REG - Fresnillo Plc - 4Q21 Production Report
26/01/2022 07:05
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RNS Number : 6315Z Fresnillo PLC 26 January 2022
Fresnillo plc
21 Upper Brook Street
London W1K 7PY
United Kingdom
www.fresnilloplc.com (http://www.fresnilloplc.com)
26 January 2022
FOURTH QUARTER PRODUCTION REPORT
FOR THE THREE MONTHS ENDED 31 DECEMBER 2021
Octavio Alvídrez, Chief Executive Officer, said:
"Given the challenges presented by both the continued effect of the pandemic
and more recent Government labour reform initiatives, as well as certain
operational issues, we have delivered a creditable performance during the
year, with silver production marginally short of guidance, but gold production
exceeding expectations. This performance highlights the strength of our
diversified portfolio and the capability of our people. During the year we
have also made further progress on our development pipeline, with construction
of the Juanicipio plant delivered on time and on budget though we await
approval to complete the tie-in to the national power grid which we now expect
at the end of the second quarter.
Looking ahead, our priorities for this year are clear - we must continue to
navigate the challenges presented by both Covid-19, which regrettably is again
accelerating in Mexico which will impact labour availability in particular, as
well as continue to adapt to the new labour reform. The safety of our people
is our priority, as is ensuring we continue to roll-out our performance
improvement measures across our portfolio."
HIGHLIGHTS
Silver
Full year attributable silver production of 53.1 moz (including Silverstream),
marginally below guidance, flat vs. FY20 with the higher ore grade at San
Julián Disseminated Ore Body (DOB) and, to a lesser extent, the contribution
of development ore from Juanicipio, offset by a lower ore grade and volume of
ore processed at Saucito and Fresnillo.
Quarterly attributable silver production of 12.9 moz (including Silverstream),
up 2.1% vs. 3Q21 mainly driven by a higher contribution of development ore
from Juanicipio, partly offset by the anticipated lower ore grade at San
Julián (DOB).
Quarterly attributable silver production (including Silverstream) remained
flat vs. 4Q20 due to a higher contribution of development ore from Juanicipio
offset by decreased volumes of ore processed and lower ore grades at both
Fresnillo and Saucito.
Gold
Full year attributable gold production of 751.2 koz, ahead of guidance, down
2.4% vs. FY20, due to a lower ore grade at Ciénega, and a lower ore grade and
volume of ore processed at San Julián Veins, partly mitigated by a higher
volume of ore processed and ore grade at Noche Buena.
Quarterly attributable gold production of 150.3 koz, down 12.9% and 30.3% vs.
3Q21 and 4Q20 respectively, mainly due to the expected lower ore grade,
decreased volume of ore processed and lower recovery rate at Herradura
primarily driven by the increased silt restricting the filter capacity at the
plant, as reported in the prior quarter.
LABOUR REFORM IN MEXICO
As reported in 3Q21, the labour reform in Mexico restricting the ability to
subcontract labour came into effect from 1st September 2021 resulting in the
requirement to internalise a high proportion of our contractor workforce.
Subsequent contractor uptake has varied, with underground mines, in particular
in the Fresnillo District and at Ciénega, more affected due to a higher
number of contractors on site resulting in an increased number of staff
vacancies and a higher workforce turnover. This in turn has affected equipment
availability (equipment previously provided by contractors and maintenance
work previously carried out by contractors) and utilisation rates (turnover
and vacancies). The actions we announced to address this short term challenge
will continue, including recruitment campaigns, training and investment in new
equipment. These campaigns are proving effective and we expect to have
completed the staffing process in the Fresnillo District and Ciénega in the
third quarter, while our open pit mines, which have seen a lesser impact,
should be fully staffed during 1Q22.
COVID-19 UPDATE
Regrettably, a fourth wave of Covid-19 has now reached Mexico, with the highly
contagious omicron variant resulting in a considerable increase in Covid cases
throughout the country. We began to see the impact of this increase in terms
of staff absenteeism due mainly to self isolation from the 2(nd) week of
December and this has accelerated throughout January. The safety and
well-being of our people is our priority and our Covid protocols remain in
place, but we are relieved to see the omicron variant in Mexico presents a
lesser health risk. Nonetheless, we are seeing greater levels of absenteeism
which in turn is having an impact across our business - we expect that to
continue in the first quarter of 2022.
By-Products
• Full year attributable by-product lead production decreased 10.5%
vs. FY20 due to a decrease in volume of ore processed and lower ore grade at
Saucito and Fresnillo and a lower ore grade at Ciénega. This was mitigated by
a higher ore grade at San Julián DOB.
• Full year attributable by-product zinc production decreased 6.9%
vs. FY20 primarily due to a lower volume of ore processed and ore grade at
Saucito and to a lesser extent, lower ore grade and recovery rate at Ciénega.
• Quarterly attributable by-product lead production decreased 9.0%
vs. 3Q21 due to a lower ore grade at Saucito and a lower ore grade and volume
of ore processed at Fresnillo.
• Quarterly attributable by-product zinc production remained flat
vs. 3Q21 due to lower ore grades at San Julián DOB and Saucito, offset by a
higher ore grade at Fresnillo.
• Quarterly attributable by-product lead and zinc production
decreased 34.3% and 26.4% vs. 4Q20 respectively, driven primarily by lower ore
grades and decreased volumes of ore processed at Saucito.
Attributable 4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Silver (koz) 12,230 11,800 3.7 12,207 0.2 49,961 50,270 (0.6)
Silverstream (koz) 684 851 (19.7) 743 (7.9) 3,134 2,780 12.7
Total Silver (koz) 12,914 12,651 2.1 12,950 (0.3) 53,095 53,050 0.1
Gold (oz) 150,313 172,534 (12.9) 215,581 (30.3) 751,203 769,618 (2.4)
Lead (t) 11,837 13,010 (9.0) 18,013 (34.3) 56,573 63,242 (10.5)
Zinc (t) 22,899 22,930 (0.1) 31,092 (26.4) 99,397 106,793 (6.9)
DEVELOPMENT PROJECTS
The construction of the Juanicipio plant was delivered on schedule during the
quarter. However, as previously disclosed, we are focusing on complying with
the new requirements from the state owned electricity company and the energy
regulator to complete the tie-in to the national power grid. As a result, the
mill commissioning timeline was extended by approximately six months. As
previously reported, stoping and mineralised mine development will continue.
To mitigate potential adverse effects, Fresnillo will make available any
unused plant capacity at its Fresnillo and Saucito operations to process
material produced at Juanicipio.
SAFETY PERFORMANCE
There were zero fatal accidents during the quarter though as previously
reported, we were deeply saddened by a fatal accident that occurred earlier in
the year. Safety is at the heart of our operations and we continue to fully
engage with the safety measures and adherence to policies needed to guarantee
a safe environment for all our people. The reinforcement and monitoring of
safety measures in all our operations at the mines and throughout the company
is a continuous commitment and the 'I Care, We Care' programme remains hugely
important across the business.
2022 OUTLOOK
Our 2022 guidance issued today is given in the context of the ongoing and new
operational challenges worsened by the pandemic (and the resulting impact on
workforce availability) and the implementation of the new labour laws which
limit use of contractors. As we reported in our 3Q21 update, we had
anticipated a certain level of impact on production as a result of these
factors in both 4Q21 and 1Q22, though we are now likely to see a greater
impact in the earlier part of the year than previously expected.
• Attributable silver production expected to be in the range of 50.5
to 56.5 moz (including Silverstream) in line with 2021 and below our previous
estimate due to a lower volume of ore processed at Saucito driven by a
shortage of personnel in conjunction with absenteeism due to Covid-19, and a
lower ore grade as a result of the instability caused by increased seismicity
in the Jarillas vein limiting access to higher ore grade areas and thereby
requiring additional development to recapture operational flexibility.
Further, given the extension to the timeline for the tie-in to the national
grid of both the Juanicipio plant and the Pyrites Plant at Fresnillo, we
expect lower contributions from both operations.
• Attributable gold production expected to be in the range of 600 to
650 koz, driven mainly by the Noche Buena mine coming to the end of its mine
life.
FULL YEAR FINANCIAL RESULTS
Fresnillo will announce its full year 2021 results on 8th March 2022.
There will be a conference call for analysts and investors on Wednesday 26th
January at 8:00am (London time). The dial in details are as follows:
UK-Wide: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
Participant password: Fresnillo
A replay of the call will also be available for seven days after the event and
details to access it will be published on our website after the conference
call.
For further information, please visit our website www.fresnilloplc.com
(http://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
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 528,103 547,140 (3.5) 590,449 (10.6) 2,216,467 2,336,943 (5.2)
Production
Silver (koz) 2,655 2,722 (2.5) 3,213 (17.4) 11,986 13,055 (8.2)
Gold (oz) 8,648 7,983 8.3 9,485 (8.8) 33,743 38,388 (12.1)
Lead (t) 4,525 4,904 (7.7) 5,254 (13.9) 18,796 21,319 (11.8)
Zinc (t) 10,025 8,958 11.9 9,051 10.8 34,530 34,116 1.2
Ore Grades
Silver (g/t) 170 170 0.0 190 (10.5) 186 194 (4.0)
Gold (g/t) 0.71 0.62 13.9 0.71 0.0 0.68 0.73 (6.9)
Lead (%) 1.03 1.07 (4.1) 1.08 (4.7) 1.01 1.08 (6.5)
Zinc (%) 2.65 2.27 16.4 2.19 20.8 2.20 2.07 6.1
Quarterly silver production was down 2.5% and 17.4% vs. 3Q21 and 4Q20 driven
by the ongoing staff vacancies related to the new labour reform, higher
Covid-19 absenteeism and a higher workforce rotation. This in turn has
affected equipment availability and utilisation rates as fewer specialised
mechanics or trained machine operators are available. In addition, following
the power cut last quarter, as previously reported, which temporarily limited
the water pumping capacity and affected some mining areas and haulage, we
continued to see some residual impact in the quarter. However, a new pumping
station is expected to be finalised in the coming weeks, and no further impact
is expected from 2Q22 onwards.
Full year silver production was down 8.2% due to a lower volume of ore
processed and lower ore grade as a result of the issues mentioned above, along
with a number of other factors through the year including additional
rehabilitation and maintenance of certain ramps and delayed access to Eastern
areas of the mine in 1Q21, a temporary ventilation system failure and an
increased presence of water in the San Alberto area during 2Q21.
Mine development rates marginally increased quarter-on-quarter to an average
of 2,832 per month in 4Q21 (3Q21: 2,798m per month), primarily driven by the
issues noted above in addition to the tunnel boring machine (TBM) advancing
through an area of poor rock quality. We expect to regain a rate of 2,900 to
3,100 m per month on average during 1H22.
Quarterly by-product gold production increased 8.3% vs. 3Q21 driven by a
higher ore grade, partially offset by a lower volume of ore processed.
Quarterly by-product gold production decreased 8.8% vs. 4Q20 due to a lower
volume of ore processed.
Full year by-product gold production decreased 12.1% vs. FY20 due to a lower
ore grade and volume of ore processed.
The silver ore grade in 2022 is estimated be in the range of 190-210 g/t,
while the gold ore grade is estimated to remain in the range of 0.50-0.70 g/t.
SAUCITO MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 558,101 565,425 (1.3) 671,429 (16.9) 2,434,449 2,767,432 (12.0)
Production
Silver (koz) 2,990 2,846 5.1 3,428 (12.8) 12,439 15,532 (19.9)
Gold (oz) 17,719 19,143 (7.4) 23,199 (23.6) 88,440 84,878 4.2
Lead (t) 4,272 4,853 (12.0) 9,354 (54.3) 24,615 28,592 (13.9)
Zinc (t) 6,672 7,226 (7.7) 14,038 (52.5) 37,469 42,774 (12.4)
Ore Grades
Silver (g/t) 186 178 4.5 195 (4.3) 183 206 (11.1)
Gold (g/t) 1.26 1.36 (7.6) 1.40 (9.8) 1.46 1.24 17.8
Lead (%) 0.90 1.01 (11.1) 1.65 (45.5) 1.18 1.22 (3.0)
Zinc (%) 1.60 1.69 (5.4) 2.95 (45.6) 2.08 2.21 (5.9)
Quarterly silver production increased 5.1% vs. 3Q21 due to a higher ore grade
as a result of preparing and accessing new stopes with better ore grades. We
continue with the installation of geomechanical monitoring equipment to enable
an efficient and optimal mine sequence, while prioritising the safety of our
teams. As a result, we expect some variability in the ore grade and reduced
volumes of ore to be processed during 2022. In conjunction with this, Covid-19
further impacted operations due to higher absenteeism during the quarter as
our people were required to self isolate.
Quarterly silver production decreased 12.8% vs. 4Q20 due to a lower volume of
ore processed as a result of the ongoing impact of the labour reform that came
into effect in 3Q21, limiting equipment and personnel availability and to a
lesser extent, a lower ore grade due to the instability caused by increased
seismicity, as mentioned above. This was mitigated by a higher recovery rate.
Full year silver production decreased 19.9% vs. FY20 due to a decrease in
volume of ore processed and lower ore grade due mainly to the aforementioned
instability issues and the adverse impact of the labour reform.
We have continued our recruitment and training campaigns at the mine with the
target of gradually reducing the shortage of personnel and returning the mine
to its potential capacity, once fully staffed.
Quarterly by-product gold production decreased 7.4% vs. 3Q21 mainly driven by
a lower ore grade.
Quarterly by-product gold production decreased 23.6% vs. 4Q20 due to a lower
volume of ore processed and ore grade.
Full year by-product gold production increased 4.2% vs. FY20, driven by higher
ore grades, partially offset by lower volumes of ore processed.
Full year 2022 silver ore grade is estimated to remain between 175-195 g/t,
while the gold ore grade is estimated to be around 1.10-1.20 g/t.
PYRITES PLANT (PHASE I)
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Iron Concentrates Processed (t) 31,976 37,376 (14.4) 47,860 (33.2) 159,635 172,233 (7.3)
Production
Silver (koz) 121 143 (15.4) 194 (37.8) 567 920 (38.4)
Gold (oz) 455 441 3.1 820 (44.5) 2,294 3,452 (33.5)
Ore Grades
Silver (g/t) 158 157 1.2 172 (8.1) 151 220 (31.6)
Gold (g/t) 1.39 1.35 3.1 1.64 (15.0) 1.50 1.92 (21.8)
Quarterly silver production decreased 15.4% vs. 3Q21 due to a lower volume of
pyrite concentrates processed from the Saucito mine.
Quarterly gold production increased 3.1% vs. 3Q21 due to a higher recovery
rate, partially offset by a lower volume of pyrite concentrates processed from
the Saucito mine.
Quarterly silver and gold production decreased 37.8% and 44.5% vs. 4Q20
respectively due to a decreased volume of pyrite concentrates processed and a
lower ore grade of pyrite concentrates processed from the Saucito mine.
Full year silver and gold production decreased 38.4% and 33.5% vs. FY20
respectively due to lower ore grades from Saucito's flotation plant, lower
volumes of pyrite concentrates processed and to a lesser extent, lower
recovery rates.
For 2022, we estimate silver production from the pyrites plant at Saucito to
be in the range of 700 to 750 koz while gold production is estimated to be in
the range of 1.5 to 2.5 koz.
As noted in previous reports, the Pyrites Plant (phase II) was completed in
4Q20 but as with Juanicipio, we are focusing on complying with the new
requirements from the state owned electrical company and the energy regulator
to complete the tie-in to the national power grid.
CIENEGA MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 301,968 320,277 (5.7) 334,977 (9.9) 1,282,367 1,318,263 (2.7)
Production
Gold (oz) 10,596 11,528 (8.1) 13,605 (22.1) 48,819 64,101 (23.8)
Silver (koz) 1,401 1,323 5.9 1,272 10.2 5,447 5,762 (5.5)
Lead (t) 772 985 (21.6) 1,339 (42.2) 3,947 6,112 (35.4)
Zinc (t) 1,240 1,491 (16.9) 2,078 (40.3) 6,373 9,263 (31.2)
Ore Grades
Gold (g/t) 1.18 1.21 (2.8) 1.36 (13.2) 1.27 1.63 (21.7)
Silver (g/t) 165.6 150 10.7 139 19.0 153 159 (3.2)
Lead (%) 0.43 0.51 (14.2) 0.61 (28.8) 0.51 0.70 (28.0)
Zinc (%) 0.75 0.85 (12.0) 1.06 (29.2) 0.90 1.18 (23.7)
Quarterly gold production decreased 8.1% vs. 3Q21 due to a lower volume of ore
processed given the continued impact of the labour reform in Mexico leading to
lower utilisation rates, though we expect this to be a temporary factor.
Further, during December we experienced an electricity outage by the Mexican
state-owned utility Comisión Federal de Electricidad (CFE) which impacted the
volumes of ore processed in addtion to higher absenteeism due to Covid-19.
Quarterly silver production increased 5.9% and 10.2% vs. 3Q21 and 4Q20
respectively due to a higher ore grade in line with the mine sequence,
partially offset by a lower volume of ore processed for the reasons explained
above.
Quarterly and full year gold production decreased 22.1% and 23.8% vs. 4Q20 and
FY20 respectively due to the lower ore grades year-on-year, in line with the
mine sequence and to a lesser extent, lower volumes of ore processed.
Full year silver production decreased 5.5% vs. FY20 due to an expected lower
ore grade and decreased volume of ore processed.
The gold and silver ore grades for 2022 are estimated to be in the ranges of
1.20-1.40 g/t and 145-155 g/t respectively.
SAN JULIÁN MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed Veins (t) 308,691 302,987 1.9 315,863 (2.3) 1,202,826 1,254,970 (4.2)
Ore Processed DOB (t) 533,631 533,204 0.1 572,962 (6.9-) 2,070,563 2,229,612 (7.1)
Total production at San Julián
Gold (oz) 12,887 13,612 (5.3) 16,048 (19.7) 55,847 64,925 (14.0)
Silver (koz) 3,967 4,156 (4.5) 3,730 6.4 16,772 13,306 26.0
Production Veins
Gold (oz) 12,142 12,550 (3.3) 15,123 (19.7) 51,840 61,790 (16.1)
Silver (koz) 1,200 1,033 16.2 965 24.3 4,224 4,030 4.8
Production DOB
Gold (oz) 745 1,062 (29.9) 925 (19.5) 4,006 3,134 27.8
Silver (koz) 2,768 3,123 (11.4) 2,765 0.1 12,548 9,276 35.3
Lead (t) 1,914 2,122 (9.8) 2,036 (6.0) 8,543 7,112 20.1
Zinc (t) 4,419 5,039 (12.3) 5,874 (24.8) 19,991 20,492 (2.4)
Ore Grades Veins
Gold (g/t) 1.29 1.36 (5.4) 1.58 (18.7) 1.42 1.61 (12.1)
Silver (g/t) 131 116 13.1 103 26.5 119 109 9.8
Ore Grades DOB
Gold (g/t) 0.08 0.11 (27.9) 0.09 (13.2) 0.10 0.09 20.0
Silver (g/t) 187 217 (14.1) 172 8.6 221 150 46.8
Lead (%) 0.45 0.50 (9.1) 0.46 (0.6) 0.51 0.41 24.5
Zinc (%) 1.10 1.24 (10.8) 1.28 (14.1) 1.27 1.19 6.6
SAN JULIÁN VEINS
Quarterly and full year silver production increased vs. all comparative
periods due to higher ore grades as a result of better dilution control.
Quarterly gold production decreased 3.3% vs. 3Q21 due to a lower ore grade in
line with the mine plan.
Quarterly and full year gold production decreased 19.7% and 16.1% vs. 4Q20 and
FY20 respectively due to a lower ore grade as a result of the depletion of
higher ore grade areas and, to a lesser extent, lower volume of ore processed
driven by two electricity outages by the Mexican state-owned utility Comisión
Federal de Electricidad (CFE) during the year.
We estimate the 2022 silver and gold ore grades to average 120-130 g/t and
1.35-1.55 g/t, respectively.
SAN JULIÁN DISSEMINATED ORE BODY (DOB)
Quarterly silver production decreased 11.4% vs. 3Q21 due to the anticipated
lower ore grade as we move towards the periphery of the ore body.
Quarterly silver production was flat vs. 4Q20 due to a higher than expected
ore grade. As reported in previous quarters, this was the result of: i) the
positive variation with the geological model in the central area of the ore
body; and ii) access to higher ore grade areas following the mine resequencing
in 2019. The higher ore grade was offset by a lower volume of ore processed.
Full year silver production increased 35.3% vs. FY20 due to a higher than
expected ore grade as described above, partially offset by a lower volume of
ore processed driven by the temporary impact in 1Q21 from the damage to the
lead circuit housing at the end of 2020 and the electricity outages by the CFE
in 1Q21 and 3Q21, as reported in previous quarters.
We estimate the 2022 silver ore grade to be in the range of 150-170 g/t as we
continue to advance towards the lower grade areas in the periphery of the ore
body.
HERRADURA TOTAL MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 4,271,069 4,546,401 (6.1) 6,875,196 (37.9) 20,311,876 19,797,063 2.6
Total Volume Hauled (t) 33,115,154 33,068,512 0.1 28,976,190 14.3 132,838,820 109,777,575 21.0
Production
Gold (oz) 69,177 94,193 (26.6) 134,439 (48.5) 421,535 425,288 (0.9)
Silver (koz) 168 228 (26.1) 231 (27.1) 926 1,306 (29.1)
Ore Grades
Gold (g/t) 0.65 0.76 (14.2) 0.76 (14.5) 0.76 0.77 (1.5)
Silver (g/t) 1.91 2.24 (14.5) 1.46 31.0 2.05 2.60 (21.2)
Quarterly gold production decreased 26.6% vs. 3Q21 due to: i) the expected
lower ore grade; ii) lower recovery rate at the leaching pads driven by the
increased silt in solution restricting the filter capacity at the plant, as
mentioned in the prior quarter, and the requirement for some repair work to an
impermeable liner in the pregnant solution collection pond; and iii) a
decrease in the volume of ore processed due to corrective maintenance in the
mill area at one of the dynamic leaching plants.
Quarterly gold production decreased 48.5% vs. 4Q20 due to a lower volume of
ore processed and ore grade for reasons explained above.
Full year gold production remained flat vs. FY20 as a result of a slower speed
of recovery on the leaching pads and slightly lower ore grade, offset by a
higher volume of ore processed following the Covid-19 operational restrictions
in 2020.
The gold ore grade in 2022 is estimated to be in the range of 0.65-0.75 g/t.
NOCHE BUENA TOTAL MINE PRODUCTION
4Q21 3Q21 % Change 4Q20 % Change FY 21 FY 20 % Change
Ore Processed (t) 2,903,023 2,389,895 21.5 1,638,305 77.2 8,996,842 6,682,617 34.6
Total Volume Hauled (t) 6,482,783 6,222,974 4.2 9,259,638 (30.0) 25,953,967 34,914,284 (25.7)
Production
Gold (oz) 28,591 25,015 14.3 17,737 61.2 96,835 87,998 10.0
Silver (koz) 11 8 29.8 9 14.7 32 39 (19.6)
Ore Grades
Gold (g/t) 0.70 0.59 17.3 0.50 38.6 0.59 0.52 15.0
Silver (g/t) 0.20 0.19 8.8 0.84 (75.9) 0.19 0.72 (73.3)
Quarterly gold production increased 14.3% vs. 3Q21 due to a higher volume of
ore processed arising from an optimised mining sequence and cycle times, in
addition to a higher ore grade. This was partially offset by a lower recovery
rate due to shorter irrigation cycles as a result of the ore being deposited
in smaller areas as we approach the end of mine life, in addition to increased
sulphide content in the ore.
Quarterly gold production increased 61.2% vs. 4Q20 due to a higher volume of
ore deposited and higher ore grade following a stability problem in the pit
during 2H20 as previously reported. This led to an increase in the waste
hauled last year to regain access to the deeper areas of the mine. The
favourable impact of the increased ore deposited and higher ore grade was
partly offset by the lower recovery rate as explained above.
Full year gold production increased 10.0% vs. FY20 due to a higher volume of
ore deposited following the Covid-19 operational restrictions last year in
addition to the aforementioned stability problem, and to a lesser extent, a
higher ore grade. This was partially offset by a lower recovery rate for
reasons explained above.
The 2022 estimated gold ore grade will be in the range of 0.40-0.50g/t, as the
mine approaches the end of its operational life.
JUANICIPIO
Development and stope ore from Juanicipio continued to be processed in the
Fresnillo and Saucito flotation plants. On an attributable basis, Juanicipio
produced 914 koz of silver and 2,232 oz of gold in 4Q21, and 1.8 moz of silver
and 3,683 oz of gold in 2021.
The construction of the Juanicipio plant was delivered on schedule during the
quarter. However, the mill commissioning timeline was extended by
approximately six months to focus on complying with the new requirements from
the state owned electrical company and the energy regulator to complete the
tie-in to the national grid.
We continue with the pre-commissioning testing and once the required permits
have been granted, we will look to ramp up operations to 85%-90% capacity by
the end of the year.
SILVERSTREAM
Quarterly Silverstream production decreased 19.6% and 7.9% vs. 3Q21 and 4Q20
respectively due to a lower volume of ore processed and ore grade.
Full year Silverstream production increased 12.7% vs. FY20 due to a higher ore
grade and volume of ore processed.
Silver production in 2022 is estimated to be in the range of 2.5-3.5 moz.
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), two development projects - the Pyrites Plant at
Fresnillo and Juanicipio, both of which have been completed but approvals to
operate are pending, and three advanced exploration projects - Orisyvo, Rodeo
and Guanajuato, 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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