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 2018 and generating 16.9% of total adjusted revenue.

Ownership: 100% Fresnillo plc
Location: Zacatecas
Commodity: Silver
Operational since: 1554
Facilities: Underground mine and flotation plant
Workforce: 1,122 employees, 2,159 contractors
Milling Capacity: 8,000 tpd / 2,640,000 tpy
Average ore grade in reserves: 240 Silver g/t, 0.79 Gold g/t
Total Reserves: 179.7 moz Silver, 590 oz Gold
Mine Life: 8.6 years (2017: 8.8)

Quarterly Production

 

1Q19

1Q18

% change

4Q18

Ore processed (t)

574,347

637,410

-9.9

571,330

         

Production

       

Silver (koz)

2,952

4,336

-31.9

3,244

Gold (oz)

11,446

10,431

9.7

10,437

Lead (t)

3,537

5,783

-38.8

3,867

Zinc (t)

5,247

8.866

-40.8

6,153

         

Ore grades

       

Silver (g/t)

181

232

-21.8

199

Gold (g/t)

0.82

0.66

24.2

0.76

Lead %

0.72

1.00

-28.1

0.79

Zinc %

1.31

1.90

-30.9

1.52

Annual Production

AR18 FRES Mine Production

AR18 FRES Mine Financial Performance

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)

15,117 (FY18) % (8.4) Change

Gold (oz)

42,290 (FY18) % 9.0 Change

Lead (t)

19,619 (FY18) % (4.4) Change

Zinc (t)

31,094 (FY18) % 3.6 Change

Financial Highlights

Adjusted Revenue (US$m, FY18)

378.3 % 10.2 Change

Segment Profit (US$m, FY18)

211.5 % (16.1) Change

Capital Expenditure (US$m, FY18)

121.1 % 8.4 Change

Exploration (US$m, FY18)

18.2 % 1.7 Change

Highlights - 1Q19

  • Quarterly silver production decreased 31.9% vs. 1Q18 due to a lower ore grade resulting from the previously described differences with the geological model, lowerequipment availability and the lower than expected volumes of development ore as a result of the narrower veins.

  • As described in prior quarters, we are taking a number of actions to address the Fresnillo mine performance, including intensifying our infill drilling programmes, controlling dilution, improving coordination amongst operating teams, improving the maintenence programme as well as making further investment in equipment and infrastructure. We are also trialing semi-automatic drilling equipment to limit down time during shift changes, and improving the speed of site access for operational staff to improve equipment utilisation rates.

  • In addition, we have agreed to extend new employees' shifts into Sundays. We expect this will have a positive impact on volumes of ore processed after a period of training.

  • Silver production is down 9.0% vs. Q418 driven by the lower silver ore grade. This is due to the aforementioned differences with the geological model which are being addressed through an intense infill drilling programme.

  • Silver production is expected to gradually increase during the year, albeit with some monthly fluctuations, as the actions described above take effect.  As a result, silver production will be weighted to the second half of the year.

  • Expected silver ore grade in 2019 remains between 210-220 g/t.

  • Quarterly by-product gold production increased 9.7% vs. both, 1Q18 and 4Q18, due mainly to the higher ore grade.

  • Quarterly by-product lead and zinc production decreased 38.8% and 40.8% respectively vs. 1Q18 due to a lower ore grade, volume of ore processed and to a lesser extent, lower recovery rate.

  • When compared to the previous quarter, by-product lead and zinc production also decreased 8.5% and 14.7% repectively driven by a lower ore grade.

2018 - Summary

  • Silver grade of 214 g/t

  • Development rates declined

  • New contractor hired during the year

  • 70,322 metres of in-fill drilling carried out

  • Deepening the San Carlos shaft continued

Performance Targets - 2019

  • Infill drilling programme to continue
  • Management control of the development rates to be enhanced
  • Tunnel boring machine to commence in 2H19
  • Deepening of the San Carlos shaft to continue, expected to be commissioned in 2020
  • Construction of the tailings flotation plant to continue
  • Install flotation cells at the beneficiation plant, 2nd stage of the expansion