January 29, 2020 / 8:10 AM / 24 days ago

UPDATE 1-Fresnillo annual output falls on Noche Buena mine closure, lower grade ore

(Adds CEO comment, outlook and details on mine closure)

Jan 29 (Reuters) - Precious metals miner Fresnillo said on Wednesday its annual gold and silver production fell, hurt by the phasing out of its the Noche Buena mine and lower-grade output from Saucito and San Julián projects in Mexico.

Gold output from the Noche Buena mine decreased 23.9% in the year because of lower volumes of ore processed, in line with the mine’s plan, Fresnillo said.

The mine, which accounted for almost 18% of the group’s total gold output and over 9% of total adjusted revenue in 2018, will be closed next year.

The company had cut its full-year production forecast four times last year due to lower-quality ore and construction delays, sending its shares down by more than 25% last year.

“Though grades remain variable as we update and refine our geological models, we continue to process higher volumes of ore on a consistent basis,” Chief Executive Officer Octavio Alvídrez said.

Fresnillo reiterated its targets for 2020, with silver production expected to be in the range of 51-56 moz and gold output in the range of 815-900 koz.

Its core profit almost halved in the first-half, prompting it to cut capital investments and delay renewals of equipment and infrastructure to rein in costs.

The company, which operates seven mines in Mexico, said it produced 875.9 kilo ounces (koz) of gold in the year ended Dec. 31, down from 923 koz in the previous year. Annual silver output also slipped 11.6%. (Reporting by Shanima A in Bengaluru; editing by Uttaresh.V)

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