REG - Fresnillo Plc - 2Q24 Production Report

FresnilloAnnouncement

24/07/2024 07:00

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RNS Number : 5551X  Fresnillo PLC  24 July 2024

Fresnillo plc

21 Upper Brook Street

London W1K 7PY

United Kingdom

www.fresnilloplc.com (http://www.fresnilloplc.com)

 

24 July 2024

 

 

 

SECOND QUARTER PRODUCTION REPORT

FOR THE THREE MONTHS ENDED 30 JUNE 2024

 

Octavio Alvídrez, Chief Executive Officer, said:

 

"The Group has maintained the steady operating performance demonstrated in the
first quarter and we remain on track to meet full year guidance. I am
particularly pleased with the strong output from Saucito which has offset a
slightly weaker performance at the Fresnillo mine. I would also like to
highlight the excellent work done by the team at Juanicipio where we have
gained access to higher grade areas, and Ciénega where we have reported a
strong rise in gold output. The period was not without weather-related
challenges, as heavy rain impacted Herradura. The Herradura team has done a
fantastic job in ensuring access to higher grade areas which will result in
higher gold output in the second half of the year. Our priorities for the
second half are unchanged. Safety is of paramount importance where we will
look to build on the strong safety performance in the second quarter, while we
will also focus on delivering the maximum performance from all our mine
sites."

 

 

 

 

HIGHLIGHTS

 

Silver

 

·    Quarterly attributable silver production of 14.6 moz (including
Silverstream) up 8.4% vs. 1Q24 due to the increase in volume of ore processed
and higher ore grade at Saucito, higher volume of ore processed, ore grade and
recovery rate at Juanicipio and higher ore grade at Ciénega.

 

·    Quarterly attributable silver production (including Silverstream)
down 1.4% vs. 2Q23, mainly due to the lower ore grade, decreased volume of ore
processed and lower recovery rate at San Julián DOB and a decrease in volume
of ore processed and lower ore grade at Fresnillo, partly offset by the higher
ore grade and increased volume of ore processed at San Julián Veins and
Saucito and higher ore grade at Ciénega.

 

·    First half silver production of 28.2 moz (including Silverstream)
broadly unchanged vs. 1H23 with the higher ore grade and increased volume of
ore processed at San Julián Veins, Saucito and Ciénega, and the increased
contribution from Juanicipio, offset by the lower production from San Julián
DOB and the decreased volume of ore processed and lower ore grade at
Fresnillo.

 

Gold

 

·    Quarterly attributable gold production of 130.0 koz, down 7.7% vs.
1Q24, mainly driven by the lower recovery rate and decrease in ore grade at
Herradura and lower ore grade at Saucito, partly mitigated by the higher ore
grade at Fresnillo and the contribution from Noche Buena.

 

·    Quarterly attributable gold production down 14.7% vs. 2Q23 primarily
due to the lower ore grade and decrease in recovery rate at Herradura and the
mine closure plan at Noche Buena, partly offset by the higher ore grade and
increased volume of ore processed at San Julián Veins and the higher ore
grade at Fresnillo.

 

·    First half gold production of 270.9 koz, down 16.8% vs. 1H23 mainly
due to lower ore grade and decreased volume of ore processed at Herradura and
the mine closure plan at Noche Buena, partly offset by the increase in volume
of ore processed and higher ore grade at San Julián Veins and Ciénega, and
higher ore grade at Fresnillo.

 

By-Products

 

•     Quarterly attributable by-product lead and zinc production
increased 13.3% and 11.8% vs. 1Q24 respectively, primarily due to the higher
ore grade and increased volume of ore processed at Saucito and Juanicipio, and
higher ore grade at San Julián DOB.

 

•     Quarterly attributable by-product lead and zinc production up
20.8% and 13.9% vs. 2Q23 respectively, due to higher ore grades and the
increase in volume of ore processed at Saucito, and higher ore grades at
Fresnillo and Juanicipio, partly offset by the decreased contribution from San
Julián DOB as it approaches the end of its life.

 

•     First half attributable by-product lead and zinc production up
16.3% and 11.3% vs. 1H23 respectively, mainly due to increased volume of ore
processed and higher ore grades at Saucito and Juanicipio, partly offset by
the decreased contribution from San Julián DOB.

 

 

                     2Q24     1Q24     % Change  2Q23     % Change  1H24     1H23     % Change
 Silver (koz)        14,038   13,117   7.0       14,135   (0.7)     27,155   26,472   2.6
 Silverstream (koz)  617      397      55.5      725      (14.9)    1,014    1,546    (34.4)
 Total Silver (koz)  14,655   13,513   8.4       14,860   (1.4)     28,169   28,018   0.5
 Gold (oz)           130,025  140,847  (7.7)     152,380  (14.7)    270,872  325,415  (16.8)
 Lead (t)            16,906   14,924   13.3      13,994   20.8      31,830   27,363   16.3
 Zinc (t)            29,240   26,157   11.8      25,670   13.9      55,397   49,788   11.3

 

SAFETY PERFORMANCE

 

We continue working towards identifying preventive measures, focusing on
training and maintaining stringent adherence to our safety policies to provide
a safer environment for our workforce. We remain committed to meeting our Zero
Fatalities target by instilling a strong safety culture through our
operations.

 

 

2024 OUTLOOK

 

Our 2024 outlook remains in line with previous guidance:

·    Attributable silver production expected to be in the range of 55.0 to
62.0 moz (including Silverstream).

·    Attributable gold production expected to be in the range of 580 to
630 koz.

 

Expressed in silver equivalent ounces 1 , total production is expected to be
101-112 million ounces.

 

 

INTERIM RESULTS

 

Fresnillo will announce its 2024 Interim Results on 30 July 2024.

 

 

For further information, please visit our website www.fresnilloplc.com
(http://www.fresnilloplc.com) or contact:

 FRESNILLO PLC                                                  Tel: +44 (0)20 7399 2470

 London Office

 Gabriela Mayor, Head of Investor Relations

 Mark Mochalski
 Mexico City Office                                             Tel: +52 55 52 79 3206

 Ana Belem Zárate

 POWERSCOURT                                                    Tel: +44 (0)7793 858 211

 Peter Ogden

 

MINING OPERATIONS

 

FRESNILLO MINE PRODUCTION

 

                    2Q24     1Q24     % Change  2Q23     % Change  1H24       1H23       % Change
 Ore Processed (t)  589,602  622,390  (5.3)     667,776  (11.7)    1,211,992  1,336,142  (9.3)

 Production
 Silver (koz)       2,583    2,676    (3.5)     3,233    (20.1)    5,259      6,789      (22.5)
 Gold (oz)          13,309   9,846    35.2      10,997   21.0      23,155     19,747     17.3
 Lead (t)           6,433    6,191    3.9       5,321    20.9      12,625     10,972     15.1
 Zinc (t)           11,260   11,668   (3.5)     10,696   5.3       22,928     22,790     0.6

 Ore Grades
 Silver (g/t)       152      151      0.7       170      (10.6)    151        177        (14.7)
 Gold (g/t)         0.95     0.66     43.9      0.72     31.9      0.80       0.64       25.0
 Lead (%)           1.27     1.15     10.4      0.93     36.6      1.21       0.96       26.0
 Zinc (%)           2.61     2.58     1.2       2.12     23.1      2.59       2.27       14.1

 

Quarterly silver production decreased 3.5% vs 1Q24, driven by the decrease in
volume of ore processed. This resulted from the lower availability of ore to
feed the beneficiation plant as ore was hauled via ramps while the two
sections of the deepened San Carlos shaft are connected. The mine was also
impacted by poor ground conditions in some areas which required additional
ground support adding to the mining cycle time, and narrower veins than
anticipated in the mine plan. Orders for additional in-mine equipment, fit for
narrower veins, have been placed, while additional bolting equipment arrived
on site at the beginning of June and will contribute to a more expeditious
preparation of new stopes.

 

Quarterly silver production decreased 20.1% vs. 2Q23, due to the lower volume
of ore processed and lower ore grade mainly due to: i) delays in development;
ii) the narrower veins with high silver content, and iii) variations with the
geological model.

 

First half silver production decreased 22.5% vs. 1H23 mainly driven by the
higher proportion of volumes extracted from the western areas of the mine with
lower silver ore grade but higher gold and base metal contents, together with
the decrease in volumes of ore processed as mentioned above.

 

Mine development rates increased to an average of 3,191m per month in 2Q24
(1Q24: 3,027m per month).

 

Quarterly and first half by-product gold production increased vs. all
comparative periods mainly driven by the higher ore grade, partially offset by
the decreased volume of ore processed.

 

Silver ore grade in 2024 is expected to be in the range of 160 to 180 g/t,
while the gold ore grade is estimated to be between 0.70 to 0.80 g/t.

 

SAUCITO MINE PRODUCTION

 

                    2Q24     1Q24     % Change  2Q23     % Change  1H24       1H23       % Change
 Ore Processed (t)  599,601  574,969  4.3       562,962  6.5       1,174,570  1,034,921  13.5

 Production
 Silver (koz)       3,577    3,234    10.6      3,006    19.0      6,811      5,811      17.2
 Gold (oz)          18,314   19,343   (5.3)     18,702   (2.1)     37,658     40,080     (6.0)
 Lead (t)           5,658    4,908    15.3      3,950    43.2      10,566     8,251      28.1
 Zinc (t)           8,909    6,694    33.1      7,001    27.3      15,603     12,993     20.1

 Ore Grades
 Silver (g/t)       208      198      5.1       188      10.6      203        197        3.0
 Gold (g/t)         1.23     1.35     (8.9)     1.31     (6.1)     1.29       1.52       (15.1)
 Lead (%)           1.10     1.00     10.0      0.84     30.9      1.05       0.95       10.5
 Zinc (%)           1.92     1.52     26.3      1.62     18.5      1.72       1.65       4.2

 

Quarterly silver production increased 10.6% vs. 1Q24 mainly due to the higher
volume of ore processed driven by the increased productivity as personnel are
becoming more experienced, and higher silver ore grade.

 

Quarterly and first half silver production increased 19.0% and 17.2% vs. 2Q23
and 1H23 respectively, primarily due to the higher ore grade, and increased
volume of ore processed driven by the increased productivity and availability
of equipment.

 

Quarterly by-product gold production decreased vs. all comparative periods
mainly driven by the lower ore grade, partially mitigated by the higher volume
of ore processed.

 

Mine development rates remained stable quarter on quarter at 2,867m per month
in 2Q24 (1Q24: 2,840m per month), in accordance with the plan.

 

The silver ore grade for 2024 is expected to be in the range of 200-220 g/t,
while the gold grade is estimated to be between 1.10-1.30 g/t.

 

PYRITES PLANT

 

                                    2Q24*   1Q24*   % Change  2Q23*   % Change  1H24*   1H23*   % Change
 Pyrite Concentrates Processed (t)  40,077  36,344  10.3      39,291  2.0       76,421  67,243  13.6

 Production
 Silver (koz)                       490     356     37.6      196     150.0     846     307     175.6
 Gold (oz)                          711     628     13.2      494     43.9      1,339   764     75.3

 Ore Grades
 Silver (g/t)                       576     497     15.9      229     151.5     539     207     160.4
 Gold (g/t)                         2.23    2.15    3.7       1.79    24.6      2.19    1.59    37.7

*Includes concentrates of Fe from Saucito and Fresnillo.

 

 

 

CIÉNEGA MINE PRODUCTION

 

                    2Q24     1Q24     % Change  2Q23     % Change  1H24     1H23     % Change
 Ore Processed (t)  257,861  261,681  (1.5)     261,253  (1.3)     519,542  501,401  3.6

 Production
 Gold (oz)          9,981    10,688   (6.6)     8,132    22.7      20,668   17,434   18.5
 Silver (koz)       1,379    1,201    14.8      1,010    36.5      2,581    1,991    29.6
 Lead (t)           982      652      50.6      756      29.9      1,634    1,504    8.6
 Zinc (t)           812      832      (2.4)     919      (11.6)    1,644    1,921    (14.4)

 Ore Grades
 Gold (g/t)         1.31     1.38     (5.1)     1.06     23.6      1.34     1.18     13.6
 Silver (g/t)       192      166      15.7      141      36.2      179      144      24.3
 Lead (%)           0.57     0.40     42.5      0.47     21.3      0.48     0.47     2.1
 Zinc (%)           0.58     0.59     (1.7)     0.67     (13.4)    0.59     0.72     (18.1)

 

Quarterly gold production decreased 6.6% vs. 1Q24 mainly due to the lower ore
grade and a decrease in volume of ore processed, both in accordance with the
mine plan.

Quarterly silver production increased 14.8% vs. 1Q24 mainly due to the higher
ore grade, partly mitigated by a decrease in volume of ore processed.

Quarterly gold and silver production increased 22.7% and 36.5% vs. 2Q23
primarily due to the higher ore grade at the Jessica Transversal and Taspana
Sur areas and, to a lesser extent, increased dilution control at the Virgen
and Virginias areas.

First half gold and silver production increased 18.5% and 29.6% vs. 1H23 due
to the higher ore grade as mentioned above and an increased volume of ore
processed driven by the contribution from the Taspana area and the timely
preparation of stopes.

The gold and silver ore grades for 2024 are estimated to be in the ranges of
1.1-1.3 g/t and 160-180 g/t respectively.

 

SAN JULIÁN MINE PRODUCTION

 

                                  2Q24     1Q24     % Change  2Q23     % Change  1H24     1H23       % Change
 Ore Processed Veins (t)          301,643  291,003  3.7       274,505  9.9       592,646  558,257    6.1
 Ore Processed DOB (t)            458,793  501,434  (8.5)     527,898  (13.1)    960,227  1,050,158  (8.6)

 Total production at San Julián
 Gold (oz)                        12,846   12,582   2.1       10,259   25.2      25,428   22,292     14.1
 Silver (koz)                     3,117    3,039    2.6       3,596    (13.3)    6,156    7,008      (12.2)

 Production Veins
 Gold (oz)                        12,353   11,973   3.2       9,325    32.5      24,326   20,464     18.9
 Silver (koz)                     2,022    2,039    (0.8)     1,168    73.1      4,061    2,480      63.8

 Production DOB
 Gold (oz)                        493      609      (19.0)    934      (47.2)    1,102    1,828      (39.7)
 Silver (koz)                     1,096    1,000    9.6       2,428    (54.9)    2,096    4,528      (53.7)
 Lead (t)                         1,303    962      35.4      2,062    (36.8)    2,264    3,917      (42.2)
 Zinc (t)                         3,472    3,241    7.1       4,020    (13.6)    6,713    7,775      (13.7)

 Ore Grades Veins
 Gold (g/t)                       1.34     1.35     (0.8)     1.11     20.6      1.35     1.20       12.7
 Silver (g/t)                     228      239      (4.7)     146      56.6      234      152        53.8

 Ore Grades DOB
 Gold (g/t)                       0.05     0.06     (16.7)    0.09     (44.4)    0.06     0.09       (33.3)
 Silver (g/t)                     88       74       18.9      165      (46.7)    81       156        (48.1)
 Lead (%)                         0.38     0.26     46.2      0.50     (24.0)    0.32     0.48       (33.3)
 Zinc (%)                         1.03     0.89     15.7      1.03     0.0       0.95     0.99       (4.0)

 

SAN JULIÁN VEINS

Quarterly gold production increased 3.2% vs. 1Q24 due to the higher volume of
ore processed driven by the continued optimisation of the maintenance
programme.

Quarterly and first half silver and gold production increased vs. 2Q23 and
1H23 respectively, mainly due to the higher ore grades at the San Antonio, La
Dura and Eliza veins, and the increased volume of ore processed (2Q23 had been
affected by the lower availability of bolting and shotcreting equipment, which
delayed access to the San Atanasio vein with higher ore grades).

Silver and gold ore grades were reviewed, and through an optimised mine
sequence, are expected to increase and to be in the ranges of 200-220 g/t and
1.20-1.40 g/t, respectively.

 

SAN JULIÁN DISSEMINATED ORE BODY (DOB)

Quarterly silver production increased 9.6% vs. 1Q24 as a result of a higher
ore grade but in accordance to the mine plan. This was partly offset by the
decrease in volumes of ore processed as the mine approaches the end of its
life.

Quarterly and first half silver production decreased vs. 2Q23 and 1H23 as a
result of the gradual decrease in production at this mine, with mining
activities expected to conclude in 3Q24.

We expect the 2024 silver ore grade to be around 70g/t.

 

HERRADURA TOTAL MINE PRODUCTION

 

                          2Q24        1Q24        % Change  2Q23        % Change  1H24        1H23        % Change
 Ore Processed (t)        5,756,109   4,695,531   22.6      5,219,844   10.3      10,451,639  11,705,553  (10.7)
 Total Volume Hauled (t)  27,093,586  22,140,776  22.4      21,445,659  26.3      49,234,362  50,669,525  (2.8)

 Production
 Gold (oz)                63,628      78,058      (18.5)    83,037      (23.4)    141,686     189,869     (25.4)
 Silver (koz)             100         119         (16.0)    136         (26.5)    219         344         (36.3)

 Ore Grades
 Gold (g/t)               0.59        0.67        (11.9)    0.76        (22.4)    0.63        0.74        (14.9)
 Silver (g/t)             1.06        1.32        (19.7)    1.33        (20.3)    1.18        1.55        (23.9)

 

Quarterly gold production decreased 18.5% vs. 1Q24 mainly due to heavy rain
which delayed access to higher grade oxidised ore areas. As a result, a
greater proportion of sulphide ore was deposited on the leaching pads and
processed, impacting both ore grade and recovery rates. This was partly
mitigated by the higher volume of ore processed in accordance with the mine
plan. The areas with oxidised ore have been prepared and gold production is
expected to increase in 2H24.

Quarterly gold production decreased 23.4% vs. 2Q23 primarily due to the lower
ore grade and recovery rates as described above, partly mitigated by the
higher volume of ore processed.

Half year gold production decreased 25.4% vs. 1H23 primarily due to the lower
ore grade as a result of the change in the mine sequence as mentioned above,
and a lower volume of ore processed in 1H24 but in accordance with the mine
plan, whereas in 1H23, positive variations with the geological model
benefitted gold production.

The gold ore grade in 2024 is expected to be in the range of 0.60-0.70 g/t.

 

NOCHE BUENA

 

6,052 ounces of gold were recovered from the leaching pads at Noche Buena in
2Q24. First half gold production totalled 10,195 ounces. As previously
announced, mining activities concluded in May 2023, and the closure plan
continues as expected.

 

 

JUANICIPIO - ATTRIBUTABLE

 

                    2Q24     1Q24     % Change  2Q23*    % Change  1H24     1H23*    % Change
 Ore Processed (t)  188,492  182,383  3.3       211,522  (10.9)    370,875  335,855  10.4

 Production
 Silver (koz)       2,791    2,489    12.1      2,916    (4.3)     5,280    4,131    27.8
 Gold (oz)          5,185    5,559    (6.7)     5,921    (12.4)    10,744   9,264    16.0
 Lead (t)           2,529    2,211    14.4      1,905    32.8      4,741    2,718    74.4
 Zinc (t)           4,788    3,722    28.6      3,034    57.8      8,510    4,309    97.5

 Ore Grades
 Silver (g/t)       498      476      4.6       498      0.0       488      448      8.9
 Gold (g/t)         1.20     1.32     (9.1)     1.25     (4.0)     1.26     1.18     6.8
 Lead (%)           1.56     1.35     15.6      1.05     48.6      1.46     0.94     55.3
 Zinc (%)           2.99     2.49     20.1      1.92     55.7      2.74     1.74     57.5

* Includes ore processed from initial tests during the commissioning of the
Juanicipio plant and ore processed at the Fresnillo and Saucito beneficiation
plants.

 

Attributable quarterly silver production increased 12.1% vs. 1Q24 driven by
the higher ore grade and an increase in volume of ore processed with strong
operational delivery enabling faster preparation of stopes.

Attributable quarterly gold production decreased 6.7% vs. 1Q24 mainly due to
lower ore grade, partly offset by the higher volume of ore processed due to
the aforementioned factors.

 

Attributable quarterly silver and gold production decreased 4.3% and 12.4% vs.
2Q23, respectively mainly due to the lower volume of ore processed as
additional volumes from the stockpile continued to be processed at the Saucito
and Fresnillo mines in 2Q23. This was mitigated by the higher recovery rate as
the beneficiation plant is now operating at full capacity and the flotation
circuit has been optimised.

 

First half silver and gold production increased significantly vs. 1H23 as
commissioning of the flotation plant concluded in 1Q23.

 

The silver ore grade for 2024 has been reviewed and is expected to be in the
range of 420-460 g/t.

 

SILVERSTREAM

Quarterly silverstream production increased 55.5% vs. 1Q24 mainly due to the
increase in volumes of ore processed in 2Q24 following a technical stoppage of
the flotation plant, which impacted volumes in 1Q24. A higher silver ore grade
also benefitted silver production.

Quarterly and first half silver production decreased vs 2Q23 and 1H23 due to a
decrease in volume of ore processed and a lower ore grade.

Silver production in 2024 is estimated to be in the range of 2.5-3.0 moz.

 

 

ABOUT FRESNILLO PLC

Fresnillo plc is the world's largest primary silver producer and Mexico's
largest gold producer, listed on the London and Mexican Stock Exchanges under
the symbol FRES.

Fresnillo plc has eight operating mines, all of them in Mexico - Fresnillo,
Saucito, Juanicipio, Ciénega, Herradura, Soledad-Dipolos(1), Noche Buena and
San Julián (Veins and Disseminated Ore Body) and four advanced exploration
projects - Orisyvo, Rodeo, Guanajuato and Tajitos as well as a number of other
long term exploration prospects.

Fresnillo plc has mining concessions and exploration projects in Mexico, Peru
and Chile.

Fresnillo plc's goal is to maintain the Group's position as the world's
largest primary silver company and Mexico's largest gold producer.

( )

(1) Operations at Soledad-Dipolos are currently suspended.

 

FORWARD-LOOKING STATEMENTS

Information contained in this announcement may include 'forward-looking
statements'. All statements other than statements of historical facts included
herein, including, without limitation, those regarding the Fresnillo Group's
intentions, beliefs or current expectations concerning, amongst other things,
the Fresnillo Group's results of operations, financial position, liquidity,
prospects, growth, strategies and the silver and gold industries are
forward-looking statements. Such forward-looking statements involve risk and
uncertainty because they relate to future events and circumstances.
Forward-looking statements are not guarantees of future performance and the
actual results of the Fresnillo Group's operations, financial position and
liquidity, and the development of the markets and the industry in which the
Fresnillo Group operates, may differ materially from those described in, or
suggested by, the forward-looking statements contained in this document. In
addition, even if the results of operations, financial position and liquidity,
and the development of the markets and the industry in which the Fresnillo
Group operates are consistent with the forward-looking statements contained in
this document, those results or developments may not be indicative of results
or developments in subsequent periods. A number of factors could cause results
and developments to differ materially from those expressed or implied by the
forward-looking statements including, without limitation, general economic and
business conditions, industry trends, competition, commodity prices, changes
in regulation, currency fluctuations (including the US dollar and Mexican Peso
exchanges rates), the Fresnillo Group's ability to recover its reserves or
develop new reserves, including its ability to convert its resources into
reserves and its mineral potential into resources or reserves, changes in its
business strategy and political and economic uncertainty.

 

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