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Silver production at Mexico City-based Fresnillo (LSE, BMV: FRES) dipped slightly in 2012 due to declining ore grades at the Fresnillo mine in Zacatecas state.
Fresnillo, the world's largest primary silver producer, reported production of 41Moz for the year, compared to 41.9Moz in 2011.
The figures include Silverstream production which remained stable at 4Moz.
Production at the Fresnillo mine was down 12.9% at 26.4Moz (2011 30.3Moz) as average ore grade fell 17.2% to 328g/t, the company said in a production statement on Tuesday (Jan 22), with further declines towards 281g/t expected through the remaining life of the mine.
The falling grades were partly offset by increased mineral volume processed at Fresnillo, the ramp-up at the Saucito mine in Sonora state and higher grades at the Ciénega mine, Durango state.
Gold production in 2012 reached a record 473,034oz, up 5.4% from 448,866oz the previous year, as a result of a first year of operations at the Noche Buena gold mine in Sonora state and production growth at Saucito.
Lead and zinc production were also up 14.9% and 7.9% to 24,639t and 24,928t respectively.
Silver production in Q4 was 9.6Moz, up 4.2% on the same period of 2011, with gold down 20.6% at 97,398oz.
The company reported six fatalities in 2012.
Silver production is set to remain stable at 41Moz, Fresnillo said, with further ramp-up at Saucito offsetting further decreases in grades at the Fresnillo mine.
Gold production is expected to reach 490,000oz due to the ramp-up at Noche Buena.
The company will also increase its exploration budget to US$270mn this year, excluding capitalized exploration expenses, up 15% from the US$234mn spent in 2012.
PROJECT, OPERATIONS UPDATES
A dynamic leaching plant at the Herradura gold-silver mine in Sonora state is on track to begin operation in the fourth quarter of 2013, with the construction of the Jarillas shaft at Saucito on track for commissioning in 1Q13.
Construction of the US$500mn San Julián silver-gold mine on the Chihuahua/Durango border began following board approval in 4Q12.
The mine is expected to begin operations in the second half of 2014.
The Saucito II silver project is expected to gain board approval in 1Q13 and begin construction in 2H13, producing an average of 8.4Moz silver and 35,000oz gold per year.
The company remains on track to produce 65Moz silver and 500,000oz gold annually by 2018.
Fresnillo, which is 77.1% owned by compatriot Industrias Peñoles (BMV: PE&OLES), also owns the San Ramón and Soledad-Dipolos mines and development projects in Mexico.