Interactive Investor

ii view: miner Fresnillo has a mixed first quarter

Shares in this FTSE 100 miner with operations across Mexico fell by a third last year. We assess prospects.

24th April 2024 15:57

by Keith Bowman from interactive investor

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First-quarter production update to 31 March

  • Silver production down 4.6% from the previous quarter to 13.5 million ounces (moz)
  • Gold production down 7.7% from Q4 to 141 kilo ounces (koz)

Chief Executive Octavio Alvidrez said:

"We have started the year with our performance in line with our expectations. We continue to prioritise safety across all our operations in 2024, while also focusing on reducing costs, improving efficiencies at all mine sites, and with our newest Juanicipio mine now fully ramped up, on the advancement of our growth pipeline."

ii round-up:

Precious metals miner Fresnillo (LSE:FRES) today detailed first-quarter production below City hopes, but repeated existing full-year estimates. 

Silver production for the three months to late March of 13.5 million ounces (moz) missed analysts hopes for more than 14 moz. So did gold production of 141 kilo ounces (koz) which compared with analyst predictions for nearer 150 koz. 

Shares in the FTSE 100 company fell 3% in UK trading before making it back into positive territory near the end of the day. They came into this latest news up 9% over the last six months. That’s similar to diversified rival Rio Tinto Registered Shares (LSE:RIO) and the FTSE 100 index, although less than the 18% gain for silver and gold prices.  

Fresnillo operates a series of mines across Mexico. It is the world's largest primary silver producer and Mexico's largest gold producer.

It continues to expect 2024 silver production of between 55 and 62 moz and gold output of between 580 and 630 koz. That’s up from 56.3 moz of silver in 2023 and 610.6 koz of gold.

Lower ore grades and reduced processing at its San Julián operation caused a drop in silver production of 4.6% from the previous quarter. 

A 7.7% decline in gold output from Q4 was down to lower grades at Herradura and a mine closure at Noche Buena. 

A second production update is scheduled for 24 July, then interim results on 30 July. 

ii view:

Fresnillo shares are listed on both the London and Mexican Stock Exchanges. The company employs around 7,000 people across its operations. It runs eight mines across Mexico including Fresnillo, Saucito, Ciénega and San Julián, along with four advanced exploration projects.  

For investors, lower-than-expected production in this latest quarter leaves more work needed to achieve current targets for 2024. A highly focused portfolio of mined commodities heightens risks compared to more diversified rivals like Glencore (LSE:GLEN) and Anglo American (LSE:AAL). A forecast dividend yield of 2% compares to over 5% at both Rio and BHP Group Ltd (LSE:BHP), while currency moves between Mexican operations, precious metals priced in dollars and shares traded in pounds also warrant consideration.  

On the upside, annual production guidance has been maintained, and the group’s focus on reducing costs and increasing efficiency continues. A price-to-net asset value below the three-year average also suggests value, while the shares offer exposure to rising precious metal prices.

Extra caution is required given Fresnillo is a more specialist miner, but it is exposed to a possible increase in industrial demand for silver during a global economic recovery, while precious metals have performed well when geopolitical tensions are high.    


  • Pursing efficiency measures
  • Income generation and exposure to precious metals


  • Lacks the product and geographical diversity of other miners
  • Currency movements can impact

The average rating of stock market analysts:


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