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REFILE-PDAC-UPDATE 2-Fresnillo will keep its no-hedging policy
March 8, 2011 / 8:25 PM / 7 years ago

REFILE-PDAC-UPDATE 2-Fresnillo will keep its no-hedging policy

* Officials completed series of meetings with investors

* Plans to raise gold and silver output by 5 pct this year

* Will spend $250 million on exploration in Mexico in 2011

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By Pav Jordan

TORONTO, March 8 (Reuters) - Mexico’s Fresnillo (FRES.MX) will stick to its policy of not hedging gold and silver production, a preference expressed by investors during recent meetings with officials of the silver miner.

“We are completely sure of this,” Chief Executive Jaime Lomelin told Reuters in Toronto, where he was attending the Prospectors and Developers mining conference. “They want to take the price risk on the upside and on the downside,” he said, referring to investors who attended the meetings in London, Edinburgh, New York and Miami.

Silver is trading near its highest since 1980, prompting many producers to hedge production and lock in prices for future output.

Fresnillo is the world’s largest primary silver producer, controlling more silver mines than any other company, but global diversified miner BHP Billiton (BLT.L) produces more of the metal overall as a byproduct from other metals.


More stories on PDAC convention: [ID:nN02153893]


Lomelin said the company plans to raise its gold and silver output as much as 5 percent this year. Investors visited in London, Edinburgh, Miami and New York sent the message that they want Fresnillo to concentrate on new projects to boost output, he said.

The company will spend $250 million in exploration efforts in Mexico this year as it proved more reserves. It also has a $5 million exploration budget in Peru, an important precious metal producer.

He said the company had no plans to engage in mergers and acquisitions at current prices, which he described as too high. Instead, Lomelin said Fresnillo has been buying early-stage projects.

Editing by Frank McGurty

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