Fresnillo profit surge on gold and silver: capex and production outlook for mine planners
Reviewed by Tom Sullivan
First reported on MINING.com
30 Second Briefing
Fresnillo nearly tripled first-half profit as a 74.7% revenue jump to $3.38 billion from stronger realised gold and silver prices outweighed lower grades and volumes, enabling a higher interim dividend of $0.43 per share and funding for the Probe Gold acquisition completed in January. Attributable silver output, including Silverstream, fell 11.4% to 22 million oz and gold production dropped 7.3% to 290,900 oz, hit by lower grades at Saucito, Juanicipio, Herradura and a fissure in a ball mill at Dynamic Leaching Plant I. For 2026, Fresnillo guides silver production at 42–46.5 million oz, gold at 500,000–550,000 oz, with capex cut to $500–$550 million and exploration around $260 million.
Technical Brief
- A fissure in a ball mill at Dynamic Leaching Plant I constrained gold throughput until repair.
- Commissioning delays at leaching pad XV further limited Herradura’s leach capacity and gold recovery schedule.
- Adverse weather disrupted operations, compounding grade-related production losses at several open pits.
- End of Silverstream’s contribution removed a discrete silver feed source, cutting attributable silver ounces.
- Lower ore grades at Saucito, Juanicipio, Fresnillo and San Julián Veins reduced metal output per tonne mined.
- By-product lead output rose 8.8% on higher grades at Fresnillo and Juanicipio, improving polymetallic revenue balance.
- Zinc production remained broadly flat, indicating relatively stable zinc head grades and plant performance.
- Jefferies notes Fresnillo trades at ~1.2× forward NAV and 6.2× attributable EV/earnings, constraining re-rating upside.
Our Take
Fresnillo’s 2026 silver production guidance of 42–46.5 Moz lines up with BMI/Fitch’s view in January 2026 that a structural silver deficit will persist, suggesting its Mexican assets like Saucito and Juanicipio are positioned to monetise tight market conditions rather than chase volume growth.
The valuation metrics cited (about 1.2x forward NAV and 6.2x EV/EBITDA) sit at the upper end of what we see for primary silver producers in our database, implying investors are already pricing Fresnillo as a relatively low-risk way to gain leveraged exposure to silver compared with smaller peers highlighted in our other silver pieces, such as Vizsla Silver.
Prepared by collating external sources, AI-assisted tools, and Geomechanics.io’s proprietary mining database, then reviewed for technical accuracy & edited by our geotechnical team.
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