Shares in Mexico-focused precious metals miner Fresnillo (LON:FRES) took a hit Tuesday after the company posted full year profit that missed expectations and anticipated higher costs.
The miner, which is the world’s largest primary silver producer and Mexico’s second largest gold company, said that earnings before interest, tax, depreciation, and amortization increased by 2.7% to $1.06 billion in 2017, slightly below the $1.09 billion forecast by analysts.
It also said it expected cost inflation this year to be about 7%, compared with the 6.4% it faced in 2017.
The company’s stock fell more than 5% in early trading on the news and was changing hands at 1,283.50 pence in late afternoon, still 3.64% lower than Monday’s closing price.
Silver production, however, reached rose 16.6% to a new record high of 58.7 million ounces, thanks mainly to the company’s San Julian silver and gold mine, which operated at full capacity in 2017 for the first full year.
Gold output for the year was 911,132 ounces, down 2.6% compared to the previous year.
For this year, the company expects silver production to increase further to a range of between 67 million to 70 million ounces, while gold output is anticipated to be in the range of 870,000 to 900,000 ounces.
Fresnillo, which floated in London in 2008, is 75% owned by Mexican billionaire Alberto Bailleres. The company’s flagship mine is Saucito, the world’s largest silver operation.