April 26, 2017 / 7:00 AM / 4 months ago

Fresnillo says first quarter silver output up 12.5 percent, on track to meet FY targets

(Reuters) - Precious metals miner Fresnillo Plc (FRES.L) said its silver production rose 12.5 percent in the first quarter due to higher ore grades at its Fresnillo and Cienega mines in Mexico.

The company, which mines silver and gold at six mines in Mexico, said silver production hit 12.4 million ounces for the quarter ended March 31.

Gold production for the quarter, however, fell 3.3 percent to 222,290 ounces due to lower grades at the company's Herradura mine and a one-off reduction of inventory levels.

The company said it was on track to meet its 2017 production guidance of 58 million-61 million ounces of silver and 870,000-900,000 ounces of gold.

Demand for gold, a safe-haven metal, has been robust amid mounting geopolitical uncertainty across the world, including Britain's move to leave the European Union.

Meanwhile, the slide in the peso has been pushing costs lower for Fresnillo, while silver XAG= prices are ramping up on strong industrial demand and the metal's attraction as a haven from risk.

Spot gold prices XAU= have risen 8.4 percent in the first quarter and silver XAG= has gained 14.4 percent, while the Mexican Peso MXN= has weakened 9.6 percent.

Reporting by Sanjeeban Sarkar in Bengaluru; Editing by Amrutha Gayathri

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