(Kitco News) - Fresnillo (LSE: FRES), the world's largest primary silver producer, announced today that its attributable silver equivalent output was 52.3 moz in first half of 2022 (H1 2022), down 15% compared to 61.8 moz produced in H1 2021.
The company said that its H1 2022 attributable silver production of 27.6 moz (including Silverstream) was in line with H1 2021 (27.5 moz) as the expected lower ore grade at San Julián DOB and lower volume of ore processed at Saucito was offset by the increased contribution of ore from Juanicipio.
However, the company's H1 2022 attributable gold production of 308.8 koz was down 27.9% over H1 2021 (428.4 moz) primarily due to a decrease in the volume of ore processed and lower ore grade at Herradura and Saucito.
The company said that its total gross profit, including hedging gains and losses, decreased by 39.7% from US$606.8 million in H1 2021 to US$365.9 million in H1 2022.
Fresnillo explained that the US$240.9 million decrease in gross profit was mainly due to the lower ore grade mostly at Herradura, and also at San Julian (DOB), Saucito, San Julián (Veins) and Ciénega (-US$208.3 million); lower silver price (-US$89.8 million); lower volumes processed (-US$84.9); and cost inflation including the MXP/USD devaluation effect (-$44.1 million).
The company's profit for the period decreased from US$308.4 million in H1 2021 to US$141.0 million in H1 2022, a 54.3% decrease period-on-period. Profit due to non-controlling interests was US$23.6 million reflecting the profit generated at Juanicipio, where MAG Silver owns 44% of the outstanding shares. Accordingly, profit attributable to equity shareholders of the Group was US$117.4 million, Fresnillo said.
Importantly, the company's Board has declared an interim dividend of 3.40 US cents per ordinary share totalling US$25.1 million. Fresnillo said that this interim dividend is lower than the previous period due to the decrease in profit in H1 2022, and remains in line with the Group's dividend policy.
“This decision was made after a comprehensive review of the Group's financial situation, assuring that the Group is well placed to meet its current and future financial requirements, including its development and exploration projects,” the company noted in a statement.
The company also reiterated it remains on track to meet its full year 2022 guidance of 50.5 to 56.5 moz of attributable silver (including Silverstream) and 600 to 650 koz of attributable gold production.
Fresnillo is the world's largest primary silver producer and Mexico's largest gold producer. Fresnillo has seven operating mines, all of them in Mexico - Fresnillo, Saucito, Ciénega, Herradura, Soledad-Dipolos, Noche Buena and San Julián, two development projects - the Pyrites Plant at Fresnillo and Juanicipio, and a number of exploration projects. Fresnillo has mining concessions and exploration projects in Mexico, Peru and Chile.
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