Nov 12 (Reuters) - Precious metals miner Fresnillo Plc ( FNLPF )

said on Tuesday that the Sabinas mine, owned by

Mexico's top silver miner Industrias Penoles, was

experiencing operational difficulties, affecting silver

production.

Shares in the FTSE 100 miner fell more than 5% in

early trade.

Fresnillo did not disclose the nature of the operational

issues at the Mexican mine.

The Sabinas mine is the mineral source as part of the

Silverstream agreement between Fresnillo and Penoles, signed in

2007.

The Silverstream contract comprises a series of 12

agreements between Fresnillo and Penoles, following which the

London-listed miner has the right to receive all proceeds from

the payable silver.

The company also said discussions are ongoing with Penoles

to assess the extent of the issues and any associated impact on

the contract.

Fresnillo, which primarily produces silver and gold, said

there was a reasonable likelihood that the issues might lead to

"significant adjustments" to the Silverstream agreement.

Last month, Fresnillo said its 2024 production outlook

remained in line with its previous forecast after posting a 1.5%

quarter-on-quarter drop in silver output for the third quarter.

(Reporting by Aby Jose Koilparambil in Bengaluru;

Editing by Abinaya Vijayaraghavan)