FTSE 100-listed mining company Fresnillo yesterday announced that it is evaluating cost-saving initiatives after the recent market slump in silver and gold prices.
The Mexico-based firm’s gold production decreased by 3.5 per cent year-on-year for the quarter ended 31 March 2013 due to lower recovery rates and volumes.
Silver performed better and increased by 2.6 per cent.
“Fresnillo made a strong start to 2013 and is on track to achieve the 2013 production targets,” said chief executive Octavio Alvidrez.
“However, the outlook for the precious metals market has become increasingly challenging over the first few months of the year. In the wake of the recent sharp falls in gold and silver prices we will review all capital expenditure and assess future exploration projects.”
Numis Securities believes there is scope for Fresnillo to trim back its “sizeable” $270m exploration budget and make capex savings.
“We still view Fresnillo as a conservative, stable business that is well placed to be defensive and weather any storms,” said the broker.