Tuesday 30 July 2019 8:48 am

Silver miner Fresnillo's shares slide as profit plunges

Profit at FTSE 100 miner Fresnillo tumbled by more than two-thirds in the first half of the year, it said today.

The company blamed production problems and lower prices for the precipitous fall.

Profit for the six months to 30 June fell 69 per cent compared to the same period last year to $70.9m (£58.2m).

Read more: Fresnillo shares fall as it slashes production guidance

Shares fell 5.2 per cent to 752p in trading this morning.

Gross profit fell 59 per cent to $205.5m and earnings before interest, tax, depreciation and amortisation fell 45 per cent to $307.9m.

Adjusted revenue fell 10 per cent to $1.06bn.

Earlier this month Fresnillo cut its output forecast, which it blamed on construction delays in Mexico and lower quality ore.

Read more: Shine taken off Fresnillo as silver production set to fall this year

Chief executive Octavio Alvidrez said: “As we previously disclosed in our second quarter production report, continued challenges at our Fresnillo, Saucito and Herradura mines, combined with higher costs, have impacted profitability for the period.

“Following the measures put in place, we have seen some short term improvement in mine performance at both Fresnillo and Saucito and we expect to see a gradual improvement in the following quarters, albeit not at the rate we had anticipated. We have therefore adjusted our  full year production forecasts in the second quarter production report.”

During the first half silver production fell 10 per cent and gold production by seven per cent. 

The company said prices also fell, with average realised silver price down 7.5 per cent from $16.50 per ounce in the first half of 2018 to $15.20 per ounce in in the first half of this year.

Adjusted production costs rose 31 per cent to $566.4m in the first half of 2018.