2 1.33 36.5 1.84 1.64 12.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production increased 1.3% vs. 1Q20 due to a
higher volume of ore processed, offset by an expected lower ore
grade.
As seen in previous quarters and in line with our expectations,
quarterly and first half silver production decreased 9.1% and 7.9%
vs. 2Q19 and 1H19 respectively as a result of the gradual depletion
of higher ore grade areas at the Jarillas vein. This decline was
mitigated by a higher volume of ore processed.
Quarterly by-product gold production decreased 3.7% vs. 1Q20
driven by the lower ore grade, mitigated by the higher volume of
ore processed.
Quarterly by-product gold production increased 13.4% vs. 2Q19,
driven by a higher volume of ore processed, and to a lesser extent,
higher recovery rate.
First half by-product gold production increased 13.2% vs. 1H19
due to a higher ore grade, volume of ore processed and recovery
rate.
The silver ore grade for 2020 continues to be in the range of
200-220 g/t, while the gold ore grade is estimated to remain around
0.95 g/t.
PYRITES PLANT (PHASE I)
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Iron Concentrates
Processed (t) 39,049 41,453 -6.0 39,159 -0.5 80,502 87,005 -7.5
------- ------- --------- ------- --------- ------- ------- ---------
Production
------- ------- --------- ------- --------- ------- ------- ---------
Silver (koz) 249 256 -2.7 333 -25.1 505 638 -20.8
------- ------- --------- ------- --------- ------- ------- ---------
Gold (oz) 924 871 6.1 1,215 -24.0 1,795 2,315 -22.5
------- ------- --------- ------- --------- ------- ------- ---------
Ore Grades
------- ------- --------- ------- --------- ------- ------- ---------
Silver (g/t) 261 244 6.9 352 -25.7 252 305 -17.3
------- ------- --------- ------- --------- ------- ------- ---------
Gold (g/t) 2.10 2.11 -0.5 2.57 -18.2 2.11 2.31 -8.7
------- ------- --------- ------- --------- ------- ------- ---------
Quarterly silver production decreased 2.7% vs. 1Q20 due to a
lower volume of iron concentrates processed, and to a lesser
extent, lower recovery rate, mitigated by the higher ore grade of
the iron concentrates produced by Saucito.
Quarterly gold production increased 6.1% vs. 1Q20 due to a
higher recovery rate.
Quarterly silver and gold production decreased 25.1% and 24.0%
vs. 2Q19 respectively as expected, primarily due to a lower ore
grade from Saucito's flotation plant, as material from the
pre-operative high grade stockpile was depleted, following the
plant's start-up in mid-2018.
First half silver production decreased 20.8% vs. 1H19 due to a
lower ore grade and volume of iron concentrates processed,
mitigated by a higher recovery rate.
Similarly, first half gold production decreased 22.5% vs. 1H19
as a result of a lower ore grade, recovery rate and volume of iron
concentrates processed.
We continue to expect this plant to recover around 1 moz silver
and 3 koz gold from the on-going Saucito tailings during 2020.
CIENEGA MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Ore Processed (t) 331,543 326,350 1.6 329,117 0.7 657,893 650,107 1.2
-------- -------- --------- -------- --------- -------- -------- ---------
Production
-------- -------- --------- -------- --------- -------- -------- ---------
Gold (oz) 15,948 16,426 -2.9 15,075 5.8 32,374 29,757 8.8
-------- -------- --------- -------- --------- -------- -------- ---------
Silver (koz) 1,573 1,396 12.7 1,457 8.0 2,969 2,920 1.7
-------- -------- --------- -------- --------- -------- -------- ---------
Lead (t) 1,489 1,747 -14.8 1,353 10.0 3,237 2,335 38.6
-------- -------- --------- -------- --------- -------- -------- ---------
Zinc (t) 2,324 2,585 -10.1 2,130 9.1 4,909 3,842 27.8
-------- -------- --------- -------- --------- -------- -------- ---------
Ore Grades
-------- -------- --------- -------- --------- -------- -------- ---------
Gold (g/t) 1.61 1.69 -4.9 1.57 2.7 1.65 1.55 6.4
-------- -------- --------- -------- --------- -------- -------- ---------
Silver (g/t) 172 154 11.2 162 6.0 163 163 -0.1
-------- -------- --------- -------- --------- -------- -------- ---------
Lead (%) 0.69 0.81 -15.1 0.64 7.3 0.75 0.56 32.3
-------- -------- --------- -------- --------- -------- -------- ---------
Zinc (%) 1.19 1.29 -7.6 1.10 7.7 1.24 1.00 24.2
-------- -------- --------- -------- --------- -------- -------- ---------
Quarterly gold production decreased 2.9% vs. 1Q20 due to a lower
ore grade driven by narrower veins, mitigated by a higher volume of
ore processed following efficiency gains in the maintenance
programme.
Quarterly silver production increased 12.7% and 8.0% vs. 1Q20
and 2Q19 due to ore extracted from the Eastern zone of the Ciénega
mine with higher silver ore grades.
Quarterly gold production increased 5.8% vs. 2Q19 due to a
marginally higher ore grade and rate of recovery.
First half gold production increased 8.8% vs. 1H19 primarily due
to the higher ore grade while first half silver production remained
flat (+1.7%) vs. 1H19. This resulted from the higher proportion of
material extracted from the Eastern zone of the district with
higher gold content but lower silver content.
The gold and silver ore grades for 2020 are expected to remain
at around 1.65-1.75 g/t and 155-165 g/t respectively.
SAN JULIÁN MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Ore Processed Veins
(t) 312,796 309,177 1.2 338,797 -7.7 621,973 661,680 -6.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Processed DOB
(t) 559,564 541,925 3.3 562,534 -0.5 1,101,489 1,107,875 -0.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Total production
at San Julián
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 16,361 15,173 7.8 18,303 -10.6 31,535 36,443 -13.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,104 3,174 -2.2 3,589 -13.5 6,277 6,542 -4.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 15,658 14,584 7.4 17,667 -11.4 30,242 35,299 -14.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,047 1,074 -2.5 1,246 -15.9 2,121 2,330 -9.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 703 589 19.4 636 10.7 1,293 1,143 13.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,057 2,100 -2.0 2,343 -12.2 4,156 4,212 -1.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 1,576 1,824 -13.5 1,891 -16.6 3,400 3,621 -6.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 4,581 4,410 3.9 5,873 -22.0 8,991 11,555 -22.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.63 1.53 5.9 1.71 -4.7 1.58 1.74 -9.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 113.02 117.75 -4.0 124.34 -9.1 115.37 119.69 -3.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.08 0.08 4.9 0.08 -0.5 0.08 0.08 1.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 133.96 140.00 -4.3 149.17 -10.2 136.93 137.00 -0.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.37 0.42 -11.0 0.44 -15.9 0.39 0.44 -9.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.08 1.13 -4.9 1.42 -24.3 1.10 1.40 -21.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
SAN JULIÁN VEINS
Quarterly silver production decreased 2.5% vs. 1Q20 due to a
lower ore grade, mitigated by a higher volume of ore processed
following the successful ramp up of the new contractor enabling
access to new areas, as described in the previous quarter.
Gold production increased 7.4% vs. 1Q20 mainly due to a higher
ore grade.
Quarterly gold and silver production decreased 11.4% and 15.9%
vs. 2Q19 respectively due to a lower volume of ore processed and
ore grade following the depletion of the stockpile, which resulted
from the development activities in 2019, as described in prior
quarters.
First half gold and silver production decreased 14.3% and 9.0%
vs. 1H19 respectively due to lower ore grades, driven by the
depletion of high ore grade areas at San Julián and Shalom, and the
lower volumes of ore processed following the depletion of the
stockpile, as mentioned above.
We continue to expect the 2020 silver and gold ore grades to
remain flat year on year, averaging 110-120 g/t and 1.6-1.7 g/t,
respectively.
SAN JULIÁN DISSEMINATED ORE BODY (DOB)
Quarterly silver production decreased 2.0% vs. 1Q20 due to a
lower ore grade, mitigated by a higher volume of ore processed. As
previously mentioned, the mine sequencing was changed in 2019 to
maintain the geotechnical stability of some high ore grade stopes
and we expect to regain access to these higher quality areas in
2H20.
Quarterly silver production decreased 12.2% vs. 2Q19 due to a
lower ore grade, following the mine resequencing during 2H19.
First half silver production decreased 1.3% vs. 1H19 due to a
marginally lower volume of ore processed and recovery rate.
The silver ore grade for 2020 is expected to remain within a
range of 140-150 g/t.
HERRADURA TOTAL MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Ore Processed
(t) 3,283,104 4,847,178 -32.3 5,466,791 -39.9 8,130,282 11,161,864 -27.2
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 18,942,659 33,840,941 -44.0 32,100,458 -41.0 52,783,600 61,233,200 -13.8
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Production
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (oz) 95,253 110,493 -13.8 119,987 -20.6 205,746 236,866 -13.1
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (koz) 300 524 -42.9 280 7.1 824 634 30.0
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Ore Grades
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (g/t) 0.90 0.76 18.5 0.84 7.1 0.82 0.82 -0.9
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (g/t) 3.28 4.19 -21.7 2.48 31.8 3.82 2.70 41.6
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Quarterly gold production decreased 13.8% vs. 1Q20 due to a
decrease in volume of ore deposited during the COVID-19 operational
restrictions. This adverse effect was mitigated by: i) the ability
to process inventories from the leaching pads and stockpile at the
dynamic leaching plants, which resulted in a reduction of gold
inventories from 64koz at the end of 1Q20 to 47koz at the end of
2Q20; ii) the increased recovery rate resulting from the improved
overall speed of recovery at the 13(th) leaching pad following its
commissioning in mid 2019; and iii) gained access to a high ore
grade area of the pit in 2Q20.
Quarterly and first half gold production decreased 20.6% and
13.1% vs. 2Q19 and 1H19 respectively driven by the lower volume of
ore deposited, for reasons explained above. Gold inventories
decreased from 72koz at the end of 2019 to 47koz at 30(th) June
2020.
Since mid-June, operations have ramped up, albeit with strict
safety protocols limiting potential productivity gains.
Following the analysis conducted during 2018 as a result of the
construction of an access road through a number of old leaching
pads, the mine has continued carrying out assays to confirm the
grade and recovery of the ore in inventories. As a result of the
information obtained, the mine updated its estimate of the
recoverable remaining gold content in the inventories at the old
leaching pads resulting in an increase of 119.3 thousand ounces of
gold as at 1st January 2020.
The gold ore grade is expected to remain around 0.75-0.80 g/t
during 2020.
NOCHE BUENA TOTAL MINE PRODUCTION
2Q20 1Q20 % Change 2Q19 % Change 1H 20 1H 19 % Change
Ore Processed
(t) 1,366,909 1,963,145 -30.4 3,663,549 -62.7 3,330,054 6,575,328 -49.4
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 5,612,622 10,104,777 -44.5 13,135,058 -57.3 15,717,399 26,115,609 -39.8
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Production
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (oz) 24,643 24,043 2.5 35,252 -30.1 48,686 65,386 -25.5
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (koz) 9 9 -1.1 17 -44.0 19 29 -35.2
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Ore Grades
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (g/t) 0.54 0.54 -0.4 0.56 -3.5 0.54 0.53 1.2
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (g/t) 0.54 0.27 99.7 0.22 141.6 0.38 0.22 73.0
---------- ----------- --------- ----------- --------- ----------- ----------- ---------
Quarterly gold production increased 2.5% vs. 1Q20 due to a
decrease in gold inventories at the leaching pads and a higher
recovery rate as a result of the installation of the carbon columns
in 2019. This was offset by the lower volume of ore processed
following the COVID 19 operational restrictions.
Quarterly and first half gold production decreased 30.1% and
25.5% vs. 2Q19 and 1H19 respectively driven by the lower volume of
ore deposited, for reasons explained above, in addition to the
expected depletion of the mine as the mine approaches closure.
These were mitigated by the higher speed of recovery due to
increased irrigation on the pads.
The expected gold ore grade has been marginally revised down to
the range of 0.50-0.55 g/t in 2020.
SILVERSTREAM
Quarterly Silverstream production decreased 4.9% and 17.1% vs.
1Q20 and 2Q19 respectively due to lower volumes of ore
processed.
First half Silverstream production decreased 14.2% vs. 1H19 due
to a decrease in ore throughput and the expected lower ore grade
resulting from narrower veins, as described in previous quarters,
which were partially compensated for by a higher recovery rate.
Expected silver production in 2020 remains in the range of
2.7-3.0 moz.
SAFETY PERFORMANCE
We had an excellent safety performance on the second quarter. We
remain fully committed to our goal of zero harm by the
reinforcement of our safety training for all employees and
contractors, encouraging the implementation of the "I Care We Care"
programme and the adherence to the safety policies throughout the
Group.
UPDATE ON EXPLORATION
During 2Q20, 135,000 metres of drilling were completed at our
operating mines, as part of the 440,000 metres programme to convert
resources into reserves. Additionally, 39,000 metres of exploration
drilling were carried out, as part of the 228,000 metres programme
at projects.
Presently, drilling is taking place across eight areas.
Interesting results were obtained at Fresnillo, Guanajuato and
Supaypacha (Peru), that identified new mineralised zones and merit
follow up; at the San Julián district, drilling successfully
converted resources to reserves on the south vein system.
Negotiations with communities to obtain access permits to drill
continue at several project areas in Mexico and Peru.
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, Las Casas Rosario & Cluster Cebollitas), Herradura,
Soledad-Dipolos(1) , Noche Buena and San Julián (Veins and
Disseminated Ore Body), three development projects - the Pyrites
Plant at Fresnillo, the optimisation of the beneficiation plant
also at Fresnillo and Juanicipio, and six advanced exploration
projects - Orisyvo, Centauro great potential, Centauro Deep,
Guanajuato, Rodeo and Tajitos, as well as a number of other long
term exploration prospects.
Fresnillo plc has mining concessions and exploration projects in
Mexico, Peru and Chile.
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 and Mexico's largest gold
producer.
(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
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July 22, 2020 02:00 ET (06:00 GMT)
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