Fresnillo shares fall as first quarter gold production dips and silver output jumps

 
Courtney Goldsmith
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Phil Phillips gold prospector
Fresnillo's shares have fallen with the price of gold in recent days (Source: Getty)

Fresnillo's shares fell more than two per cent after it said gold output slowed in its first quarter production update.

For the first three months of 2017, the precious metals miner's gold production fell 3.3 per cent to 222,300 ounces, due to lower than expected ore grades at its Herradura mine and a one-off reduction of inventory levels. However, Fresnillo said it is on track to meet full-year guidance of 870,000 to 900,000 ounces.

Silver production jumped 10.7 per cent to 13.5m ounces, including its Silverstream mine. The miner said it is on track to deliver on its guidance of 58m to 61m ounces of silver for 2017.

Fresnillo's FTSE 100-listed shares fell 2.2 per cent at 1,470p in afternoon trading.

The price of gold has fallen over the past week since the first round of the French presidential election inspired investors to go for risk-on assets, but on the whole, gold demand has been strong amid geopolitical uncertainty around the world.

Meanwhile, the depreciation of the peso since Donald Trump won the US election has pushed costs lower for Fresnillo, which mines silver and gold at six locations in Mexico.

Chief executive Octavio Alvídrez said: "We continue to focus on maximising efficiency and productivity across all our mines, and remain on course to meet our 2017 production guidance."

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