Mexico-focused precious metals miner Fresnillo has lowered its production expectations for the year, as the highly contagious Omicron variant has worsened ongoing operational challenges relating to its labour force.

The fourth wave of Covid has resulted in higher staff absenteeism, starting in the second week of December. The London-listed company says the situation is expected to continue throughout the first quarter.

The pandemic impact comes on top of labour challenges presented by the introduction of new labour laws, which limit the use of contractors, on September 1.

Fresnillo states that it had anticipated a certain level of impact on production from the labour legislation changes, but that the Omicron variant has made it worse and will result in a greater impact in the earlier part of the year than previously thought.

Fresnillo expects its attributable silver production to be between 50.5-million and 56.5-million ounces this year. Although it is in line with 2021’s production, the guidance is below the group’s previous estimate, owing to a lower volume of ore processed at Saucito, driven by a shortage of personnel in conjunction with absenteeism owing to Covid-19, as well as a lower ore grade as a result of the instability caused by increased seismicity in the Jarillas vein, limiting access to higher ore grade areas.

Further, the timeline for the tie-in to the national grid of both the Juanicipio plant and the Pyrites plant at Fresnillo will result in lower contributions from both operations. 

Attributable gold production is expected to be in the range of 600 000 oz to 650 000 oz, driven mainly by the Noche Buena mine coming to the end of its mine life.

In 2021, the group produced 53.1-million ounces of silver, which was marginally below its guidance but in line with 2020’s performance.

Full-year attributable gold production of 751 200 oz was ahead of guidance, but down 2.4% compared with 2020.