ii view: precious metals miner Fresnillo makes record profit

Full-year results to 31 December

• Adjusted revenues up 27.6% to $4.6 billion
• Adjusted profit (EBITDA) up 81% to $2.8 billion
• Final dividend of 108.12 US cents per share
• Total dividend payment of 128.92 US cents per share, up from last years 74.3 cents and which included a special dividend 
• Net cash held of $1.92 billion, up from $458 million a year ago 

Guidance:

• Continues to expect full year 2026 silver production of 42-46.5 million ounces (moz)
• Continues to expect full year 2026 gold production of 500-550 thousand ounces (koz)

Chief Executive Octavio Alvidrez said:

"These results demonstrate our ability to leverage our high-quality asset base while managing costs carefully to expand margins, resulting in significant cash generation and returns to our shareholders. 

"Operationally, silver production was in line with guidance and gold production exceeded expectations. 

"Looking ahead, we remain committed to responsible growth, with the safety of our people as our top priority. We will continue to monitor and manage costs, while advancing our exploration pipeline to support long-term value creation.”

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ii round-up:

Fresnillo (LSE:FRES) reported record annual profits, although the precious metals miner flagged higher-than-expected mine development expenditure for the year ahead. 

Soaring silver and gold prices during 2025 helped push adjusted profits (EBITDA) up 81% to $2.8 billion (£2.1 billion). A final dividend of 108.12 US cents per share makes for a total 2025 payment of 128.92, a payout ratio of 69% and ahead of a 33-50% payout policy. Planned capital expenditure in 2026 of $765 million is up from a previous estimate of $505 million and tops City forecasts of around $621 million.

Shares in the FTSE 100 company fell around 5% in post results trading with wider markets lower given ongoing developments in the Middle East. Fresnillo shares came into this news up more than 400% during 2025. Silver and gold each soared by 136% and 64% respectively last year. Fellow precious metals miner Endeavour Mining (LSE:EDV) rose 172%. 

Factors including raised global geopolitical tensions and elevated government debt have been attracting investors to precious metals over recent years. 

Fresnillo operates a series of mines across Mexico. Shifts to narrower veins and required operational phrasing continues to see management predicting full year 2026 silver production of 42-46.5 moz,  a potential fall from 2025’s 48.7 moz. 

Gold output is still expected to come in at 500-550 koz, a fall from 2025’s 600.3 koz. Fresnillo is the world's largest primary silver producer and Mexico's biggest gold producer.

Higher metal prices underpinning raised cashflows pushed group year-end cash held to $1.92 billion, up from $458 million in late 2024.  

Fresnillo recently completed its $556 million acquisition of Canada’s Probe Gold, bringing established infrastructure and a skilled workforce, as well as adding 10 million gold ounces to its resource base.

A first-quarter production update is scheduled for 22 April. 

ii view:

Headquartered in Mexico City, Fresnillo employs around 7,000 people. Nine Mexican operations include underground mines at Fresnillo, Saucito, Juanicipio and Ciénega, as well as open pit mines at Herradura, Soledad-Dipolos and Noche Buena. Group exploration includes a silver and gold project within the Guanajuato region as well as three other gold exploration projects.

For investors, silver and gold output both fell in 2025 compared to 2024, with further falls forecast for 2026. A share price-to-net asset value ratio comfortably above the three-year average may suggest the shares are not obviously cheap. A highly focused portfolio of mined commodities heightens risks compared to more diversified rivals like Glencore (LSE:GLEN) and Rio Tinto Ordinary Shares (LSE:RIO), while currency moves between Mexican operations, precious metals priced in dollars and shares traded in pounds also deserves thought.

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More favourably, a return to similar silver and gold production levels seen in 2025 are forecast for 2027 and 2028. Group net cash held of $1.92 billion as of late December points towards a robust balance sheet. The acquisition of Canadian miner Probe Gold brings new resources and geographical diversification, while a management focus on improving operational efficiency persists.

On balance, a substantial rise in the share price over the last year and forecast falls in 2026 production offer grounds for caution. That said, elevated global geopolitical tensions and a forecast dividend yield of over 2% will likely keep investors interested.

Positives: 

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

Negatives:

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

The average rating of stock market analysts:

Hold