Fresnillo announces new CEO and confirms placing of 19.7m shares

Mining giant Fresnillo has reported another year of good operational performance as it announced its new Chief Executive and confirmed the placing of 19.7m new shares at 1,130p each.

Mining giant Fresnillo has reported another year of good operational performance as it announced its new Chief Executive and confirmed the placing of 19.7m new shares at 1,130p each.

Speaking at its annual general meeting, the company unveiled Octavio Alvdrez as its new Chief Executive Officer, who Chairman Alberto Baillres described as "an experience and effective leader".

In his address to investors, Baillres said the group had done well in what has been a year of challenges for the mining industry.

"As you will be aware, precious metal miners are operating in an environment of exceptionally volatile metal prices, higher production costs and growing social and environmental pressures," he said.

"In 2012, the weak gold price in the first half of the year recovered during the second half of the year as central banks increased reserves and investors sought protection against economic uncertainty and possible inflation. The pattern for silver was similar, although its recovery in the second half of the year was less than that for gold, so while our average realised price for gold ended the year around 6.0% higher than in 2011, silver prices were around 10% lower.

"The volatility has extended into 2013, with particularly steep falls in prices seen in mid-April as a result of speculation of European central banks selling their gold reserves, as well as expectations that Western economies would stop implementing quantitative easing measures. These trends may continue into the remainder of this year but your management continue to bear down on costs, and keep Fresnillo within the lowest quartile of the cost curve with industry leading margins. This comes despite industry pressures arising from higher labour and energy costs and higher unit costs for operating materials such as explosives, tyres and reagents."

The Chairman also said the company had delivered "significant progress" in the growth of its ore resource bases, having confirmed resources at San Julin, Orisyvo and Centauro Deep.

"The group's production and project implementation schedule is on track to meet our growth targets," he continued.

"Furthermore, a large number of prospects in early stage exploration, in both current and new districts, should ensure our longer term project pipeline.

"The board recognises the challenging environment for mining companies and has decided to continue to invest in only those projects that are essential to achieve our long term targets and which meet certain investment criteria. We will only invest in those projects which we believe have attractive internal rates of return, are low cash cost and will continue to create value for our stakeholders. We will continue to exercise caution and discipline when analysing new projects and as we announced at our first quarter results we are reviewing all capital expenditure and future exploration projects.

"The board has authorised a total budget of $279.6m to be invested in exploration and early stage underground development in 2013, a decrease of 12.3% over 2012. As we look ahead to the second half of this decade and our 2018 commitments, this investment reflects our disciplined approach to allocating risk capital to the continued profitable growth of the group."

The share price fell 1.31% to 1,162p.

NR

Recommended

I wish I knew what a share buyback was, but I’m too embarrassed to ask
Too embarrassed to ask

I wish I knew what a share buyback was, but I’m too embarrassed to ask

A share buyback means just what it says – a company buys back its own shares. But why? And how does that benefit shareholders?
3 Aug 2021
Improve your odds of investment success with these three stocks
Share tips

Improve your odds of investment success with these three stocks

Professional investor Tom Wildgoose of the Nomura Global High Conviction Fund highlights three of his favourite stocks.
2 Aug 2021
How to profit from pampered pets beyond the pandemic
Share tips

How to profit from pampered pets beyond the pandemic

Covid-19 has greatly boosted ownership. But the market had been expanding for years, and demographic, cultural and medical trends all point to long-te…
30 Jul 2021
Share tips of the week – 30 July
Share tips

Share tips of the week – 30 July

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
30 Jul 2021

Most Popular

Why the UK's 2.5% inflation is a big deal
Inflation

Why the UK's 2.5% inflation is a big deal

After years of inflation being a financial-assets problem, it is now an “ordinary things” problem too, says Merryn Somerset Webb. But central banks st…
16 Jul 2021
The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism
Economy

The MoneyWeek Podcast: Asia, financial repression and the nature of capitalism

Russell Napier talks to Merryn about financial repression – or "stealing money from old people slowly" – plus how Asian capitalism is taking over in t…
16 Jul 2021
Three companies that are reaping the rewards of investment
Share tips

Three companies that are reaping the rewards of investment

Professional investor Edward Wielechowski of the Odyssean Investment Trust highlights three stocks that have have invested well – and are able to deal…
19 Jul 2021