Fresnillo pushes through pandemic headwinds with modest production gains
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Fresnillo has reported a modest increase in production over the first three months of year, as it navigates challenging pandemic conditions.
The Mexican precious metals mining company, which is listed on the FTSE 100, revealed that quarterly silver production had risen 2.8 per cent to 13.3m ounces (moz) while gold production was flat.
The boost in silver was driven by a higher contribution of ore from Juanicipio and a higher volume of ore processed and ore grade at Fresnillo, partly offset by the anticipated lower volume of ore processed at Saucito.
Quarterly gold production was stable at 149.8k ounces (koz) with a lower volume of ore processed at Noche Buena and to a lesser extent, a lower volume of ore processed at Saucito and San Julian Veins.
This was counteracted by a higher ore grade and recovery rate at Herradura – leading to a flat level of performance.
The group has faced a number of challenging headwinds during the first quarter of the year, including a fourth wave of Covid-19 across Mexico.
The wave started in the previous quarter, but the impact continued to be felt into the new year with increases in staff absenteeism across January and February – with workers self-isolating and reducing numbers across key sites for weeks.
Meanwhile, labour reforms in Mexico which restrict the subcontracting of labour came into effect last September – with Fresnillo still adapting to the changes.
The miner is now required to internalise a high proportion of our contractor workforce, with the miner now focusing on recruitment campaigns, training and investment in new equipment.
It expects to complete the staffing process in the Fresnillo District, San Julián and Ciénega in the third quarter of this year, while our open pit mines, which saw a lesser impact, are now fully staffed.
Nevertheless, challenges remain in common with other industry sectors – as the labour market remains very tight, with considerable competition for talent.
Fresnillo is also experiencing some delays to new equipment deliveries due to global supply bottlenecks.
Octavio Alvídrez, Chief Executive Officer, said:
“We are reporting a solid first quarter’s production, in line with expectations. We remain committed to delivering on our targets for the year, completing the labour reform process, ramping up new Juanicipio production rapidly once connection to the electricity grid is enabled by mid-2022, capitalising on the considerable opportunities presented by our highly prospective exploration programme, while never losing focus on our people, their well-being and their safety.”
He said the company’s full year guidance is unchanged.