Explosives suspension lifted at Fresnillo mine but two still shut

City A.M. Reporter
SHARES in miner Fresnillo remained flat yesterday despite the group’s announcement that a temporary suspension on explosive use at its Noche Buena mine has been lifted.

The Mexico-focused firm said the country’s Ministry of Defence had reversed a court ordered suspension of its explosive permits following a dispute over land boundaries. Operations have already restarted at Noche Buena, but continue to be suspended at Herradura and Soledad, Fresnillo said yesterday. Fresnillo has confirmed it will update the market once the suspension is lifted, but analysts said yesterday that the company’s previous production guidance for 2013 was likely to have been hit by the stoppages. Fresnillo has six operating mines – all of them in Mexico – and is aiming to up production to 65m ounces of silver and 500,000 ounces of gold by 2018.

Back in August Fresnillo, the world’s largest primary silver producer, said it would slash costs after posting a 29 per cent drop in first-half earnings and cutting its dividend due to a plunge in precious metal prices. Gold prices have fallen more than 20 per cent so far this year, while silver has seen even steeper declines, putting Fresnillo and other miners under intense pressure to cut costs.