Last checked at 
(Alliance News) - Fresnillo PLC on Tuesday scaled back dividends for its half-year, as profit more than halved during the period and gold production fell by nearly 30%.
In the first half of 2022, the Mexico City-based silver and gold miner said pretax profit from continuing operations plummeted by 65% year-on-year to USD155.2 million from USD445.4 million.
Shares in Fresnillo tumbled 3.9% to 700.00 pence each in London on Tuesday morning, making it the worst performer in the FTSE 100.
Exploration expenses jumped 28% to USD77.7 million, as expected. The firm recorded a net Silverstream effect loss of USD36.3 million, widened from USD4.0 million the year before.
Total revenue fell 14% to USD1.26 billion from USD1.47 billion a year prior.
The decline was mostly a result of the lower volume of gold sold as well as a decrease in the price of silver, which was partially offset by higher zinc and gold prices, the company said.
The price of silver dropped 14% to USD22.8 per ounce, though gold prices rose 4.6% to USD1,871.1 per ounce.
Total silver production was flat year-on-year at 27.6 million ounces, as the increase in ore from Juanicipio offset lower-than-expected ore grade at San Julian DOB and the lower volume of ore processed at Saucito.
Gold production, however, fell 28% to 308,752 ounces from 428,356 ounces the year before.
The lower gold production was "primarily due to the expected decrease in the volume of ore processed and lower ore grades at Herradura and Saucito", Fresnillo said.
The firm declared an interim dividend of 3.40 cents, sharply lower than the payout of 9.90 cents the year before. The difference reflects the decrease in profit for the period, the firm said.
Looking ahead, Fresnillo expects to meet annual production guidance of between 50.5 million to 56.5 million ounces of attributable silver, and 600,000 to 650,000 ounces of attributable gold.
It expects the tie-in of Juanicipio plant and Pyrites plant to the national electricity grid to be completed in the coming weeks. The Juanicipio plant will be commissioned soon after, with the ramp up of the plant to begin "towards the end of the third quarter".
"The actions we have taken to implement the Mexican labour reform have been effective. We are on track to complete the staffing process at Fresnillo and San Julian by the end of 3Q22, and at Cienega and Saucito by year end, despite a tight labour market," said Chief Executive Officer Octavio Alvidrez.
"The global supply chain bottlenecks that so many industries are facing, together with cost inflation will have some impact in the second half. However, we are confident in our ability to weather these short term challenges, without limiting our ambitious longer term growth plans."
By Elizabeth Winter; elizabethwinter@alliancenews.com
Copyright 2022 Alliance News Limited. All Rights Reserved.