Largest Primary Silver Miner’s Average Yield Declines 13% In 2012

The top primary silver mining company in the world, Fresnillo LLC saw its averge silver yield decline 13% in 2012.  The large percentage of the decline came from its flagship Fresnillo mine whose average silver ore grade fell from 396 g/t in 2011 to 328 g/t in 2012.
The figures for the chart above came from Fresnillo LLC’s two primary silver mines, Fresnillo and Saucito.  Fresnillo’s average silver yield declined from 11.7 oz/t in 2011 to 9.6 oz/t in 2012, whereas Saucito actually increased its average yield from 7.2 oz/t in 2011 to 7.8 oz/t in 2012.
According to Fresnillo’s 2012 Annual Report:

Annual silver production at Fresnillo decreased 12.9% from 2011 due to the expected and natural decline in ore grades.  Based on current assumptions, we expect ore grades to decline to approximately 300 g/t level in 2013, then to remain within in the range between 300 g/t and 325 g/t for four years before declining in the following years towards the ore grade in reserve (281 g/t).

As I mentioned before, as ore grades decline, it takes more energy to produce the same or less metal.  The company has been working on upgrading the milling capacity from 8,000 to 10,000 tonnes per day at Fresnillo to make up for the declining ore grade.  However, they have decided to analyze the situation and to see how to best develop the project to the benefit of all operations within the district.

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6 Comments on "Largest Primary Silver Miner’s Average Yield Declines 13% In 2012"

  1. This is a wonderful and handy section of info. I am thankful that you simply shared this useful data around. Remember to continue to be all of us advised such as this. Many thanks spreading.

  2. Day Trading… thanks for the comment. I plan on putting a great deal of information about ore grades, yields and energy consumption at it pertains to the gold and silver miners on this site.

    We must remember, as ore grades fall it takes more energy to remove the same or less metal. This is fine when the world is able to increase its energy supply, but becomes a huge problem when the opposite is true.


  3. Dear Srocco,

    Thanks again for your contribution in analyzing real silver cost and ore grades trend. Could you pay attention to CPM Silver Year book to analyze their global silver supply data? According to their silver year book in 2013, the silver supply in 2012 has increased 1.5% and will get record high this year.

  4. andybull… yes I will be doing a post on the subject in the future.


  5. I am thrilled to see you finally gathered your postings onto one site. I’ve encountered your posts on ZH, TFMR, and even that Financial Sense site. You have a way with conveying this information in direct prose and crisp charts and graphs. One question: Am I insane for continuing to hold mining stocks in light of this grade degradation, and rising energy costs? Or should I hold out with the hope that the PMs may be released from the downward manipulation, relaying proper profits to the miners?

    • Simon… thanks for visiting the site and the reply. Yes, the miners have taken a beating, even worse than 2008-9. However, this kind of selloff will not last. I don’t know if you saw this article by Tekoa de Silva:

      Soros Reports Over $239mm In Gold Positions, Buys $25mm In Call Options On Juniors

      In a 13-F release issued by the SEC after market close yesterday, it was reported that Soros Fund Management LLC, founded and chaired by billionaire financier George Soros, significantly increased its gold related holdings, most notably, through the purchase of over $25 million dollars worth of call options on the GDXJ Junior Gold Miners index.

      You can read the rest here:

      I am not a big fan of Soros, but if he is buying that much in junior call options, he must believe we are close to a bottom. I will be discussing a great deal about the miners going forward. Even though the future energy situation will make it challenging for the gold and silver miners, I believe they will do a lot better than the base metal miners.

      I believe the gold and silver miners will turn out to be a great place to be within 1-2 years.


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