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

 

2Q20

1Q20

% change

2Q19

Ore processed (t)

596,115

598,790

-0.5

619.852
         

Production

       

Silver (koz)

3,611

3,145

14.8

3,455 

Gold (oz)

10,828

8,781

23.3 

13,489 

Lead (t)

6,860

4,617

48.6 

5,233 

Zinc (t)

10,978

6,758

62.4 

6,710 
         

Ore grades

        

Silver (g/t)

209

183

14.1

192

Gold (g/t)

0.79

0.65

21.1

0.90

Lead %

1.33

0.95

40.2

0.97

Zinc %

2.55

1.69

50.8

1.60

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

2Q20

  • Quarterly silver production up 14.8% vs. 1Q20 as a result of higher ore grade due to a combination of incremental improvements achieved following implementation of action plan, as set out at end of last year and described below.

  • Quarterly silver production increased 4.5% vs. 2Q19 driven by a higher ore grade for reasons mentioned above, offset by a lower voume of ore processed due to workforce constraints resulting from the COVID-19 contingency.

  • First half silver production increased 5.5% vs. 1H19 due to higher ore grade, as we continue to implement action plan.

  • Our performance improvement plan, as set out on the Capital Markets Day in December 2019, continues to be implemented, focusing on controlling dilution, enhancing blasting and drilling techniques to cope with the narrower veins. All the long haul drilling stopes have now been scanned. Further, intiatives to increase efficiency and reduce downtime have been advanced, with semi-automatic drilling machines now operating.

  • Development rates remained at a similar level vs. 1Q20, with an average of 3,183m per month in 2Q20 (1Q20: 3,200m per month), despite a reduction in the number of contractors and employees on site while they self isolated in accordance to COVID-19 guidelines. During the first half, development rates increased 6.3% (3,190m per month) vs. 1H19 (3,000m per month) as a result of the ramp up of the tunnel boring machine and the new contractor hired at the end of 2019. With these measures and assuming COVID-19 evolution does not worsen, we remain confident of hitting our expected development rates of 3,400m per month by the end of 2020.

  • Quarterly by-product gold production increased 23.3% vs. 1Q20 driven by a higher ore grade.

  • Quarterly and first half by-product gold production decreased 19.7% and 21.4% vs. 2Q19 and 1H19 respectively due to lower ore grades and to a lesser extent, lower recovery rates.
  • Silver ore grade 2020 continues to be in range of 185-200 g/t, gold ore grade estimated to remain 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