Fresnillo cautious on production in current year

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Fresnillo Plc (LON:FRES) expects a modest production increase at best in the current financial year.


The FTSE 250-listed miner, recently demoted from the FTSE 100 index, has been implementing a performance improvement plan to increase productivity and to better understand the geology of its mines.


The Mexican group now expects to produce between 51mln-56mln ounces of silver and 815,000-900,000 ounces of gold in 2020.


READ: Hiscox and Fresnillo leave FTSE 100, while Centrica and Kingfisher sweat


In the year to 31 December, gold production was 875,913 ounces, 5% lower than 2018.


The drop was due to construction delays and lower-than-expected ore grades at Herradura, one of Mexico’s largest open-pit gold mines and generates a third of Fresnillo’s revenues.


However, the asset is getting back on track, as gold production was 233,700 ounces in the fourth quarter or up 0.7% and 11% compared to last year and the third quarter respectively.


In contrast, silver production was 13.1mln ounces, a 10% decrease from last year but 4% higher than the third quarter.


Total silver production in 2019 was 54mln ounces, down 12% from 2018, due to expected lower ore grade at the Saucito mine, one of Fresnillo’s major assets.


Shares were flat at 611p on Wednesday morning.

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