TIDMFRES
RNS Number : 7568N
Fresnillo PLC
25 January 2023
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
25 January 2023
FOURTH QUARTER PRODUCTION REPORT
FOR THE THREE MONTHSED 31 DECEMBER 2022
Octavio Alvídrez, Chief Executive Officer, said:
"Fresnillo reports a solid operating result in the fourth
quarter, with full year production in line with our guidance. In
particular silver output was driven by a strong performance from
our Fresnillo mine which is showing consistent improvement and the
continued contribution of our new Juanicipio project offsetting the
expected lower grades at San Julián. During the year we have worked
hard to minimise the impact of a very tight labour market and to
mitigate the impact of the labour reform in Mexico. Our recruitment
and training campaigns are now complete and the mines are well
staffed for 2023. A key highlight in the fourth quarter was the
successful tie-in to the national electricity grid of our new
Juanicipio mine. Commissioning is ongoing and we expect a gradual
ramp up in the coming months. We very much look forward to seeing
this major new project deliver on its potential, making a sizeable
addition to our overall production for many years to come."
HIGHLIGHTS
Silver
-- Full year attributable silver production of 53.7 moz
(including Silverstream), in line with guidance, slightly above
FY21 with production from Juanicipio and increased volumes of ore
processed at Fresnillo, offset by the lower ore grade at San Julián
(DOB).
-- Quarterly attributable silver production of 12.5 moz
(including Silverstream), down 7.8% vs. 3Q22 with stronger
performances at the Fresnillo mine and San Juli á n (veins) offset
by lower production at other mines, and a decrease in production
from the Silverstream.
-- Quarterly attributable silver production (including
Silverstream) decreased 3.0% vs. 4Q21 due to a decrease in ore
throughput and lower ore grade at San Juli án (DOB) and Ciénega,
mitigated by increased volumes of ore processed and higher ore
grades at Fresnillo .
Gold
-- Full year attributable gold production of 635.9 koz, in line
with guidance, down 15.3% vs. FY21, primarily due to a lower
recovery rate as higher volumes of sulphide ore are processed and
lower ore grade at Herradura, and a decrease in the volume of ore
processed and lower ore grades at Noche Buena, Saucito and
Ciénega.
-- Quarterly attributable gold production of 168.0 koz, up 5.5%
vs. 3Q22, mainly due to an increase in volumes of ore deposited at
Herradura, partly offset by decreased volumes of ore processed and
a lower recovery rate at Noche Buena and lower ore grade and a
decrease in ore throughput at Saucito.
-- Quarterly attributable gold production increased 11.7% vs.
4Q21 driven by increased volumes of ore deposited and higher ore
grades at Herradura, partly offset by decreased volumes of ore
deposited and lower ore grade at Noche Buena.
By-Products
-- Full year attributable by-product lead production decreased
6.4% vs. FY21 due to a decrease in the volume of ore processed and
lower ore grade at Saucito and decreased ore grade at San Juli á n
(DOB), mitigated by increased ore throughput and higher ore grade
at Fresnillo and increased contribution from Juanicipio.
-- Quarterly attributable by-product lead production decreased
4.9% vs. 3Q22 due to decreased ore throughput and lower ore grade
at Saucito and a lower volume of ore processed from Juanicipio.
-- Quarterly attributable by-product zinc production decreased
9.8% vs. 3Q22 due to a decreased volume of ore processed and lower
ore grades at Saucito and Fresnillo, and lower contribution from
Juanicipio.
-- Quarterly attributable by-product lead production increased
7.8% vs. 4Q21 driven primarily by increased volumes of ore
processed and higher ore grades at Fresnillo and increased
contribution from Juanicipio, partly offset by lower ore throughput
at Saucito.
Attributable 4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Silver (koz) 12,073 12,787 (5.6) 12,230 (1.3) 51,052 49,961 2.2
-------- -------- --------- -------- --------- -------- -------- ---------
Silverstream
(koz) 450 799 (43.7) 684 (34.2) 2,688 3,134 (14.2)
-------- -------- --------- -------- --------- -------- -------- ---------
Total Silver
(koz) 12,522 13,586 (7.8) 12,914 (3.0) 53,740 53,095 1.2
-------- -------- --------- -------- --------- -------- -------- ---------
Gold (oz) 167,969 159,205 5.5 150,313 11.7 635,926 751,203 (15.3)
-------- -------- --------- -------- --------- -------- -------- ---------
Lead (t) 12,756 13,415 (4.9) 11,837 7.8 52,950 56,573 (6.4)
-------- -------- --------- -------- --------- -------- -------- ---------
Zinc (t) 23,060 25,560 (9.8) 22,899 0.7 99,153 99,397 (0.2)
-------- -------- --------- -------- --------- -------- -------- ---------
Silver Equivalent Basis [1]
Attributable quarterly silver equivalent ounces of 25.9 moz in
4Q22 (4Q21: 24.9 moz, 3Q22: 26.3 moz) and attributable full year
silver equivalent ounces of 104.6 moz (FY21: 113.2 moz).
DEVELOPMENT PROJECTS
Commissioning of the Juanicipio plant is ongoing. We continue to
expect a gradual ramp up with the objective of reaching full
nameplate capacity in the third quarter of 2023. As reported, ore
will be processed at the Juanicipio plant but can also continue to
be processed at our nearby Saucito and Fresnillo operations if
required.
Having achieved Juanicipio's tie-in to the national grid, the
focus is to get the pyrites plant connected by the end of 1Q23,
with commissioning and ramp up starting immediately afterwards.
SAFETY PERFORMANCE
We continue with our 'I Care, We Care' programme and will
continue working towards identifying preventive measures to provide
a safer environment for our workforce. We remain committed to
meeting our Zero Fatalities target and continue encouraging
adherence to stringent safety policies and implementing controls
and training to guarantee a strong safety culture.
OPERATING ENVIRONMENT
As communicated in previous reports, the labour reform in Mexico
which restricts subcontracting of labour came into effect from
September 2021. This resulted in the requirement to internalise a
proportion of our contractor workforce. Contractor uptake varied
across the Group, resulting in staff vacancies and lower equipment
availability at our underground mines. The labour market remains
very tight in common with other sectors and indeed geographies.
However, our recruitment and training campaigns are now complete
and the mines are well staffed for 2023.
ITEMS IMPACTING THE INCOME STATEMENT
Ahead of the release of the Company's Full Year Results, we are
providing an update on different factors impacting several items in
the income statement.
Payability rates for all metals sold remained at the same levels
as those observed in 2021, while realised metal prices are expected
to be very similar to the average spot metal prices. In particular,
realised prices for gold, silver, lead and zinc for the full year
are anticipated to be around US$1,800 per ounce, US$21.7 per ounce,
US$96.3 cents per pound and US$152.2 cents per pound
respectively.
Adjusted production costs in 2H22 are expected to increase c.20%
vs. 1H22 mainly due to:
1. an increase in volumes of ore processed at Herradura
(+33.2%), Fresnillo (+6.2%) and Saucito (+5.6%),
2. higher cost inflation observed in 2H22 vs 1H22,
3. an increase of 49% in waste material hauled charged to costs,
despite the 21% decrease in the total volume of waste material
hauled (capitalised and charged to costs), mostly related to IFRIC
20 accounting interpretation for stripping costs in the production
phase. In 1H22, 54.8 million tonnes of total waste material was
moved, of which 48% was capitalised; whereas in 2H22, 43.3 million
tonnes of waste material was moved, but only 3% of this was
capitalised, with the rest being charged to costs. The reason
behind this significant change in the volume of waste material
being capitalised is that in 1H22 the total stripping ratio of c.
5.7 was significantly higher than the prevailing average stripping
ratio for the life of the mine (LOM) (under IFRIC 20 stripping
costs above the average LOM stripping ratio are capitalised), this
higher stripping ratio was due to the need to prepare and gain
access to the mineral banks; whereas in 2H22 the 3.4 total
stripping ratio was only slightly higher than the prevailing
average stripping ratio for LOM, thus decreasing the portion of
volume being capitalised.
4. increased maintenance as a result of the purchase of
additional in-mine equipment and increased personnel costs
following the labour reform, an increase in maintenance to
guarantee the continuity of operations and increased consumption of
diesel and other operating materials due to longer haulage
distances.
Depreciation in 2H22 is expected to be 15% higher vs. 1H22
primarily driven by the additional depreciation registered at Noche
Buena to fully depreciate the assets as it approaches the end of
its mine life, an increase in the depletion factor at Herradura due
to the higher production, and the purchase of additional equipment
following the internalisation of contractors as a result of the
aforementioned Mexico labour reform.
As guided previously, exploration expenses are expected to be c.
US$165-US$170 million.
2023 OUTLOOK
Our 2023 guidance issued today is in line with previous
expectations in terms of silver equivalent ounces. We expect
increased production of gold due to an updated mine plan at
Herradura and a slight increase in volumes at Noche Buena following
condemnation drilling, alongside moderated production of silver due
to the later than expected ramp up at Juanicipio (from mid 2022 to
early 2023) and tie in of the pyrites plant at Fresnillo.
-- Attributable silver production expected to be in the range of
57.0 to 64.0 moz (including Silverstream).
-- Attributable gold production expected to be in the range of 590 to 640 koz.
-- Taking the above ranges and expressed in silver equivalent
ounces(1) , production is expected to be 104 -115 million
ounces.
FULL YEAR FINANCIAL RESULTS
Fresnillo will announce its full year 2022 results on 7th March
2023.
The information contained within this announcement is deemed by
Fresnillo plc to constitute inside information as stipulated under
the Market Abuse Regulation (EU) No. 596/2014. Upon the publication
of this announcement, this inside information is now considered to
be in the public domain. The person making the notification is
Carlos Ortiz Mena, Head of Legal, Fresnillo plc. The time of the
notification is 7:00 a m UK time.
For further information, please visit our website
www.fresnilloplc.com or contact:
FRESNILLO PLC Tel: +44 (0)20 7399 2470
London Office
Gabriela Mayor, Head of Investor
Relations
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
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed
(t) 624,105 643,945 (3.1) 528,103 18.2 2,462,409 2,216,467 11.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,606 3,394 6.2 2,655 35.8 13,609 11,986 13.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 8,314 7,970 4.3 8,648 (3.9) 34,432 33,743 2.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 5,609 5,715 (1.9) 4,525 24.0 21,756 18,796 15.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 11,097 12,107 (8.3) 10,025 10.7 43,343 34,530 25.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 197 181 8.8 170 15.9 189 186 1.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.58 0.54 7.4 0.71 (18.3) 0.61 0.68 (10.3)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.05 1.05 0.0 1.03 1.9 1.05 1.01 4.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.37 2.45 (3.3) 2.65 (10.6) 2.38 2.20 8.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver and gold production increased 6.2% and 4.3%
respectively vs. 3Q22 driven by higher ore grades in line with the
mine plan, partially offset by a lower volume of ore processed from
certain areas of the mine and decreased development ore.
Quarterly silver production was up 35.8% vs. 4Q21 mainly due to
a higher ore grade and increased volume of ore processed as
operating restrictions that affected ore throughput in 2021 were
addressed, including: i) the effect of the labour reform in Mexico
which resulted in staff vacancies and affected equipment
availability (the recruitment and training campaign is now complete
and the mine is well staffed for 2023); and ii) the residual impact
in 4Q21 of a short circuit of a main power line, which limited
water pumping capacity thereby affecting access to some mining
areas and haulage levels.
Full year silver and gold production increased 13.5% and 2.0%
vs. FY21 respectively, primarily due to a higher volume of ore
processed driven by the factors mentioned above.
Mine development rates slightly decreased quarter on quarter
averaging 2,933 metres per month in 4Q22 (3Q22: 3,030 metres per
month), with the full year rate averaging 2,929 meters per month,
in line with expectations. Works to relocate the tunnel boring
machine to a haulage level continued and are expected to be
concluded in 1H23. Notwithstanding, development rates are expected
to remain at 3,000 metres per month on average in 2023 while an
assessment is conducted to determine the optimal rate going
forward, based on production levels and updated reserves.
Quarterly by-product gold production decreased 3.9% vs. 4Q21 due
to a lower ore grade.
The silver ore grade in 2023 is estimated be in the range of
185-205 g/t, while the gold ore grade is estimated to remain in the
range of 0.50-0.70 g/t.
SAUCITO MINE PRODUCTION
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed (t) 508,455 556,199 (8.6) 558,101 (8.9) 2,072,812 2,434,449 (14.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,026 3,171 (4.6) 2,990 1.2 11,977 12,439 (3.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 18,076 22,249 (18.8) 17,719 2.0 73,497 88,440 (16.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 3,859 4,513 (14.5) 4,272 (9.7) 17,816 24,615 (27.6)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 5,868 6,882 (14.7) 6,672 (12.1) 28,415 37,469 (24.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 208 199 4.5 186 11.8 201 183 9.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.39 1.58 (12.0) 1.26 10.3 1.40 1.46 (4.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.90 0.96 (6.3) 0.90 0.0 1.01 1.18 (14.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.56 1.64 (4.9) 1.60 (2.5) 1.78 2.08 (14.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production decreased 4.6% vs. 3Q22 due to a
decrease in ore throughput driven by one off factors including
lower equipment availability, lower productivity as new employees
completed training modules, and a longer than planned shutdown
required by CFE related to the tie at Juanicipio. This was
partially mitigated by the higher ore grade areas mined in
4Q22.
Quarterly silver and gold production slightly increased 1.2% and
2.0% vs. 4Q21 respectively, due to higher ore grades from
improvements to the short term mine planning process and the
regained access to certain areas of the mine with higher ore
grades, offset by a lower volume of ore processed for the factors
mentioned above.
Full year silver production decreased 3.7% vs. FY21 driven by a
lower volume of ore processed mainly due to changes to the short
planning process and, to lesser extent, a lower productivity from
internalised personnel, offset by the higher ore grade due to the
factors explained above.
Quarterly and full year by-product gold production was down
18.8% and 16.9% vs. 3Q22 and FY21 respectively, driven by a lower
ore grade and a decrease in ore throughput.
Full year 2023 silver ore grade is estimated to remain between
190-210 g/t, while the gold ore grade is estimated to be around
1.20-1.40 g/t.
PYRITES PLANT (PHASE I)
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Iron Concentrates
Processed (t) 32,211 37,142 (13.3) 31,976 0.7 135,044 159,635 (15.4)
------- ------- --------- ------- --------- -------- -------- ---------
Production
------- ------- --------- ------- --------- -------- -------- ---------
Silver (koz) 111 142 (21.8) 121 (8.3) 529 567 (6.7)
------- ------- --------- ------- --------- -------- -------- ---------
Gold (oz) 374 653 (42.7) 455 (17.8) 1,959 2,294 (14.6)
------- ------- --------- ------- --------- -------- -------- ---------
Ore Grades
------- ------- --------- ------- --------- -------- -------- ---------
Silver (g/t) 145 159 (8.8) 158 (8.2) 164 151 8.6
------- ------- --------- ------- --------- -------- -------- ---------
Gold (g/t) 1.19 1.71 (30.4) 1.39 (14.4) 1.44 1.50 (4.0)
------- ------- --------- ------- --------- -------- -------- ---------
Quarterly silver and gold production decreased 21.8% and 42.7%
vs. 3Q22 due to a decreased volume of pyrite concentrates processed
from the Saucito mine and a lower ore grade.
Quarterly silver and gold production was down 8.3% and 17.8% vs.
4Q21 respectively, due to a lower ore grade.
Full year silver production decreased 6.7% vs. FY21 due to lower
volumes of pyrite concentrates processed from Saucito's flotation
plant, mitigated by a higher ore grade.
Full year gold production decreased 14.6% vs. FY21 due to a
decreased volume of pyrite concentrates processed from the Saucito
mine and a lower ore grade.
Following the successful tie-in of the Juanicipio mine in the
fourth quarter, we now expect the pyrites plant to complete tie-in
by the end of 1Q23, with commissioning and ramp up starting
immediately afterwards.
CIENEGA MINE PRODUCTION
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed (t) 256,928 294,210 (12.7) 301,968 (14.9) 1,114,232 1,282,367 (13.1)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 9,122 9,437 (3.3) 10,596 (13.9) 37,466 48,819 (23.3)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 982 1,242 (20.9) 1,401 (29.9) 4,709 5,447 (13.5)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 930 904 2.9 772 20.5 3,518 3,947 (10.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 1,372 1,419 (3.3) 1,240 10.6 5,387 6,373 (15.5)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.20 1.09 10.1 1.18 1.7 1.14 1.27 (10.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 139 152 (8.6) 165.6 (15.9) 152 153 (0.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.56 0.48 16.7 0.43 30.2 0.49 0.51 (3.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 0.94 0.87 8.0 0.75 25.3 0.86 0.90 (4.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly gold production was down 3.3% and 13.9% vs. 3Q22 and
4Q21 respectively, due to a lower volume of ore processed as a
result of the non-scheduled minor technical stoppages at the SAG
mill, and lower productivity from new personnel at the mine,
mitigated by a higher ore grade.
Quarterly silver production decreased 20.9% and 29.9% vs. 3Q22
and 4Q21 respectively, due to a lower ore throughput for the
reasons explained above, and a lower ore grade in line with the
mine sequence .
Full year silver and gold production were down13.5% and 23.3%
vs. FY21 respectively, due to the lower volumes of ore processed
and a lower gold ore grade as a higher proportion of ore from the
main Ciénega mine was processed, as opposed to processing ore from
a satellite operation in the surrounding area with a higher average
ore grade.
The gold and silver ore grades for 2023 are estimated to be in
the ranges of 1.0-1.1 g/t and 150-160 g/t respectively.
SAN JULIÁN MINE PRODUCTION
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed Veins
(t) 294,582 297,216 (0.9) 308,691 (4.6) 1,175,164 1,202,826 (2.3)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Processed DOB
(t) 517,733 498,882 3.8 533,631 (3.0) 2,092,971 2,070,563 1.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Total production
at San Julián
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 11,907 11,387 4.6 12,887 (7.6) 46,727 55,847 (16.3)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,113 3,171 (1.8) 3,967 (21.5) 14,252 16,772 (15.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 11,062 10,625 4.1 12,142 (8.9) 43,397 51,840 (16.3)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,288 1,115 15.5 1,200 7.3 4,638 4,224 9.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 845 762 10.9 745 13.4 3,330 4,006 (16.9)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,825 2,056 (11.2) 2,768 (34.1) 9,614 12,548 (23.4)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 1,712 1,461 17.2 1,914 (10.6) 7,105 8,543 (16.8)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 3,604 3,790 (4.9) 4,419 (18.4) 17,487 19,991 (12.5)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.23 1.17 5.1 1.29 (4.7) 1.21 1.42 (14.8)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 149 128 16.4 131 13.7 135 119 13.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.08 0.08 0.0 0.08 0.0 0.08 0.10 (20.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 130 153 (15.0) 187 (30.5) 168 221 (24.0)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.43 0.39 10.3 0.45 (4.4) 0.43 0.51 (15.7)
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 0.93 1.01 (7.9) 1.10 (15.5) 1.09 1.27 (14.2)
-------- -------- --------- -------- --------- ---------- ---------- ---------
SAN JULIÁN VEINS
Quarterly silver and gold production increased 15.5% and 4.1%
vs. 3Q22 as we gained access to higher ore grade stopes, in line
with the mine plan.
Quarterly silver production was up 7.3% vs. 4Q21 due to a higher
ore grade driven by the operational decision to adjust the mine
plan to prioritise extraction from wider veins of the mine with
higher silver content but lower gold ore grade, partly offset by a
lower ore throughput driven by faster than expected mill
maintenance in 4Q21.
Quarterly gold production decreased 8.9% vs. 4Q21 due to a lower
ore grade in narrow veins at Refugio and San Atanasio areas and the
depletion of high ore grade areas at the Shalom and Santa Maria
stopes, and a decrease in volumes of ore processed.
F ull year gold production decreased 16.3% vs. FY21 mainly due
to a lower ore grade for the factors mentioned above and, to a
lesser extent, lower volume of ore processed.
Full year silver production increased 9.8% vs. FY21 due to the
higher ore grade for the reason explained above, partly offset by
lower ore throughput.
We estimate the 2023 silver and gold ore grades to average
130-140 g/t and 1.20-1.30 g/t, respectively.
SAN JULIÁN DISSEMINATED ORE BODY (DOB)
Quarterly silver production decreased 11.2% vs. 3Q22 due mainly
to a lower ore grade consistent with the mine sequence and
additional ground supporting activities required, which limited
access to certain higher grade areas. This was partly compensated
for by a higher volume of ore processed due to the optimisation of
the maintenance programme.
Quarterly silver production was down 34.1% vs. 4Q21 driven by
the expected decrease in ore grade as we move towards the periphery
of the ore body, and a lower ore throughput due to the lower
availability of haulage trucks and the need to prioritise ground
support activities in the mine.
Full year silver production decreased 23.4% vs. FY21 due to the
expected lower ore grades in 2022 following the higher than
anticipated ore grade in 2021 as a result of: i) the positive
variation with the geological model in the central area of the ore
body; and ii) access to higher ore grade areas following the mine
resequencing in 2019.
We estimate the 2023 silver ore grade to be in the range of
130-140 g/t as we mine lower grade areas in the periphery of the
ore body.
HERRADURA TOTAL MINE PRODUCTION
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed
(t) 7,084,437 5,592,474 26.7 4,271,069 65.9 22,195,187 20,311,876 9.3
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Total Volume
Hauled (t) 27,446,767 28,590,141 (4.0) 33,115,154 (17.1) 120,370,290 132,838,820 (9.4)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Production
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (oz) 103,826 85,245 21.8 69,177 50.1 349,715 421,535 (17.0)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (koz) 191 199 (4.0) 168 13.7 776 926 (16.2)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Ore Grades
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (g/t) 0.71 0.71 0.0 0.65 9.2 0.69 0.76 (9.2)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (g/t) 1.35 1.71 (21.1) 1.91 (29.3) 1.65 2.05 (19.5)
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Quarterly gold production increased 21.8% vs. 3Q22 due to the
increased volumes of ore processed as a result of the positive
variations with the geological model and faster recovery from ore
deposited on the lower layers of the leaching pad 14B.
Quarterly gold production was up 50.1% vs. 4Q21 due to the
increased volume of ore processed for reasons explained above, and
a higher ore grade driven by the positive variation with the
geological model.
Full year gold production decreased 17.0% vs. FY21 as a result
of the expected decrease in ore grade and lower recovery rates as
higher volumes of sulphide ore are processed, partly mitigated by
the increase in volume of ore processed for the factors explained
above.
The gold ore grade in 2023 is estimated to be in the range of
0.65-0.75 g/t.
NOCHE BUENA TOTAL MINE PRODUCTION
4Q22 3Q22 % Change 4Q21 % Change FY 22 FY 21 % Change
Ore Processed
(t) 1,232,125 1,811,987 (32.0) 2,903,023 (57.6) 7,428,189 8,996,842 (17.4)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 7,296,832 6,274,060 16.3 6,482,783 12.6 26,854,547 25,953,967 3.5
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Production
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Gold (oz) 13,331 19,235 (30.7) 28,591 (53.4) 79,669 96,835 (17.7)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Silver (koz) 3 3 0.0 11 (72.7) 20 32 (37.5)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Ore Grades
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Gold (g/t) 0.51 0.44 15.9 0.70 (27.1) 0.53 0.59 (10.2)
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Silver (g/t) 0.21 0.16 31.3 0.20 5.0 0.22 0.19 15.8
---------- ---------- --------- ---------- --------- ----------- ----------- ---------
Quarterly gold production decreased 30.7% vs. 3Q22 due to
expected decrease in volume of ore deposited as the mine approaches
the end of its life and a lower recovery rate, partly mitigated by
the higher ore grade.
Quarterly gold production decreased 53.4% vs. 4Q21 due to the
decrease in ore processed and lower ore grade as the mine
approaches the end of its life, partly compensated for by a higher
recovery rate due to shorter irrigation cycles .
Full year gold production decreased 17.7% vs. FY21 due to a
decreased volume of ore processed and lower ore grade consistent
with end of mine life.
The 2023 estimated gold ore grade will remain in the range of
0.40-0.50g/t, as the mine approaches the end of its operational
life.
JUANICIPIO
Mineralised material from Juanicipio continued to be processed
through the Fresnillo and Saucito flotation plant during the
quarter. On an attributable basis, Juanicipio produced 1,042 koz of
silver and 3,020 oz of gold in 4Q22, and 5.2 moz of silver and
12,461 oz of gold in 2022.
As reported in December, the final testing of the downstream
power distribution and control systems was completed and the entire
electric system energised. Commissioning of the Juanicipio plant is
ongoing. We expect a gradual ramp up with the objective of reaching
full nameplate capacity in the third quarter of 2023. As reported,
ore will be processed at the Juanicipio plant and can also continue
to be processed at our nearby Saucito and Fresnillo operations if
required.
SILVERSTREAM
Quarterly Silverstream production decreased against all
comparative periods due to a decrease in volume of ore processed
driven by a technical stoppage of the flotation plant in December.
The maintenance programme was concluded and operations have resumed
according to plan.
Silver production in 2023 is estimated to be in the range of
2.5-3.5 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 seven operating mines, all of them in Mexico -
Fresnillo, Saucito, Ciénega (including Las Casas Rosario &
Cluster Cebollitas), Herradura, Soledad-Dipolos(1) , Noche Buena
and San Julián (Veins and Disseminated Ore Body), two development
projects - Juanicipio and the Pyrites Plant at Fresnillo, which has
been completed and is awaiting tie-in of the plant to the national
electricity grid, and three advanced exploration projects -
Orisyvo, Rodeo and Guanajuato, 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 has a strong and long tradition of exploring,
mining, a proven track record of mine development, reserve
replacement, and production costs in the lowest quartile of the
cost curve for silver.
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.
LEI: 549300JXWH1UV5J0XV81
[1] Au:Ag ratio of 80:1
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END
MSCBELBLXFLBBBV
(END) Dow Jones Newswires
January 25, 2023 02:00 ET (07:00 GMT)
Fresnillo (LSE:FRES)
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