Over the six months ending June, Fresnillo’s revenue rose by approximately 30% to about US$1.94 billion, while net income surged roughly 297% to US$467.6 million – up from just US$117.7 million in the same period of 2024.
This performance was underpinned by disciplined cost controls, lower production costs (aided in part by a weaker Mexican peso), and increased gold volumes, particularly at the Herradura mine.
The magnitude of the profitability improvement demonstrates the operational leverage inherent in precious metals mining when prices and production align favourably.
Mixed operational performance across metals
Operationally, Fresnillo has maintained its production guidance for 2025 even in the face of headwinds in its silver operations and the exit from its Silverstream contract.
In its second quarter (Q2), the company reported attributable silver output (including the Silverstream contribution) of around 12.5 million ounces, down about 14.7% year-on-year (YoY).
While gold output increased by 21.3% to approximately 157,700 ounces, largely due to improved ore grades and inventory drawdowns at Herradura.
Silver portfolio undergoes strategic shift
Looking ahead, the key metrics and strategic questions will revolve around how well Fresnillo can sustain its cost momentum, manage volatility in metal prices, and navigate its evolving silver portfolio.
The termination of the Silverstream contract was costly (with a net accounting loss), but it removes a legacy overhang and gives the company more control over its silver economy.
On the gold side, Fresnillo has upgraded its gold guidance, reflecting confidence in continued strength at Herradura mine.
Conversely, silver guidance has been adjusted downward to account for the reduced contribution from Silverstream and weaker silver output across some mines.
Cash generation supports shareholder returns
Investors will scrutinise how margins evolve sequentially, given that much of the cost tailwinds may have already been realised in the first half.
Free cash flow generation is also a focal point – Fresnillo generated over US$1 billion of free cash flow in the first half, supporting a solid interim dividend of 20.8 US cents per share.
Furthermore, the company must manage exploration spend, capital allocation, and balance sheet strength as it approaches the seasonal second half.
This second half is more dependent on consistent execution and metal price resilience rather than one-off cost benefits or inventory adjustments.
Multiple risk factors warrant attention
On the risk front, fluctuations in silver and gold prices, operational interruptions (e.g. equipment, safety, permitting), and FX volatility remain key threats.
Political and regulatory risk in Mexico is also non-trivial, particularly given the country’s evolving mining and environmental policies that could affect operating conditions.
Fresnillo analyst rating and technical analysis
Analysts may also question whether Fresnillo’s strong first-half performance can be replicated or whether some of its gains were front-loaded.
The sustainability of margin improvements and cash generation will be crucial for determining whether current performance levels represent a new baseline or exceptional conditions.
According to LSEG Data & Analytics, analysts rate Fresnillo as a ‘hold’ with a target at 1,894.42p, around 28% lower than current levels (as of 15/10/2025).