Had Fresnillo 's (FRES) half-year financial results been anonymised, a quadrupling in the half-year dividend on a broadly flat cost base would offer a pretty big clue that these are the numbers of a precious metals group that just hit a sweet patch. As it was, the success of Fresnillo's six months to June was less about a spike in prices than surges in the production of gold and silver, which jumped 23 and 6 per cent respectively.
For example, at $1,246 (£941) an ounce, the average realised price of gold was just 3.3 per cent higher in the first half of 2016 than the same period last year. Against this backdrop, chief executive Octavio AlvÃdrez could hardly be blamed for dampening expectations at the publication of preliminary results in March, but if the recent upgrades to 2016 production guidance are anything to go by, management is now decidedly more bullish. Fresnillo now expects to mine 850,000-870,000 ounces of gold, 10 per cent more than March's modest predictions. The recent ramp-up in production from the Herradura and Noche Buena open pit mines suggests the FTSE 100 group is on track to meet that target, while higher ore grades at its eponymous mine should support silver forecasts of 49m-51m ounces.