Fresnillo PLC on Tuesday said it delivered annual profit and revenue growth on gold production that exceeded its guidance and higher precious metal prices.
Shares were up 5.3% at 778.60 pence each on Tuesday morning in London.
For 2021, pretax profit improved 11% to $611.5 million from $551.3 million, as revenue grew to $2.70 billion from $2.43 billion.
The Mexico City-based precious metals miner said it was able to produce 53.1 million ounces of silver in 2021. This was marginally below guidance, with its silver output expected to be between 53.5 million and 59.5 million ounces.
Fresnillo’s gold production, however, was ahead of guidance.
The miner forecasted an output in the range of 675,000 and 725,000 ounces, down 12% from its output of 769,618 ounces in 2020, but exceeding this guidance with a production of 751,200 ounces. This was down only 2.4% compared to 2020.
Together with higher prices for precious metals, this resulted in the rise in annual revenue.
The average realised silver price was $24.9 per ounce, an increase of 17% over the previous year. Meanwhile, gold prices remained relatively flat at $1,795.0 per ounce. Average prices for zinc and lead increased by 32% and 22%, respectively.
Fresnillo declared a final dividend of 24.0 US cents per ordinary share, a 2.1% increase from 23.5 US cents per share in 2020. This brought its total dividend to 33.9 cents, up 31% from 25.8 cents the year before.
The miner guided for silver production in the range of 50.5 million to 56.5 million ounces for 2022, meaning that the lower end of the forecast would be a 4.9% decline from 2021.
Gold production is forecasted to be in the range of 600,000 to 650,000 ounces, reflecting a 13% to 20% decline from its 2021 output.
Nevertheless, Fresnillo said it was optimistic about the outlook for precious metals prices, which will support the financial performance of the business.
Chief Executive Octavio Alvidrez said: ‘Looking ahead we remain alert to potential on-going challenges that are outside our control, not least possible further regulatory reform, inflationary pressures and of course the threat of new covid variants. Lower production and recovery rates at Herradura and the continuing workforce shortages at Saucito caused by the new labour reform - as well as the impact of recent geotechnical instability in the Saucito area - are also likely to add to the pressures we may face in 2022.
‘In addition, the extension to the timeline for the tie-in to the national grid of both the Juanicipio plant and the Pyrites plant mean that we now expect lower contributions than previously anticipated from these operations during 2022.’
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