Fresnillo is on golden form as it beats targets

MINER Fresnillo’s shares surged over three per cent yesterday as it hiked its gold production target after the opening of a new mine in Mexico.

Gold production beat targets, soaring 26 per cent to 121,792 ounces in the quarter to the end of March.

Fresnillo, which was reporting production figures for the three months to the end of March, said gold output was boosted by a 42 per cent jump in gold production at its flagship Fresnillo mine, which has been active for 500 years.

It added that production from a new mine, Noche Buena, which came into commercial production in March had also fuelled rises.

Chief executive Jaime Lomelin said on the new mine: “This will significantly increase the proportion of gold production within our portfolio. This represents a step forward to consolidate Fresnillo’s position as a significant gold producer in its own right.”

The miner said silver production including output from the Silverstream agreement for the three months to 31 March fell 2.9 per cent to 9.8m ounces, compared to the same quarter in 2011, in line with expectations. Quarterly lead production rose 19.4 per cent and zinc 18.1 per cent.

Lomelin added: “The strong operational performance that Fresnillo enjoyed in 2011 has continued into 2012. We have delivered another strong quarter of production with gold beating our expectations.”

During the quarter Fresnillo signed a deal with Canadian listed miner, Orex Minerals to explore and develop a mining concession near to Fresnillo’s operations.

In return for the initial investment of $6m over three years Fresnillo will acquire a 55 per cent stake in the project with an option to extend that to 71 per cent.

Fresnillo’s shares closed 3.2 per cent higher yesterday at £1,624.