TIDMFRES
RNS Number : 1779H
Fresnillo PLC
26 July 2023
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
26 July 2023
SECOND QUARTER PRODUCTION REPORT
FOR THE THREE MONTHSED 30 JUNE 2023
Octavio Alvídrez, Chief Executive Officer, said:
"I am pleased to report a solid production performance in the
first half and confirm that our full year guidance is unchanged.
Higher silver production was in part due to the on-going ramp up of
our new Juanicipio mine, which is progressing as planned and we
expect to reach full nameplate capacity in the next quarter. The
continued strong grades and volumes at our Herradura mine, together
with an increased contribution from Saucito, generated an increase
in gold production from the previous half. We were also pleased to
complete the tie-in of the new Pyrites Plant to the national power
grid with the plant moving quickly into operations. Looking ahead,
our focus remains on the safe operation of our mines, with a
particular attention on costs, which continue to be impacted by
inflation and the revaluation of the Mexican peso against the
dollar, while meeting our longer term development objectives."
HIGHLIGHTS
Silver
-- Quarterly attributable silver production of 14.9 moz
(including Silverstream), up 12.9% vs. 1Q23, mainly driven by the
ramp-up of Juanicipio and, to a lesser extent, a higher ore grade
at San Julián Disseminated Ore Body (DOB) and the increase in
volume of ore processed at Saucito, partially offset by the lower
ore grade at Fresnillo.
-- Quarterly and first half attributable silver production
(including Silverstream) increased 3.5% and 1.4% vs. 2Q22 and 1H22
respectively, primarily due to the ramp-up of Juanicipio, partially
offset by the lower ore grade at San Julián (DOB).
Gold
-- Quarterly attributable gold production of 152.4 koz down
11.9% vs. 1Q23 mainly due to the lower volume of ore processed at
Herradura as a result of the temporary suspension of operations
following an illegal stoppage by a very small group of unionised
employees, as reported in May.
-- Quarterly attributable gold production down 4.1% vs. 2Q22
primarily due to the decrease in gold production at Noche Buena,
partly offset by the ramp-up of Juanicipio and increased ore
processed at Saucito.
-- First half attributable gold production increased 5.4% vs.
1H22 mainly due to the increased volume of ore processed and higher
ore grade at Herradura and Saucito, partially compensated for by
the decrease in gold production at Noche Buena.
By-Products
-- Quarterly attributable by-product lead production up 4.7% vs.
1Q23 due to the ramp-up at Juanicipio, partly offset by the lower
ore grade at Saucito and Fresnillo.
-- Quarterly attributable by-product zinc production up 6.4% vs.
1Q23 due to the ramp-up at Juanicipio and the higher volume of ore
processed at Saucito, partly offset by the lower ore grade at
Fresnillo.
-- Quarterly attributable by-product lead production decreased
3.7% vs. 2Q22 due to the lower ore grades at Saucito, and Fresnillo
and lower ore grade and recovery rate at San Julián (DOB), partly
offset by the ramp-up at Juanicipio.
-- Quarterly attributable by-product zinc production decreased
4.2% vs. 2Q22, driven by the lower ore grades at Saucito and San
Juli án (DOB), partly offset by the ramp-up at Juanicipio .
-- First half by-product lead production increased 2.2% vs. 1H22
due to the increased contribution from Juanicipio and higher ore
processed at Fresnillo, partly offset by the lower ore grade at
Saucito.
-- First half by-product zinc production decreased 1.5% vs. 1H22
due to the lower ore grades at Saucito and San Julián (DOB),
mitigated by the increased production at Juanicipio and the higher
ore processed at Fresnillo.
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Silver (koz) 14,135 12,337 14.6 13,664 3.4 26,472 26,192 1.1
-------- -------- --------- -------- --------- -------- -------- ---------
Silverstream
(koz) 725 821 (11.7) 692 4.8 1,546 1,440 7.4
-------- -------- --------- -------- --------- -------- -------- ---------
Total Silver
(koz) 14,860 13,158 12.9 14,356 3.5 28,018 27,632 1.4
-------- -------- --------- -------- --------- -------- -------- ---------
Gold (oz) 152,380 173,034 (11.9) 158,960 (4.1) 325,415 308,752 5.4
-------- -------- --------- -------- --------- -------- -------- ---------
Lead (t) 13,994 13,368 4.7 14,535 (3.7) 27,363 26,779 2.2
-------- -------- --------- -------- --------- -------- -------- ---------
Zinc (t) 25,670 24,118 6.4 26,808 (4.2) 49,788 50,533 (1.5)
-------- -------- --------- -------- --------- -------- -------- ---------
Silver Equivalent Basis ([1])
Attributable quarterly silver equivalent ounces of 27.1 moz in
2Q23 (1Q23: 27.0 moz, 2Q22: 27.1 moz) and attributable first half
silver equivalent ounces of 54.1 moz (1H22: 52.3 moz).
SAFETY PERFORMANCE
We are extremely saddened to report a fatal accident at the
Saucito mine in the last week of June. Fresnillo, together with the
authorities, carried out a thorough investigation of the incident
to ensure all lessons can be learned. We continue to reinforce our
safety measures with both contractors and employees with the
objective of strengthening our safety culture throughout the
Company.
2023 OUTLOOK
2023 guidance remains unchanged. Attributable silver production
is expected to be in the range of 57.0 to 64.0 moz (including
Silverstream) while attributable gold production is expected to be
in the range of 590 to 640 koz. Expressed in silver equivalent
ounces (1) , production is expected to be 104 -115 million
ounces.
Cost inflation and the revaluation of the Mexican Peso versus
the US Dollar are expected to continue to impact costs in the
second half of the year following an increase in 1H 23 (See Items
Impacting the Income Statement on page 9).
INTERIM RESULTS
Fresnillo will announce its 2023 Interim Results on 1(st) of
August 2023.
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
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
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed
(t) 667,776 668,366 (0.1) 618,860 7.9 1,336,142 1,194,359 11.9
-------- --------- --------- -------- --------- ---------- ---------- ---------
Production
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,233 3,557 (9.1) 3,595 (10.1) 6,789 6,609 2.7
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 10,997 8,750 25.7 9,668 13.7 19,747 18,148 8.8
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 5,321 5,651 (5.8) 5,644 (5.7) 10,972 10,432 5.2
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 10,696 12,094 (11.6) 10,758 (0.6) 22,790 20,139 13.2
-------- --------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 170 184 (7.6) 197 (13.7) 177 189 (6.3)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.72 0.57 26.3 0.69 4.3 0.64 0.67 (4.5)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.93 1.00 (7.0) 1.10 (15.5) 0.96 1.04 (7.7)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.12 2.42 (12.4) 2.46 (13.8) 2.27 2.35 (3.4)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production decreased 9.1% vs. 1Q23 mainly due
to a lower ore grade as a result of increased dilution and delays
in the preparation of some stopes as long drilling equipment
required additional calibration. Both of these factors have been
addressed through training and increased equipment availability and
no further delays are expected in the second half.
Quarterly silver production decreased 10.1% vs. 2Q22 mainly as a
result of the lower ore grade and lower recovery rate. These
factors were mitigated by the higher volume of ore processed from
the San Alberto, Candelaria, San Ricardo and San Mateo areas.
First half silver production increased 2.7% vs. 1H22 mainly as a
result of the increase in volume of ore processed, partly offset by
the lower ore grade and recovery rate.
Mine development rates increased quarter on quarter to an
average of 3,288m per month in 2Q23 (1Q23: 3,105m per month),
primarily due to the higher productivity of the unionised
personnel.
Quarterly by-product gold production increased 25.7% vs. 1Q23
mainly driven by the higher ore grade.
Quarterly by-product gold production increased 13.7% vs. 2Q22
mainly due to the increased volume of ore processed and higher ore
grade.
First half by-product gold production increased 8.8% vs. 1H22
primarily as a result of the higher volume of ore processed, partly
offset by the lower ore grade.
The silver ore grade in 2023 is expected to remain in the range
of 185-205 g/t, while the gold ore grade is expected to remain in
the range of 0.50-0.70 g/t.
The tie in of the Pyrites Plant to the national grid at
Fresnillo was completed in 2Q23 and commissioning began immediately
with ramp up of production expected in 2H23.
SAUCITO MINE PRODUCTION
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed (t) 562,962 471,959 19.3 512,739 9.8 1,034,921 1,008,158 2.7
-------- --------- --------- -------- --------- ---------- ---------- ---------
Production
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,006 2,804 7.2 3,043 (1.2) 5,811 5,781 0.5
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 18,702 21,378 (12.5) 16,785 11.4 40,080 33,172 20.8
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 3,950 4,301 (8,2) 5,180 (23.7) 8,251 9,444 (12.6)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 7,001 5,991 16.9 8,367 (16.3) 12,993 15,665 (17.1)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 188 207 (9.2) 205 (8.3) 197 199 (1.0)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.31 1.77 (26.0) 1.31 0.0 1.52 1.30 16.9
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.84 1.07 (21.5) 1.19 (29.4) 0.95 1.09 (12.8)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.62 1.68 (3.6) 2.12 (23.6) 1.65 1.97 (16.2)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production increased 7.2% vs. 1Q23 mainly
driven by the increase in volume of ore processed from the Central
area, following the lower availability of scalers and haulage
equipment at the West and Central areas in 1Q23 and part of 2Q23.
This was partly offset by the lower ore grade as a result of the
aforementioned lower availability of equipment, which delayed mine
preparation and limited operational flexibility. We continued
working on increasing the availability of equipment and improving
the productivity of our personnel and expect to further increase
volumes of ore processed in 2H23.
Quarterly and first half silver production remained at similar
levels vs. 2Q22 and 1H22, as higher volumes of ore processed were
offset by the aforementioned lower ore grade.
Quarterly by-product gold production decreased 12.5% vs. 1Q23
mainly driven by a lower ore grade, partially mitigated by the
higher volume of ore processed.
Quarterly by-product gold production increased 11.4% vs. 2Q22
primarily driven by the higher volume of ore processed.
First half by-product gold production increased 20.8% vs. 1H22
as a result of the higher ore grade and increase in volume of ore
processed.
Mine development rates increased quarter on quarter to an
average of 3,069m per month in 2Q23 (1Q23: 2,975m per month; 1H22:
2,436m per month), primarily due to the higher productivity of the
unionised personnel.
Full year 2023 silver ore grade is estimated to remain between
190-210 g/t, while the gold ore grade is estimated to continue to
be around 1.20-1.40 g/t.
PYRITES PLANT (PHASE I)
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Pyrite Concentrates
Processed (t) 27,892 27,952 (0.2) 33,326 (16.3) 55,844 65,690 (15.0)
------- -------- --------- ------- --------- ------- ------- ---------
Production
------- -------- --------- ------- --------- ------- ------- ---------
Silver (koz) 127 111 14.4 126 0.8 238 277 (14.1)
------- -------- --------- ------- --------- ------- ------- ---------
Gold (oz) 331 270 22.6 422 (21.6) 601 932 (35.5)
------- -------- --------- ------- --------- ------- ------- ---------
Ore Grades
------- -------- --------- ------- --------- ------- ------- ---------
Silver (g/t) 207 177 16.9 160 29.4 192 176 9.1
------- -------- --------- ------- --------- ------- ------- ---------
Gold (g/t) 1.58 1.31 20.6 1.21 30.6 1.44 1.40 2.9
------- -------- --------- ------- --------- ------- ------- ---------
CIÉNEGA MINE PRODUCTION
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed (t) 261,253 240,148 8.8 280,526 (6.9) 501,401 563,094 (11.0)
-------- --------- --------- -------- --------- -------- -------- ---------
Production
-------- --------- --------- -------- --------- -------- -------- ---------
Gold (oz) 8,132 9,302 (12.6) 8,917 (8.8) 17,434 18,907 (7.8)
-------- --------- --------- -------- --------- -------- -------- ---------
Silver (koz) 1,010 980 3.1 1,069 (5.5) 1,991 2,485 (19.9)
-------- --------- --------- -------- --------- -------- -------- ---------
Lead (t) 756 748 1.1 758 (0.3) 1,504 1,684 (10.7)
-------- --------- --------- -------- --------- -------- -------- ---------
Zinc (t) 919 1,002 (8.3) 1,245 (26.2) 1,921 2,596 (26.0)
-------- --------- --------- -------- --------- -------- -------- ---------
Ore Grades
-------- --------- --------- -------- --------- -------- -------- ---------
Gold (g/t) 1.06 1.30 (18.5) 1.08 (1.9) 1.18 1.14 3.5
-------- --------- --------- -------- --------- -------- -------- ---------
Silver (g/t) 141 147 (4.1) 138 2.2 144 159 (9.4)
-------- --------- --------- -------- --------- -------- -------- ---------
Lead (%) 0.47 0.47 0.0 0.43 9.3 0.47 0.47 0.0
-------- --------- --------- -------- --------- -------- -------- ---------
Zinc (%) 0.67 0.77 (13.0) 0.79 (15.2) 0.72 0.82 (12.2)
-------- --------- --------- -------- --------- -------- -------- ---------
Quarterly gold production decreased 12.6% vs. 1Q23 mainly due to
a lower ore grade as a result of increased dilution in narrower
veins. This was partly mitigated by the higher volume of ore
processed due to the timely preparation of stopes and increase in
development rate resulting from the increased availability of
equipment.
Quarterly gold production decreased 8.8% vs. 2Q22 mainly due to
the lower volume of ore processed in accordance with the mine plan,
and lower ore grade.
First half gold production decreased 7.8% vs. 1H22 mainly due to
the lower volume of ore processed in accordance with the mine plan,
partly mitigated by the higher ore grade.
Quarterly silver production increased 3.1 vs. 1Q23 as a result
of the higher volume of ore processed which more than compensated
for the lower ore grade.
Quarterly silver production decreased 5.5% vs. 2Q23 mainly as a
result of the lower volume of ore processed in accordance with the
mine plan, partly mitigated by the higher ore grade.
First half silver production decreased 19.9% vs. 1H22 due to the
decrease in volume of ore processed and lower ore grade as a result
of the increased dilution and the delay in the preparation of a
stope with higher silver ore grades.
The gold and silver ore grades for 2023 are estimated to remain
in the ranges of 1.0-1.1 g/t and 150-160 g/t respectively.
SAN JULIÁN MINE PRODUCTION
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed Veins
(t) 274,505 283,752 (3.3) 289,821 (5.3) 558,257 583,966 (4.4)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Ore Processed DOB
(t) 527,898 522,260 1.1 535,326 (1.4) 1,050,158 1,076,326 (2.4)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Total production
at San Julián
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 10,259 12,033 (14.7) 11,748 (12.7) 22,292 23,433 (4.9)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,596 3,412 5.4 4,328 (16.9) 7,008 7,968 (12.0)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Production Veins
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 9,325 11,139 (16.3) 10,865 (14.2) 20,464 21,710 (5.7)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,168 1,312 (11.0) 1,175 (0.6) 2,480 2,235 11.0
-------- --------- --------- -------- --------- ---------- ---------- ---------
Production DOB
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 934 894 4.5 883 5.8 1,828 1,723 6.1
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,428 2,100 15.6 3,152 (23.0) 4,528 5,733 (21.0)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 2,062 1,855 11.2 2,325 (11.3) 3,917 3,933 (0.4)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 4,020 3,755 7.1 5,368 (25.1) 7,775 10,093 (23.0)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Ore Grades Veins
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.11 1.28 (13.3) 1.22 (9.0) 1.20 1.22 (1.6)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 146 158 (7.6) 138 5.8 152 131 16.0
-------- --------- --------- -------- --------- ---------- ---------- ---------
Ore Grades DOB
-------- --------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.09 0.09 0.0 0.09 0.0 0.09 0.08 12.5
-------- --------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 165 146 13.0 213 (22.5) 156 193 (19.2)
-------- --------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.50 0.46 8.7 0.51 (2.0) 0.48 0.45 6.7
-------- --------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.03 0.96 7.3 1.29 (20.2) 0.99 1.20 (17.5)
-------- --------- --------- -------- --------- ---------- ---------- ---------
SAN JULIÁN VEINS
Quarterly silver and gold production decreased 11.0% and 16.3%
vs. 1Q23, respectively due to the lower ore grade and to a lesser
extent, the decreased volume of ore processed as a result of lower
availability of bolting and shotcreting equipment, which delayed
access to the San Atanasio vein with higher ore grades.
Quarterly gold production decreased 14.2 vs. 2Q22 mainly due to
the lower ore grade and decreased volume of ore processed for the
reasons mentioned above.
Quarterly silver production remained flat vs. 2Q22 as the higher
ore grade offset the lower volume of ore processed.
First half silver production increased 11.0% vs. 1H22 mainly due
to the higher ore grade at San Antonio, Ultima Tierra and Elisa
stopes, partly offset by the lower volume of ore processed.
First half gold production decreased 5.7% vs. 1H22 mainly due to
the decrease in volume of ore processed and lower ore grade.
Additional bolting equipment is expected to arrive in 3Q23,
which will contribute to the normalisation of mining cycles.
We continue to expect 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 increased 15.6% vs. 1Q23 mainly as a
result of accessing the higher ore grade areas as planned.
Quarterly and first half silver production decreased 23.0% and
21.0% vs. 2Q22 and 1H22 respectively, mainly due to the expected
lower ore grade in the areas in the periphery of the ore body and
structural geological features which slowed down the long hole
drilling cycles.
We continue to expect the 2023 silver ore grade to be in the
range of 130-140 g/t.
HERRADURA TOTAL MINE PRODUCTION
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed
(t) 5,219,844 6,485,710 (19.5) 5,301,678 (1.5) 11,705,553 9,518,276 23.0
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 21,445,659 29,223,867 (26.6) 31,548,611 (32.0) 50,669,525 64,333,382 (21.2)
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Production
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (oz) 83,037 106,832 (22.3) 83,043 0.0 189,869 160,644 18.2
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (koz) 136 208 (34.6) 169 (19.5) 344 387 (11.1)
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Ore Grades
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Gold (g/t) 0.76 0.73 4.1 0.67 13.4 0.74 0.68 8.8
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Silver (g/t) 1.33 1.72 (22.7) 1.49 (10.7) 1.55 1.83 (15.3)
----------- ----------- --------- ----------- --------- ----------- ----------- ---------
Quarterly gold production decreased 19.5% vs. 1Q23 mainly driven
by the lower volume of ore processed as a result of the temporary
suspension of operations following an illegal stoppage by a very
small group of unionised employees, as reported in May. This was
partly mitigated by the higher ore grade.
Quarterly gold production remained flat vs. 2Q22 as the higher
ore grade in the sulphides was offset by the lower recovery rates
in the pads as the cycle was impacted by the temporary suspension
of activities.
First half gold production increased 18.2% vs. 1H22 mainly
driven by the increased volume of ore processed and higher ore
grade in the sulphides and positive variations with the geological
model. The aforementioned factors were partly offset by the lower
recovery rate driven by the temporary suspension and the slower
pace of irrigation.
As part of its regular processes, the Group compares the ore
grades placed on the pads to the quantities of metal recovered
through the leaching process to evaluate the appropriateness of the
estimated recovery. Recovery estimates are then refined based on
actual results over time and when new information becomes
available. As a result of this, the mine updated its estimate of
the recoverable remaining gold content in leaching pads, resulting
in an increase of 30.7 thousand ounces of gold as at 1 January
2023.
The adjusted production costs were impacted by the increase in
waste material hauled charged to costs, rather than capitalised,
despite the 28.9% decrease in the total volume of waste material
hauled (capitalised and charged to costs). This is because in 1H22
the stripping ratio for the main component of the Herradura mine of
c. 7.3 was significantly higher than the prevailing stripping ratio
for the life of the mine (LOM) of this component (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 benches; whereas in 1H23 the
3.4 stripping ratio was below the prevailing stripping ratio for
LOM of this component, thus registering all the stripping as cost
in the income statement.
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
2Q23 1Q23 % Change 2Q22 % Change 1H23 1H22 % Change
Ore Processed
(t) 799,290 1,711,348 (53.3) 2,594,599 (69,2) 2,510,639 4,384,077 (42.7)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Total Volume
Hauled (t) 1,829,412 6,595,264 (72.3) 8,105,466 (77.4) 8,424,676 13,283,655 (36.6)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Production
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Gold (oz) 14,801 11,078 33.6 25,234 (41.3) 25,878 47,103 (45.1)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Silver (koz) 4 4 0.0 6 (33.3) 8 14 (42.9)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Ore Grades
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Gold (g/t) 0.45 0.48 (6.3) 0.53 (15.1) 0.47 0.57 (17.5)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Silver (g/t) 0.20 0.15 33.3 0.22 (9.1) 0.17 0.26 (34.6)
---------- ----------- --------- ---------- --------- ---------- ----------- ---------
Quarterly gold production increased 33.6% vs. 1Q23 mainly due to
a higher recovery rate at the leaching pads, partly offset by the
decreased volume of ore processed and lower ore grade following the
mine closure process which started in May.
Quarterly and first half gold production decreased 41.3% and
45.1% vs. 2Q22 and 1H22, respectively as a result of the decrease
in the volume of ore processed and lower ore grade due to the
previously mentioned factors, partially mitigated by the higher
recovery rate at the leaching pads.
The final 2023 gold ore grade was 0.47 g/t as no additional
volumes will be deposited.
JUANICIPIO - ATTRIBUTABLE
2Q23* 1Q23* % Change 2Q22** % Change 1H23* 1H22** % Change
Ore Processed
(t) 211,522 124,333 70.1 86,279 145.2 335,855 167,751 100.2
--------- --------- --------- ------- --------- -------- -------- ---------
Production
--------- --------- --------- ------- --------- -------- -------- ---------
Silver (koz) 2,954 1,260 134.4 1,328 122.4 4,214 2,672 57.7
--------- --------- --------- ------- --------- -------- -------- ---------
Gold (oz) 5,958 3,392 75.6 3,143 89.6 9,351 6,412 45.8
--------- --------- --------- ------- --------- -------- -------- ---------
Lead (t) 1,905 813 134.3 628 203.3 2,718 1,286 111.4
--------- --------- --------- ------- --------- -------- -------- ---------
Zinc (t) 3,034 1,275 138.0 1,071 183.3 4,309 2,041 111.1
--------- --------- --------- ------- --------- -------- -------- ---------
Ore Grades
--------- --------- --------- ------- --------- -------- -------- ---------
Silver (g/t) 498 363 37.2 567 (12.2) 448 582 (23.0)
--------- --------- --------- ------- --------- -------- -------- ---------
Gold (g/t) 1.25 1.08 15.7 1.49 (16.1) 1.18 1.53 (22.9)
--------- --------- --------- ------- --------- -------- -------- ---------
Lead (%) 1.05 0.74 41.9 0.91 15.4 0.94 0.92 2.2
--------- --------- --------- ------- --------- -------- -------- ---------
Zinc (%) 1.92 1.44 33.3 1.73 11.0 1.74 1.73 0.6
--------- --------- --------- ------- --------- -------- -------- ---------
* Includes ore processed as part of the initial tests during the
commissioning of the Juanicipio plant and ore processed at the
Fresnillo and Saucito beneficiation plants.
** Ore processed at the Fresnillo and Saucito beneficiation
plants.
Attributable quarterly silver and gold production increased vs.
1Q23 due to the ramp-up following the commissioning completed in
1Q23. Full nameplate capacity is expected to be reached by 3Q23. As
previously reported, ore will continue to be processed at the
nearby Saucito and Fresnillo plants if required.
SILVERSTREAM
Quarterly Silverstream production decreased 11.7% vs. 1Q23 due
to the decreased volume of ore processed and lower recovery rate,
partly mitigated by a higher ore grade.
Quarterly Silverstream production increased 4.8% vs. 2Q22 mainly
due to a higher ore grade, partially compensated for by the
decreased volume of ore processed and lower recovery rate.
First half Silverstream production increased 7.4% vs. 1H22 as a
result of the increase in volume of ore processed and higher ore
grade.
Silver production in 2023 is estimated to be in the range of
2.5-3.5 moz.
ITEMS IMPACTING THE INCOME STATEMENT
Adjusted production costs in 1H23 were impacted by:
1. The 10.2% average revaluation of the Mexican peso vs. the US
dollar from $20.28 per US dollar in 1H22 to $18.21 per US dollar in
1H23, which is expected to have an adverse effect of c. US$45
million.
2. Ongoing cost inflation of 6.2%, excluding the effect of the
revaluation of the Mexican peso vs. US dollar, which is expected to
have a negative impact of c. US$40 million.
3. An increase in waste material hauled at Herradura charged to
costs, rather than capitalised, despite the 28.9% decrease in the
total volume of waste material hauled (capitalised and charged to
costs), with an expected impact of approximately US$20 million,
(See Herradura page 7) .
In addition, cost of sales is expected to be impacted by a
decrease in inventories both at Juanicipio as a result of the start
up of the beneficiation plant, enabling additional volumes to be
processed and the stockpile to be reduced, and at Noche Buena as it
approached the end of its mine life. This, together with the
favourable effect of the reassessment of the gold inventories at
Herradura (See Herradura page 7) , resulted in an estimated
reduction in inventories of c. US$25 million in 1H23.
Further to the disclosures that the Company has previously made
regarding the stoppage of operations at Soledad-Dipolos, the
Company has identified certain suspected illegal extraction of gold
content at its leaching pads. The Company estimates a loss of
approximately 20 thousand ounces of gold content and consequently
will recognise a write off of c. US$22 million regarding the
Soledad-Dipolos gold contents in inventory, which will be presented
as other expenses in the Interim Consolidated Income Statement. The
Company is taking relevant actions so that the illegal leaching
activities be ceased as soon as possible. The Company does not
currently expect any further losses of this inventory to be
significant.
We have front loaded 2023 exploration spend, with c. US$97
million in 1H23. The FY guidance of US$175 million remains
unchanged.
The Silverstream effect is expected to have an adverse impact of
c. US$17 million mainly due to the lower forward silver price as at
30 June 2023 and a decrease in silver reserves at the Sabinas
mine.
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 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.
Note: financials disclosed in this statement are unaudited
[1] Au:Ag ratio of 80:1
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END
STRFELLLXDLBBBL
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July 26, 2023 02:00 ET (06:00 GMT)
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