{"id":1129624,"date":"2019-07-30T06:43:57","date_gmt":"2019-07-30T11:43:57","guid":{"rendered":"https:\/\/www.mining.com\/?p=997929"},"modified":"2019-07-30T06:43:57","modified_gmt":"2019-07-30T11:43:57","slug":"fresnillo-shares-collapse-as-profits-fall-short-despite-precious-metals-prices-rally","status":"publish","type":"post","link":"https:\/\/juniorminingnews.com\/?p=1129624","title":{"rendered":"Fresnillo shares collapse as profits fall short despite precious metals prices rally"},"content":{"rendered":"<p>Shares in Mexico-focused precious metals miner Fresnillo (LON:FRES)&nbsp;hit a three-year low on Tuesday after it <a href=\"http:\/\/www.fresnilloplc.com\/media\/434584\/fres-1h19-interim-report-300719-web.pdf\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">reported half-year results<\/a> that fell short of market expectations.<\/p>\n<div class='d-flex justify-content-center'>\n<div id='div-gpt-ad-1561499308230-0'><script>googletag.cmd.push(function() {googletag.display('div-gpt-ad-1561499308230-0');});<\/script><\/div>\n<\/div>\n<p>The company, which is the world\u2019s<br \/>\nlargest primary silver producer and Mexico\u2019s second largest gold miner,&nbsp;said<br \/>\ncore earnings fell 46% to $308 million in the six months to June, significantly<br \/>\nworse than the 20% drop estimated by analysts.<\/p>\n<p>Operational setbacks, lower-quality ore and rising costs at its Mexican operations were the main causes of the poor performance, said the company, which had recently <a href=\"https:\/\/www.mining.com\/fresnillo-shares-dive-as-it-cuts-2019-production-cites-challenging-times\/11\/\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">anticipated the impact of such complications<\/a>. <\/p>\n<p>Silver production fell 10.4% to 27.6 million ounces in the first half of the year, while gold output dropped by 7.1%. Fresnillo\u2019s cost of sales rose 30% to $796 million.<\/p>\n<figure class=\"wp-block-pullquote alignright\">\n<blockquote>\n<p>Operational setbacks, lower-quality ore and rising costs at its Mmines were the main causes of the poor performance, said the company.<\/p>\n<\/blockquote>\n<\/figure>\n<p>The company noted its two main silver mines, Saucito and Fresnillo, will continue facing challenges. Fresnillo needs about 18 months to stabilize operations, chief executive Octavio&nbsp;Alv\u00eddrez told reporters <a href=\"https:\/\/edge.media-server.com\/mmc\/p\/ogqo3e7r\"  rel=\"noreferrer noopener\" aria-label=\" (opens in a new tab)\">on a conference call<\/a>.<\/p>\n<p>Precious metals, in contrast, are selling<br \/>\na high prices as investors seek refuge in safe havens amid worries about the<br \/>\nChina-US trade war and expectations that the Federal Reserves will lower<br \/>\ninterest rates.&nbsp;<\/p>\n<p>The price of silver, as measured by<br \/>\nfutures contracts traded on the New York Mercantile Exchange, has surged by 15%<br \/>\nsince late May. This may be a sign that gold\u2019s impressive rally over the past<br \/>\nyear \u2014 its price has gone up 16%, compared with roughly 6% for the S&amp;P 500 \u2014<br \/>\nis finally spreading to other precious metals.<\/p>\n<p>Earlier this month, Fresnillo cut<br \/>\nits 2019 gold production forecast to 880,000-910,000 ounces, against a previous<br \/>\nestimate of 910,000-930,000 ounces and silver production to 55-58 million<br \/>\nounces from 58 to 61 million.<\/p>\n<p>The company, one of the 100<br \/>\nbusiness with the highest market capitalization listed on the London Stock<br \/>\nExchange, maintained its revised guidance, but said it would reduce capital<br \/>\nexpenditure to $655 million, below its previous forecast of $710 million.<\/p>\n<p>It also noted that it was hopeful earnings<br \/>\nin the second half of this year would improve given higher gold and silver<br \/>\nprices, and cost cutting.<\/p>\n<p>Fresnillo, which floated in London<br \/>\nin 2008, is 75% owned by Mexican billionaire Alberto Bailleres.&nbsp;The<br \/>\ncompany\u2019s flagship mine is Saucito, the&nbsp;world\u2019s largest silver operation.<\/p>\n<p>The miner\u2019s shares were down 13% to<br \/>\n693.4 pence mid-morning in London, their lowest point since February 2016. The<br \/>\ncompany was also the second-biggest loser in the FTSE 100.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Its shares fell 13% to a three-year low of 693.4 pence in morning trading. They were also the second-biggest decliners in the FTSE 100.<\/p>\n","protected":false},"author":8,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"default","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-gradient":""}},"footnotes":""},"categories":[369,4],"tags":[],"_links":{"self":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1129624"}],"collection":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/users\/8"}],"replies":[{"embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=1129624"}],"version-history":[{"count":8,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1129624\/revisions"}],"predecessor-version":[{"id":1129783,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=\/wp\/v2\/posts\/1129624\/revisions\/1129783"}],"wp:attachment":[{"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=1129624"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=1129624"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/juniorminingnews.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=1129624"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}