Fresnillo on track to hit silver guidance, sets new gold target

15th Oct 2014 07:37

Mexican precious metals group Fresnillo said that silver production was flat over the third quarter, while the output of gold slipped.However, the company maintained its guidance for silver production and actually increased its target for gold, after factoring in more volumes from the recent buyout of its Penmont joint venture.Quarterly attributable silver production including Silverstream declined by 0.3% on the year before to 11.08m ounces, while year-to-date production rose 1% to 32.41m ounces.Fresnillo said that lower ore grades at the Fresnillo mine offset higher ore volumes processed at Saucito and an increased contribution from Silverstream - the agreement signed with Penoles in 2007 which entitles Fresnillo to proceeds from Penoles' Sabinas mine.Nevertheless, the company said it is on track to hit its 2014 guidance of 43m silver ounces, including Silverstream.Quarterly gold output was down 4.4% at 109,345 ounces and year-to-date production has now fallen 14.1% to 300,662 ounces as a result of temporary disruptions at the Herruda project earlier in the year.Work is still required at Herradura, where processing capacity needs to be "enhanced" so that the company can meet its long-term targets.The company said that 2014 gold production, including Penmont, will now by 590,000 ounces, compared with its previous forecast for 450,000 ounces.Chief executive Octavio Alvídrez said: "We are confident that gold production deferred in the quarter as a result of the works required to improve processing capacity will be made up in 2015 with no effect to our long-term production expectations."At the time of the Penmont deal, the company increased its 2018 gold production target from 500,000 ounces to 750,000 ounces.The stock was down 1.3% at 780p in early deals on Wednesday.