Fresnillo hit by faltering silver prices and costs

City A.M. Reporter
MEXICAN miner Fresnillo, the world’s largest primary silver producer, said yesterday its first-half profit dipped nine per cent on the back of weaker average silver prices and rising costs.

Core profit, or earnings before interest, tax, depreciation and amortisation (Ebitda), dropped to $684.4m (£436.4m), a better result than some analysts had expected, while attributable profit fell 25 per cent to $366.7m, also less steeply than forecast as margins held up.

Fresnillo, also Mexico’s second-largest gold miner, has been hit by a 13 per cent fall in the price of silver and said the cost of sales rose 34.5 per cent compared with the first half of last year, fuelled by higher production and labour costs.

It will pay an interim dividend of $0.15.

Last week, the miner announced chief executive Jaime Lomelin was retiring at 77 and would be replaced by Octavio Alvidrez, well-known to London’s financial community after a spell as head of investor relations at Fresnillo between its listing in 2008 and 2010.

Fresnillo also confirmed it was on track to meet silver and gold output targets for this year, helped by the ramping up of production at its new Saucito mine.