Fresnillo left at 'sell' by Numis after half year results

Numis reiterated a ‘sell’ rating and target price of 1,400p for Fresnillo on Wednesday after the miner reported its first half results.

While Fresnillo reported first half financials that beat consensus, Numis believes the company is “trading too high relative to peers despite being an excellent business”.

First-half silver and gold production rises of 6% and 23% respectively combined with a Brexit-led recovery of the gold price and devaluation of the Mexican peso/US dollar exchange rate helped to boost Fresnillo core earnings before interest, tax, depreciation and amortisation to $474m from $317.9m.

Revenues rose 17.9% to $886.9m. Profit from continuing operations before income tax increased by 87.4% to $255.1m.

“EBITDA of US$474m, EPS of US$0.227/share and net income of US$165.6m beat consensus estimates by 14%, 6% and 13%, respectively,” Numis noted.

“Per tonne costs were lower across the board aided by an 8.1% fall in the Mexican peso and a 22.3% fall in weighted energy costs.”

Shares rose 0.51% to 1,965p at 1038 BST.