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

 

2Q19

1Q19

% change

2Q18

Ore processed (t)

619,852

574,347

7.9

620,906

         

Production

       

Silver (koz)

3,455

2,952

17.0

3,793

Gold (oz)

13,489

11,446

17.8

10,953

Lead (t)

5,233

3,537

48.0

5,052

Zinc (t)

6,710

5,247

27.9

7,979

         

Ore grades

       

Silver (g/t)

192

181

6.1

211

Gold (g/t)

0.90

0.82

9.8

0.70

Lead %

0.97

0.72

34.7

0.90

Zinc %

1.60

1.31

22.1

1.74

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 - 2Q19

  • Quarterly silver production increased 17.0% vs. 1Q19 due to an increase in ore throughput resulting from the improved mine coordination and operational control achieved following the investment in technology and systems together with other productivity initiatives. The increase in ore processed, together with some early stage improvements in dilution control, had a positive effect on the silver ore grade.

  • Quarterly and 1H silver production decreased 8.9% and 21.2% vs. 2Q18 and 1H18 respectively, primarily driven by lower ore grades resulting from the differences with the geological model and the delays in development as previously identified.

  • Mine performance improvement remains a key priority and a number of iniativies are on-going. The infill drilling programme has progresed well, which will result in an updated and more accurate geological model. We anticipate the lower dilution rate to continue following the introduction of operational measures and controls and the more effcient and accurate topographic scanner. With these new measurements, blasting, operational controls and mine design will be adjusted and further improvements in dilution control are expected towards the last quarter of the year.

  • Development rates averaged 3,100 mts per month in 2Q19 as more preparation and infrastructure (electricity, ventilation, waste haulage) of the mine was needed to ensure continuous improvement. Training of new personnel and improvements to maintenance programme to increase equipment availability are still underway.

  • Despite improvements achieved in 2Q19, the pace at which these initiatives are progressing is not expected to compensate for low production in 1H19. As a result, Group’s total silver production will be impacted and guidance has been adjusted.

  • Silver ore grade in 2019 is expected to be between 190-200 g/t, while gold, lead and zinc ore grades are estimated to remain around current levels of 0.85 g/t, 0.85% and 1.45 respectively.

  • Quarterly by-product gold production increased against all comparable periods as a result of higher grades.

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