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

 

4Q20

3Q20

% change

4Q19

Ore processed (t)

590,449

551,589

7.0

618,940

         

Production

       

Silver (koz)

3,213

3,085

4.2

3,192

Gold (oz)

9,485

9,295

2.0

11,723

Lead (t)

5,254

4,588

14.5

5,665

Zinc (t)

9,051

7,328

23.5

9,348 

         

Ore grades

       

Silver (g/t)

190

193

-1.9

181

Gold (g/t)

0.71

0.77

-7.1

0.82

Lead %

1.08

0.95

13.3

1.08

Zinc %

2.19

1.83

19.5

2.10

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, FY19)

164.6 % (22.2) Change

Capital Expenditure (US$m, FY19)

172.8 % 42.7 Change

Exploration (US$m, FY19)

13.3 % (26.9) Change

4Q20

  • Quarterly silver production was up 4.2% vs. 3Q20 as a result of an increase in the volume of ore processed. This followed a quarter where fewer personnel were on site following Covid-19 preventive measures affecting employee attendance, development rates and equipment availability. While these measures continue to be enforced, better personnel management has improved production.

  • Quarterly and full year silver production remained flat vs. both 4Q19 and FY19 due to a higher ore grade resulting from incremental improvements achieved following the implementation of our performance improvement initiatives, offset by a lower volume of ore processed for reasons explained above.

  • Our performance improvement plan, as set out on the Capital Markets Day in December 2019, continues to be implemented. We continue to focus on controlling dilution and enhancing blasting and drilling techniques to cope with the narrower veins.

  • Development rates increased to an average of 3,241m per month in 4Q20 (3Q20: 2,878m per month), marginally missing our target of 3,300m per month by year end, but a good performance given the impact of Covid-19 related personnel issues (including self isolation and quarantine). For the full year, development rates increased to 3,130m per month on average, up 3.1% vs. FY19 (3,037m per month) as a result of the ramp up of the tunnel boring machine and the new contractor hired at the end of 2019.

  • Quarterly by-product gold production increased 2.0% vs. 3Q20 driven by a higher volume of ore processed, offset by a lower ore grade

  • Quarterly and full year by-product gold production decreased 19.1% and 26.5% vs. 4Q19 and FY19 respectively due to lower ore grades, lower volumes of ore processed and lower recovery rates.

  • Silver ore grade in 2021 is expected to be in the range of 190 to 210 g/t, while the gold ore grade is estimated to be between 0.55 to 0.70 g/t.

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