TIDMFRES
RNS Number : 6315Z
Fresnillo PLC
26 January 2022
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
26 January 2022
FOURTH QUARTER PRODUCTION REPORT
FOR THE THREE MONTHSED 31 DECEMBER 2021
Octavio Alvídrez, Chief Executive Officer, said:
"Given the challenges presented by both the continued effect of
the pandemic and more recent Government labour reform initiatives,
as well as certain operational issues, we have delivered a
creditable performance during the year, with silver production
marginally short of guidance, but gold production exceeding
expectations. This performance highlights the strength of our
diversified portfolio and the capability of our people. During the
year we have also made further progress on our development
pipeline, with construction of the Juanicipio plant delivered on
time and on budget though we await approval to complete the tie-in
to the national power grid which we now expect at the end of the
second quarter.
Looking ahead, our priorities for this year are clear - we must
continue to navigate the challenges presented by both Covid-19,
which regrettably is again accelerating in Mexico which will impact
labour availability in particular, as well as continue to adapt to
the new labour reform. The safety of our people is our priority, as
is ensuring we continue to roll-out our performance improvement
measures across our portfolio."
HIGHLIGHTS
Silver
Full year attributable silver production of 53.1 moz (including
Silverstream), marginally below guidance, flat vs. FY20 with the
higher ore grade at San Julián Disseminated Ore Body (DOB) and, to
a lesser extent, the contribution of development ore from
Juanicipio, offset by a lower ore grade and volume of ore processed
at Saucito and Fresnillo.
Quarterly attributable silver production of 12.9 moz (including
Silverstream), up 2.1% vs. 3Q21 mainly driven by a higher
contribution of development ore from Juanicipio, partly offset by
the anticipated lower ore grade at San Julián (DOB).
Quarterly attributable silver production (including
Silverstream) remained flat vs. 4Q20 due to a higher contribution
of development ore from Juanicipio offset by decreased volumes of
ore processed and lower ore grades at both Fresnillo and
Saucito.
Gold
Full year attributable gold production of 751.2 koz, ahead of
guidance, down 2.4% vs. FY20, due to a lower ore grade at Ciénega,
and a lower ore grade and volume of ore processed at San Julián
Veins, partly mitigated by a higher volume of ore processed and ore
grade at Noche Buena.
Quarterly attributable gold production of 150.3 koz, down 12.9%
and 30.3% vs. 3Q21 and 4Q20 respectively, mainly due to the
expected lower ore grade, decreased volume of ore processed and
lower recovery rate at Herradura primarily driven by the increased
silt restricting the filter capacity at the plant, as reported in
the prior quarter.
LABOUR REFORM IN MEXICO
As reported in 3Q21, the labour reform in Mexico restricting the
ability to subcontract labour came into effect from 1st September
2021 resulting in the requirement to internalise a high proportion
of our contractor workforce. Subsequent contractor uptake has
varied, with underground mines, in particular in the Fresnillo
District and at Ci é nega, more affected due to a higher number of
contractors on site resulting in an increased number of staff
vacancies and a higher workforce turnover. This in turn has
affected equipment availability (equipment previously provided by
contractors and maintenance work previously carried out by
contractors) and utilisation rates (turnover and vacancies). The
actions we announced to address this short term challenge will
continue, including recruitment campaigns, training and investment
in new equipment. These campaigns are proving effective and we
expect to have completed the staffing process in the Fresnillo
District and Ci é nega in the third quarter, while our open pit
mines, which have seen a lesser impact, should be fully staffed
during 1Q22.
COVID-19 UPDATE
Regrettably, a fourth wave of Covid-19 has now reached Mexico,
with the highly contagious omicron variant resulting in a
considerable increase in Covid cases throughout the country. We
began to see the impact of this increase in terms of staff
absenteeism due mainly to self isolation from the 2(nd) week of
December and this has accelerated throughout January. The safety
and well-being of our people is our priority and our Covid
protocols remain in place, but we are relieved to see the omicron
variant in Mexico presents a lesser health risk. Nonetheless, we
are seeing greater levels of absenteeism which in turn is having an
impact across our business - we expect that to continue in the
first quarter of 2022.
By-Products
-- Full year attributable by-product lead production decreased
10.5% vs. FY20 due to a decrease in volume of ore processed and
lower ore grade at Saucito and Fresnillo and a lower ore grade at
Ciénega. This was mitigated by a higher ore grade at San Julián
DOB.
-- Full year attributable by-product zinc production decreased
6.9% vs. FY20 primarily due to a lower volume of ore processed and
ore grade at Saucito and to a lesser extent, lower ore grade and
recovery rate at Ciénega.
-- Quarterly attributable by-product lead production decreased
9.0% vs. 3Q21 due to a lower ore grade at Saucito and a lower ore
grade and volume of ore processed at Fresnillo.
-- Quarterly attributable by-product zinc production remained
flat vs. 3Q21 due to lower ore grades at San Julián DOB and
Saucito, offset by a higher ore grade at Fresnillo.
-- Quarterly attributable by-product lead and zinc production
decreased 34.3% and 26.4% vs. 4Q20 respectively, driven primarily
by lower ore grades and decreased volumes of ore processed at
Saucito.
Attributable 4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Silver (koz) 12,230 11,800 3.7 12,207 0.2 49,961 50,270 (0.6)
-------- -------- --------- ---------------- --------- -------- -------- ---------
Silverstream
(koz) 684 851 (19.7) 743 (7.9) 3,134 2,780 12.7
-------- -------- --------- ---------------- --------- -------- -------- ---------
Total Silver
(koz) 12,914 12,651 2.1 12,950 (0.3) 53,095 53,050 0.1
-------- -------- --------- ---------------- --------- -------- -------- ---------
Gold (oz) 150,313 172,534 (12.9) 215,581 (30.3) 751,203 769,618 (2.4)
-------- -------- --------- ---------------- --------- -------- -------- ---------
Lead (t) 11,837 13,010 (9.0) 18,013 (34.3) 56,573 63,242 (10.5)
-------- -------- --------- ---------------- --------- -------- -------- ---------
Zinc (t) 22,899 22,930 (0.1) 31,092 (26.4) 99,397 106,793 (6.9)
-------- -------- --------- ---------------- --------- -------- -------- ---------
DEVELOPMENT PROJECTS
The construction of the Juanicipio plant was delivered on
schedule during the quarter. However, as previously disclosed, we
are focusing on complying with the new requirements from the state
owned electricity company and the energy regulator to complete the
tie-in to the national power grid. As a result, the mill
commissioning timeline was extended by approximately six months. As
previously reported, stoping and mineralised mine development will
continue. To mitigate potential adverse effects, Fresnillo will
make available any unused plant capacity at its Fresnillo and
Saucito operations to process material produced at Juanicipio.
SAFETY PERFORMANCE
There were zero fatal accidents during the quarter though as
previously reported, we were deeply saddened by a fatal accident
that occurred earlier in the year. Safety is at the heart of our
operations and we continue to fully engage with the safety measures
and adherence to policies needed to guarantee a safe environment
for all our people. The reinforcement and monitoring of safety
measures in all our operations at the mines and throughout the
company is a continuous commitment and the 'I Care, We Care'
programme remains hugely important across the business.
2022 OUTLOOK
Our 2022 guidance issued today is given in the context of the
ongoing and new operational challenges worsened by the pandemic
(and the resulting impact on workforce availability) and the
implementation of the new labour laws which limit use of
contractors. As we reported in our 3Q21 update, we had anticipated
a certain level of impact on production as a result of these
factors in both 4Q21 and 1Q22, though we are now likely to see a
greater impact in the earlier part of the year than previously
expected.
-- Attributable silver production expected to be in the range of
50.5 to 56.5 moz (including Silverstream) in line with 2021 and
below our previous estimate due to a lower volume of ore processed
at Saucito driven by a shortage of personnel in conjunction with
absenteeism due to Covid-19, and a lower ore grade as a result of
the instability caused by increased seismicity in the Jarillas vein
limiting access to higher ore grade areas and thereby requiring
additional development to recapture operational flexibility.
Further, given the extension to the timeline for the tie-in to the
national grid of both the Juanicipio plant and the Pyrites Plant at
Fresnillo, we expect lower contributions from both operations.
-- Attributable gold production expected to be in the range of
600 to 650 koz, driven mainly by the Noche Buena mine coming to the
end of its mine life.
FULL YEAR FINANCIAL RESULTS
Fresnillo will announce its full year 2021 results on 8th March
2022.
There will be a conference call for analysts and investors on
Wednesday 26th January at 8:00am (London time). The dial in details
are as follows:
UK-Wide: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
Participant password: Fresnillo
A replay of the call will also be available for seven days after
the event and details to access it will be published on our website
after the conference call.
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
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed
(t) 528,103 547,140 (3.5) 590,449 (10.6) 2,216,467 2,336,943 (5.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,655 2,722 (2.5) 3,213 (17.4) 11,986 13,055 (8.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 8,648 7,983 8.3 9,485 (8.8) 33,743 38,388 (12.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 4,525 4,904 (7.7) 5,254 (13.9) 18,796 21,319 (11.8)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 10,025 8,958 11.9 9,051 10.8 34,530 34,116 1.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 170 170 0.0 190 (10.5) 186 194 (4.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.71 0.62 13.9 0.71 0.0 0.68 0.73 (6.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.03 1.07 (4.1) 1.08 (4.7) 1.01 1.08 (6.5)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.65 2.27 16.4 2.19 20.8 2.20 2.07 6.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production was down 2.5% and 17.4% vs. 3Q21 and
4Q20 driven by the ongoing staff vacancies related to the new
labour reform, higher Covid-19 absenteeism and a higher workforce
rotation. This in turn has affected equipment availability and
utilisation rates as fewer specialised mechanics or trained machine
operators are available. In addition, following the power cut last
quarter, as previously reported, which temporarily limited the
water pumping capacity and affected some mining areas and haulage,
we continued to see some residual impact in the quarter. However, a
new pumping station is expected to be finalised in the coming
weeks, and no further impact is expected from 2Q22 onwards.
Full year silver production was down 8.2% due to a lower volume
of ore processed and lower ore grade as a result of the issues
mentioned above, along with a number of other factors through the
year including additional rehabilitation and maintenance of certain
ramps and delayed access to Eastern areas of the mine in 1Q21, a
temporary ventilation system failure and an increased presence of
water in the San Alberto area during 2Q21.
Mine development rates marginally increased quarter-on-quarter
to an average of 2,832 per month in 4Q21 (3Q21: 2,798m per month),
primarily driven by the issues noted above in addition to the
tunnel boring machine (TBM) advancing through an area of poor rock
quality. We expect to regain a rate of 2,900 to 3,100 m per month
on average during 1H22.
Quarterly by-product gold production increased 8.3% vs. 3Q21
driven by a higher ore grade, partially offset by a lower volume of
ore processed.
Quarterly by-product gold production decreased 8.8% vs. 4Q20 due
to a lower volume of ore processed.
Full year by-product gold production decreased 12.1% vs. FY20
due to a lower ore grade and volume of ore processed.
The silver ore grade in 2022 is estimated be in the range of
190-210 g/t, while the gold ore grade is estimated to remain in the
range of 0.50-0.70 g/t.
SAUCITO MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 558,101 565,425 (1.3) 671,429 (16.9) 2,434,449 2,767,432 (12.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,990 2,846 5.1 3,428 (12.8) 12,439 15,532 (19.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 17,719 19,143 (7.4) 23,199 (23.6) 88,440 84,878 4.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 4,272 4,853 (12.0) 9,354 (54.3) 24,615 28,592 (13.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 6,672 7,226 (7.7) 14,038 (52.5) 37,469 42,774 (12.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 186 178 4.5 195 (4.3) 183 206 (11.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.26 1.36 (7.6) 1.40 (9.8) 1.46 1.24 17.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.90 1.01 (11.1) 1.65 (45.5) 1.18 1.22 (3.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.60 1.69 (5.4) 2.95 (45.6) 2.08 2.21 (5.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production increased 5.1% vs. 3Q21 due to a
higher ore grade as a result of preparing and accessing new stopes
with better ore grades. We continue with the installation of
geomechanical monitoring equipment to enable an efficient and
optimal mine sequence, while prioritising the safety of our teams.
As a result, we expect some variability in the ore grade and
reduced volumes of ore to be processed during 2022. In conjunction
with this, Covid-19 further impacted operations due to higher
absenteeism during the quarter as our people were required to self
isolate.
Quarterly silver production decreased 12.8% vs. 4Q20 due to a
lower volume of ore processed as a result of the ongoing impact of
the labour reform that came into effect in 3Q21, limiting equipment
and personnel availability and to a lesser extent, a lower ore
grade due to the instability caused by increased seismicity, as
mentioned above. This was mitigated by a higher recovery rate.
Full year silver production decreased 19.9% vs. FY20 due to a
decrease in volume of ore processed and lower ore grade due mainly
to the aforementioned instability issues and the adverse impact of
the labour reform.
We have continued our recruitment and training campaigns at the
mine with the target of gradually reducing the shortage of
personnel and returning the mine to its potential capacity, once
fully staffed.
Quarterly by-product gold production decreased 7.4% vs. 3Q21
mainly driven by a lower ore grade.
Quarterly by-product gold production decreased 23.6% vs. 4Q20
due to a lower volume of ore processed and ore grade.
Full year by-product gold production increased 4.2% vs. FY20,
driven by higher ore grades, partially offset by lower volumes of
ore processed.
Full year 2022 silver ore grade is estimated to remain between
175-195 g/t, while the gold ore grade is estimated to be around
1.10-1.20 g/t.
PYRITES PLANT (PHASE I)
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Iron Concentrates
Processed (t) 31,976 37,376 (14.4) 47,860 (33.2) 159,635 172,233 (7.3)
------- ------- --------- ------- --------- -------- -------- ---------
Production
------- ------- --------- ------- --------- -------- -------- ---------
Silver (koz) 121 143 (15.4) 194 (37.8) 567 920 (38.4)
------- ------- --------- ------- --------- -------- -------- ---------
Gold (oz) 455 441 3.1 820 (44.5) 2,294 3,452 (33.5)
------- ------- --------- ------- --------- -------- -------- ---------
Ore Grades
------- ------- --------- ------- --------- -------- -------- ---------
Silver (g/t) 158 157 1.2 172 (8.1) 151 220 (31.6)
------- ------- --------- ------- --------- -------- -------- ---------
Gold (g/t) 1.39 1.35 3.1 1.64 (15.0) 1.50 1.92 (21.8)
------- ------- --------- ------- --------- -------- -------- ---------
Quarterly silver production decreased 15.4% vs. 3Q21 due to a
lower volume of pyrite concentrates processed from the Saucito
mine.
Quarterly gold production increased 3.1% vs. 3Q21 due to a
higher recovery rate, partially offset by a lower volume of pyrite
concentrates processed from the Saucito mine.
Quarterly silver and gold production decreased 37.8% and 44.5%
vs. 4Q20 respectively due to a decreased volume of pyrite
concentrates processed and a lower ore grade of pyrite concentrates
processed from the Saucito mine.
Full year silver and gold production decreased 38.4% and 33.5%
vs. FY20 respectively due to lower ore grades from Saucito's
flotation plant, lower volumes of pyrite concentrates processed and
to a lesser extent, lower recovery rates.
For 2022, we estimate silver production from the pyrites plant
at Saucito to be in the range of 700 to 750 koz while gold
production is estimated to be in the range of 1.5 to 2.5 koz.
As noted in previous reports, the Pyrites Plant (phase II) was
completed in 4Q20 but as with Juanicipio, we are focusing on
complying with the new requirements from the state owned electrical
company and the energy regulator to complete the tie-in to the
national power grid.
CIENEGA MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 301,968 320,277 (5.7) 334,977 (9.9) 1,282,367 1,318,263 (2.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 10,596 11,528 (8.1) 13,605 (22.1) 48,819 64,101 (23.8)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,401 1,323 5.9 1,272 10.2 5,447 5,762 (5.5)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 772 985 (21.6) 1,339 (42.2) 3,947 6,112 (35.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 1,240 1,491 (16.9) 2,078 (40.3) 6,373 9,263 (31.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.18 1.21 (2.8) 1.36 (13.2) 1.27 1.63 (21.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 165.6 150 10.7 139 19.0 153 159 (3.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.43 0.51 (14.2) 0.61 (28.8) 0.51 0.70 (28.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 0.75 0.85 (12.0) 1.06 (29.2) 0.90 1.18 (23.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly gold production decreased 8.1% vs. 3Q21 due to a lower
volume of ore processed given the continued impact of the labour
reform in Mexico leading to lower utilisation rates, though we
expect this to be a temporary factor. Further, during December we
experienced an electricity outage by the Mexican state-owned
utility Comisión Federal de Electricidad (CFE) which impacted the
volumes of ore processed in addtion to higher absenteeism due to
Covid-19.
Quarterly silver production increased 5.9% and 10.2% vs. 3Q21
and 4Q20 respectively due to a higher ore grade in line with the
mine sequence, partially offset by a lower volume of ore processed
for the reasons explained above .
Quarterly and full year gold production decreased 22.1% and
23.8% vs. 4Q20 and FY20 respectively due to the lower ore grades
year-on-year, in line with the mine sequence and to a lesser
extent, lower volumes of ore processed.
Full year silver production decreased 5.5% vs. FY20 due to an
expected lower ore grade and decreased volume of ore processed.
The gold and silver ore grades for 2022 are estimated to be in
the ranges of 1.20-1.40 g/t and 145-155 g/t respectively.
SAN JULIÁN MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed Veins
(t) 308,691 302,987 1.9 315,863 (2.3) 1,202,826 1,254,970 (4.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Processed DOB
(t) 533,631 533,204 0.1 572,962 (6.9-) 2,070,563 2,229,612 (7.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Total production
at San Julián
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 12,887 13,612 (5.3) 16,048 (19.7) 55,847 64,925 (14.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,967 4,156 (4.5) 3,730 6.4 16,772 13,306 26.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 12,142 12,550 (3.3) 15,123 (19.7) 51,840 61,790 (16.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,200 1,033 16.2 965 24.3 4,224 4,030 4.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 745 1,062 (29.9) 925 (19.5) 4,006 3,134 27.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,768 3,123 (11.4) 2,765 0.1 12,548 9,276 35.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 1,914 2,122 (9.8) 2,036 (6.0) 8,543 7,112 20.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 4,419 5,039 (12.3) 5,874 (24.8) 19,991 20,492 (2.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.29 1.36 (5.4) 1.58 (18.7) 1.42 1.61 (12.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 131 116 13.1 103 26.5 119 109 9.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.08 0.11 (27.9) 0.09 (13.2) 0.10 0.09 20.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 187 217 (14.1) 172 8.6 221 150 46.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.45 0.50 (9.1) 0.46 (0.6) 0.51 0.41 24.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.10 1.24 (10.8) 1.28 (14.1) 1.27 1.19 6.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
SAN JULIÁN VEINS
Quarterly and full year silver production increased vs. all
comparative periods due to higher ore grades as a result of better
dilution control.
Quarterly gold production decreased 3.3% vs. 3Q21 due to a lower
ore grade in line with the mine plan.
Quarterly and full year gold production decreased 19.7% and
16.1% vs. 4Q20 and FY20 respectively due to a lower ore grade as a
result of the depletion of higher ore grade areas and, to a lesser
extent, lower volume of ore processed driven by two electricity
outages by the Mexican state-owned utility Comisión Federal de
Electricidad (CFE) during the year.
We estimate the 2022 silver and gold ore grades to average
120-130 g/t and 1.35-1.55 g/t, respectively.
SAN JULIÁN DISSEMINATED ORE BODY (DOB)
Quarterly silver production decreased 11.4% vs. 3Q21 due to the
anticipated lower ore grade as we move towards the periphery of the
ore body.
Quarterly silver production was flat vs. 4Q20 due to a higher
than expected ore grade. As reported in previous quarters, this was
the result of: i) the positive variation with the geological model
in the central area of the ore body; and ii) access to higher ore
grade areas following the mine resequencing in 2019. The higher ore
grade was offset by a lower volume of ore processed.
Full year silver production increased 35.3% vs. FY20 due to a
higher than expected ore grade as described above, partially offset
by a lower volume of ore processed driven by the temporary impact
in 1Q21 from the damage to the lead circuit housing at the end of
2020 and the electricity outages by the CFE in 1Q21 and 3Q21, as
reported in previous quarters.
We estimate the 2022 silver ore grade to be in the range of
150-170 g/t as we continue to advance towards the lower grade areas
in the periphery of the ore body.
HERRADURA TOTAL MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed
(t) 4,271,069 4,546,401 (6.1) 6,875,196 (37.9) 20,311,876 19,797,063 2.6
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Total Volume
Hauled (t) 33,115,154 33,068,512 0.1 28,976,190 14.3 132,838,820 109,777,575 21.0
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Production
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (oz) 69,177 94,193 (26.6) 134,439 (48.5) 421,535 425,288 (0.9)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (koz) 168 228 (26.1) 231 (27.1) 926 1,306 (29.1)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Ore Grades
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (g/t) 0.65 0.76 (14.2) 0.76 (14.5) 0.76 0.77 (1.5)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (g/t) 1.91 2.24 (14.5) 1.46 31.0 2.05 2.60 (21.2)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Quarterly gold production decreased 26.6% vs. 3Q21 due to: i)
the expected lower ore grade; ii) lower recovery rate at the
leaching pads driven by the increased silt in solution restricting
the filter capacity at the plant, as mentioned in the prior
quarter, and the requirement for some repair work to an impermeable
liner in the pregnant solution collection pond; and iii) a decrease
in the volume of ore processed due to corrective maintenance in the
mill area at one of the dynamic leaching plants.
Quarterly gold production decreased 48.5% vs. 4Q20 due to a
lower volume of ore processed and ore grade for reasons explained
above.
Full year gold production remained flat vs. FY20 as a result of
a slower speed of recovery on the leaching pads and slightly lower
ore grade, offset by a higher volume of ore processed following the
Covid-19 operational restrictions in 2020.
The gold ore grade in 2022 is estimated to be in the range of
0.65-0.75 g/t.
NOCHE BUENA TOTAL MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed
(t) 2,903,023 2,389,895 21.5 1,638,305 77.2 8,996,842 6,682,617 34.6
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 6,482,783 6,222,974 4.2 9,259,638 (30.0) 25,953,967 34,914,284 (25.7)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Production
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Gold (oz) 28,591 25,015 14.3 17,737 61.2 96,835 87,998 10.0
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Silver (koz) 11 8 29.8 9 14.7 32 39 (19.6)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Ore Grades
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Gold (g/t) 0.70 0.59 17.3 0.50 38.6 0.59 0.52 15.0
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Silver (g/t) 0.20 0.19 8.8 0.84 (75.9) 0.19 0.72 (73.3)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Quarterly gold production increased 14.3% vs. 3Q21 due to a
higher volume of ore processed arising from an optimised mining
sequence and cycle times, in addition to a higher ore grade. This
was partially offset by a lower recovery rate due to shorter
irrigation cycles as a result of the ore being deposited in smaller
areas as we approach the end of mine life, in addition to increased
sulphide content in the ore.
Quarterly gold production increased 61.2% vs. 4Q20 due to a
higher volume of ore deposited and higher ore grade following a
stability problem in the pit during 2H20 as previously reported.
This led to an increase in the waste hauled last year to regain
access to the deeper areas of the mine. The favourable impact of
the increased ore deposited and higher ore grade was partly offset
by the lower recovery rate as explained above.
Full year gold production increased 10.0% vs. FY20 due to a
higher volume of ore deposited following the Covid-19 operational
restrictions last year in addition to the aforementioned stability
problem, and to a lesser extent, a higher ore grade. This was
partially offset by a lower recovery rate for reasons explained
above.
The 2022 estimated gold ore grade will be in the range of
0.40-0.50g/t, as the mine approaches the end of its operational
life.
JUANICIPIO
Development and stope ore from Juanicipio continued to be
processed in the Fresnillo and Saucito flotation plants. On an
attributable basis, Juanicipio produced 914 koz of silver and 2,232
oz of gold in 4Q21, and 1.8 moz of silver and 3,683 oz of gold in
2021.
The construction of the Juanicipio plant was delivered on
schedule during the quarter. However, the mill commissioning
timeline was extended by approximately six months to focus on
complying with the new requirements from the state owned electrical
company and the energy regulator to complete the tie-in to the
national grid.
We continue with the pre-commissioning testing and once the
required permits have been granted, we will look to ramp up
operations to 85%-90% capacity by the end of the year.
SILVERSTREAM
Quarterly Silverstream production decreased 19.6% and 7.9% vs.
3Q21 and 4Q20 respectively due to a lower volume of ore processed
and ore grade.
Full year Silverstream production increased 12.7% vs. FY20 due
to a higher ore grade and volume of ore processed.
Silver production in 2022 is estimated to be in the range of
2.5-3.5 moz.
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 Las Casas Rosario &
Cluster Cebollitas), Herradura, Soledad-Dipolos(1) , Noche Buena
and San Julián (Veins and Disseminated Ore Body), two development
projects - the Pyrites Plant at Fresnillo and Juanicipio, both of
which have been completed but approvals to operate are pending, and
three advanced exploration projects - Orisyvo, Rodeo and
Guanajuato, 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
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