The London-headquartered company said this week it now expected to produce about 17% less gold at between 745,000-775,000oz as authorities have limited the number of employees allowed onto mine sites.
The Herradura mine has been impacted hard by the restrictions, but lower than expected ore grades at the Dynamic Leaching Plant, together with restricted access to deeper areas at the Noche Buena mine, have added to the bleaker outlook.
The FTSE 100 index company was forced to shutter its mines at the height of the pandemic before the government deemed it an essential industry in May.
Fresnillo said it expected to produce between 815,000-900,000oz gold in March, but in July reduced the outlook to 785,000-815,000oz.
It left the silver guidance intact at 51-56Moz, saying fewer safety restrictions were deemed necessary for the mainly underground silver-producing assets.
Gold production in the September quarter fell 6.3% qoq to 172,700oz, and was down 17.7% on a yoy basis. Silver output dropped 2.3% qoq to 13.3Moz and remained flat compared with the prior-year period.
Despite the gloom, BMO Capital Markets said a positive takeaway from the production update was that Fresnillo processed a modest 42,000 tonnes, on a 100% basis, from Juanicipio at the Fresnillo plant. Commissioning of the Juanicipio plant remains on track for mid-2021.
The bank trimmed its target price from £14.00 to £13.75.
Fresnillo shares (LSE:FRES) were down more than 5% Wednesday to £12.57, capitalizing it at £9.4 billion (US$12.4 billion).
