UPDATE:Fresnillo 2Q Silver Output Rises;Upbeat On Exploration

14th Jul 2010 09:44

(Adds details.) By Alex MacDonald Of DOW JONES NEWSWIRES LONDON (Dow Jones)--Mexican precious metals miner Fresnillo PLC (FRES.LN) Wednesday reported record quarterly gold and silver production and said its exploration program is delivering positive results. London-listed Fresnillo, the world's biggest primary silver producer, said attributable silver production for the three months to June 30 was 9.62 million troy ounces, compared to 9.59 million ounces during the same period a year earlier. Gold output increased 33.9% to a record 91,254 ounces compared to the same period a year ago, boosted significantly by the startup of commercial production at the Soledad-Dipolos mine. Fresnillo said it is "well on track" to achieve full year production targets of about 38 million ounces of silver and about 340,000 ounces of attributable gold in 2010 due to the contribution of Soledad-Dipolos. Fresnillo produced 37.92 million ounces of silver and 277,000 ounces of attributable gold output in 2009. Fresnillo is still sticking to its full-year gold output target despite a significant rise in gold output from the Soledad-Dipolos mine. "[We're] not really sure that we can maintain this pace during the full year [due to fluctuations in ore grade] but we expect to meet our target for the year," Octavio Alvidrez, head of investor relations, said in a call with reporters. Fresnillo expects its three existing gold-producing mines to produce as much gold as last year while the Soledad-Dipolos mine should produce 100,000 ounces of gold this year, of which 66,000 ounces will be attributable to Fresnillo, Alvidrez said. On the exploration front, the company reported positive results at each of the six properties where the company is drilling. The company has 40 exploration drill rigs operating around its mines and projects and reported particularly good results at Saucito and Orisyvo, where new extensions of mineralization were discovered. The FTSE-100 miner said it will provide further details at its Aug. 3 interim results. On the expansion front, the company confirmed that it remains on track to increase Cienega's milling capacity to 930,000 metric tons a year by the first half of 2011 and said its Saucito project is on schedule with a number of concentrator components arriving in June. The Saucito shaft is also fully operational. Costs remain a concern, particularly with regard to electricity, Alvidrez said, noting that more details would be revealed at the interim results. Looking further ahead, the company will continue to focus on organic growth by opening a new mine or completing a mine expansion project every year until 2014. The company said it continues to keep an eye on mergers and acquisition opportunities in South America, but Alvidrez said there wasn't anything appealing at the moment. Fresnillo is majority-owned by Mexico's Industrias Penoles (PE&OLES.MX), which spun off its precious metals holdings in a May 2008 initial public offering. At 0825 GMT, the company's shares were up 1.3% or 14 pence at 1111p, slightly outperforming most of the other mining companies in London's FTSE-100 index. Company Web site: www.fresnilloplc.com -By Alex MacDonald, Dow Jones Newswires; 44 20 7842 9328; [email protected] (END) Dow Jones Newswires July 14, 2010 04:44 ET (08:44 GMT)