Mine production up at Fresnillo – but scrap still holds the key for 2011

Following on from yesterday’s announcement by the GFMS that they expected mine production to hit 4% in 2011 (up from 3.8% in 2010), comes news that mining giant Fresnillo reported record gold production in Q1 of 2011.

Fresnillo is “the world’s largest primary silver producer and Mexico’s second largest gold producer, listed on the London Stock Exchange…”. It goes by the ticker symbol FRES on the FTSE.

Read the full report here:

http://www.fresnilloplc.com/downloads/Production%20Report%201Q%202011.pdf

Production at the UK listed miner was up 13.3% (96,407) compared to Q1 in 2010.

However it’s worth remembering that according to the ‘Gold Survey 2011’ released yesterday it wasn’t gold production at mines that hampered supply, that was a healthy 3.8%. It was the availability of scrap gold coming to market that really bought total supply down to 0.4%. Scrap gold coming to market in 2010 actually fell by 2.9%

This year supply of gold to the market is expected to be 6% higher than in 2010, with 4% of this rise coming from the miners and a 2% rise is scrap gold coming to market in 2011.

However should scrap supplies again surprise to the downside, the record gold production at miners such as Fresnillio will become a mute point. If scrap metal just repeated the fall of 2010, then the expected 6% gain for gold supply in 2011 would quickly turn into just 1.1%. And this isn’t allowing for any purchases that the central banks are expected to make in 2011.

Related posts:

1. GFMS Gold Survey 2011 – price to hit $1600 this year
2. Further delay for Scots gold mine
3. 2011 American Gold Eagles and Silver Eagles Released
4. Gold Holds Above $1,000
5. Royal Mint Ups Production as Demand Increases

Link to this article: : http://www.goldmadesimplenews.com/mining/mine-production-up-at-fresnillo-but-scrap-still-holds-the-key-for-2011-3479/

Posted by Thomas Paterson on Apr 14 2011. Filed under Mining. You can follow any responses to this entry through the RSS 2.0. Responses are currently closed, but you can trackback from your own site.