Fresnillo profits took 64% hit in 2013

Weak precious metals prices took a major bite out of Fresnillo's (LON:FRES) profits: The world's biggest primary silver producer saw its pre-tax profit decline by 64% in 2013, the company reported on Tuesday.

Fresnillo also attributes the results to a decrease in gold production due to a legal dispute at one of its operations and the revaluation of its Silverstream contract which resulted in a $65.7 million non-cash loss.

Meanwhile, silver production increased by 4.3% and gold output by 10%.

Over the next year the company expects costs to rise – though "less than in recent years" – due partly to new mining duties that the government will impose this year.

Last year Mexico introduced significant reforms to its tax regime, provoking an outcry from the mining industry.

Fresnillo also warned about the possibility of more regulation over the use of explosives. In 2013 the company had to halt one of its operations due to a legal dispute over explosives permits. The Mexican government granted a new permit last week.

Following the release of its 2013 results, the miner's share price lost nearly 5% on the London exchange.

The company also said it will recommend a special dividend of 6.8 cents per share – adding to a special dividend of 22 cents paid last November.

"This has been recommended by the Board of Fresnillo reflecting their confidence in the strength of the balance sheet and in the company's capital expenditure plans for its development and exploration projects," Fresnillo wrote in a statement.