Silver boom boosts Fresnillo

Marion Dakers
MEXICAN silver miner Fresnillo was yesterday the latest firm to post bumper gains from the commodities boom, more than doubling its pre-tax profit to $1bn (£615m).

The firm said the price charged for its gold and silver rose 27 and 40 per cent respectively during the year, on production up 33.4 and 1.7 per cent – all record highs for Fresnillo.

The company had no debt and a cash position of $559.5m at the end of the year, more than enough to fund its planned capital expenditure as it looks to expand or start six mines in 2011.

The London-listed miner said it expects silver production to rise five per cent this year to 44m ounces.

Gold output is anticipated to increase five to six per cent to around 390,000 ounces, not as fast as the eight per cent rise the company had targeted in January.

However, the firm said it was on track to produce 65m ounces of silver and over 400,000 ounces of gold annually by 2018.

Fresnillo said its production costs were in the lowest quartile of the industry at $3.30 an ounce for silver and below $400 an ounce for gold.

“For 2011, despite the uncertain outlook for economic and metal price performance, we expect that our high quality resource base and low-cost production profile will enable Fresnillo to deliver growth,” it said in a statement.

Fresnillo shares gained slightly after the announcement, closing up 0.13 per cent at £15.96.