Fresnillo Plc Gold production continues to beat expectations

Fresnillo Plc (LON:FRES) today released Q3 2018 production report

Overview

· Quarterly silver production of 15.5 moz (including Silverstream), up 6.3% vs. 3Q17 due to the contribution of the new Pyrites Plant, higher ore grades at Fresnillo, Herradura and Ciénega, and higher volumes of ore milled at San Julián phase II. 3Q18 production in line with 2Q18.

· Year to date silver production (including Silverstream) of 46.3 moz, up 8.5% vs. YTD17 mainly as a result of the start of operations at San Julián JM (Phase II) in July 2017.

· Quarterly gold production of 225 koz, down 3.5% vs. 3Q17 as a result of higher than normal speed in the recovery rate at the leaching pads in 3Q17 and the lower grade and volume of ore deposited on the pads at Herradura in 3Q18.

· Quarterly gold production down 3.7% vs. 2Q18 mainly due to a lower speed in the recovery rate at the leaching pads at Herradura in 3Q18, and the lower ore grade and recovery rate at Noche Buena.

· Year to date gold production of 690 koz, up 1.7% vs. YTD17 mainly due to higher ore grade at Saucito and a higher volume of ore processed at Noche Buena.

· Full year consolidated production guidance has been revised marginally: total gold production to 920 – 940 koz (previously 900 – 930 koz) and total silver production to 62.0 – 64.5 moz (previously 64.5 – 67.5 moz) including Silverstream due to continued challenges at the Saucito and Fresnillo mines, which are currently being addressed.

Octavio Alvídrez, Chief Executive Officer of Fresnillo, said:

“Gold production continues to beat expectations and we are once again revising our guidance upwards following another strong quarter, in particular at our Saucito and Noche Buena mines where volumes exceed targets. Though silver production is up against all comparable periods, we are revising full year silver guidance following continued challenges at the Fresnillo and Saucito mines. These are world class, tier one silver assets, and we remain both determined, and confident, given the actions we are taking, that we will deliver a better performance in the last quarter and in 2019.

In line with our strategy, we continue to conservatively invest in the business to deliver sustainable growth and returns to shareholders. The Pyrites Plant in the Fresnillo district, which will improve overall recoveries of both gold and silver from the Fresnillo and Saucito mines, is progressing well. The first stage of the project, the leaching plant at Saucito, is now ramping up and already making a contribution to overall production. We expect to complete construction of phase 2, the flotation plant at the Fresnillo mine, by the end of 2019. We look forward to this project making a positive impact on performance.”

Total Production