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

 

2Q19

1Q19

% change

2Q18

Ore processed: Phase I - Veins (t)

338,797

322,883

4.9

289,775

Ore processed: Phase II - DoB (t)

562,534

545,341

3.2

540,261

         

Total Production San Julian

       

Gold (oz)

18,303

18,139

0.9

20,097

Silver (koz)

3,589

2,953

21.5

3,533

         

Production: Phase I - Veins

       

Gold (oz)

17,667

17,632

0.2

19,584

Silver (koz)

1,246

1,084

14.9

1,263

         

Production: Phase II - DoB

       

Gold (g/t)

636

508

25.2

513

Silver (g/t)

2,343

1,868

25.4

2,270

Lead (%)

1,891

1,730

9.3

1,493

Zinc (%)

5,873

5,682

3.4

5,254

         

Ore grades: Phase I - Veins

       

Gold (g/t)

1.71

1.78

-3.9

2.12

Silver (g/t)

124.34

114.81

8.3

144.58

Ore grades: Phase II - DoB

       

Gold (g/t)

0.08

0.08

0.0

0.07

Silver (g/t)

149.17

124.45

19.9

156.71

Lead (%)

0.44

0.43

2.3

0.42

Zinc (%)

1.42

1.37

3.6

1.26

 

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.

2Q19

San Julián Veins

  • Quarterly silver production increased 14.9% vs. 1Q19 due to a temporarily higher ore grade found on the Santa Maria vein and an increased volume of ore processed due to the optimisation of the maintenance programme.

  • Compared to 2Q18, quarterly silver production remained broadly unchanged due to a lower ore grade, mitigated by a higher volume of ore processed. Similarly, first half silver production decreased 13.9% due to a lower than expected ore grade as a result of the different quality of the areas exploited.

  • Quarterly gold production remained flat vs 1Q19 due to a higher volume of ore processed, offset by a lower ore grade. Quarterly and first half gold production decreased 9.8% and 8.8% vs. 2Q18 and 1H18 respectively, driven by lower grades, mitigated by higher volumes of ore processed.

  • Expect gold ore grades in the range of 1.6-1.7 g/t and reduce silver grades to average 110-125 g/t, from 130- 140 g/t.

San Julián Disseminated Ore Body

  • Quarterly silver production increased 25.4% vs. 1Q19 mainly due to a higher ore grade, in line with the sequencing of the mine plan, and higher ore processed.

  • Compared to 2Q18, silver production increased 3.2% due to a higher volume of ore processed and increased recovery rates. This was partly offset by a lower ore grade as the sequencing of the mine plan was temporarily changed to maintain the geotechnical stability of some high ore grade stopes.

  • First half silver production decreased 4.1% vs. 1H18 mainly due to lower ore grade resulting from additional safety procedures taken as a result of the instability in areas with higher silver ore grade.

  • These changes to the mine plan have impacted silver ore grade and the guidance for the full year is decreased from 160-170 g/t to 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.