Gold Miners See Lower Production in 1Q22

In 1Q22, leading Mexican gold miners saw their production slump compared to the past year. The 12 main producers showed a combined output of 714,199oz, a 11.8 percent drop compared to the 809,735oz produced by 11 companies in 1Q21. Seven out of the 12 corporations registered lower output in their Mexican operations, 4 posted an increase and 1 reported stable production.

Even though production dropped, most of the companies still expect to meet their original guidance for 2022, according to BNamericas.

According to the US Geological Survey, Mexico produced 3.2Moz in 2021, which makes the country Latin America’s largest gold producer. The top Mexican producing companies are Fresnillo, Newmont, Torex Gold, Equinox Gold and Agnico Eagle Mines.

Fresnillo saw a year-on-year decrease of 34.4. percent in 1Q21, going from 228,193 to 149,792oz due to lower grades and volumes of ore at its biggest gold mine, Herradura. The American company Newmont, the largest gold producer in Latin America, recorded a production drop at its Peñasquito mine, going from 178,000 to 137,000oz.

Torex Gold’s El Limón-Guajes gold production fell from 129,509 to 112,440oz. Nevertheless, Judy Kuzenko, CEO, said that production is expected to increase in the next quarters of the year. Agnico Eagle Mines also experienced a drop from 50,460 to 47,878oz, mainly due to the company’s lower output at its Pinos Altos and Crestón Mascota mines.

By contrast, Equinox Gold was the only company to report a strong increase as production went from 29,447 to 50,123oz due to higher production at its Los Filos mine and the addition of the Mercedes mine acquired in April 2021.

Experts argue that while in 2021 Mexico ranked as the world's seventh-largest gold producer and therefore could benefit greatly from higher gold prices. Nevertheless, a drop in production could hamper its gains. In 2022, Mexico is expected to produce 3.03 Moz of gold, showing a decrease of 7.5 percent compared to the 2021 gold production of 3.27 Moz, according to estimates made in conjunction with the 19 main gold producers in the country, reported BNamericas.

The general decrease in production is due to lower grades and mine closures at two of Mexico's largest gold producers, Newmont and Fresnillo. However, experts believe that Mexico could compensate for the production drop since 6 of the 19 companies considered in the estimate are expected to increase production. However, this perspective can only be confirmed at the end of 2022.