Fresnillo PLC (LSE:FRES) has warned investors of a further six-month delay to the start of production of its 56%-owned Juanicipio underground mine.
The FTSE 100 company said the Mexican state owned electric company, Comisión Federal de Electricidad, has informed it that approval to complete the tie-in to the national power grid cannot yet be granted.
The precious metals company said that full load commissioning activities is expected to be approved sometime after the first week of May 2022.
Before the pandemic, the companies expected the mine to begin production in “mid-2020”.
Fresnillo said the delay is a direct consequence of the pandemic, with the power company unable to provide enough staff to oversee key tasks, such as review the existing installation, supervise physical connection to the active power grid, and approve required blackout prevention devices.
The company says that some activities will continue at the site, such as stoping, where large underground rooms are formed, and the development of mineralised material.
It will also make use of any unused capacity at its other sites to process mineralized material produced at Juanicipio during this period.
"As an industry, we continue to manage the ongoing impact of the pandemic and while frustrating for all concerned, we recognize this situation is beyond the control of all parties," said Octavio Alvidrez, chief executive of Fresnillo.
He added, “We will continue to process mineralized development material by using any excess capacity available at the Minera Fresnillo and Minera Saucito plants, minimizing any impact on future cashflow generation."