Fresnillo plc (LON:FRES) shares dropped as the miner reduced its production targets for the year after lower-than-expected ore grades and delays in construction at its Herradura gold mine in Mexico hit second quarter output.
The group cut its 2019 gold output forecast to 880,000-910,000 ounces from a previous target of 910,000-930,000 ounces and sliver production to 55-58mln ounces from 58-61mln ounces.
Second quarter gold production fell 5.4% to 221,307 ounces and silver production decreased 6% to 14.4mln ounces.
The company said adjusted production costs for the first half was expected to be US$135mln more than last year due to lower ore grades and issues at its Herradura gold mine.
Fresnillo reiterated the warning it issued in May when it said that 2019 would be more challenging than last year.
"However, we will continue to work hard to ensure the improvements we have seen this quarter are maintained in the second half of the year," said chief executive Octavio Alvidrez.
Shares declined 1.2% to 910p in morning trading.