Fresnillo doubles dividend as profits soar

Gold prices rose by 28.1 per cent last year and attributable gold production achieved a record 448,900 ounces (an increase of 21.6 per cent) as output ramped up at Soledad-Dipolos and throughput increased at Herradura. Silver production remained stable at 41.87m ounces as the start up of Saucito, the group's fifth mine, offset the ongoing decline of the large but maturing Fresnillo operation. However, with silver prices up almost 75 per cent year on year, profits soared.

The production pipeline looks promising, too, with the Noche Buena gold mine expected to begin production later this month. While average attributable output of 42,000 ounces per year is expected over an initial mine life of just five years, chief executive Jaime Lomelin is confident there is scope to extend this.

Furthermore, the group increased silver resources by 23 per cent to 1.8bn ounces and gold resources by 17 per cent to 23.5m ounces. Fresnillo plans to invest $360m (£227m) in exploration this year – more than double 2011's exploration spend – to further build resources to secure long-term production growth. Analysts are updating their forecasts in light of these results.