Fresnillo says operational issues at Sabinas mine affecting silver production

Precious metals miner Fresnillo said on Tuesday that the Sabinas mine, owned by Mexico's top silver miner Industrias Penoles, was experiencing operational difficulties, affecting silver production.

Shares in the FTSE 100 miner fell more than 5% in early trade.

Fresnillo did not disclose the nature of the operational issues at the Mexican mine.

The Sabinas mine is the mineral source as part of the Silverstream agreement between Fresnillo and Penoles, signed in 2007.

The Silverstream contract comprises a series of 12 agreements between Fresnillo and Penoles, following which the London-listed miner has the right to receive all proceeds from the payable silver.

The company also said discussions are ongoing with Penoles to assess the extent of the issues and any associated impact on the contract.

Fresnillo, which primarily produces silver and gold, said there was a reasonable likelihood that the issues might lead to "significant adjustments" to the Silverstream agreement.

Last month, Fresnillo said its 2024 production outlook remained in line with its previous forecast after posting a 1.5% quarter-on-quarter drop in silver output for the third quarter.