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Fresnillo H1 profit dips 9% on silver price fall

Fresnillo has been hit by a 13% fall in the price of silver and says the cost of sales rose 34.5% compared with the first half of last year, fuelled by higher production and labour costs.

LONDON (Reuters)  - 

Mexican miner Fresnillo, the world's largest primary silver producer, said first-half profit dipped 9 percent on the back of weaker average silver prices and rising costs.

Core profit, or earnings before interest, tax, depreciation and amortisation (EBITDA), dropped to $684.4 million, a better result than some analysts had expected, while attributable profit fell 25 percent to $366.7 million, also less steeply than forecast as margins held up.

Fresnillo, also Mexico's second-largest gold miner, has been hit by a 13 percent fall in the price of silver and said the cost of sales rose 34.5 percent compared with the first half of last year, fuelled by higher production and labour costs.

It will pay an interim dividend of 15 U.S. cents.

Last week, the miner announced chief executive Jaime Lomelin was retiring at 77 and would be replaced by Octavio Alvidrez, well-known to London's financial community after a spell as head of investor relations at Fresnillo between its listing in 2008 and 2010. He joins as the company's new boss from Penoles, the Mexican mining company which controls Fresnillo.

Fresnillo confirmed it was on track to meet silver and gold output targets for this year, helped by the ramping up of production at its new Saucito mine.