Fresnillo hikes divi after strong 2011 - UPDATE

6th Mar 2012 07:04

Fresnillo, the world's largest primary silver producer and second largest gold producer in Mexico, saw sales rise by more than a half in 2011, helped by a surge in metals prices and an increase in production.Despite the sell-off seen in the wider mining sector on Tuesday morning, shares in Fresnillo were bucking the trend, trading up 1.3% at 1,855p.Revenue in the 12 months ended December 31st increased by 55.6% from $1,409.6m to $2,192.7m. Adjusted revenue, which excludes treatment and refining charges, increased by 56.6% to $2,307.4m.The average realised silver price jumped by 62.5% during the year, while gold prices improved by 26.6%. Gold accounted for 43.7% of group revenues, up from 36.1% in 2008.Attributable gold production jumped 21.6% to a record 448.9koz during 2011, helped by the ramp-up at Soledad-Dipolos and higher throughput at Herradura. Silver output was stable at 41.87Moz."We are now a significant gold producer in our own right and have increased our 2018 target to produce 500,000 ounces per year," said Chief Executive Jaime Lomelín. The silver production target stands at 65Moz per year."For 2012, the economic outlook may be uncertain, but our commitment to continuous investment in exploration, productivity improvements, bringing a new mine or expansion on line every year for the next five years, cost controls and the enhanced safety culture remains unchanged, supporting long-term value creation for all stakeholders," he said.Pre-tax profit jumped by 50.1% from $1,022.4m to $1,534.4m.Following two dividends paid out earlier in the year - after rising metals prices and a solid operating performance generated additional cash flow - the total dividend stands at 102.85 cents per share, significantly higher than the 44.8 cents per share paid out the year before.The group says it remains in a good position, with $684.9m in cash and no debt on the balance sheet as of December 31st. "Our capital funding options remain flexible for exploration and development, pursuing potential acquisitions and returning dividends to shareholders," the statement said.On a gloomy note, the group did acknowledge that its safety performance in 2011 was "unacceptable" after reporting 11 fatalities during the year, and one additional fatality in early 2012. "I am personally committed to turning around our performance in this area and see it as an important corollary to the work we are doing in enterprise risk management and enhancing the overall sustainability framework," Lomelín said.BC