Fresnillo Lowers Gold Production in 2021

Fresnillo Plc has announced it expects lower gold production for 2021, mainly due to the landslide that affected its operations. As a result, the company’s shares on the London Stock Exchange (LSE) fell around 12 percent on Wednesday.

In a press release, the company explained that less ore had been recovered at Noche Buena as it approaches its closure and because of a non-hazardous local landslip that limited access to deeper areas of the mine.

Noche Buena was acquired in 2008 from Seavridge and is part of the Fresnillo’s district consolidation strategy in Sonora. In 2019, Noche Buena produced 12 percent of the company’s total gold and generated more than 8 percent of its total revenue, reported Fresnillo.

In July, company officials said that the devaluation of the Mexican peso against the US dollar and the lower volumes of ore deposited at Herradura and Noche Buena affected productions costs after a reduction in inventories due to the COVID-19 pandemic, reported MBN.

According to mining.com, the company cut its year gold production outlook twice in 2020 due to COVID-19, which restricted its mining operations at the Herradura district, forcing it to operate with fewer workers.

In 2020, gold production totaled 769.6koz, which is lower than the 8.75.9koz produced in 2019. For 2021, the company expects a gold output between 675koz and 725koz and a silver production between 53.5Moz and 59.5Moz, up from the 53.1Moz produced last year. Additionally, Fresnillo announced there has been progress at its Juanicipio processing plant during 4Q20. Its commissioning is expected in 4Q21, which was postponed due to the delay in infrastructure contracts during the COVID-19 lockdowns.

Among its development projects, the company has the construction of the Pyrites plant at the Fresnillo district, which was commissioned in 4Q20 and is currently complying with schedule and budget. The beginning of operations was also delayed due to COVID-19-related restrictions and inspections, which required more energy permits. The company announced that once the final inspection is completed and permits are approved, the company will reach full capacity in one quarter.

Meanwhile, the Fresnillo flotation plant optimization to manage higher content of lead and zinc was commissioned during 4Q20. However, the connection of the circuit to the beneficiation plant was postponed until February to avoid operational interruptions.

Octavio Alvídrez, CEO at Fresnillo, said he was proud that despite the challenges, the company delivered strong operational performance. Alvídrez emphasized that the company successfully developed several projects such as the Pyrites Plant, which is a remarkable achievement under current circumstances. Alvídrez said the high quality of Fresnillo’s team and resource base continue to bring confidence to the company as it enters 2021.