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

Broker safety – your questions answered
Investment strategy

Broker safety – your questions answered

Cris Sholto Heaton answers more of your questions about the safety of stockbroker accounts
25 Mar 2020
How demographics affects stock valuations
Investment strategy

How demographics affects stock valuations

New research suggests that stock and bond valuations are driven by the age of the population – at least in the US.
24 Feb 2020
Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Why investors should be “cautiously bullish” for 2020
Stockmarkets

Why investors should be “cautiously bullish” for 2020

Analysts have been out in force making rosy predictions for stockmarkets in 2020, but while there is certainly a case for optimism, investors should r…
17 Jan 2020

Most Popular

Will a second wave of Covid lead to another stockmarket crash?
Stockmarkets

Will a second wave of Covid lead to another stockmarket crash?

Can we expect to see another lockdown like in March, and what will that mean for your money? John Stepek explains.
18 Sep 2020
Here’s why you really should own at least some bitcoin
Bitcoin

Here’s why you really should own at least some bitcoin

While bitcoin is having a quiet year – at least in relative terms – its potential to become the default cash system for the internet is undiminished, …
16 Sep 2020
James Ferguson: How bad data is driving fear of a second wave of Covid-19
UK Economy

James Ferguson: How bad data is driving fear of a second wave of Covid-19

Merryn and John talk to MoneyWeek regular James Ferguson about the rise in infections in coronavirus and what the data is really telling us.
17 Sep 2020