Fresnillo lowers 2011 silver guidance, ups gold production outlook *****

Implementation of a mine safety program has slowed production at Mexican silver miner Fresnillo’s flagship mine, prompted a reduction in this year’s silver production guidance, but gold output to rise.

Author: Dorothy Kosich
Posted: Wednesday , 12 Oct 2011

RENO, NV – The world’s top silver miner, Fresnillo Plc. Wednesday lowered its 2011 silver production guidance from 44 million to 41 million ounces.

However, 2011 gold production was revised upwards from 400,000 ounces to 430,000 ounces.

Quarterly attributable silver production without silverstream decreased 7.3% from 9,868,000 ounces for the third quarter of 2010 to 9,147,000 ounces for third-quarter 2011.

“This resulted from a slowdown production at the Fresnillo mine, due mainly to actions taken to reinforce safety conditions, including backfilling one of our high silver grade, long-hole stopes, which had been left open,” the company said. “These actions temporarily limited access to this part of the mine.”

“We are confident that we will return to full capacity by the end of October,” Fresnillo said.

Meanwhile, Fresnillo also reported a 12.2% increase to 919,321 silver ounces under the Peñoles Silverstream Agreement. The increase was attributed to higher mill throughput and increased ore grades at the Sabinas mine.

Year-to-date silver production (including silverstream) totaled 31.527 million ounces for the first nine months of 2011, a slight drop from the 31.61 million ounces of total silver production reported during the same period of last year.

Fresnillo reported year-to-date attributable gold production rose to a record 326,245 ounces for the first nine ounces of this year, up 21.7% from the 268,173 ounces of gold production reported during the same period of 2010.

Record gold production was also achieved during the third-quarter 2011 at 119,768 ounces, up 30.4% from the 91,822 ounces reported during the same quarter of last year. In the third quarter of 2011 attributable gold production continued to benefit from expanded capacity and improved recovery rates at Soledad-Dipolos and increased volumes of ore processed at Herradura and Saucito. Development ore from San Ramón, a new satellite mining zone at Ciénega, was hauled and processed, further augmenting quarterly gold production.

Year-to-date lead production rose 14.4% from 13,941 metric tons for the first nine months of 2010 to 15,942 metric tons for the first nine months of this year. Third-quarter 2011 lead production increased 11.3% from 4,797 metric tons for the third-quarter 2010 to 5,340 metric tons. The increase in lead production was attributed to the ramp up of Saucito and higher lead ore grades at the Fresnillo mine.

Total year-to-date zinc production increased 3.1% from 16,667 metric tons for the first nine months of 2010 to 17,180 metric tons for the same period of 2011. By-product zinc production decreased slightly from 5,842 metric tons for the third-quarter 2010 to 5,751 metric tons for third-quarter 2011. The drop was attributed to lower ore grades at Ciénega.

Jamie Lomelin, Fresnillo’s CEO, said that during the third quarter, “we sought to reinforce safety conditions at all our operating units and projects. Although the actions have temporarily slowed down our silver production, mainly at the Fresnillo Mine, the safety of our workers comes first and is our most important priority.”

However, Fresnillo also reported two fatal accidents occurred in July, involving contractors, one at the Fresnillo Mine and the other at the Centauro Deep Project. “Both fatal accidents were caused by falling rocks which resulted from breaches of Fresnillo Plc’s safety policies and the failure to follow correct rock bolting and shotcreting procedures,” the company said.

Meanwhile, Fresnillo reported construction of the San Carlos shaft remains on schedule to be completed in the fourth quarter of this year. The US$19.1 million project will provide direct access to the western zone of the San Carlos vein, reducing haulage and hoisting costs.

The company has ramped up production at Saucito and is revising its full year target from 4.7 million ounces of silver to 5.5 million ounces.

The Herradura mine reported records in quarterly and year-to-date gold production due to increased ore volumes deposited.

Now that the Soledad-Dipolos expansion has been finished, attributable gold production is set to increase to a targeted capacity of 130,000 ounces annually.


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