San Julián (Phase I and II)

 

Ownership: 100% Fresnillo plc
Location: Chihuahua/Durango border
Commodity: Silver/Gold
Facilities: Underground mine, flotation plant and a dynamic leaching plant
Workforce: 143 employees, 1,717 contractors
Operational since: 2H16 (Phase I) / 1H17 (Phase II)
Anticipated Production: Avg. annual production of 14.2 moz silver, 49.3 koz gold
Pre-operative Capex: US$515 million
Life of Mine: 3.5 years Veins, 6.3 years Disseminated Ore Body (2017: 9.0)

The San Julián silver-gold project is a cornerstone of our current and future production goals. In 2018 it contributed 24% to total silver production and generated 16% of total adjusted revenue.. The geological potential identified in the region thus far may be sufficient to establish a new mining district in the future. The San Julián project includes construction of two plants: i) a dynamic leaching plant to treat ore from the veins and ii) a flotation plant with 6,000 tpd capacity to process ore from the disseminated body.


Quarterly Production

 

3Q19

2Q19

% change

3Q18

Ore processed: Phase I - Veins (t)

321,798

338,797

-5.0

332,836

Ore processed: Phase II - DoB (t)

559,693

562,534

-0.5

561,808

         

Total Production San Julian

       

Gold (oz)

14,234

18,303

-22.2

19,452

Silver (koz)

3,080

3,589

-14.2

3,626

         

Production: Phase I - Veins

       

Gold (oz)

13,711

17,667

-22.4

18,458

Silver (koz)

1,035

1,246

-16.9

1,347

         

Production: Phase II - DoB

       

Gold (g/t)

523

636

-17.7

994

Silver (g/t)

2,045

2,343

-12.7

2,279

Lead (%)

1,792

1,891

-5.2

1,263

Zinc (%)

5,705

5,873

-2.9

5,041

         

Ore grades: Phase I - Veins

       

Gold (g/t)

1.39

1.71

-18.7

1.84

Silver (g/t)

108.09

124.34

-13.1

137.19

Ore grades: Phase II - DoB

       

Gold (g/t)

0.07

0.08

-17.7

0.11

Silver (g/t)

130.13

149.17

-12.8

155.54

Lead (%)

0.41

0.44

-7.6

0.40

Zinc (%)

1.35

1.42

-4.8

1.33

 

AR18 San Julian Production

AR18 San Julian Financial Performance

Financial Highlights

Adjusted Revenue (US$m, FY18)

366.5 % 27.6 Change

Segment Profit (US$m, FY18)

176.5 % 1.0 Change

Capital Expenditure (US$m, FY18)

83.1 % 5.1 Change

Exploration (US$m, FY18)

14.3 % 472.0 Change

1H19

  • Both processing plants working above nameplate capacity.

  • Geotechnical instability in the disseminated ore body (D.O.B) during 2Q19 led to temporary re-sequencing of the mine plan.

  • Construction of the water reservoir continued – expected conclusion by year end.

3Q19

San Julián Veins

  • Quarterly silver and gold production decreased 16.9% and 22.4% vs. 2Q19 respectively due to lower ore grades resulting from differences with the geological model and a temporary lower volume of ore processed while we transitioned to a new contractor. That contractor is now in place and is already operating at the higher grade areas of the mine.

  • Quarterly and YTD silver production decreased 23.2% and 17.0% mainly due to the depletion of high grade areas at the San Julián and San Atanasio veins.

  • Quarterly and year to date gold production decreased 25.7% and 14.2% vs. 3Q18 and YTD18 respectively, primarily driven by lower ore grades resulting from the same reason as explained above.

  • We expect gold and silver ore grades to remain in the ranges of 1.6-1.7 g/t and 110-125 g/t, respectively.

San Julián Disseminated Ore Body

  • Quarterly silver production decreased 12.7% vs. 2Q19 due to a lower ore grade. This resulted from the ongoing limited access to higher grade areas caused by geotechnical conditions. As explained in prior quarters, the mine sequencing has been changed to maintain the geotechnical stability of some high ore grade stopes and we expect to regain access to these higher quality areas by the end of 2020.

  • Quarterly silver production decreased 10.3% and 6.2% vs. 3Q18 and YTD18, respectively, driven by lower ore grades for reasons explained above.

  • The silver ore grade guidance for the full year remains at 125-140 g/t.

2H19 Priorities

  • Re-gain access to the higher grade area of the D.O.B through mitigating actions following the temporary re-sequencing of the mine plan.
  • Conclude the construction of the water reservoir by year end.
  • Continue preparation of the mine.
  • Focus on converting resources to reserves, including exploring the district’s geological potential.