UBS has cut its target price for precious metals miner Fresnillo from 2,100p to 2,00p and kept its 'neutral' rating on the stock following a mixed fourth-quarter production report yesterday.

Fourth-quarter silver production totalled 10.6m ounces, slightly ahead of UBS's 10.5m-ounce estimate. However, gold output of 97,000 ounces came in well below the 125,000-ounce forecast.

The broker explained: "The lower gold production was due to: 1) slower recovery at Soledad; 2) lower grades at Herradura; and, 3) an adjustment to previously reported gold production. Full year gold production of 473kozs still beat the company's guidance of 460kozs (which we viewed as overly conservative)."

Going forward, UBS said that the construction of a leaching plant at Herradura - which remains on track for the third quarter - should increase annual gold production, along with the construction of the San Julian mine.

Shares were down 2.14% at 1,688p by 11:00.

BC

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