MEXICO CITY -(Dow Jones)- Mexican mining company Minera Frisco SAB (MFRISCO.MX) on Wednesday posted a net loss in the second quarter as losses on metals futures pushed up financial costs, offsetting higher sales and operating profit.
Frisco, the mining business of billionaire Carlos Slim, said its net loss was 372 million pesos ($32 million), compared with a net profit of MXN492 million in the second quarter of 2010.
The company said it made a net loss on metals futures, which, along with higher interest expense, led to a financing cost of MXN1.42 billion in the period. Frisco said it uses swaps, futures and options to hedge part of its future production, “mainly because of the strong volatility in gold and silver prices, brought on largely by the devaluation and weakness of the [U.S.] dollar.”
Frisco’s sales in the April-June quarter rose 15% to MXN2.09 billion from MXN1.82 billion, on higher production and higher metals prices than a year ago. Frisco produced 1.4 million ounces of silver, up 27%, and 61,846 ounces of gold, up 17% from a year ago. Copper and lead production also rose, while zinc output fell.
Operating profit rose 3.9% to MXN904 million, growing less than sales because of higher costs of labor, electricity and sulfuric acid. Spending on exploration more than doubled from the year-ago quarter.
Frisco expects to make capital expenditures this year of $1.2 billion. The company’s series A-1 shares traded on the Mexican stock exchange were up 2.2% at MXN57.38 around 1:30 p.m. EDT.
