Fresnillo cuts silver guidance again on mine challenges
Mexican miner Fresnillo lowered its silver production guidance for a second time, due to challenges at its two biggest silver mines.
Fresnillo now expects to produce 62.0-64.5Moz of the metal, including silver delivered through a streaming agreement, down from 64.5-67.5Moz previously.
The company previously reduced guidance from the original 67-70Moz following water issues at its San Julián mine.
FRESNILLO, SAUCITO CHALLENGES
Output at the Fresnillo mine was below expectations in Q3 due to lower ore throughput and grades in some areas of the mine, the company said.
At Saucito, silver output dipped on lower grades at two high-grade stopes in the upper levels of the mine.
The company has started drilling programs at both mines aimed at increasing the accuracy of the geological models to address these grade issues.
The Fresnillo mine produced 3.7Moz silver and 10,469oz gold in the quarter, up from 3.5Moz and 8,819oz, respectively, in the same quarter of 2017.
Silver output at Saucito was 4.9Moz, down from 5.0Moz, with gold production at 23,558oz, up from 18.5Moz.
SAN JULIÁN
Fresnillo secured permits to construct a reservoir at its San Julián operation, where water supply issues have hampered production, resulting in the previous lowering of 2018 silver guidance.
Construction is expected to take a year.
Companywide silver output was 15.5Moz in Q3, up from 14.6Moz in the same quarter last year.
GOLD
Fresnillo increased gold guidance for a second time to 920-940,000oz from 900-930,000oz, following a strong quarter, in which production was boosted by higher than budgeted volumes at the Saucito and Noche Buena operations.
The company previously lifted guidance from the original 870-900,000oz, due to higher output at Herradura (pictured).
Companywide gold output was 225,202oz, down from 233,311oz in 3Q17. Fresnillo also produced 13,076t lead, up 4.8%, and 22,935t zinc, up 29.7%.
PROJECTS
Production is ramping up at the phase 1 leaching plant of the pyrites plant project at Saucito, which contributed 434,000oz silver and 1,418oz gold in Q3.
The phase 2 tailings flotation plant is due to be concluded in 2019.
Construction of a US$110mn second dynamic leaching plant at Herradura was completed in Q2, with commercial production expected in by end-2018.
Fresnillo expects to secure approval for its US$360mn Juanicipio silver-gold project, a JV with MAG Silver, in 2018.
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