Fresnillo maintains guidance after mixed first quarter

Precious metals miner Fresnillo reported attributable silver production of 13.3 million ounces including Silverstream in its first quarter on Wednesday, up 2.8% over the last quarter of 2021.

The FTSE 100 company said that was mainly 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.

Silver production was up 5.1% year-on-year, primarily due to the higher contribution from Juanicipio, offset by the lower volumes at Saucito.

Quarterly attributable gold production came in at 149,800 ounces, which was flat compared to the fourth quarter, mainly due to 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, mitigated by a higher ore grade and recovery rate at Herradura.

Gold production was down 34.4% year-on-year, due to an expected lower volume of ore processed and ore grade at Herradura.

Attributable silver equivalent ounces came in at 25.3 million for the first quarter, down from 30.9 million at the same time last year.

Elsewhere, Fresnillo said quarterly attributable by-product lead production increased 3.4% over the fourth quarter, due to a higher contribution of development ore from Juanicipio, partially offset by a lower ore grade at San Julián DOB.

Quarterly attributable by-product zinc production was ahead 3.6%, meanwhile, due to a higher contribution of development ore from Juanicipio and a higher ore grade and recovery rate at Saucito, offset by a lower ore grade at Fresnillo.

Finally, quarterly attributable by-product lead and zinc production decreased 20.2% and 8.3% year-on-year, respectively, driven primarily by lower ore grades and decreased volumes of ore processed at Saucito.

“We are reporting a solid first quarter's production, in line with expectations,” said chief executive officer Octavio Alvídrez.

“We have taken proactive steps to manage the impact of the Mexico labour reforms, and though we continue to see some covid-related absenteeism at our mine sites, this declined during the quarter and we are currently seeing a limited covid impact.

“Like other industry sectors, the labour market remains very tight, and we have also seen some delays to equipment deliveries given the global supply constraints.”

Alvídrez said the company remained committed to delivering on its targets for the year, completing the labour reform process, ramping up new Juanicipio production rapidly once connection to the electricity grid was enabled by mid-2022, and capitalising on the “considerable opportunities” presented by its highly-prospective exploration programme.

“Our full year guidance is unchanged.”

At 0802 BST, shares in Fresnillo were up 0.83% at 778.8p.