Fresnillo proactive on longer Mexican permitting and 'superpeso'

Mexican silver and gold miner Fresnillo was forced to continue operating in a challenging environment last year, being affected by lengthier permitting processes and the strong peso, according to CEO Alejandro Baillères.

“We are proactively addressing these difficulties. We are working with our suppliers to mitigate the effects of inflation and the strong peso by identifying opportunities to improve supply chain logistics, reduce costs and speed up deliveries of key equipment,” the executive said in a statement presented at its annual general meeting this week.

“We have a long track record of successfully operating in Mexico, with different governments and shifting regulations, and we are committed to continue doing so,” Baillères added. 

He explained that these challenges underline the value of the close working relationships the miner has forged with all its stakeholders over many years to navigate short-term operational challenges and build a sustainable future that will provide long-term benefits for all.

Through initiatives such as greater automation, Baillères said that Fresnillo is working closely with workers and unions to increase productivity and support its efforts to address inflationary pressures. “Meanwhile, maximizing the potential of all our existing operations is key to mitigating the impact of the lengthier permitting process,” he underscored.

Fresnillo said in its 2023 financial results report that it is advancing the Orisyvo, Tajitos, Rodeo and Guanajuato exploration projects, all in Mexico, after starting commercial production at its Juanicipio JV with MAG Silver and the operations of its pyrites plant in 2023.

According to the CEO, Fresnillo’s silver production was up last year, although marginally below initial expectations, while gold production was in line with guidance, albeit down slightly on last year as the Noche Buena mine approaches its end of life.

In 1Q24, attributable silver production of 13.5Moz (including silverstream production) decreased 4.6% compared with 4Q23 due to the lower ore grade and, to a lesser extent, reduced volume of ore processed at San Julián and lower ore grades at Saucito and Fresnillo, mitigated by higher ore grade at San Julián.

According to the company, quarterly attributable gold production was 140,800oz in 1Q24, down 7.7% compared with 4Q23, mainly driven by the lower ore grade at Herradura in line with the mine plan and the mine closure plan at Noche Buena, but partly mitigated by the higher ore grade at Saucito.

“2024 has started as expected and our full-year guidance is unchanged,” Baillères.

Fresnillo’s attributable silver production is expected to be in the range of 55.0Moz to 62.0Moz (including silverstream) in 2024, while attributable gold production would be in the range of 580,000-630,000oz.