‘Solid’ was the watchword in half-year figures for Mexican miner Fresnillo (FRES). Ramp up at the San Julián mine, and further signs of a turnaround at the precious metal company's eponymous mine fed through to an 11.2 per cent increase in like-for-like silver production. We should expect this trend to continue, after the second phase of construction at San Julián completed last month on time and on budget. This strengthened source of output, part of a “solid operational performance”, has led management to reiterate its 2017 target for 58m-61m ounces of silver and 870-900k ounces gold.
Higher output resulted in a 33 per cent increase in capital expenditure to $264m (£200m), although Fresnillo wants more. Seeking a “solid base” on which to add growth, exploration efforts have intensified. Focusing on existing operating mining districts and projects with the highest potential, the company spent 23 per cent more in the period than it did in 2016, incurring $64m of costs.
These efforts have been made possible by cost reduction initiatives elsewhere, although Fresnillo notes that the devaluation in the Mexican peso could soon add pressure to outgoings – the one cloud in an otherwise silver-lined set of numbers. Prior to their publication, analysts at Numis were forecasting full-year pre-tax profit of $509m and EPS of 45¢, against $718m and 58¢ in 2016.
| FRESNILLO (FRES) | ||||
| ORD PRICE: | 1,523p | MARKET VALUE: | £11.2bn | |
| TOUCH: | 1,522-1,524p | 12-MONTH HIGH: | 2,035p | LOW: 1,052p |
| DIVIDEND YIELD: | 1.6% | PE RATIO: | 26 | |
| NET ASSET VALUE: | 386¢ | NET CASH: | $88.4m | |
| Half-year to | Turnover | Pre-tax | Earnings per | Dividend |
| 30 Jun | ($m) | profit ($m) | share (¢) | per share (¢) |
| 2016 | 887 | 255 | 22.7 | 8.6 |
| 2017 | 996 | 387 | 41.9 | 10.6 |
| % change | +12 | +52 | +85 | +23 |
| Ex-div: | 10 Aug | |||
| Payment: | 08 Sep | |||
| £1=$1.32 | ||||
