Falling prices, gold output hit H1 profits at Fresnillo

5th Aug 2014 09:03

- EBITDA down 33.3% year-on-year as metals prices fall- Silver production up 1.7%, gold output down 18.9%- Full-year production guidance maintainedProfits at Mexico-focused precious metals miner Fresnillo dropped in the first half of 2014 as a result of "significantly lower" commodity prices and a sharp decline in gold production.Nevertheless, the company still held on to its full-year guidance for production.Earnings before interest, taxes, depreciation and amortisation (EBITDA) totalled just $324.5m in the first six months of the year, down by a third on the same period of 2013.Basic and diluted earnings per share fell 11.5% to $0.177, on revenues that dropped by 26.9% to $667.1m.The miner said that attributable silver production increased by 1.7% to 21.334m ounces in the first half, as a strong performance at Saucito and an increased contribution from the Sabinas mine compensated for lower grades at the its eponymous Fresnillo project.However, attributable gold output slumped 18.9% over the year to 191,317 ounces due to temporary disruptions at Herradura and the suspensionof operations at Soleded-Dipolos.Results were also affective by a drop in the realised price of each metal, with silver down 17.9% at $20.26 per ounce and gold 11.5% lower at $1,302.07 per ounce.Chief executive Octavio Alvídrez said: "In a challenging pricing environment, our operations continue to perform very well although our financial results for the period have been impacted by lower gold and silver prices, and by the lower gold ounces sold that followed the suspension of operations at Soledad-Dipolos and the temporary stoppage at Herradura. "The latter issue has now been resolved and gold production is returning to normal levels."Operating cash generation before changes in working capital was said to have "remain[ed] significant" but sank 32.2% year-on-year to $336.7m in the first half.Fresnillo said it still expects to mine 43m silver ounces and 450,000 gold ounces this year.The shares were down 0.4% at 938.01p by 08:26 on Tuesday.BC