Performance

Production Report - 4Q22

Octavio Alvídrez, Chief Executive Officer, said: “Fresnillo reports a solid operating result in the fourth quarter, with full year production in line with our guidance. In particular silver output was driven by a strong performance from our Fresnillo mine which is showing consistent improvement and the continued contribution of our new Juanicipio project offsetting the expected lower grades at San Julián. During the year we have worked hard to minimise the impact of a very tight labour market and to mitigate the impact of the labour reform in Mexico. Our recruitment and training campaigns are now complete and the mines are well staffed for 2023. A key highlight in the fourth quarter was the successful tie-in to the national electricity grid of our new Juanicipio mine. Commissioning is ongoing and we expect a gradual ramp up in the coming months. We very much look forward to seeing this major new project deliver on its potential, making a sizeable addition to our overall production for many years to come."  Read full release »


Silver

  • Full year attributable silver production of 53.7 moz (including Silverstream), in line with guidance, slightly above FY21 with production from Juanicipio and increased volumes of ore processed at Fresnillo, offset by the lower ore grade at San Julián (DOB).
  • Quarterly attributable silver production of 12.5 moz (including Silverstream), down 7.8% vs. 3Q22 with stronger performances at the Fresnillo mine and San Julián (veins) offset by lower production at other mines, and a decrease in production from the Silverstream.
  • Quarterly attributable silver production (including Silverstream) decreased 3.0% vs. 4Q21 due to a decrease in ore throughput and lower ore grade at San Julián (DOB) and Ciénega, mitigated by increased volumes of ore processed and higher ore grades at Fresnillo.

Gold

  • Full year attributable gold production of 635.9 koz, in line with guidance, down 15.3% vs. FY21, primarily due to a lower recovery rate as higher volumes of sulphide ore are processed and lower ore grade at Herradura, and a decrease in the volume of ore processed and lower ore grades at Noche Buena, Saucito and Ciénega.
  • Quarterly attributable gold production of 168.0 koz, up 5.5% vs. 3Q22, mainly due to an increase in volumes of ore deposited at Herradura, partly offset by decreased volumes of ore processed and a lower recovery rate at Noche Buena and lower ore grade and a decrease in ore throughput at Saucito.
  • Quarterly attributable gold production increased 11.7% vs. 4Q21 driven by increased volumes of ore deposited and higher ore grades at Herradura, partly offset by decreased volumes of ore deposited and lower ore grade at Noche Buena.

By-Products

  • Full year attributable by-product lead production decreased 6.4% vs. FY21 due to a decrease in the volume of ore processed and lower ore grade at Saucito and decreased ore grade at San Julián (DOB), mitigated by increased ore throughput and higher ore grade at Fresnillo and increased contribution from Juanicipio.
  • Quarterly attributable by-product lead production decreased 4.9% vs. 3Q22 due to decreased ore throughput and lower ore grade at Saucito and a lower volume of ore processed from Juanicipio.
  • Quarterly attributable by-product zinc production decreased 9.8% vs. 3Q22 due to a decreased volume of ore processed and lower ore grades at Saucito and Fresnillo, and lower contribution from Juanicipio.
  • Quarterly attributable by-product lead production increased 7.8% vs. 4Q21 driven primarily by increased volumes of ore processed and higher ore grades at Fresnillo and increased contribution from Juanicipio, partly offset by lower ore throughput at Saucito.

Development Projects

Commissioning of the Juanicipio plant is ongoing. We continue to expect a gradual ramp up with the objective of reaching full nameplate capacity in the third quarter of 2023. As reported, ore will be processed at the Juanicipio plant but can also continue to be processed at our nearby Saucito and Fresnillo operations if required. Having achieved Juanicipio’s tie-in to the national grid, the focus is to get the pyrites plant connected by the end of 1Q23, with commissioning and ramp up starting immediately afterwards.

Safety Performance

We continue with our ‘I Care, We Care’ programme and will continue working towards identifying preventive measures to provide a safer environment for our workforce. We remain committed to meeting our Zero Fatalities target and continue encouraging adherence to stringent safety policies and implementing controls and training to guarantee a strong safety culture.

Operating Environment

As communicated in previous reports, the labour reform in Mexico which restricts subcontracting of labour came into effect from September 2021. This resulted in the requirement to internalise a proportion of our contractor workforce. Contractor uptake varied across the Group, resulting in staff vacancies and lower equipment availability at our underground mines. The labour market remains very tight in common with other sectors and indeed geographies. However, our recruitment and training campaigns are now complete and the mines are well staffed for 2023.

2023 outlook

Our 2023 guidance issued today is in line with previous expectations in terms of silver equivalent ounces. We expect increased production of gold due to an updated mine plan at Herradura and a slight increase in volumes at Noche Buena following condemnation drilling, alongside moderated production of silver due to the later than expected ramp up at Juanicipio (from mid 2022 to early 2023) and tie in of the pyrites plant at Fresnillo. 

Attributable silver production expected to be in the range of 57.0 to 64.0 moz (including Silverstream).

Attributable gold production expected to be in the range of 590 to 640 koz.

Taking the above ranges and expressed in silver equivalent ounces1, production is expected to be 104 -115 million ounces.

Total Production

 

4Q22

3Q22

% change

4Q21

% change

FY22

FY21

% change

Silver (koz)

12,073

12,787

(5.6)

12,230

(1.3)

51,052

49,961

2.2

Silverstream (koz)

450

799

(43.7)

684

(34.2)

2,688

2,688

(14.2)

Total Silver (koz)

12,522

13,586

(7.8)

12,914

(3.0)

53,740

53,095

1.2

Gold (oz)

167,969

159,205

5.5

150,313

11.7

635,926

751,203

(15.3)

Lead (t)

12,756

13,415

(4.9)

11,837

7.8

52,950

56,573

(6.4)

Zinc (t)

23,060

25,560

(9.8)

22,899

0.7

99,153

99,397

(0.2)


Financial Performance

 

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

Total attributable silver
production incl. Silverstream (Moz)

53.1

53.1

54.6

61.8

58.7

53.0

47.0

45.0

43.0

41.0

Attributable Gold Production (koz)

751.2

769.6

875.9

922.5

911.1

935.5

761.7

596.0

425.8

473.0

EBITDA (millions of US$)

1,206.3

1,169.1

674.0

915.1

1,060.1

1,032.0

547.5

567.3

729.8

1,315.3

Cash flow from operating activities
before changes in working capital
(millions of US$)

1,208.3

1,168.7

685.5

930.7

1,073.7

1,023.3

537.3

568.5

750.2

1,356.7


Decade of progress and achievement

Prelims 27FEB17 Decade Of Progress And Achievement

Key Commitments and Targets

1. Explore » Ensure business continuity and growth by replenishing depleted reserves and maintaining a robust growth pipeline
Evaluate early-state acquisitions and maintain reserves for 10 years. Ensure organic growth and assess key acquisition opportunities.
2. Develop » Deliver growth through development projects
Deliver profitable growth by advancing new projects towards commissioning, whist optimising cash flow and returns. Maintain track record of delivery on time and on budget and focus on CAPEX control as well as specialised engineering and construction teams.
3. Operate » Maximise the potential of exisiting operations
Maximise our potential of exisiting operations whilst maintaing our position as leading low cost producer. Operate at 100% capacity and remain a low-cost producer whilst optimising mining methods and metallurgy to maintain high recovery rates.
4. Sustain » Advance and enhance the sustainability of our business and uphold our licence to operate
Strengthen our safety performance with zero tolerance for non-compliance, and increase investment and support for training and oversight. Improve general health and minimise environmental impact whilst maintaining sound relations within our communities.