Fresnillo Says Silver On Track, Ups Gold Output

Fresnillo, the world's largest primary silver producer, posted first-quarter output of the metal in line with its expectations and said production of gold was ahead of target, helped by the start-up of a new mine in Mexico.

The Mexican precious metals miner said on Wednesday silver production including output from the Silverstream agreement for the three months to Mar. 31 fell 2.9 percent to 9.8 million ounces, compared to the same quarter in 2011, in line with its expectations.

Gold production beat targets soaring 26 percent to 121,792 ounces in the quarter, Fresnillo said, as part of the company's plan to take advantage of high gold prices.

The precious metal remains on course to rally through this year and into 2013, having risen for a decade, with gold prices spiking above $1,920 an ounce last September.

Fresnillo said gold output was boosted by a 42 percent jump in gold production at its flagship Fresnillo mine, which has been active for 500 years, and by production from a new mine, Noche Buena, which came into commercial production in March.

This will significantly increase the proportion of gold production within our portfolio, Chief Executive Jaime Lomelin said on the new mine.

This represents a step forward to consolidate Fresnillo's position as a significant gold producer in its own right.

Shares in Fresnillo, which have fallen 12 percent in the last month, closed at 1,573 pence on Tuesday, valuing the firm at 11.3 billion pounds ($18 billion).