LONDON BRIEFING: Fresnillo Aims To Stabilise Output As Guidance Cut

(Alliance News) - Ahead of its capital markets day in London on Monday, Mexican gold and silver ...

Alliance News 2 December, 2019 | 7:59AM
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(Alliance News) - Ahead of its capital markets day in London on Monday, Mexican gold and silver miner Fresnillo said its objectives going forward were to focus on stabilising production, improving operational performance and on project delivery at its mines.

Fresnillo set its 2019 production guidance at the bottom of its previous guidance range. The miner said it expects to produce 885,000 ounces of gold and 55 million ounces of silver. In October, Fresnillo had guided for 880,000 ounces to 910,000 ounces of gold for 2019, and for between 55 million ounces and 58 million ounces of silver. However, it had said at the time that it expected 2019 production to be towards the lower end of each range.

Fresnillo said the decrease in gold production guidance was driven by the planned Noche Buena mine closure and lower production from the Herradura site. Fresnillo expects 2019 capital expenditure to be around USD585 million.

"Our priorities for 2020 are to stabilise production, and to unlock the full potential of our current mines and projects. We will focus on operational improvement and efficiency, while de-risking and advancing our development pipeline, most notably the new Juanicipio mine. We are confident that with the proactive measures put in place at our mines, together with our consistent, focused strategy, we will deliver on these priorities and that we will continue to create sustained value for stakeholders in the long-term, balancing growth with returns and maintaining a solid financial position," said Chief Executive Officer Octavio Alvídrez.

Here is what you need to know at the London market open:

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MARKETS

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FTSE 100: called up 0.2% at 7,360.40

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Hang Seng: up 0.3% at 26,436.46

Nikkei 225: closed up 1.0% at 23,529.50

DJIA: closed down 112.59 points, 0.4%, at 28,051.41

S&P 500: closed down 0.4% at 3,140.98

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GBP: soft at USD1.2920 (USD1.2929)

EUR: flat at USD1.1021 (USD1.1017)

Gold: down at USD1,459.52 per ounce (USD1,463.01)

Oil (Brent): flat at USD61.14 a barrel (USD61.18)

(changes since previous London equities close)

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ECONOMICS AND GENERAL

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Monday's Key Economic Events still to come

0930 GMT UK manufacturing purchasing managers' index

0955 CET Germany manufacturing PMI

1000 CET EU manufacturing PMI

0945 EST US manufacturing PMI

1000 EST US ISM manufacturing report on business

1000 EST US construction spending

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Labour and the Tories will resume their UK general election campaigns in earnest as they seek to move on from the political row over the London Bridge terrorist attack. With just 10 days to go until the polls open, Jeremy Corbyn will announce plans to slash regulated rail fares in England by a third from next month if his party enters government. The Tories, meanwhile, will set out a range of measures to strengthen border security after Brexit including automated entrance and exit checks to identify individuals who have overstayed their visa. Boris Johnson and Corbyn cancelled some planned campaign events over the weekend after two young people were fatally stabbed by convicted terrorist Usman Khan on Friday. The prime minister sought to blame Labour for Khan's early release, while Corbyn said convicted terrorists should "not necessarily" serve their full prison sentence. The Liberal Democrats criticised both parties for seeking to use the incident as a "political football".

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The first workforce decline in more than three years drove yet another decline in Irish manufacturing conditions in November, AIB Ireland's latest data showed. The seasonally-adjusted purchasing managers' index sunk to 49.7 in November, lagging behind 50.7 in October, and below the 50.0 marker which separates expansion from contraction. It was the fifth time in the last six months that Irish manufacturing conditions have worsened, AIB added. It was also the first time workforce numbers reduced since September 2016, with staffing numbers falling in line with weaker customer demand.

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Ireland's minority government suffered a blow after failing to win any seats in four by-elections which could provide clues before the whole country goes to the polls next year. Fine Gael is the country's largest party and its tight margin for passing laws with the support of a coalition of independents will shrink further following the result of Friday's vote in parts of Dublin and the south. Contests were ordered to fill vacancies left by parliamentarians elected to the European Parliament in May. Fine Gael leader and Irish Premier Leo Varadkar faces a general election for the Dail parliament next spring while grappling with the ongoing impact of Brexit on his country's economy.

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The 177th biannual OPEC meeting takes place in Vienna, Austria on Thursday. OPEC will decide on production policy for the first six months of 2020 at the meeting. Iraq said on Sunday that OPEC and other major producers would consider slashing output by 400,000 barrels a day to support prices when they meet in Vienna this week. The news helped mitigate some of the losses suffered on Friday after reports said Russia was looking to delay any further output reductions until April's gathering.

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BROKER RATING CHANGES

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RBC RAISES GLENCORE TO 'OUTPERFORM' ('SECTOR PERFORM') - TARGET 290 (310) PENCE

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CREDIT SUISSE RAISES GLENCORE PRICE TARGET TO 310 (275) PENCE - 'OUTPERFORM'

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JPMORGAN CUTS LAND SECURITIES TO 'NEUTRAL' ('OVERWEIGHT') - TARGET 1000 PENCE

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LIBERUM RAISES UNILEVER PLC TO 'BUY' ('HOLD')

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COMPANIES - FTSE 250

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Sirius Real Estate has acquired an office complex near Munich airport for EUR20.2 million from German investment firm KCM Invest.

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PPHE Hotel Group bought a freehold interest in a site located in south east London for GBP12 million in the hopes of developing it into a hotel, subject to planning permission. The site was acquired from an unnamed third party seller and will be funded from PPHE's existing cash reserves. The site is located near the Park Plaza hotel in Waterloo, London.

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Trainline, the recently London-listed train ticket selling platform, faces a direct rival if the Labour Party wins this month's UK general election, the Mail on Sunday reported. As part of Labour's nationalisation plans were it to get into power, the UK government would create a 'one-stop shop' for rail passengers to buy tickets online without booking fees, the Mail reported without citing its sources.

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COMPANIES - OTHER MAIN MARKET AND AIM

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Ted Baker said an independent review found that the value of inventory held on its balance sheet has been overstated. The retailer estimates an impact of between GBP20 million to GBP25 million, but believes that any adjustment to inventory value "will have no cash impact and will relate to prior years".

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Pebble Group priced its initial public offering at 105 pence per share. The company, which provides products and services to the promotional products industry, said it expects to begin trading on London's junior AIM market on Thursday. Pebble said its market capitalisation upon admission is expected at around GBP176 million. Its share placing as part of the IPO raised GBP79 million for the company and GBP56 million for shelling shareholders. Pebble said Elysian Capital will retain a 14% stake in the newly listed company.

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COMPANIES - INTERNATIONAL

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Woolworths Group said it is set to be faced with a class action lawsuit from an Australian law firm in relation to the retail giant underpaying its staff by more than USD200 million. Adero Law Firm, based in the country's capital Canberra, on Friday said it expects to open proceedings against the retailer, on behalf Cameron Baker, a former worker at a Woolworths unit in Sydney, and roughly 7,000 other former and current employees. The Sydney-listed firm on Monday said: "Woolworths Group Ltd has been notified that a Canberra law firm has announced its intention to file an employee class action proceedings against Woolworths Group in the Federal Court of Australia, in relation to payment shortfalls to Woolworths salaried store team members covered by the general retail industry award." The retailer in October had said it would begin making back payments, including interest and retirement contributions, before Christmas.

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Monday's Shareholder Meetings

Bovis Homes (re acquisition of Linden Homes businesses)

Mirada

JPMorgan Smaller Companies Investment Trust

Fusion Antibodies

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By Tom Waite; thomaslwaite@alliancenews.com

London Briefing is available to subscribers as an email newsletter. Contact info@alliancenews.com

Copyright 2019 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Rating
Glencore PLC 225.80 GBX -0.24
Fresnillo PLC 572.40 GBX -3.05 -
Land Securities Group PLC 1,001.50 GBX 7.46 -

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