Yahoo Finance FTSE 100: Fresnillo shares jump despite lower silver production
The World's largest silver ore producer, Fresnillo (FRES.L) reported a fall in silver (SI=F) production in the third quarter, as well as flat gold (GC=F) production throughout the period.
Silver production at the FTSE 100 (^FTSE) mining company declined 5.4% quarter-on-quarter to 12.78 million ounces, down from 13.6m ounces in the second quarter.
That was mainly due to the expected lower ore grade and decreased volume of ore processed at San Julián Disseminated Ore Body, Fresnillo said.
Total silver production, including silverstream, rose 7.4% year-on-year to 13.6 million ounces, compared to 12.7 million ounces.
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Gold production rose just 0.2% to 159,205 ounces on a quarterly basis, and fell 7.7% annually to 159,205 ounces from 172,534 ounces.
It said that the annual decline was "mainly due to a lower recovery rate as higher volumes of sulphide ore are processed and lower ore grade at Herradura, and a decrease in volume of ore processed and lower ore grade at Noche Buena and Cienega".
Company shares jumped 3.2% in early trade on Wednesday in London.
The Mexico City-based miner noted a "challenging" operating environment amid a tight labour market in the South American country following labour reforms introduced last September, and industry-wide supply bottlenecks.
"Contractor uptake varied across the group, resulting in staff vacancies and lower equipment availability at our underground mines. Recruitment and training campaigns continue, albeit at a slightly slower pace than initially anticipated," the company said.
But, it said it was "confident" in the group's overall performance despite the third quarter drop in silver production.
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Fresnillo said it remains on track to meet its full-year outlook of 50.5m-56.5m ounces of attributable silver and 600,000 to 650,000 of attributable gold production.
"Our focus in the final quarter is to achieve our 2022 targets, continue to drive volumes in the Fresnillo District, and deliver a rapid ramp-up of our new Juanicipio mine, while always prioritising the safety and wellbeing of our people," chief executive Octavio Alvídrez said.
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