Fresnillo Highlights Growth Pipeline, Strong Cash Flow and Bullish Metals Outlook

Key Points

• Fresnillo reported stronger first-half financial performance, with revenue, gross profit, margins and EBITDA rising, alongside positive free cash flow, a strong cash position and an unchanged dividend policy. The company has returned more than $2 billion to shareholders over the past five years.
• The miner is advancing a broad growth pipeline across Mexico and Canada. Near-term projects include Valles underground, which could begin production by year-end and add 50,000–90,000 ounces annually, while longer-term assets include Herradura underground, Rodeo, Guanajuato, Orisyvo and Canada’s Novador project.
• Fresnillo remains bullish on gold and silver, citing geopolitical and macroeconomic support for gold and a structural silver deficit. Existing operations generally performed in line with plans, with Juanicipio above its targeted production rate and Ciénega gold output up 15%.

Fresnillo LON: FRES said it is continuing to focus on operating its existing mines efficiently while advancing a portfolio of brownfield and greenfield development projects in Mexico and Canada.

During a company presentation, Octavio said the miner operates eight mines across a mix of underground and open-pit operations and has five midterm advanced exploration projects. The company is pursuing a district-based development strategy, citing its three operations in the Fresnillo district—Fresnillo, Saucito and Juanicipio—as well as its northern Mexico Herradura cluster.

The company described itself as the world’s largest silver producer and Mexico’s largest gold producer. It said its resource portfolio contains more than 2 billion ounces of silver and 44 million ounces of gold.

Financial Position and Metals Outlook

Fresnillo said revenue, gross profit and gross-profit margin increased in the first half, with gross profit and margin “almost doubling,” according to the presentation. EBITDA also grew during the period, the company said.

The miner said it has returned more than $2 billion to shareholders through dividends during the past five years, while continuing to invest in future growth. It cited a strong balance sheet, a strong cash position, positive free cash flow and an unchanged dividend policy.

Octavio said the company remains positive on both gold and silver markets. Gold has been supported by geopolitical and macroeconomic developments, he said, while silver has benefited from a structural deficit in recent years and rising use across a range of applications.

Operating Updates

Fresnillo, Saucito and Juanicipio operated in line with mine plans and expected grades, the company said. At the Fresnillo mine, it reported maintaining expected silver grades while producing more gold. Zinc and lead output also contributes to the group’s cash-cost position, according to the presentation.

At Saucito, the company is preparing to connect the Jarillas shaft, which it said should reduce costs per ton. Juanicipio has operated above its planned production rate, Fresnillo said, and the company is investing in a conveyor belt intended to lower costs per ton.

In northern Mexico, Herradura, Ciénega and San Julián made what the company called solid operational progress in the first half. Herradura’s production reflected planned lower grades, alongside infrastructure and project work intended to add ounces in the near future. Ciénega was a highlight, with gold production rising 15%, while San Julián’s vein system helped mitigate the effect of lower grades.

Project Pipeline

Fresnillo highlighted several brownfield projects that it expects to provide production before some of its larger greenfield developments come on stream.

• Valles underground: Located near the Herradura district, the project is expected to add 50,000 to 90,000 ounces of annual production. Fresnillo said first production could begin near the end of the year.
• Noche Buena: The company said exploration success and the current price environment have enabled it to extend the mine’s life by six to seven years. It is re-leaching pads and plans to restart stripping activity.
• Herradura underground: The longer-term development is expected to produce 120,000 to 160,000 ounces beginning in 2032. Herradura is in its 29th year of operations, Fresnillo said.
• Tajitos: The project sits near Herradura and has 1.1 million ounces of gold identified. The company expects potential operating synergies with its existing Herradura operations.

Among greenfield assets, Fresnillo said it has advanced the preliminary economic assessment for Rodeo and is nearing completion of confirmation work. Expected output has increased to 90,000 to 110,000 ounces of gold annually, from an earlier range of 75,000 to 90,000 ounces.

The company also described Guanajuato as one of its strongest silver projects, citing high grades and exploration potential along veins and at depth. Initial mining work, including a decline and shaft, is expected in the coming months. Fresnillo currently expects the project could begin production in 2033, though it is evaluating options to start earlier.

At Orisyvo, Fresnillo said metallurgical studies have produced strong results, addressing what it characterized as the project’s principal challenge. The company also highlighted Novador in Canada, acquired through its purchase of Probe Gold, citing approximately 10 million ounces of gold resources and an exploration package spanning 180,000 hectares.

Octavio said the company’s cost focus remains central, noting that consolidated total costs were broadly the same in 2024 and 2025. Addressing labor, he said talent availability is a challenge as mining companies develop projects and expand output, though Fresnillo maintains a constructive relationship with its union and develops much of its own workforce while using contractors across its operations.

About Fresnillo (LON:FRES)

Fresnillo plc is the world's largest silver producer and Mexico's largest gold producer, listed on the London and Mexican stock exchanges. The Group seeks to create value for stakeholders across precious metal cycles, focusing on high-potential silver and gold projects that can be developed into low cost, world-class mines. Following a decade of consistent and successful progress, the Group is now focused on consolidating its growth and advancing its pipeline in order to deliver further growth in the years ahead.

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