Mexico's gold miners forecast stable output in 2019

Gold production in Mexico is set to stabilize in 2019 following three years of declines.

Output is expected at 3.51Moz, according to midpoint guidance and BNamericas estimates for 20 companies.

This compares to 3.49Moz produced by the firms in 2018, which was a 4% decline from 3.64Moz the previous year. BNamericas figures show output has fallen every year since a peak of 3.90Moz in 2015.

2019 GUIDANCE

The slight increase in output expected this year is largely due to higher forecasts for three of Mexico's top gold producers.

Torex Gold expects production to reach 430,000oz, up around 76,000oz from last year, as output ramps up at the El Limón-Guajes mine.

Meanwhile Argonaut Gold is forecasting a 42,000oz increase at its El Castillo and La Colorada mines to 207,500oz (figures are gold equivalent and include small amounts of silver).

Commissioning of the US$420mn pyrite leach plant at Peñasquito mine last year is also likely to drive Goldcorp's Mexican production higher in 2019.

BNamericas estimates 298,000oz gold, based on the company's previous indications of rising grades, throughput and recoveries (Goldcorp has not issued 2019 guidance by mine). Output was 272,000oz last year.

Leagold Mining is also forecasting a small rise in output from its Los Filos mine, to 210,000oz.

Overall 2019 guidance includes roughly flat output by Mexican miners Industrias Peñoles (based on midpoint guidance from precious metals subsidiary Fresnillo and assuming flat output at Peñoles operations), and Minera Frisco.

The latter does not issue production guidance.

Gains will be partly offset by lower output by Agnico Eagle Mines, Alamos Gold, Coeur Mining and Pan American Silver.

First Majestic Silver is expected to secure a spot in the top 10 this year, with output projected at around 159,000oz, up from 111,084oz in 2018 (based on silver production guidance and a steady silver-to-gold production ratio from Q4).

Smaller miners included in the calculations are Premier Gold, Alio Gold, Fortuna Silver, Endeavour Silver, Gold Resource, Great Panther Silver, Hecla Mining, McEwen Mining and Avino Silver & Gold Mines.

2018 PERFORMANCE FALLS SHORT

Output in 2018 fell 3% short of original combined midpoint guidance and BNamericas estimates of 3.59Moz.

Companies that fell short of original midpoint figures include Goldcorp, which forecast 310,000oz, along with Leagold and Pan American.

Production at Minera Frisco was significantly lower than BNamericas' estimate of flat output.

But Peñoles came in significantly higher than the 925,669oz forecast, with Fresnillo twice raising gold guidance during the year.

Agnico, Torex, Alamos and Coeur achieved higher than forecast Mexican output, as did First Majestic following its acquisition of the San Dimas operation.

TOP 10 RANKINGS

Peñoles cemented its position as Mexico's dominant player in the gold space last year, while Goldcorp fell to fourth from second, overtaken by Torex (second) and Agnico (third), and Frisco slipping to fifth.

If 2019 guidance is met, Leagold and Argonaut will leapfrog Alamos, with Coeur falling out of the top 10, behind First Majestic and Pan American.