Fresnillo's gold output beats own forecasts

Mining giant Fresnillo has hailed a strong start to 2012 with gold production beating expectations and silver output on target.

Attributable gold production increased by 26.3% to 121,792 ounces in the three months to March 31st, compared with the 96,407 mined in the first quarter of 2011. This was mainly due to the increased throughput at Mexican mines Saucito, Cinega and Herradura. Compared with the fourth quarter of 2011, production fell slightly.

Silver production fell 3.5% to 8,769k ounces from 9,083k ounces the year before, in line with expectations. The group said that the anticipated natural decline in silver grades was compensated by the ramp-up of production at Saucito.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

Meanwhile, by-product lead and zinc production increased by 19.4% and 18.1%, respectively, helped by higher ore grades, recovery rates and tonnage milled at the Fresnillo mine and improved volumes of ore milled at Saucito.

"The strong operational performance that Fresnillo enjoyed in 2011 has continued into 2012," said Chief Executive Officer Jaime Lomelin.

"As operators, we continually manage and adjust our operations to ensure our production profile is optimised to extract the maximum value from our portfolio. In the case of our gold production, we optimised our mine plan in order to take advantage of the high gold prices," he said.

Lomelin said that the highlight of the quarter was the completion and commissioning of the new gold mine at Noche Buena in the Herradura district, which was accomplished on time and within budget. Commercial production began last month and it is expected to produce 42,000 attributable ouches of gold per year at full capacity, which is expected by year-end.

BC