Shares of Mexico-based silver miner Fresnillo PLC (LON: FRES) fell slightly on Wednesday on the news of a decline on the company’s silver production during 2012 due to declining ore grades at its mine in Zacatecas state.
Fresnillo’s shares dropped down 1.71% to 1,695 as the world's largest primary silver producer reported production of 41Moz for 2012, compared to 41.9Moz in 2011.
The figures include Silverstream production, which remained stable at 4Moz.
Output at the Fresnillo mine was down 12.9% at 26.4Moz (2011 30.3Moz) as average ore grade fell 17.2% to 328g/t, said the company.
Fresnillo added further declines towards 281g/t are expected through the remaining life of the mine.
Sinking grades were partially balance by increased mineral volume processed at Fresnillo, the ramp-up at the Saucito mine in Sonora state and higher grades at the Ciénega mine, Durango state.
Gold output reached a record 473,034oz last year, said Fresnillo, up 5.4% from 448,866oz the previous year, as a result of a first year of operations at the Noche Buena gold mine in Sonora state and production growth at Saucito.
Lead and zinc production were also up 14.9% and 7.9% to 24,639t and 24,928t respectively.
The company anticipates silver production to remain stable at 41Moz, mainly thanks to an upcoming ramp-up at Saucito, which is expected to offset further decreases in grades at the Fresnillo mine.
Gold production is expected to reach 490,000oz due to the ramp-up at Noche Buena.
The company will also increase its exploration budget 15% to $270 million in 2013.
(Image: Fresnillo mine operations, courtesy of Fresnillo)