* Fresnillo says confident will win court case
* Miner says ban expected to be lifted by March
* Firm hits 2013 silver production target, gold down
By Stephen Eisenhammer
LONDON, Jan 28 Mexican miner Fresnillo
said it expects to win a court case in the coming days which
would be a step towards lifting a ban on explosives at one of
its gold mines that has paralysed production.
The suspension was imposed in October at Minera Penmont
after a dispute with the local community, or ejido, which has
rights to certain land under Mexican law. It led to a lowering
of the precious metals miner's 2013 gold target.
Even if the district court in Mexico's northerly desert
state of Sonora rules in Fresnillo's favour, it will not be the
end of the saga as the ban would still need to be lifted by the
Ministry of Defense - and although the company has said it
expects to be able to resume the use of explosives in March,
analysts say there is a risk of delay.
Shares in the London-listed miner were down 3 percent at
1214 GMT, making it the biggest faller on the FTSE 100
which was up 0.4 percent, due to concerns over the court case
and a 2014 outlook which disappointed some analysts.
"We are disappointed that we don't yet have a confirmation
from the district court hearing on Friday regarding the
explosives suspension, but we understand that the request to
impede the lifting of the suspension should be denied," Chief
Executive Octavio Alvidrez said in a statement on Tuesday.
"The company is currently awaiting publication by the
district court of this decision, which should be forthcoming
within days," the statement added.
However Jon Bergtheil, analyst at Citi, said: "They're not
unrealistic in saying they expect to win the court case."
"(But) it has dragged on and there are people in the market
who are concerned it will drag on further," he added.
Fresnillo returned land at Dipolos last year which the ejido
successfully claimed belonged to them. But it says the area of
Herradura and Soledad, where the use of explosives has been
banned, is "clearly located outside" this area.
Fresnillo said it hit its 2013 production target for silver,
but just missed a target for gold that had been lowered in
December because of the explosives ban.
The miner produced 42.7 million ounces of attributable
silver in 2013 - up 4.3 percent on the previous year and ahead
of the 41 million ounces it forecast.
It produced 425,831 ounces of gold, just below revised
guidance of 425,900 ounces. Fresnillo cut its forecast for 2013
gold production by 8.4 percent in December.
For 2014, Fresnillo said it expects to increase production
of attributable silver to 43 million ounces and forecast
attributable gold production at 450,000 ounces with the
resumption of mining at Minera Penmont and increases at its
Noche Buena mine. A delay on the lifting of the ban on
explosives would, however, hit gold guidance.
The firm reiterated guidance of hitting annual production of
65 million ounces of silver and 500,000 attributable ounces of
gold by 2018.
"Fresnillo may be a high-growth story in terms of 2018
silver, but it is not a high-growth story for 2014 in either
silver or gold," analysts at Citi said in a note to clients.
Fresnillo's share price has more than halved since this time
last year, hit by tumbling gold and silver prices,
as well as operational issues such as the explosives ban and the
loss of land at Dipolos.