By The Gold Report

Source: Streetwise Reports   10/26/2017

BMO Capital Markets reviewed this silver and gold miner’s Q3/17 production results.

Fresnillo Plc’s (FRES:LSE) Q3/17 production of gold was a beat whereas that of silver, which included ounces from the Silverstream contract, was “a slight miss,” wrote analyst Andrew Kaip with BMO Capital Markets in an Oct. 25 research report. The 233 Koz of gold produced compares to BMO’s expected 223 Koz. BMO anticipated silver production of 15.4 Moz, but it came in at 14.6 Moz.

The mining firm announced that it “remains on track to achieve full-year guidance of 870–900 Koz of gold and 58–61 Moz of silver,” added Kaip.

As for gold, the outperforming mine during Q3/17 was Herradura, which “exceeded our expectation, producing 132 Koz versus our estimate of 103 Koz,” Kaip indicated. “The strong quarter from Herradura more than offset misses in production at Noche Buena and Saucito, as Cienega, Fresnillo and San Julian were largely in line.”

In terms of silver, “the Fresnillo mine disappointed, with the operation not able to maintain the momentum it saw in Q2/17,” Kaip noted. “Ore processed was 596.5 Kt, and silver grade fell to 202 g/t.”

Kaip explained the company attributed this to “temporary limited access to higher grades given delays in development and mining equipment outages, as well as increased dilution.” Further, “lower productivity from contractors and equipment failures” compounded the situation. Kaip noted BMO expects the effect of these circumstances to continue in Q4/17.

As for production at Fresnillo’s other silver operations, Cienega was “slightly ahead” of estimates, Kaip reported. San Julian was “relatively in line.” Saucito “missed on lower silver grades (264 g/t versus our estimate at 290 g/t).”

BMO’s research note also included a brief update on two of Fresnillo’s projects, which continue to advance. One, the pyrites plant, “remains on track and budget” for commissioning in H1/18, Kaip said. Two, “the second line of the dynamic leaching plant also remains on track and on budget at Herradura” for commissioning next year.

BMO has a rating of Market Perform and a target price of £15 per share on Fresnillo, whose stock is currently trading at around £13.28 per share.

Want to read more Gold Report articles like this? Sign up for our free e-newsletter, and you’ll learn when new articles have been published. To see a list of recent articles and interviews with industry analysts and commentators, visit our Streetwise Interviews page.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are sponsors of Streetwise Reports: None. Streetwise Reports does not accept stock in exchange for its services. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

Additional disclosures about the sources cited in this article

( Companies Mentioned: FRES:LSE,
)