Fresnillo hit record production of gold and silver in 2016

Courtney Goldsmith
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The firm had a record year for gold and silver
The firm had a record year for gold and silver (Source: Getty)

Precious metals miner Fresnillo reported record-breaking annual gold and silver production in its fourth quarter report, but its shares have slipped as prices remain low.

In 2016, the miner produced 935,300 ounces of gold, up 22.8 per cent, and 50.3m ounces of silver, up 7.1 per cent from the previous year.

After breaking records in the third quarter of 2016, fourth quarter production levels were up again. The FTSE 100-listed firm brought in 24.2 per cent more gold compared with 2015, beating its upped guidance, mainly due to reduced gold inventories at its Herradura mine. Against the previous quarter, production was up 22 per cent.

Silver production for the three months ended 31 December increased 9.5 per cent compared with 2015, which Fresnillo said was mainly due to the ramp-up of its leaching plant San Julian phase one, a higher ore grade at its Cienega mine and increased contribution from its Silverstream site.

Fresnillo's shares were down more than 1.37 per cent at 1,461.63p in afternoon trading despite its production levels as prices for the two metals remains low, according to Neil Wilson, analyst at ETX Capital.

Chief executive Octavio Alvídrez said the company contineued to experience issues impacting the delivery of its turnaround plan at its Fresnillo mine.

"We have, however, implemented a number of measures and remain focused on addressing these issues and are targeting a year-on-year increase in silver production in the range of 7-10 per cent at the mine in 2017," he added.

For the year ahead, 2017 gold production is expected to be between 870,000 to 890,000 ounces as the company reaches a steady level of inventories. Silver production is expected to be in the range of 58m to 61m ounces, on track to reach 65m ounces by 2018.

The firm said it is confident the commissioning of its flotation plant, San Julian phase two, will take place in the second quarter of 2017, but it was previously set to be commissioned by the end of 2016.

Read more: Gold miner Fresnillo is ramping up production in the face of Brexit jitters

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