Fresnillo shines in first half as metals price rise boosts sales, profits

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.

Silver production was 25,212 ounces, while gold was 447,569. The company said it was well-placed to meet 2016 silver production guidance of 49m – 51m ounces, and recently increased 2016 gold production guidance of 850,000 – 870,000 ounces.

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

Fresnillo said it continued to expect full year 2016 capital expenditure of $600m and exploration investment of around $135m-$140m, as spend will be weighted towards the second half.

The dividend has been ramped to 8.6 cents a share from 2.1 cents.

“Precious metals prices have seen a strong recovery since the start of the year, particularly post the UK referendum on departing the European Union. However, the sustainability of any rally in gold and silver prices will always remain uncertain. We therefore maintain our Contingency Plan which was put in place at the beginning of the year,” the company said.

"We remain on track to meet our 2018 silver production target of 65m ounces, having already surpassed our 2018 gold target of 750,000 ounces."