Mexican silver and gold miner Fresnillo delivered a sparkling first half performance that saw cash profits rise by 92 per cent to $392m (£246m) and margins increase by 10 percentage points to 64.7 per cent.
The miner benefited from an ideal combination of record output and higher prices, which were more than enough to offset a rise in costs due to an 8.5 per cent revaluation of the Mexican peso against the US dollar, a hike in electricity and diesel prices as well as higher contractor costs. Total silver production rose 1.7 per cent to 20.9m ounces and gold output jumped a third to 176,351 ounces, thanks in part to the start of production at the group's new Soledad-Dipolos mine. Gold prices hit new highs during the period.
Output remains on track to achieve full-year targets of 38m ounces of silver and 340,000 ounces of gold and with average realised prices of both commodities up by more than a quarter, analysts at Deutsche Bank expect full-year pre-tax profits to rise 72 per cent to $787m, giving EPS of 63c ($457m and 42c in 2009).
Expansion of the Cienega mine and the Saucito development project are expected to start operations next year, with output in the first year estimated at 4.7m ounces of silver and 22,500 ounces of gold, ramping up to 9m ounces and 45,000 ounces, respectively, in the third year.
| FRESNILLO (FRES) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,067p | MARKET VALUE: | £7.6bn | |
| TOUCH: | 1066-1068p | 12-MONTH HIGH: | 1,139p | LOW: 539p |
| DIVIDEND YIELD: | 1.5% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 179c | NET CASH: | $390m | |
| Half-year to 30 Jun | Turnover ($m) | Pretax profit ($m) | Earnings per share (c) | Dividend per share (c) |
|---|---|---|---|---|
| 2009 | 379 | 180 | 16.9 | 5.25 |
| 2010 | 606 | 354 | 30.8 | 9.20 |
| % change | +60 | +97 | +82 | +75 |
Ex-div:18 Aug Payment:14 Sep £1=$1.590 | ||||
