Fresnillo slashes half-year payout

For every ounce of silver and gold sold throughout the period, Fresnillo on average received $24.67 and $1,467.67 respectively, representing falls of 20.6 per cent and 10.6 per cent against 2012's first half. However, those declines represent roughly half the actual price falls since the beginning of the year. So, short of an unlikely rebound in metals' prices, we can expect selling prices to contract even more by the year-end. The upshot at the half-year mark is that operating cash flow fell by nearly a third, while cash profits were down by 29 per cent to $486m (£318m).

The miner intends to accelerate its cost-cutting programme through the remainder of this year, which may prove difficult given the cost pressures it is experiencing domestically. The company reiterated its 2013 target for silver production of 41m ounces, and a slightly lower target for gold output of 465,000 ounces, following a downgrade in July. As a low-cost producer, Fresnillo has so far avoided the huge write-downs announced by a number of its sector peers.

Investment bank JPMorgan Cazevove expects 2013 EPS of 50.8¢ (103¢ in 2012)