UPDATE 1-Lower silver and gold prices hit Fresnillo profit

Tue Aug 5, 2014 4:04am EDT

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* First-half attributable profit falls 10 pct

* Average realised silver prices falls 18 pct, gold 12 pct

* Special dividend of 5 cents a share

* Shares fall 0.9 percent (Adds details, share price)

Aug 5 (Reuters) - Fresnillo Plc reported a 10 percent decline in first-half attributable profit after selling silver and gold from its Mexican mines at significantly lower prices.

Shares of Fresnillo, which prides itself on production costs among the lowest in the industry, fell in early trading. The miner also announced a special dividend of 5 cents a share.

Many gold and silver miners were forced to slash costs last year after prices of the precious metals fell to their lowest in a decade. Gold fell 28 percent and silver plunged 36 percent in 2013.

Fresnillo's average realised silver price for the first half of 2014 fell 18 percent to $20.26 per ounce. Its average realised gold price fell 12 percent to $1,302.07 per ounce.

Attributable profit fell to $130.1 million in the six months ended June 30 from $144.8 million a year earlier. Revenue fell 27 percent to $677.1 million.

Fresnillo said silver production rose 1.7 percent to 21.3 million ounces, including its Silverstream contract, while attributable gold production fell 19 percent to 191,317 ounces.

Operations at Soledad-Dipolos, one of Fresnillo's six mines in Mexico, have been halted by a legal dispute. Production at another mine, Herradura, was halted between October and March by a temporary ban on the use of explosives.

Fresnillo maintained its 2014 production guidance at 43 million silver ounces and 450,000 attributable gold ounces.

The company's shares were down 1.2 percent at 930 pence at 0755 GMT. (Reporting by Karen Rebelo in Bangalore; Editing by Robin Paxton)

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