TIDMFRES
RNS Number : 9956M
Fresnillo PLC
27 January 2021
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com
27 January 2021
FOURTH QUARTER PRODUCTION REPORT
FOR THE THREE MONTHSED 31 DECEMBER 2020
Octavio Alvídrez, Chief Executive Officer, said:
"The health and well-being of our people and our local
communities has remained our priority in the last quarter. Once
again I would like to thank them for their resilience and ability
to adapt to the working practice changes we have made in light of
the on-going impact of the pandemic. We will continue to support
our local communities and the regional health authorities through
education, the supply of PPE and other health initiatives.
It gives me real pride that despite the challenges, we have
delivered a robust operational performance in the final quarter
with both gold and silver production in line with expectations. We
have also successfully progressed our development pipeline during
the year. The Pyrites Plant and optimisation of the beneficiation
plant, both at Fresnillo, were successfully completed in the last
quarter, both on time and on budget - a remarkable achievement
under the circumstances. The optimisation plant, which will improve
our ability to process the higher lead and zinc content at the
Fresnillo mine, is expected to start operations in February, while
electrical permitting delays will push back start of the Pyrites
Plant into the third quarter. Nevertheless, our high-quality team
and resource base continue to give us grounds for confidence as we
enter 2021"
COVID-19 UPDATE
While 4Q20 production was in line with our expectations, we
continue to closely monitor the spread of the virus and implement a
range of safety measures across our business, following guidelines
in accordance with the World Health Organisation and Mexican
authorities. These measures are ongoing and we remain vigilant to
any localised increase in Covid-19 cases. More details will be
provided in our annual report.
TOTAL PRODUCTION
HIGHLIGHTS
Silver
-- Quarterly attributable silver production of 13.0 moz
(including Silverstream), down 2.5% and 6.0% vs. 3Q20 and 4Q19
respectively, driven by a lower ore grade and volume of ore
processed at Saucito, mitigated by a higher ore grade at San Julián
Disseminated Ore Body (DOB).
-- Full year attributable silver production of 53.1 moz
(including Silverstream), down 2.9% vs. FY19 due to the expected
lower ore grade at Saucito, mitigated by a higher ore grade at San
Juli á n DOB and development ore from Juanicipio being processed
for the first time.
Gold
-- Quarterly attributable gold production of 215.6 koz, up 24.8%
vs. 3Q20, due to the higher volumes of ore processed, ore grade and
recovery rate at Herradura. This followed a weaker 3Q20 due to
Covid-19 operational restrictions earlier in the year which
resulted in lower volumes of ore deposited at our open pits during
2Q20 and subsequently affected the recovery cycle at the leaching
pads in 3Q20.
-- Quarterly attributable gold production decreased 7.8% vs.
4Q19, due in part to a lower recovery rate at Herradura compared to
the same quarter in 2019, which benefitted from the start-up of
operations at the 13(th) leaching pad in 3Q19 which improved the
overall speed of recovery in 4Q19. Furthermore, though to a lesser
extent, a lower volume of ore was processed at Noche Buena, a
result of the fewer available areas as the mine approaches its
planned closure and a minor, non-hazardous local land slip in one
of the pit walls which impacted the mining sequence together with a
lower ore grade at Ciénega, also impacted production in the
quarter.
-- Full year attributable gold production of 769.6 koz decreased
12.1% vs. FY19 driven primarily by a lower volume of ore processed
at Herradura as a result of Covid-19 related working restrictions
and the aforementioned issues at Noche Buena.
By-Products
-- Quarterly attributable by-product lead and zinc production
increased 18.9% and 18.1% respectively vs. 3Q20, driven primarily
by higher ore grades at Saucito and Fresnillo.
-- Quarterly attributable by-product lead and zinc production
increased 20.1% and 25.2% vs. 4Q19 respectively and 13.5% and 15.4%
vs. FY19 respectively, due to higher ore grades at Saucito.
Attributable 4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Silver (koz) 12,207 12,572 -2.9 13,131 -7.0 50,270 51,764 -2.9
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
Silverstream
(koz) 743 709 4.9 643 15.6 2,780 2,850 -2.5
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
Total Silver
(koz) 12,950 13,281 -2.5 13,775 -6.0 53,050 54,614 -2.9
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
Gold (oz) 215,581 172,718 24.8 233,744 -7.8 769,618 875,913 -12.1
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
Lead (t) 18,013 15,144 18.9 14,997 20.1 63,242 55,722 13.5
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
Zinc (t) 31,092 26,320 18.1 24,832 25.2 106,793 92,578 15.4
---------------- ---------------- --------- ---------------- --------- -------- --------- ---------
DEVELOPMENT PROJECTS
-- Continued progress was achieved on the construction of the
Juanicipio processing plant during the quarter. Commissioning of
the plant is now expected by 4Q21, a few months later than
anticipated, as a result of delayed infrastructure contracts, as
well as Covid-19 preventive measures and the brief stoppage of work
earlier in the year.
-- Construction of the Pyrites plant (phase II) at the Fresnillo
district was commissioned on time in 4Q20 and in line with the
budget. As previously disclosed, the start of operations has been
deferred due to a delay in final inspections by the authorities as
a result of Covid-19 restrictions on travel. These inspections are
required in order to provide the energy permits needed to operate
the plant. Once the final inspection by the authority is undertaken
and electrical permits have been approved, we expect the plant to
ramp up to full capacity within a quarter. Given the current
Covid-19 situation in Mexico, we do not foresee inspections taking
place in the first half of the year, and this is reflected in our
2021 production outlook.
-- The Fresnillo flotation plant optimisation to cope with
higher content of lead and zinc was commissioned on time and on
budget during 4Q20. The connection of this new circuit to the
beneficiation plant has been postponed until February to avoid
unnecessary interruptions to the normal operation of the plant.
2021 OUTLOOK
Our 2021 guidance issued today is given in the context of
continued uncertainty presented by Covid-19 in Mexico and
operational challenges.
-- Attributable silver production expected to be in the range of
53.5 to 59.5 moz (including Silverstream) due to the Covid-19
related impact on the timings of the Juanicipio development and
delay to the start of operations of the Pyrites Plant at Fresnillo,
together with a partial shut down of 20 days at the San Julián lead
circuit explained below, and lower production at Saucito.
-- Attributable gold production expected to be in the range of
675 to 725 koz mainly due to a minor land slip at Noche Buena which
limited access to the deeper areas of the pit, thus changing the
mining sequencing, and a lower ore grade at Ciénega.
FULL YEAR FINANCIAL RESULTS
-- Fresnillo will announce its full year 2020 results on 2nd March 2021.
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
Patrick Chambers
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
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed
(t) 590,449 551,589 7.0 618,940 -4.6 2,336,943 2,461,785 -5.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,213 3,085 4.2 3,192 0.7 13,055 13,007 0.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 9,485 9,295 2.0 11,723 -19.1 38,388 52,259 -26.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 5,254 4,588 14.5 5,665 -7.3 21,319 21,472 -0.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 9,051 7,328 23.5 9,348 -3.2 34,116 31,530 8.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 190 193 -1.9 181 4.7 194 185 5.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.71 0.77 -7.1 0.82 -13.5 0.73 0.89 -17.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.08 0.95 13.3 1.08 -0.8 1.08 1.01 6.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.19 1.83 19.5 2.10 4.2 2.07 1.80 14.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production was up 4.2% vs. 3Q20 as a result of
an increase in the volume of ore processed. This followed a quarter
where fewer personnel were on site following Covid-19 preventive
measures affecting employee attendance, development rates and
equipment availability. While these measures continue to be
enforced, better personnel management has improved production.
Quarterly and full year silver production remained flat vs. both
4Q19 and FY19 due to a higher ore grade resulting from incremental
improvements achieved following the implementation of our
performance improvement initiatives, offset by a lower volume of
ore processed for reasons explained above.
Our performance improvement plan, as set out on the Capital
Markets Day in December 2019, continues to be implemented. We
continue to focus on controlling dilution and enhancing blasting
and drilling techniques to cope with the narrower veins.
Development rates increased to an average of 3,241m per month in
4Q20 (3Q20: 2,878m per month), marginally missing our target of
3,300m per month by year end, but a good performance given the
impact of Covid-19 related personnel issues (including self
isolation and quarantine). For the full year, development rates
increased to 3,130m per month on average, up 3.1% vs. FY19 (3,037m
per month) as a result of the ramp up of the tunnel boring machine
and the new contractor hired at the end of 2019.
Quarterly by-product gold production increased 2.0% vs. 3Q20
driven by a higher volume of ore processed, offset by a lower ore
grade.
Quarterly and full year by-product gold production decreased
19.1% and 26.5% vs. 4Q19 and FY19 respectively due to lower ore
grades, lower volumes of ore processed and lower recovery
rates.
Silver ore grade in 2021 is expected to be in the range of 190
to 210 g/t, while the gold ore grade is estimated to be between
0.55 to 0.70 g/t.
SAUCITO MINE PRODUCTION
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed (t) 671,429 710,618 -5.5 721,963 -7.0 2,767,432 2,752,638 0.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,428 3,963 -13.5 4,280 -19.9 15,532 17,160 -9.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 23,199 20,105 15.4 21,727 6.8 84,878 79,539 6.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 9,354 7,267 28.7 5,418 72.6 28,592 20,764 37.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 14,038 10,993 27.7 7,658 83.3 42,774 29,365 45.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 195 207 -6.1 220 -11.7 206 228 -9.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.40 1.14 22.3 1.26 11.2 1.24 1.19 4.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 1.65 1.21 36.5 0.91 81.6 1.22 0.90 35.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 2.95 2.24 31.3 1.65 78.8 2.21 1.57 40.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly silver production decreased 13.5% and 19.9% vs. 3Q20
and 4Q19 respectively due to the expected lower ore grade in
accordance with the mine plan and, as noted last quarter, due to
material being processed from several Western areas with a lower
silver grade. Further, a lower volume of ore processed driven by
higher absenteeism related to Covid-19 preventative measures, in
addition to a lower recovery rate also led to lower silver
production.
As seen in previous quarters and in line with our expectations,
full year silver production decreased 9.5% vs. FY19 as a result of
the gradual depletion of higher ore grade areas at the Jarillas
vein.
Quarterly by-product gold production increased 15.4% and 6.8%
vs. 3Q20 and 4Q19 respectively due to a higher ore grade, offset by
a lower volume of ore processed.
Full year gold production increased 6.7% vs. FY19 due to a
higher ore grade and to a lesser extent higher recovery rate.
The silver ore grade for 2021 is expected to be in the range of
200 to 220 g/t, while the gold grade is estimated to be around 1.10
g/t.
PYRITES PLANT (PHASE I)
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Iron Concentrates
Processed (t) 47,860 43,871 9.1 41,935 14.3 172,233 167,513 2.8
------- ------- --------- ------- --------- -------- -------- ---------
Production
------- ------- --------- ------- --------- -------- -------- ---------
Silver (koz) 194 221 -12.3 248 -21.8 920 1,171 -21.4
------- ------- --------- ------- --------- -------- -------- ---------
Gold (oz) 820 837 -2.1 775 5.8 3,452 4,045 -14.7
------- ------- --------- ------- --------- -------- -------- ---------
Ore Grades
------- ------- --------- ------- --------- -------- -------- ---------
Silver (g/t) 172 212 -18.8 273 -36.9 220 299 -26.5
------- ------- --------- ------- --------- -------- -------- ---------
Gold (g/t) 1.64 1.87 -12.4 2.22 -26.3 1.92 2.32 -17.2
------- ------- --------- ------- --------- -------- -------- ---------
Quarterly silver and gold production decreased 12.3% and 2.1%
vs. 3Q20 respectively due to a lower ore grade of iron concentrates
produced by Saucito, mitigated by a higher volume of iron
concentrates processed.
Quarterly silver production decreased 21.8% vs. 4Q19 due to a
lower ore grade of iron concentrates from Saucito's flotation plant
after the pre-operative high grade stockpile was depleted following
the plant's start-up in mid-2018. This was mitigated by the higher
volume of iron concentrates processed and higher recovery rate.
Quarterly gold production increased 5.8% vs. 4Q19 driven by a
higher recovery rate and volume of iron concentrates processed,
offset by a lower ore grade of iron concentrates.
Full year silver and gold production decreased 21.4% and 14.7%
vs. FY19 respectively, due to a lower ore grade of iron
concentrates produced by Saucito as expected.
In 2021, we expect production from this plant at Saucito to
remain unchanged year-on-year.
As noted in the highlights, the Pyrites Plant (phase II) was
commissioned on time in 4Q20 but given the current Covid-19
situation in Mexico, we do not foresee inspections taking place in
the first half of the year. As a result, we do not expect
commercial production at the Pyrites Plant (phase II) at Fresnillo
to start until the end of 3Q21.
CIENEGA MINE PRODUCTION
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed (t) 334,977 325,392 3.0 343,534 -2.5 1,318,263 1,329,134 -0.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 13,605 18,122 -24.9 17,969 -24.3 64,101 65,583 -2.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 1,272 1,522 -16.4 1,492 -14.8 5,762 5,796 -0.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 1,339 1,536 -12.8 1,678 -20.2 6,112 5,839 4.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 2,078 2,275 -8.7 2,390 -13.0 9,263 8,986 3.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.36 1.85 -26.9 1.75 -22.5 1.63 1.66 -2.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 139 169 -17.9 158 -12.2 159 159 -0.2
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.61 0.71 -14.7 0.74 -18.1 0.7 0.67 4.6
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.06 1.18 -10.0 1.17 -9.3 1.18 1.13 4.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Quarterly gold and silver production decreased 24.9% and 16.4%
vs. 3Q20 respectively, and 24.3% and 14.8% vs. 4Q19 respectively,
as a result of a lower ore grade driven by an increase in dilution
due to narrower veins.
Full year gold and silver production were marginally lower, down
2.3% and 0.6% vs. FY19 respectively, in line with the year's
expectations.
The gold and silver ore grades for 2021 are expected to be in
the range of 1.30-1.40 g/t and 150-160 g/t respectively.
SAN JULIÁN MINE PRODUCTION
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed Veins
(t) 315,863 317,134 -0.4 281,552 12.2 1,254,970 1,265,030 -0.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Processed DOB
(t) 572,962 555,161 3.2 559,389 2.4 2,229,612 2,226,956 0.1
-------- -------- --------- -------- --------- ---------- ---------- ---------
Total production
at San Julián
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 16,048 17,342 -7.5 13,923 15.3 64,925 64,600 0.5
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 3,730 3,298 13.1 3,387 10.1 13,306 13,009 2.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 15,123 16,426 -7.9 13,196 14.6 61,790 62,207 -0.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 965 944 2.2 952 1.4 4,030 4,317 -6.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Production DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (oz) 925 917 0.9 727 27.3 3,134 2,393 31.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (koz) 2,765 2,355 17.5 2,435 13.6 9,276 8,692 6.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (t) 2,036 1,676 21.5 2,235 -8.9 7,112 7,648 -7.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (t) 5,874 5,627 4.4 5,436 8.1 20,492 22,697 -9.7
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades Veins
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 1.58 1.71 -7.4 1.54 2.5 1.61 1.61 0.4
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 103 100 2.9 114 -9.1 109 115 -5.9
-------- -------- --------- -------- --------- ---------- ---------- ---------
Ore Grades DOB
-------- -------- --------- -------- --------- ---------- ---------- ---------
Gold (g/t) 0.09 0.1 -7.1 0.08 8.4 0.09 0.08 13.0
-------- -------- --------- -------- --------- ---------- ---------- ---------
Silver (g/t) 172 154 11.4 154 12.0 150 139 7.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Lead (%) 0.46 0.39 16.6 0.48 -4.1 0.41 0.44 -6.8
-------- -------- --------- -------- --------- ---------- ---------- ---------
Zinc (%) 1.28 1.27 0.8 1.28 -0.1 1.19 1.36 -12.3
-------- -------- --------- -------- --------- ---------- ---------- ---------
SAN JULIÁN VEINS
Quarterly silver production increased 2.2% vs. 3Q20, due to a
higher ore grade.
Quarterly gold production decreased 7.9% vs. 3Q20, as a result
of a lower ore grade.
Quarterly silver production increased 1.4% vs. 4Q19, due to a
higher volume of ore processed following some efficiency gains in
the maintenance programme, offset by a lower ore grade.
Quarterly gold production increased 14.6% vs. 4Q19 due to a
higher volume of ore processed following the same efficiency gains
in the maintenance programme mentioned above.
Full year gold production remained flat vs. FY19, as the volume
of ore processed, grade and recovery rate were in line with
2019.
Full year silver production decreased 6.7% vs. FY19 due to a
lower ore grade driven by the depletion of high ore grade areas at
San Julián and Shalom.
We expect the 2021 silver and gold ore grades to average 110-120
g/t and 1.30-1.50 g/t, respectively.
SAN JULIÁN DISSEMINATED ORE BODY (DOB)
Quarterly and full year silver production increased against all
comparable periods due to a higher ore grade. As previously
mentioned, the mine sequencing was changed in 2019 to maintain the
geotechnical stability of some high ore grade stopes. During 3Q20,
we regained access to these higher quality areas, resulting in the
higher ore grades, which continued into 4Q20.
The San Julián lead circuit housing suffered some minor
structural damage at the end of December that only affected the
conditioning tank, resulting in a short production outage. Though
production was ramped back up within 20 days following immediate
remedial work, the plant is now expected to operate at c. 6,000
tonnes per day (down from the previous 6,600 per day) while
permanent repair work is completed. 2021 total silver production
volume has been adjusted to reflect the lower volume produced in
January.
The silver ore grade for 2021 is expected to be within a range
of 160-170 g/t.
HERRADURA TOTAL MINE PRODUCTION
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed
(t) 6,875,196 4,791,585 43.5 6,172,932 11.4 19,797,063 22,926,542 -13.6
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Total Volume
Hauled (t) 28,976,190 28,017,785 3.4 29,856,230 -2.9 109,777,575 127,637,495 -14.0
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Production
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (oz) 134,439 85,102 58.0 143,417 -6.3 425,288 482,722 -11.9
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (koz) 231 251 -7.9 518 -55.4 1,306 1,563 -16.5
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Ore Grades
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Gold (g/t) 0.76 0.72 5.2 0.78 -3.0 0.77 0.80 -3.4
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Silver (g/t) 1.46 2.18 -33.1 3.8 -61.5 2.6 3.15 -17.3
----------- ----------- --------- ----------- --------- ------------ ------------ ---------
Quarterly gold production increased 58.0% vs. 3Q20 due to a
higher volume of ore processed, ore grade and recovery rate. This
followed a weaker 3Q20 as a result of Covid-19 operational
restrictions earlier in the year which lowered the volumes of ore
deposited during 2Q20 and subsequently affected the recovery cycle
at the leaching pads in 3Q20. Further, increased irrigation on new
areas of the leaching pads helped to recover additional gold ounces
while the incorporation of additional personnel from Noche Buena
helped to increase volumes hauled and processed.
Quarterly gold production decreased 6.3% vs. 4Q19 due to a lower
recovery rate compared to the same quarter in 2019, which
benefitted from the start-up of operations at the 13(th) leaching
pad in 3Q19 which improved the overall speed of recovery in 4Q19.
To a lesser extent, a slowdown in the gold recovery due to the
presence of more sulphides in the areas mined also impacted 4Q20
production. This was mitigated by the higher volume of ore
processed.
Full year gold production decreased 11.9% vs. FY19 due to lower
volumes of ore processed during the Covid-19 operational
restrictions. Additionally, the measures put in place to maintain
social distancing have resulted in a decreased number of personnel
on site, affecting the preparation of the mine. This limited access
to deeper areas of the pit, thus impacting the mine plan. These
adverse impacts were mitigated by a higher speed of recovery,
driven by increased irrigation on the leaching pads.
The gold ore grade in 2021 is expected to be in the range of
0.70-0.75 g/t.
NOCHE BUENA TOTAL MINE PRODUCTION
4Q20 3Q20 % Change 4Q19 % Change FY 20 FY 19 % Change
Ore Processed
(t) 1,638,305 1,714,258 -4.4 2,376,495 -31.1 6,682,617 12,166,990 -45.1
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Total Volume
Hauled (t) 9,259,638 9,937,248 -6.8 10,244,063 -9.6 34,914,284 48,621,485 -28.2
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Production
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Gold (oz) 17,737 21,574 -17.8 24,210 -26.7 87,998 127,166 -30.8
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Silver (koz) 9 11 -14.4 14 -34.0 39 58 -32.0
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Ore Grades
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Gold (g/t) 0.50 0.49 1.9 0.55 -9.1 0.52 0.55 -5.7
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Silver (g/t) 0.84 1.25 -32.8 0.31 170.8 0.72 0.25 190.0
---------- ---------- --------- ----------- --------- ----------- ----------- ---------
Quarterly gold production decreased 17.8% vs. 3Q20 due to a
lower overall speed of recovery as a result of the lower volume of
material being deposited on the leaching pads. To mitigate this,
increased irrigation of the pads is now happening.
Quarterly gold production decreased 26.7% vs. 4Q19 due to the
lower volume of ore deposited as a result of expected depletion of
the mine as it approaches closure and a minor land slip in one of
the pit walls which impacted the mining sequence in 2020. The
change in the mine plan is therefore expected to extend the mine
life for an additional four to six months in 2022.
Full year gold production decreased 30.8% vs. FY19 due to the
lower volume of ore deposited following the Covid-19 operational
restrictions, which affected the recovery cycle at the leaching
pads, in addition to the expected depletion of the mine as it
approaches closure. These were mitigated by the higher speed of
recovery due to increased irrigation on the pads and the
installation of the carbon columns in 2019.
The expected gold ore grade in 2021 is predicted to be in the
range of 0.40-0.50 g/t.
JUANICIPIO
As previously disclosed, the preparation of the first production
stope was concluded in 3Q20 and on an attributable basis, a total
of 349.2 koz of silver and 589.6 oz of gold were produced in 2020
at Juanicipio.
Continued progress was achieved on the construction of the
Juanicipio processing plant during the quarter. Commissioning of
the plant is now expected by 4Q21, a few months later than
anticipated, as a result of a delayed infrastructure contracts, as
well as Covid-19 preventive measures and the brief stoppage of work
earlier in the year.
We expect to process an average of 16,000 tonnes per month
through to 4Q21 on a consolidated basis, at which time we expect to
start commissioning the Juanicipio beneficiation plant.
SILVERSTREAM
Quarterly Silverstream production increased 4.9% vs. 3Q20 due to
higher ore grades, offset by a lower volume of ore processed.
Quarterly Silverstream production increased 15.6% vs. 4Q19 due
to higher ore grade, offset by a lower volume of ore processed and
recovery rate.
Full year Silverstream production decreased 2.5% vs. FY19 due to
lower volume of ore processed and, to a lesser extent, the expected
lower ore grade resulting from narrower veins and a lower recovery
rate.
Expected silver production in 2021 is in the range of 2.5-3.5
moz.
SAFETY PERFORMANCE
Progress towards improving our safety record continues to
advance with the number of accidents trending down year-on-year. A
healthy and safe working environment builds trust with our people
and we continue to be absolutely committed to instilling a strong
safety culture across our mines, targeting zero harm through the
reinforcement of our safety training for all employees and
contractors, encouraging the implementation of the "I Care We Care"
programme and the adherence to the safety policies throughout the
Group.
PRICE RISK MANAGEMENT
We have made a change to our Price Risk Management policy, which
gives the Company the ability to hedge up to 20% of our expected
annual silver and gold production over the next 12 months, as
determined at the time of entering the hedge. As previously stated,
we will opportunistically implement hedging strategies only if
market conditions are such that is it advantageous to do so. The
change in policy follows our decision to hedge 7% of the Company's
2021 silver production at very favourable terms to capitalise on
unique market conditions, announced in September 2020. This policy
change does not signal an intent to enter into hedging contracts
immediately, nor an intent to reach or maintain a 20% hedged
position over any timescale. We believe this is a prudent step to
take in the interests of shareholders. By implementing a hedging
strategy on a strictly selective basis, we will be able to lock in
a strong margin for the volume hedged while ensuring the Company
can benefit from rises in precious metal prices in the future.
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), three development
projects - the Pyrites Plant at Fresnillo, the optimisation of the
beneficiation plant also at Fresnillo, and Juanicipio, and four
advanced exploration projects - Orisyvo, Rodeo, Guanajuato and
Pilarica, 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
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END
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January 27, 2021 02:00 ET (07:00 GMT)
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