Fresnillo Reports 10.6-percent Rise in Silver Output for H1 2015

Fresnillo plc (LSE:FRES) released its results for the first half of 2015, commenting that it produced 23.8 million ounces of silver (including SilverStream), a 10.6-percent increase from the year-ago period. That rise came on the back of the start of operations at Saucito II.
Meanwhile, gold production rose 37 percent, to 364,000 ounces, largely as a result of Herradura being fully operational.
Other H1 highlights include:

• Significantly lower realised commodity prices (silver US$16.61 per oz, down 18.0%; gold US$1,206.10 per oz, down 7.4%) impacting financial performance
• Profit for the period of US$76.4m, a decrease of 44.3%
• Basic and diluted EPS US$10.4 cents per share, down 41.2%
• Cash generation from operations remains significant at US$314.9m, down 6.5%
• Strong balance sheet maintained – cash, cash equivalents and short term investments of US$475.7m
• Interim dividend of US$15.5m (2.1 US cents per share) declared reflecting Board’s confidence in the Company’s financial position and outlook; no change to previously stated policy
• Stage 1 of the San Julián project now expected to be commissioned in 1Q16 (vs. previous expectation of 4Q15). Pyrites project remains on track for production to commence in 2017
• Capital expenditure for the full year 2015 now expected to be in the region of US$570m (vs. previous expectation of c. US$700m)
• Positive drill results at Ciénega and Juanicipio projects will result in an increase in inferred resources 
• 2015 gold production guidance raised to 715-730 koz from 670-685 koz (+6.6%); full year silver production remains on track (45-47 moz, including Silverstream)

Fresnillo CEO Octavio Alvídrez commented:

We have had a solid first half operationally, with silver and gold production up 11% and 37% respectively. Saucito drove the increase in silver production, with the ramp up of Saucito II achieved well ahead of the three year timeframe initially anticipated. The increase in gold production was driven by Herradura and its dynamic leaching plant being fully operational throughout the period. We continue to advance development rates at Fresnillo, which should result in increased production by the year end, and we remain on track to reach steady state production at Herradura in the fourth quarter. I am confident that we are well-placed to meet our 2015 production guidance of 45-47 million ounces of silver (including the Silverstream) and our increased 2015 gold production guidance of 715-730 thousand ounces.

We have made good progress at our near-term development projects in the first half. Although we experienced some delays at San Julián, we are confident that stage 1 of the project will be commissioned early next year, and our Pyrites project remains on track to commence operations in 2017. Our advanced exploration projects are all progressing according to plan, with good exploration results achieved at Juanicipio and Centauro Deep, and a preliminary economic assessment underway for Orisyvo.

Click here to read the full Fresnillo plc (LSE:FRES) press release.