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

 

1Q19

1Q18

% change

4Q18

Ore processed - Phase I (t)

322,883

310,742

3.9

337,428

Ore processed - Phase II (t)

545,341

531,459

2.6

587,905

         

Production - Phase I

       

Gold (oz)

17,632

19,791

-8.3

23,003

Silver (koz)

1,084

3,568

-17.2

3,903

         

Production - Phase II

       

Gold (g/t)

508

680

-25.3

938

Silver (g/t)

1,868

2,123

-12.0

2,524

Lead (%)

1,730

1,328

30.3

2,017

Zinc (%)

5,682

5,252

8.2

6,479

         

Ore grades - Phase I

       

Gold (g/t)

1.78

1.97

-9.8

2.11

Silver (g/t)

114.81

158.35

-27.5

137.22

Ore grades - Phase II

       

Gold (g/t)

0.08

0.09

-16.5

0.1

Silver (g/t)

124.45

146.64

-15.1

158.09

Lead (%)

0.43

0.40

8.0

0.51

Zinc (%)

1.37

1.31

4.6

1.48

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

Highlights - 1Q19

San Julián Veins

  • Quarterly silver and gold production decreased 25.0% and 7.7% respectively vs. 1Q18 due to a lower than expected ore grade, which is temporary, mitigated by a higher volume of mineral processed.

  • Similarly, quarterly silver and gold production decreased 21.4% and 20.1% respectively vs. 4Q18, due to the lower ore grade and to a lesser extent, a lower volume of ore processed resulting from mechanical difficulties with the mill.

  • Gold ore grades expected to be in range of 1.6-1.7 g/t and silver grades to average between 130-140 g/t.

San Julián Disseminated Ore Body

  • Quarterly silver production decreased 12.0% vs. 1Q18 due to a lower ore grade, mitigated by a higher volume of ore processed. Compared to the previous quarter, silver production decreased 26.0% resulting from a lower ore grade and volume of ore processed.

  • Quarterly gold production decreased 25.3% vs. 1Q18 due to a lower ore grade and a lower recovery rate. Gold production decreased 45.8% due to a lower ore grade, recovery rate and volume of ore processed.

  • Decrease in silver ore grade expected to be temporary and guidance for the full year remains between 160-170 g/t.

  • Quarterly by-product lead production increased 30.3% vs. 1Q18 due to a higher ore grade and higher recovery rate. Compared to 4Q18, by-product lead production decreased 14.2% due to a lower ore grade and lower volume of ore processed, mitigated by a higher recovery rate.

  • Quarterly by-product zinc production increased 8.2% vs. 1Q18 due to a higher ore grade. When compared to 4Q18, by-product zinc production decreased 12.3% driven by a lower ore grade and volume of ore processed.

2018 - Summary

  • Sustainably operating both phases above their nameplate capacities, despite low water availability restricting processing capacity in 1H18

  • Indigenous consultation concluded, construction of the water reservoir began

  • Resources within the San Julián area of influence increased following an intensive exploration programme

  • Completed second stage of the expansion of tailings dam, a downstream structure

  • Full capacity achieved in 2H18 following low water availability in 1H18 – Initiatives taken to reduce risk going forward

Performance Targets - 2019

  • Conclude the construction of the water reservoir by year end
  • Ensure sufficient water is available to run the mine at full capacity while water reservoir is under construction
  • Continue preparation of the mine
  • Focus on converting resources to reserves, including exploring the district geological potential