Fresnillo

One of the world’s oldest continuously operated mines, the Fresnillo mine has been producing silver for more than five centuries; and recently producing 24% of the Group's total silver in 2019 and generating 15.9% of total adjusted revenue.

Ownership: 100% Fresnillo plc
Location: Zacatecas
Commodity: Silver
Operational since: 1554
Facilities: Underground mine and flotation plant
Workforce: 1,183 employees, 2,274 contractors
Milling Capacity: 8,000 tpd / 2,640,000 tpy
Average ore grade in reserves: 234 Silver (g/t), 0.76 Gold (g/t)
Total Reserves: 149.3 Silver (moz), 483 Gold (oz)
Mine Life: 7.5 years (2018: 8.6)

Quarterly Production

 

1Q20

4Q19

% change

1Q19

Ore processed (t)

598,790

618,940

-3.3

574,347

         

Production

       

Silver (koz)

3,145

3,192

-1.5

2,952

Gold (oz)

8,781

11,723

-25.1

11,446

Lead (t)

4,617

5,665

-18.5

3,537

Zinc (t)

6,758

9,348

-27.7

5,247

         

Ore grades

       

Silver (g/t)

183

181

1.1

181

Gold (g/t)

0.65

0.82

-20.7

0.82

Lead %

0.95

1.08

-12.0

0.72

Zinc %

1.69

2.10

-19.5

1.31

Annual Production

AR19 FRES Mine Production

12019 reserves as of 31 May 2019,  22019 resources as of 31 May 2019

Financial Performance

AR19 FRES Mine Financials

3Margin defined as average realised price less cash cost per ounce

History

1961

Peñoles acquires 60% interest in Cia Fresnillo

1996

Peñoles acquires remaining 40% interest in Cia Fresnillo

2004

Mill capacity is increased from 4,500 to 7,000 tpd

Production

Silver (koz)

13,007 (FY19) % (14.0) Change

Gold (oz)

52,259 (FY19) % 23.6 Change

Lead (t)

21,472 (FY19) % 9.4 Change

Zinc (t)

31,530 (FY19) % 1.4 Change

Financial Highlights

Adjusted Revenue (US$m, FY19)

361.7 % (4.4) Change

Segment Profit (US$m, FY18)

211.5 % (16.1) Change

Capital Expenditure (US$m, FY19)

172.8 % 42.7 Change

Exploration (US$m, FY19)

13.3 % (26.9) Change

1Q20

  • Quarterly silver production down 1.5% vs. 4Q19 due to lower volume of ore processed resulting from staff absences over holiday period as per FY report; mitigated by slightly higher ore grade as measures implemented to control dilution, began to take effect

  • Quarterly silver production up 6.5% vs. 1Q19 driven by higher volume of ore processed following marginal gains beginning to be seen as we continue to implement our mine improvement plan

  • Our action plan, as per Capital Markets Day (Dec-19), continues to be implemented, focusing on controlling dilution, in particular enhancing blasting and drilling techniques to cope with narrower veins, in conjunction with the use of more efficient and accurate topographic scanners. All long haul drilling stopes now scanned. Further inititives to increase efficiency and reduce downtime advanced, with use of 5 semi-automatic drilling machines now operating. Infill drilling programme to increase certainty of geological model, advanced according to plan.

  • Development rates increased vs 4Q19, to just under 3200m p/m in 1Q20 (4Q19:2,900m p/m), and up 10% vs same period in 2019 (1Q19: 2,895m p/m). As Tunnel Boring Machine continues to ramp up, we remain confident of hitting expected development rates of between 3,400-3,800 p/m by 2020 end.

  • Quarterly by-product gold production decreased 25.1% vs 4Q19 driven by lower ore grade, and to a lesser extent, lower volume of ore processed. Against 1Q19, quarterly by-product gold production decreased 23.3% due to lower ore grade and recovery rate, mitigated by a higher volume of ore processed

  • Silver ore grade for 2020 continues to be in range of 185-200 g/t, whilst gold ore grade revised to around 0.7 g/t

FY19

  • Operational action plan developed and implemented

  • Development rates improved - 3,026m/m

  • Peruvian contractor hired at year end

  • Tunnel Boring Machine (TBM) commissioned at year end

  • 126,000 metres of infill drilling carried out

  • Deeping of the San Carlos shaft continued, on track to be concluded end of 2020

2020 Priorities

  • Infill drilling programme to continue (84-90 mts).
  • Development rates to be improved; target 3,500 - 3,800 m/m by year end
  • Dilution expected to decrese to 34%
  • Continue implementing initiatives to increase productivity and efficiency
  • Ramp up TBM in 1Q20 and targeting and average 300 m/m thereafter
  • Conclude the deepening of the San Carlos shaft by year end; access 56% of Fresnillo reserves
  • Commission the tailings flotation plant in 2H20 (Pyrites plant project phase II)
  • Conclude 2nd stage of beneficiation plant expansion, installation of flotation cells