Fresnillo profit down as silver prices tumble

FALLING silver prices weighed on full-year profits last year for Mexican precious metals miner Fresnillo, it said yesterday.

Profit fell 19 per cent to $845m (£567m) over 2012 – on revenues down 0.9 per cent year on year at $2.3bn – hurt by higher exploration expenses and a 10 per cent drop in average realised silver prices.

Lower ore grades at its flagship Fresnillo mine also weighed on profits, although the company – the world’s largest miner focused on producing silver – said a ramp up in production at its Saucito mine helped offset the decline.

Over 2012, its Noche Buena gold mine was brought on stream, which boosted production.

Silver production over the year fell 2.1 per cent to 41m ounces, while output of the yellow metal was up 5.4 per cent to 473,000 ounces.

Production of silver will remain broadly flat this year, Fresnillo has forecast, with gold production rising slightly as the Noche Buena mine continues to ramp up to full output.

“There is no certainty that the fundamentals will remain in place to support long-term demand for both silver and gold,” Fresnillo warned yesterday, adding it was well-positioned in the market.