Fresnillo reports lower revenues as gold volumes fall and Covid’s impact lingers

Fresnillo reported lower revenues for the first half of 2022 due to the drop in gold volumes and silver prices, with Covid’s impacts still a concern.

The Mexican metals mining company reported adjusted revenues of $1.35bn, a drop of 12.6 per cent as volumes and prices of precious metals that the company mines declined. 

The company’s gross profit was $365.9m and EBITDA at $459.1m, tumbling 39.7 per cent and 38.5 per cent respectively. 

Covid-related absenteeism affected the company’s operations in the first half after the fourth wave of the pandemic arrived at the end of 2021, with a fifth wave in Mexico in 2022 leading to a rise in cases.

“We face new uncertainties in these challenging times,” following the new Covid wave in Mexico, CEO Octavio Alvídrez said. “”We have proactively addressed these challenges and I am pleased to report a good financial performance in the first half.”

“We benefit from a consistent strategy, exceptional assets, an exciting growth pipeline and a very strong balance sheet. We are well placed to deliver on our objectives this year. We look forward with determination and confidence.”

The CEO said global supply chain issues and cost inflation would affect Fresnillo’s performance in the second half of the year.

Fresnillo’s adjusted production costs rose by 7.9 per cent to $659.3 million in the first half.  

The $48.2m increase was mainly from cost inflation, including Mexican peso vs. US dollar devaluation, costs from the start-up of operations at Juanicipio power plant, rise in the use of infrastructure contractors, and electric and mechanical maintenance, and higher volume of ore processed.