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1. Company Snapshot

1.a. Company Description

Fresnillo plc mines, develops, and produces non-ferrous minerals in Mexico.It operates through seven segments: Fresnillo, Saucito, Ciénega, Herradura, Noche Buena, San Julián, and Other.The company primarily explores for silver, gold, lead, and zinc concentrates.


Its projects include Fresnillo silver mine located in the state of Zacatecas; Saucito silver mine situated in the state of Zacatecas; Ciénega gold mine located in the state of Durango; Herradura gold mine situated in the state of Sonora; Noche Buena gold mine located in the state of Sonora; and San Julián silver-gold mine situated on the border of Chihuahua/Durango states.The company has mining concessions covering an area of approximately 1.7 million hectares of surface land in Mexico.It also leases mining equipment; produces gold/silver doré bars; and provides administrative services.


The company was founded in 1887 and is headquartered in Mexico City, Mexico.Fresnillo plc is a subsidiary of Industrias Peñoles S.A.B. de C.V.

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1.b. Last Insights on FRES

Fresnillo's recent performance has been driven by upgraded growth expectations and favorable market dynamics. The company's acquisition of Probe Gold for $560 million diversifies its exposure beyond Mexico and is expected to return growth to its portfolio. Rising gold and silver prices, amid supply deficits, have also boosted the stock. Analysts have raised their consensus price target from £22.64 to £24.10, reflecting growing optimism. Additionally, a hammer chart pattern has formed, indicating potential support for the stock.

1.c. Company Highlights

2. Fresnillo's Strong First Half Driven by Higher Prices and Cost Control

Fresnillo delivered a robust first half of 2025, with gross profit and EBITDA surpassing $1 billion each. This success was fueled by a combination of higher silver and gold prices, coupled with strict cost management strategies. Revenue surged by $420 million, primarily driven by the favorable metal price environment. Production costs decreased by $170 million, a testament to Fresnillo's operational efficiency and cost-cutting initiatives.

Publication Date: Aug -15

📋 Highlights
  • Strong Financial Performance:: Fresnillo reported $1.1 billion in cash from operations (up 100% YoY) and $1.1 billion in EBITDA for H1 2025, driven by higher metal prices and cost reductions.
  • Dividend Payout:: Generated $150 million in dividends for shareholders, with plans to distribute up to $1.6 billion in special dividends by year-end if cash flow allows.
  • Operational Efficiency:: Herradura’s gold production and Fresnillo’s silver grade increased by 12%, supported by cost controls and operational excellence programs.
  • Strategic Acquisition:: Buyback of the Silverstream contract for $40 million (resulting in a $133 million non-cash loss) will shift production focus toward gold at Herradura.
  • Project Pipeline:: $1.5 billion in CapEx allocated to key projects (Orisyvo, Guanajuato Sur, Valles), with Valles expected to reach 50% production capacity by 2027.

Operational Highlights

The company showcased strong operational performance across its mines. The Herradura gold mine excelled, thanks to operational excellence programs implemented to enhance productivity. Fresnillo also achieved a 12% increase in silver grade at its namesake Fresnillo mine, highlighting the successful application of mining techniques to improve resource extraction.

Strategic Decision and Project Updates

Fresnillo made the strategic decision to buy back the Silverstream contract from Peñoles for $40 million. This move, while resulting in a non-cash loss of $133 million after tax, is expected to have a positive long-term impact on attributable silver production guidance for 2025. This is anticipated to be offset by increased gold production at Herradura. The company continues to advance several development projects, including Orisyvo and Guanajuato Sur. The prefeasibility study for Orisyvo was completed, and significant drilling progress was made at Guanajuato Sur.

Focus on Cost Management and Growth

Fresnillo remains steadfast in its commitment to cost management and safety. The company is actively pursuing initiatives to enhance environmental performance and strengthen community relations.

3. NewsRoom

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.67%)

6. Segments

Herradura

Expected Growth: 6.5%

Herradura's 6.5% growth is driven by increasing silver prices, successful mine expansion, and improved operational efficiency. Additionally, Fresnillo's focus on exploration and development of new projects, such as the Juanicipio mine, contributes to the segment's growth. Strong demand for silver in the industrial and jewelry sectors also supports the growth momentum.

Saucito

Expected Growth: 6.8%

Saucito's 6.8% growth is driven by increased silver and gold production, improved ore grades, and enhanced operational efficiency. Additionally, Fresnillo's strategic investments in exploration and development have expanded the mine's resource base, supporting long-term growth. Favorable market conditions, including rising precious metal prices, have also contributed to the segment's strong performance.

Fresnillo

Expected Growth: 7.0%

Fresnillo's 7.0% growth driven by increasing silver and gold production, strong demand from industrial and jewelry sectors, and strategic expansion into new mining projects, such as Juanicipio and Pyrites, while benefiting from a favorable Mexican peso exchange rate and cost savings initiatives.

San Julian

Expected Growth: 6.2%

San Julian's 6.2% growth is driven by increased silver and gold production, improved ore grades, and enhanced operational efficiency. Additionally, Fresnillo's strategic investments in exploration and development have expanded the mine's resource base, supporting long-term growth. Favorable market conditions, including rising precious metal prices, have also contributed to the segment's growth.

Juanicipio

Expected Growth: 7.2%

Juanicipio's 7.2% growth is driven by increasing silver prices, rising production volumes, and improved operational efficiency. The mine's high-grade ore and low cash costs also contribute to its strong performance. Additionally, Fresnillo's investment in exploration and development activities is expected to further boost production and drive growth.

Cienega

Expected Growth: 6.0%

Cienega's 6.0% growth is driven by increasing silver prices, improved ore grades, and enhanced operational efficiency. Additionally, Fresnillo's strategic investments in exploration and development have expanded the mine's resource base, supporting higher production levels. These factors have contributed to the segment's robust growth, positioning it for continued success.

Noche Buena

Expected Growth: 6.7%

Fresnillo plc's Noche Buena segment growth of 6.7% is driven by increasing silver prices, improved ore grades, and enhanced operational efficiency. Additionally, successful exploration efforts and strategic investments in mine development have contributed to the segment's growth.

7. Detailed Products

Silver

Fresnillo plc is one of the world's largest primary silver producers, with a strong track record of silver mining and exploration in Mexico.

Gold

Fresnillo plc is a significant gold producer, with gold mining operations in Mexico.

Lead

Fresnillo plc produces lead as a by-product of its silver and zinc mining operations in Mexico.

Zinc

Fresnillo plc produces zinc as a by-product of its silver and lead mining operations in Mexico.

8. Fresnillo plc's Porter Forces

Forces Ranking

Threat Of Substitutes

Fresnillo plc operates in the mining industry, where substitutes are limited. However, the company's focus on silver and gold mining makes it vulnerable to fluctuations in global demand and prices.

Bargaining Power Of Customers

Fresnillo plc's customers are primarily industrial manufacturers and jewelry makers, who have limited bargaining power due to the company's strong market position and diversified customer base.

Bargaining Power Of Suppliers

Fresnillo plc relies on suppliers for equipment, materials, and services. While the company has some bargaining power, suppliers can still exert pressure on prices and delivery terms.

Threat Of New Entrants

The mining industry has high barriers to entry, including significant capital requirements, regulatory hurdles, and environmental concerns, making it difficult for new entrants to challenge Fresnillo plc's market position.

Intensity Of Rivalry

The mining industry is highly competitive, with many established players competing for market share. Fresnillo plc faces intense rivalry from companies like Industrias Peñoles, Goldcorp, and Newmont Goldcorp.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 20.10%
Debt Cost 3.95%
Equity Weight 79.90%
Equity Cost 5.02%
WACC 4.81%
Leverage 25.16%

11. Quality Control: Fresnillo plc passed 3 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Aurubis

A-Score: 5.9/10

Value: 9.6

Growth: 5.2

Quality: 4.2

Yield: 3.1

Momentum: 9.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Endeavour Mining

A-Score: 5.6/10

Value: 3.8

Growth: 5.0

Quality: 5.8

Yield: 6.2

Momentum: 10.0

Volatility: 2.7

1-Year Total Return ->

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Stock-Card
Fresnillo

A-Score: 5.2/10

Value: 2.3

Growth: 6.0

Quality: 7.4

Yield: 3.8

Momentum: 10.0

Volatility: 1.7

1-Year Total Return ->

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Stock-Card
KGHM Polska Miedz

A-Score: 4.5/10

Value: 7.4

Growth: 4.2

Quality: 4.6

Yield: 1.2

Momentum: 5.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
SCA

A-Score: 4.2/10

Value: 3.6

Growth: 1.8

Quality: 6.6

Yield: 2.5

Momentum: 2.0

Volatility: 8.7

1-Year Total Return ->

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Stock-Card
Stora Enso

A-Score: 3.7/10

Value: 8.3

Growth: 1.3

Quality: 2.1

Yield: 6.2

Momentum: 1.5

Volatility: 3.0

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

27.14$

Current Price

27.14$

Potential

-0.00%

Expected Cash-Flows