Fresnillo persists with targets despite metals crunch

Precious metals miner Fresnillo increased production in the last quarter but will now review all expenditure and exploration projects after the recent sharp falls in gold and silver prices.

Precious metals miner Fresnillo increased production in the last quarter but will now review all expenditure and exploration projects after the recent sharp falls in gold and silver prices.

Octavio Alvdrez, Chief Executive Officer of the Mexico-focused group, admitted "the outlook for the precious metals market had become increasingly challenging over the first few months of the year".

"In the wake of the recent sharp falls in gold and silver prices we will review all capital expenditure and assess future exploration projects."

He added that, even before looking at new cost-saving initiatives, the board was confident all current development projects remained attractive in spite of the gold and silver price crunch.

"They have been designed to be low cost projects and our modelling suggests they will continue to deliver industry leading margins and profits at precious metals prices far below today's levels," he explained.

The company therefore was determined to keep on with its long-term goals of producing 68m ounces of silver and 500,000 oz of gold a year by 2018, but Alvdrez insisted that it would do so "with a view to maximizing benefits for all our stakeholders".

In the three months to the end of March attributable silver production increased 2.6% to 10.1m ounces over the same period in 2012 mainly due to the continued ramp-up and higher than expected ore grades at the Saucito mine.

Attributable gold production decreased 3.5% to 117,500 ounces due to a lower recovery rate and reduced volume of ore deposited at Soledad-Dipolos and lower ore grade at Cinega, mitigated by a ramp-up of production at Noche Buena.

As for its development projects, Fresnillo reported that construction of a dynamic leaching plant at Herradura is on track to start up in the fourth quarter, with engineering for the processing plants and construction at San Julin advancing according to schedule.

All in all the group said it remained on track to achieve the 2013 production targets of 41m ounces of silver and 490,000 attributable ounces of gold.

OH

Recommended

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework
Investment strategy

The MoneyWeek Podcast: picking stocks is fun, but you need to do your homework

John Stepek talks to Steve Clapham, investor, analyst and author of The Smart Money Method, about the dangers in picking individual stocks and why you…
8 Apr 2021
BP looks set to return more money to shareholders as it beats expectations
Energy stocks

BP looks set to return more money to shareholders as it beats expectations

Oil major BP is to embark on a share buyback programme after significantly reducing its debts. Saloni Sardana looks at what it means for your portfoli…
6 Apr 2021
Deliveroo has hit the market – but it’s not getting the warmest welcome
UK stockmarkets

Deliveroo has hit the market – but it’s not getting the warmest welcome

Food delivery company Deliveroo made its debut on the stockmarket this morning. But with the share price sliding by 30% straight away, it’s not made t…
31 Mar 2021
Three stocks to buy now that will come back stronger after Covid-19
Share tips

Three stocks to buy now that will come back stronger after Covid-19

Professional investor Ed Wielechowski of Odyssean Capital, chooses three compelling stocks that should thrive in a post-pandemic world.
29 Mar 2021

Most Popular

Lab-grown meat: how “moo’s law” will drive innovation
Soft commodities

Lab-grown meat: how “moo’s law” will drive innovation

Jim Mellon and Anthony Chow, co-founders of Aim-listed Agronomics, explain why they believe that “cellular agriculture” will benefit from massive long…
16 Apr 2021
The bitcoin bubble will burst: here’s how to play it
Bitcoin

The bitcoin bubble will burst: here’s how to play it

The cryptocurrency’s price has soared far beyond its fundamentals, says Matthew Partridge. Here, he looks at how to short bitcoin.
12 Apr 2021
Lab-grown meat: the new agricultural revolution
Soft commodities

Lab-grown meat: the new agricultural revolution

Vegan alternatives are taking off, but the future of food technology lies in lab-grown meat – cultivating steaks and burgers from animal cells, says A…
16 Apr 2021