By Fresnillo, the Mexican precious-metals miner producer, has announced an increase in second-quarter silver production while experiencing a decline in gold production. However, the company continues to maintain its full-year guidance.
Silver Production
- Quarterly attributable silver production reached 14.9 million ounces (including Silverstream), marking a 12.9% increase compared to Q1 2023. This growth is primarily attributed to the ramp-up of Juanicipio and improved ore grade at San Julian Disseminated Ore Body (DOB). Additionally, the increased volume of ore processed at Saucito contributed to the positive performance, partially offsetting the lower ore grade at Fresnillo.
- Comparing quarterly and first-half results, attributable silver production (including Silverstream) saw a 3.5% and 1.4% increase relative to Q2 2022 and H1 2022 respectively. These gains can largely be attributed to the ramp-up of Juanicipio, somewhat mitigated by the lower ore grade at San Julian (DOB).
Gold Production
- Quarterly attributable gold production fell by 11.9% compared to Q1 2023 (152.4 thousand ounces). This decrease can be primarily attributed to the lower volume of ore processed at Herradura, resulting from a temporary suspension of operations due to an illegal stoppage instigated by a small group of unionized employees.
- Comparing quarterly results, attributable gold production also declined by 4.1% in comparison to Q2 2022. This decrease is mainly due to reduced gold production at Noche Buena. However, the ramp-up of Juanicipio and increased ore processed at Saucito helped offset this decline.
- First-half attributable gold production experienced a 5.4% increase compared to H1 2022. This growth is primarily due to the increased volume of ore processed and higher ore grade at Herradura and Saucito, partially compensating for the decrease in gold production at Noche Buena.
By-Product Lead Production
- Quarterly attributable by-product lead production increased by 4.7% compared to Q1 2023. This growth is attributed to the ramp-up at Juanicipio. However, a lower ore grade at Saucito and Fresnillo partially offset the overall increase.
Fresnillo’s positive performance in silver production despite the decline in gold production demonstrates its resilience in navigating potential challenges. The company continues to forge ahead with its full-year guidance.
Quarterly Attributable Zinc Production
Quarterly attributable by-product zinc production increased by 6.4% compared to Q1 2023. This growth can be attributed to the ramp-up at Juanicipio and the higher volume of ore processed at Saucito. However, this increase was partially offset by the lower ore grade at Fresnillo.
Quarterly Attributable Lead Production
On the other hand, quarterly attributable by-product lead production decreased by 3.7% compared to Q2 2022. This decrease was primarily due to the lower ore grades at Saucito and Fresnillo and lower ore grade and recovery rate at San Julian (DOB). However, this decline was partly offset by the ramp-up at Juanicipio.
Decrease in Zinc Production
In addition, quarterly attributable by-product zinc production decreased by 4.2% compared to Q2 2022. This decrease was mainly driven by the lower ore grades at Saucito and San Julian (DOB). However, similar to before, this decline was partly mitigated by the ramp-up at Juanicipio.
First Half Lead and Zinc Production
Looking at the first half of the year, by-product lead production increased by 2.2% compared to H1 2022. This growth was driven by the increased contribution from Juanicipio and higher ore processed at Fresnillo. However, there was a slight decline in lead production due to the lower ore grade at Saucito.
On the other hand, first half by-product zinc production decreased by 1.5% compared to H1 2022. This decrease was primarily due to the lower ore grades at Saucito and San Julian (DOB). However, there was some increase in zinc production as a result of the higher production at Juanicipio and the higher volume of ore processed at Fresnillo.
2023 Production Guidance
The guidance for 2023 remains unchanged. It is expected that attributable silver production will be in the range of 57.0 to 64.0 million ounces (including Silverstream), while attributable gold production is expected to be in the range of 590 to 640 thousand ounces.
Additionally, expressed in silver equivalent ounces, production for 2023 is expected to be in the range of 104 to 115 million ounces.
Cost and Currency Impact
Cost inflation and the revaluation of the Mexican Peso versus the U.S. Dollar are expected to continue impacting costs in the second half of the year. This follows an increase in costs during the first half of 2023.
Stock Performance
At 0706 GMT, shares were down by 4.40 pence, or 0.7%, at 627.60 pence.
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