Fresnillo Share Price Soars as Silver Production Grows

on Jul 17, 2013
Listen, Wednesday, July 17th: Mexico’s Fresnillo Plc (LON:FRES), the world’s largest primary silver producer, today reported a rise in silver output in the second quarter of 2013 but trimmed its full-year gold production guidance on account of a court-ordered stoppage at one of its sites. Fresnillo’s share price, which has plunged 45 percent in the past six months, rose more than five percent in intraday trading in London today.

**Fresnillo’s Silver Production Rises**
The FTSE 100 miner said in a statement that its quarterly attributable silver production rose to 10.9 million ounces in the second quarter, up 6.3 percent year-on-year and 8.6 percent higher as compared with the first quarter of 2013. Attributable silver production for the first half of the year rose by 4.5 percent over the same period of 2012. Fresnillo attributed the rise in output to the continued ramp-up at its Saucito operation and increased volumes of ore processed from the San Ramon satellite mine in Cienega.

Commenting on the production update, Fresnillo’s chief executive Octavio Alvidres noted that the company was on track to achieve its 2013 production target of 41 million ounces of silver.
**Miner Cuts Gold Production Guidance**
While Fresnillo’s silver production rose, gold production was 118,315 ounces in the second quarter, slightly above the previous quarter but down 6.8 percent year-on-year, with the result attributed to the slower rate of recovery and reduced volume of ore deposited at the Soledad-Dipolos operation, as well as to the anticipated lower ore grade at Cienega. In addition, the company lowered its gold production guidance for 2013 to 465,000 ounces from 490,000 ounces to reflect the impact of a court-ordered stoppage at its Dipolos open pit mine. The court order, stemming from legal proceedings brought by members of an agrarian community in the state of Sonora, where the mine is located, requires Fresnillo to vacate the surface land at Dipolos, which would affect the operation of the mine and benefaction plant.

Fresnillo said that the court order was likely to result in a loss of production of 25,000 ounces, with the loss representing as little as 5.1 percent of the miner’s total gold production. “Therefore, the impact on Fresnillo Plc is not regarded as material,” the company said.
!m[London-listed Miner Cuts 2013 Gold Output Guidance ](/uploads/story/4079/thumbs/pic1_inline.jpg)

While silver has traditionally been Fresnillo’s larger business, last year gold accounted for around 49 percent of the miner’s revenues, whereas silver delivered 47 percent.
Fresnillo’s second-quarter by-product lead production increased by 15.5 percent over the previous quarter due to higher ore grade and better recovery rates. Lead production for the first half decreased by 3.3 percent as compared with the same period of 2012. Quarterly and year to date by-product zinc output dropped by 2.3 percent and 11.9 percent, respectively, as compared with the same periods of 2012, mainly on account of lower ore grades.
**Fresnillo’s share price was 5.31 percent up at 1,070.00p in London as of 13:45 BST on 17 July 2013.**