Fresnillo profit surges as precious metal prices offset lower output

Fresnillo PLC has delivered a striking set of interim results, with soaring precious metal prices more than compensating for lower gold and silver production.

Revenue rose 74.7% to US$3.38 billion in the six months to 30 June 2026, while profit for the period increased 213.0% to US$1.46 billion. The interim dividend more than doubled to 43.4 US cents per share.

The headline figures are exceptional, but the operational picture is more mixed. Production declined, costs increased and several mines experienced lower grades or disruption. Fresnillo's performance was therefore driven principally by the prices received for its metals rather than higher output.

Fresnillo's key first-half figures

Metric	H1 2026	H1 2025	Change
Revenue	US$3.38 billion	US$1.94 billion	74.7%
Gross profit	US$2.36 billion	US$1.02 billion	130.7%
EBITDA	US$2.35 billion	US$1.10 billion	113.2%
EBITDA margin	69.5%	56.9%	12.6 percentage points
Profit for the period	US$1.46 billion	US$467.6 million	213.0%
Earnings per share	US$1.751	US$0.534	227.9%
Silver production	22.0 million ounces	24.9 million ounces	-11.4%
Gold production	290,885 ounces	313,840 ounces	-7.3%
Interim dividend per share	43.4 US cents	20.8 US cents	108.7%

EBITDA means earnings before interest, tax, depreciation and amortisation. It is commonly used to assess the underlying operating performance of a business before financing and certain accounting costs.

Precious metal prices did the heavy lifting

The most important numbers in these results are Fresnillo's realised selling prices.

The average realised silver price increased 134.4% to US$78.90 per ounce, while the average realised gold price rose 47.3% to US$4,666.80 per ounce. This added substantially more revenue than was lost through lower sales volumes.

Adjusted revenue from silver increased 122.6% to US$1.84 billion, making silver responsible for 54.0% of the group total. Gold adjusted revenue rose 37.6% to US$1.32 billion.

That pricing strength explains why gross profit more than doubled despite weaker production. The EBITDA margin expanded from 56.9% to 69.5%, showing how quickly higher commodity prices can feed through a miner's income statement once operating costs have been covered.

Juanicipio became the largest contributor to group gross profit, generating US$621.1 million, up 147.8%. The Fresnillo mine's contribution increased 250.2% to US$401.7 million, while Saucito produced US$424.3 million of gross profit.

Lower production remains the main concern

First-half attributable silver production declined 11.4% to 22.0 million ounces. This reflected the end of the Silverstream contribution, lower ore grades across several mines and reduced processing volumes at Saucito and Ciénega.

Gold production fell 7.3% to 290,885 ounces, primarily because of weaker performance at Herradura. Its gold output declined 15.1% after lower-grade production, a fissure in a ball mill, a minor delay commissioning leaching pad XV and disruption from heavy rain and fog.

Ore grade refers to the concentration of valuable metal within mined material. Lower grades generally mean more material must be processed to recover the same quantity of metal, which can put pressure on production and costs.

Performance varied considerably by operation. Gold production at the Fresnillo mine increased 47.6%, while Ciénega's gold output rose 15.3%. However, silver production declined at Fresnillo, Saucito, Juanicipio, Ciénega and San Julián Veins.

The positive point is that management described production as being in line with its expectations and maintained full-year guidance.

Costs are rising despite management's discipline

Adjusted production costs increased 20.5% to US$811.9 million. Cost of sales rose by a more moderate 12.0% to US$1.02 billion, helped by lower depreciation.

A 12.5% strengthening of the Mexican peso against the US dollar increased the reported value of peso-denominated costs. Fresnillo estimated the currency movement had a US$58.5 million adverse effect on costs.

Underlying cost inflation, excluding currency movements, was 3.5%. Other pressures included maintenance at Saucito, additional stripping and longer haulage distances at Herradura, and contractor expenses while sections of the Jarillas shaft were being interconnected.

Mine-level all-in sustaining costs also rose sharply at several operations. This measure includes cash operating costs as well as expenditure needed to sustain future production.

Saucito's all-in sustaining cost increased 70.6% to US$29.32 per equivalent silver ounce. The equivalent measure rose 48.3% at Fresnillo and 39.4% at Juanicipio. Herradura's all-in sustaining cost increased 30.5% to US$1,790.56 per equivalent gold ounce.

Those increases were comfortably absorbed by current realised prices during the period. However, they matter because commodity prices are outside management's control, while a higher cost base can remain after prices weaken.

Cash generation supports investment and dividends

Cash generated from operations before working-capital movements increased 114.3% to US$2.36 billion. Net cash from operating activities rose 43.6% to US$1.49 billion after US$890.0 million of taxes, mining rights and employee profit sharing.

Fresnillo spent US$236.2 million on capital expenditure and US$547.8 million acquiring Probe Gold. It also paid US$797.4 million of dividends to its shareholders, described as a record for the group, and US$191.7 million to non-controlling shareholders.

Even after these outflows, cash and other liquid funds stood at US$2.50 billion on 30 June. After accounting for US$840.0 million of outstanding senior notes, net cash was US$1.66 billion.

This financial position supported an interim dividend of 43.4 US cents per share, totalling US$319.8 million. It is due to be paid on 18 September 2026 to shareholders on the register on 14 August 2026. The payment is subject to Mexico's 10% dividend withholding tax.

Guidance is unchanged, but capital spending is lower

Management maintained its 2026 production guidance:

• Silver production of 42.0 million to 46.5 million ounces
• Gold production of 500,000 to 550,000 ounces
• Lead production of 54,000 to 59,000 tonnes
• Zinc production of 85,000 to 95,000 tonnes
• Total production of 82 million to 91 million silver-equivalent ounces

Full-year capital expenditure guidance was revised to US$500 million to US$550 million following the rationalisation of spending across the group's mines. Exploration expenses are expected to be approximately US$260 million, with total risk capital invested in exploration anticipated at around US$308 million.

Fresnillo is also expanding its longer-term portfolio. It completed the Probe Gold acquisition during the period and, after the reporting date, invested approximately US$95.3 million for a 5% holding in Sinda.

Investors can review the figures in the original company announcement.

What investors should watch next

These results show the strength of Fresnillo's exposure to silver and gold prices. Revenue, margins, cash generation and dividends all rose rapidly, while the balance sheet remained in net cash despite acquisitions and substantial shareholder distributions.

The trade-off is that production moved in the wrong direction and costs increased across several important mines. Current metal prices provided more than enough protection, but operational improvement will be important if that pricing tailwind moderates.

The key indicators for the second half are whether Herradura recovers from its disruption, whether the Jarillas shaft work supports improved performance at Saucito and whether Fresnillo remains within unchanged production guidance. For now, the financial performance is outstanding, but it has been delivered against a less convincing production backdrop.