Mexico-focused precious metals miner Fresnillo (LON: FRES) nearly tripled first-half profit as higher gold and silver prices more than offset lower production, lifting revenue 74.7% to $3.38 billion and supporting a higher interim dividend.
The company said stronger realized prices for silver and gold drove revenue and earnings growth despite lower grades and sales volumes.
Chief executive Octavio Alvídrez said Fresnillo’s financial position enabled it to fund the acquisition of Probe Gold, completed in January. It also allowed the miner to continue capital spending and exploration, and increase its interim dividend to $0.43 a share while maintaining a strong balance sheet.
Shares rose 3.6% to 2,586p in early afternoon trading, valuing the company at nearly £19 billion ($25 billion).
“Operationally, gold and silver production was in line with our expectations and plans across our mines are progressing well,” Alvídrez said. “We remain focused on managing costs within our control by driving efficiencies across our supply chain and advancing key infrastructure projects.”
Higher precious metals prices continue to cushion miners from inflationary pressures and operational disruptions, although producers remain under pressure to replace reserves and maintain output as ore grades decline across mature operations.
Operations
Attributable silver production, including Silverstream, fell 11.4% year over year to 22 million oz, mainly because of the end of Silverstream’s contribution, lower ore grades at Saucito, Juanicipio, Fresnillo and the San Julián Veins, and reduced ore processed at several operations. Attributable gold production declined 7.3% to 290,900 oz as lower grades at Herradura, a fissure in a ball mill at Dynamic Leaching Plant I, delays commissioning leaching pad XV and adverse weather reduced output. By-product lead production rose 8.8% on higher grades at Fresnillo and Juanicipio, while zinc production was broadly unchanged.
Outlook
Fresnillo expects 2026 silver production of 42 million to 46.5 million oz and gold production of 500,000 to 550,000 oz. The company revised expected 2026 capital spending to $500 million-$550 million and forecasts exploration spending of about $260 million.
Jefferies described the first-half results as a clean beat across the board, with earnings, cash flow and sales volumes exceeding forecasts while capital spending guidance was cut sharply. The broker said the shares appear fairly valued, trading at about 1.2 times forward net asset value and 6.2 times attributable enterprise value to earnings.
