Fresnillo (LON:FRES) is the world's largest primary silver producer with attributable output of 37.9 million ounces of silver in 2009, an increase of 8.8% on 2008. This compares to production in the whole of Mexico, the world's second largest silver producing nation, of 104.7 million ounces in 2009.
The group has four producing mines in Mexico which are Fresnillo, Cienega, Herradura and Soledad-Dipolos. There is also one development project Saucito, five advanced exploration prospects and other long-term exploration prospects. Mining concessions cover 1.86 m hectares in Mexico.
Fresnillo's 2010 Q3 production report saw record silver production at 10.69 million ounces and the group also confirmed it should meet the 2010 output target of 41.1 million ounces. This would be an 8.5% increase on 2009 and puts Fresnillo closer towards its target of 65 million ounces of annual silver production by 2018. However, there is still a long way to go as the 2018 output goal will still need silver production to rise 57% from 2010 output.
A record was also achieved in the third quarter for gold with production at 91,822 ounces -an increase of 44.4% on last year. This has also enabled the group to confirm that it is on target for production of 340,000 ounces in 2010 which is a 23% increase on 2009. The longer-term target is for 400,000 ounces of annual production by 2018 which would represent an increase of 17.6% on 2010 gold output.
Clearly then from 2010 onwards silver will be the big growth driver for the group as output is set to increase by more than half from then end of this year until 2018. On this front the Saucito development project and the Cienga expansion project are both on schedule for start up in the first half of 2011.
Exploration efforts have also been successful with positive exploration results from Herradura mine and at the San Julian and Orisyvo projects. Drilling was also completed at one of the early stage exploration projects, Noche Bunea, with indicated resources at 600,000 ounces of gold and a pre feasibility study is in progress.
For the group as a whole there will be an update on reserves and resources that will be published before the end of 2010. The third quarter has confirmed a solid operational record for Fresnillo which increases confidence that ambitious output goals can…
