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(Sharecast News) - Fresnillo reported significant increases in silver production in the second quarter and the first half on Wednesday, driven by the ramp-up of the Juanicipio project, while gold production faced challenges amid operational issues at some of its mines.
The FTSE 100 precious metals miner said that during the second quarter, it achieved attributable silver production of 14.9 million ounces including Silverstream, making for a 12.9% increase compared to the first quarter.
It put the growth down to the ramp-up of the Juanicipio project and, to a lesser extent, a higher ore grade at the San Julián Disseminated Ore Body (DOB), as well as an increase in the volume of ore processed at Saucito.
However, the progress was partially offset by lower ore grades at the Fresnillo mine.
On a year-on-year basis, second quarter attributable silver production increased 3.5% compared to the same period in 2022.
The first half saw a 1.4% rise in silver production when compared to the first half of last year, with the increases also primarily driven by the ramp-up of the Juanicipio project, though partially offset by lower ore grades at the San Julián DOB mine.
Fresnillo meanwhile reported quarterly attributable gold production of 152,400 ounces, making for an 11.9% decrease compared to the first quarter.
The decline was blamed on the temporary suspension of operations at the Herradura mine following a stoppage by a group of unionised employees, as it reported in May.
In a year-on-year comparison, the second quarter's attributable gold production decreased 4.1% due to decreased production at the Noche Buena mine.
However, the ramp-up of the Juanicipio project and increased ore processing at Saucito partially offset that reduction.
Despite the challenges faced in the second quarter, Fresnillo said gold production in the first half was up 5.4% on the year, primarily due to increased ore processing and higher ore grades at the Herradura and Saucito mines, partially compensated for by decreased gold production at the Noche Buena mine.
On the safety front, Fresnillo reported that a fatal accident occurred at the Saucito mine in the last week of June.
The company and local authorities conducted a thorough investigation, the board said, in a bid to learn from the incident and enhance safety measures for both contractors and employees.
Looking ahead, Fresnillo's 2023 production guidance remained unchanged, with attributable silver production expected to be within the range of 57 million to 64 million ounces including Silverstream.
Attributable gold production was meanwhile expected to be within the range of 590,000 to 640,000 ounces.
On a silver equivalent basis, production was projected to be between 104 million and 115 million ounces.
"I am pleased to report a solid production performance in the first half and confirm that our full year guidance is unchanged," said chief executive officer Octavio Alvídrez.
"Higher silver production was in part due to the ongoing ramp up of our new Juanicipio mine, which is progressing as planned and we expect to reach full nameplate capacity in the next quarter.
"The continued strong grades and volumes at our Herradura mine, together with an increased contribution from Saucito, generated an increase in gold production from the previous half."
Alvídrez said Fresnillo was also pleased to complete the tie-in of the new Pyrites Plant to the national power grid, with the plant moving quickly into operations.
"Looking ahead, our focus remains on the safe operation of our mines, with a particular attention on costs, which continue to be impacted by inflation and the revaluation of the Mexican peso against the dollar, while meeting our longer-term development objectives."
Fresnillo said it would announce its 2023 interim results on 1 August.
Reporting by Josh White for Sharecast.com.
