Fresnillo Weathers Pandemic, Presents Solid 1H20 ResultsBy MBN Staff | Fri, 07/31/2020 - 11:16
Fresnillo plc reported strong financial results for 1H20. “The combination of higher commodity prices and lower costs has resulted in a significant rise in profitability,” commented CEO Octavio Alvídrez.
The company explained that total revenues increased 5.3 percent to US$1.125 million in 1H20, mainly due to higher gold and silver prices and, to a lesser extent, higher volumes of zinc and lead sold. This was partially offset by lower sale volumes of gold and silver and the decrease in zinc and lead prices. The average realized gold price increased 27 percent in 1H20, while the average realized silver price increased 10 percent.
Fresnillo plc noted that adjusted production costs decreased by 10.6 percent to US$506.6 million in 1H20. The decrease resulted mainly from the devaluation of the Mexican peso against the US dollar and from lower volumes of ore deposited at Herradura and Noche Buena. However, the company added that these favorable impacts were partly offset by the increase in development (US$25.7 million).
Also, the variation in the change in work in progress had a positive effect totaling US$24.2 million compared to 1H19. This resulted from the re-assessment of the gold content on the old leaching pads at Herradura with an estimated positive effect of US$65.1 million, the company reported. This was partially offset by the net effect of the reduction of inventories at Herradura and Noche Buena during the pandemic.
These strong results were achieved while the company strived to keep its workers and communities safe from COVID-19. “Our purpose is to contribute to the well-being of people, through the sustainable mining of silver and gold and this has guided all of our decisions throughout the pandemic. Our commitment to prioritize the well-being of our workforce and communities at all times meant that we acted promptly and rapidly, while adapting our activities and operations to protect our staff’s health. COVID-19 has presented a challenge to Fresnillo in 1H20,” said Alvídrez.
Fresnillo plc’s CEO also highlighted the company’s extensive engagement with stakeholders, which has resulted in a high level of trust between the company, its workforce and the government. “This trust has meant that we have been able to minimize the pandemic’s impact on our operations. Production at our underground mines remains broadly in line with the plan, despite a reduction in the number of workers on site. The impact on our open pit gold mines has been greater, as mining activities had to cease for around six weeks, although processing continued. However, mining has now restarted and activities are ramping up,” Alvídrez concluded.