Fresnillo share price: Miner posts full-year results

on Mar 4, 2015
Updated: Oct 21, 2019

Fresnillo Plc (LON:FRES) today released its financial report for 2014. Key information from the report provided below, with more to follow:
**Fresnillo plc today announced financial results for the full year ended 31 December 2014. Octavio Alvídrez, CEO said:** “In 2014 we have delivered a reasonable performance considering the lower silver and gold prices that impacted the industry as a whole. This has again demonstrated that the quality of our assets, the strength of our balance sheet and our conservative approach to creating sustainable value places Fresnillo in a strong position amongst precious metals producers.

Our annual silver production of 45 million ounces was ahead of guidance and in gold we met our revised production guidance following the Penmont acquisition, producing 596 thousand ounces over the year.
2014 was of course not without its operational challenges, in particular at Fresnillo and Herradura. We are confident that the initiatives we put in place during the year at these mines will result in improved production in 2015. In addition, in 2014 we saw the start-up of the dynamic leaching plant at Herradura which will contribute to a decrease in cash costs at the mine, and we made excellent progress at our development projects in 2014, with the commissioning of Saucito II in December on time and on budget.

Furthermore, the acquisition of the 44% stake of Penmont further strengthened our position in the highly prospective Herradura district and allowed us to increase our 2018 gold production target from 500 thousand ounces to 750 thousand ounces. Our 2018 silver production target of 65 million ounces remains in place.
As we enter 2015, our focus will remain on delivering operational efficiencies, generating improvements in productivity, maintaining our cost position and margins in our current operation; as well as investing in growth projects. Our strong balance sheet will support our growth plans.”

**2014 Highlights**

**Maintaining operational excellence:** Record annual silver production (including Silverstream) of 45 Moz; up 4.9% vs. 2013 and ahead of 43.0 Moz guidance due mainly to increase in ore processed at Saucito and Silverstream contribution; Annual gold production of 596 Koz in line with revised guidance post Penmont acquisition; a 2.4% decrease vs. 2013 due to the stoppage of operations at Soledad-Dipolos; Silver grades at Fresnillo continued to decline but measures implemented to control dilution and improve contractor efficiency will deliver improved production in the second half 2015; Technical and capacity issues associated with ramp-up of operations at Herradura impacted production, but mine expected to reach steady state in 2015 due to measures taken in 2014; Ciénega mill capacity optimised resulting in an 8% increase in ore processed, partially offsetting expected lower gold ore grades; Start-up of Herradura dynamic leaching plant in March 2014; Production at Noche Buena ramped up and reached expanded capacity during 2014; Maintained focus on cost control to retain position as a low cost producer; Key safety indicators continued to improve in 2014.
**Delivering growth through the cycle:** Operations commenced at Saucito II on time and on budget; set to produce 8.4 Moz silver and 35 koz gold annually at full capacity; San Julián on track to start production in 4Q15; expected average annual production of 10.3 Moz silver and 44 koz gold at full capacity; US$450 million acquisition of 44% stake in Penmont to consolidate our position in one of Mexico’s most prospective gold belts; Extensive greenfield and brownfield exploration programmes continued to deliver positive results, most notably at Herradura, Orisyvo and Guanajuato; 2014 exploration expenditure of US$184.5 million, delivered a 21.3% and 45.0% increase in silver and gold reserves despite lower price assumptions; gold resources grew 1.7% and silver resources declined 6.2% on exploration results.
**Delivering positive earnings and returns in a low price environment:** Adjusted revenue of US$1,545 million; Gross profit and EBITDA of US$521.1 million and US$567.3 million; Profit from continuing operations of US$245.6 million; 2014 financial results impacted by higher adjusted production costs and adverse effects of non-cash exceptional items including foreign exchange loss and higher deferred taxes; Basic and diluted EPS from continuing operations of US$0.147; adjusted EPS of US$0.074; Strong balance sheet maintained; cash, cash equivalents and short-term investments of US$449.3 million at 31 December 2014; 2014 final dividend of 3 US cents per share – equivalent to approximately US$22.1 million was recommended by the Board.
As of 07:42 GMT, Wednesday, 04 March, Fresnillo Plc share price is 791.50p.


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