Fresnillo shareholders fail to see silver lining as production set to drop
Shares in Fresnillo fell by over two per cent today as the company warned investors that production from its silver mines may drop off after a “challenging” 2018.
Silver output will fall to between 58m to 61m ounces, the company said, sending shares down 2.56 per cent to 888.8p just before markets closed.
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That would mark a downgrade from last year’s record 61.8m ounces production, up 5.3 per cent on 2017 after the San Julian mine came online for its first full year.
Meanwhile the company’s gold production is expected to remain flat at between 910,000 and 930,000 ounces, Fresnillo said.
“Record annual silver production and a very strong gold performance does not mask what was a challenging year for Fresnillo,” chief executive Octavio Alvidrez said.
“We are reporting lower silver production than anticipated. This was mainly explained by the lower than expected ore grades at the Fresnillo and Saucito mines which have persisted into the final quarter, together with operational issues.”
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The company will be drilling more wells and investing in infrastructure as it tries to claw back production at the mines, Alvidrez said. Meanwhile the board expects to approve the Juanicipio mining project, which is likely to produce 10m ounces of silver and 30,000 of gold, in early 2019.
“We will continue to conservatively invest in the business to deliver sustainable growth and returns to shareholders. I fully expect to be able to make a further positive announcement on our Juanicipio development project in due course,” he said.