Market Leadership
As the world’s largest primary silver miner and Mexico’s top gold producer, Fresnillo benefits from a strong asset base, established infrastructure, and industry-leading production.
Fresnillo: Silver Lining in Gold Mining
A leading global silver miner with gold ambitions and strong cash flow
LON:FRES
GBp1455.00+1.04%
Updated: May 02, 2025
Energy & Materials
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Bull & Bear Case
An overview of the main reasons to invest and the key risks involved.
Bull Case
Financial Strength
With $906 million in free cash flow, a $458 million net cash position, and consistent dividend payouts, Fresnillo has the liquidity to invest in growth while rewarding shareholders.
Growth Projects
The company’s investment in brownfield expansions and projects like Orisyvo, Guanajuato, and Rodeo positions it for long-term production increases and improved mine life.
Bear Case
Regulatory Risks
Mexico’s evolving mining policies, including restrictions on concessions and potential tax changes, create uncertainty that could impact future expansion and profitability.
Declining Reserves
With some key mines approaching depletion, Fresnillo must successfully replace reserves through exploration and development to sustain long-term production.
Production Volatility
Operational challenges, including grade variability, rising haulage costs, and adjustments at Herradura, could create fluctuations in output and pressure on earnings.
Executive Summary
A Global Leader In Precious Metals
Fresnillo plc is the world’s largest primary silver producer and Mexico’s top gold miner, operating eight mines nationwide. With a diversified portfolio of underground and open-pit operations, the company is at the forefront of silver and gold production, benefiting from strong metal prices and a robust asset base. Its exploration pipeline includes advanced projects in Mexico and other Latin American countries, securing future production growth.
From an investment perspective, Fresnillo offers a unique mix of stable production, operational efficiency, and strong financial performance. In 2024, the company delivered record revenue and EBITDA, supported by higher gold and silver prices, cost optimization, and disciplined capital allocation. Despite near-term production challenges, an attractive dividend yield, solid free cash flow, and potential project expansions make it a compelling long-term investment case.
Investment Thesis
Overview of buy and sell case of the business.
Why Invest?
Key pieces of information about the business that you need to know about.
Market Leadership in Precious Metals
Fresnillo is the world’s largest primary silver producer and a significant gold miner, benefiting from strong demand in industrial and investment markets. The global market for precious metals is ~$300B today and is expected to grow between 5-6% over the next 10 years. This will be driven by continued wealth creation and rising demand from industrial applications. Silver is essential for renewable energy, electronics, and 5G infrastructure, while gold demand remains a store of value. The company’s low-cost, high-quality assets provide resilience amid market fluctuations.
Strong Free Cash Flow & Dividends
In 2024, Fresnillo generated $906 million in free cash flow, supporting a special dividend payout of $308 million on top of regular dividends. Its net cash position of $458 million underscores financial strength, allowing it to return capital to shareholders while funding exploration and expansion projects.
Growth Pipeline
The company is investing in brownfield and greenfield projects, including the Rodeo and Orisyvo mines, which could significantly boost production post-2027. Efficiency improvements, including cost-cutting measures and mine plan optimizations, support long-term profitability despite near-term production declines at older assets.
Catalysts
The key events that could drive investment opportunities and shift markets.
Higher-than-expected gold production at Herradura
The mine’s revised plan to focus on higher-grade zones has yielded strong results. If this trend continues, it could offset declines in other assets and provide an upside surprise to earnings.
Dividend resilience and potential special payout
With a net cash position and strong free cash flow generation in 2024, investors are watching closely for another potential special dividend announcement, which would reinforce Fresnillo’s shareholder returns.
Energy Transition
Silver is poised to play a crucial role in the global energy transition due to its conductive properties. Technological advance in solar has baselines meaning that it’s becoming difficult to use less silver in photovoltaic cells, which has been a historic drag in silver prices. Demand for the metal is 59% industrial with ~1/3 of supply going into solar panels. This differs from gold for which only 9% is directed towards practical use.
Potential ramp-up at new brownfield projects
The company has added two underground projects—Valles UG (gold) and Herradura UG—aimed at sustaining production beyond 2027. Feasibility studies and development timelines will be key investor focus points.
Regulatory clarity under Mexico’s new administration
With early signs of a more favorable stance towards mining, any easing in the permitting process or tax regulations could unlock long-term growth opportunities for Fresnillo.
Orisyvo and Rodeo projects are moving toward production
These two large gold projects could add 270,000-315,000 oz of annual gold production by the late 2020s, providing Fresnillo with a significant growth engine.
Sustainability and cost-efficiency improvements
Increasing renewable energy usage (already at 80.6% of electricity supply) and further automation in operations could lower costs and improve ESG credentials, supporting long-term profitability.
Key Risks
Key pieces of information about the business risks that you need to know about.
Mexican Regulatory Environment
Despite recent signals of a more constructive stance on mining under the new Mexican administration, uncertainty remains a major concern. Historically, the government has restricted new open-pit mining concessions and increased taxation and royalty payments, creating challenges for expansion. While Fresnillo is well-established with existing operations, any adverse policy changes—such as higher mining royalties, environmental restrictions, or delays in permitting for expansion projects—could limit long-term growth. Investors are closely watching for updates on land access, water rights, and tax incentives that could impact future projects like Orisyvo and Rodeo.
Commodity Price Volatility
Fresnillo’s revenue is highly sensitive to silver and gold prices, which are driven by macroeconomic factors such as interest rates, inflation, geopolitical tensions, and currency movements. While silver demand is expected to remain strong due to industrial applications in solar panels, 5G networks, and electric vehicles, prices can fluctuate due to market speculation and monetary policy shifts.
Production Challenges
Fresnillo’s San Julián DOB and Ciénega mines are nearing the end of their operational life, raising concerns over production replacement. While the company is developing brownfield projects and accelerating exploration, there is a risk that new reserves may not be identified or developed quickly enough to sustain current production levels.
Follow the Experts
Quickly navigate key insights from industry experts and leverage their knowledge and market intelligence.
Expert Insights
article
“Over the past year, Fresnillo’s shares are up by two-thirds, buoyed by a silver price that's flirting with 30-year highs.”
Expert Insights
Expert Insights
podcasts
"If its (Fresnillo) is able to ramp up production meaningfully that will be reflected in the share price"
Expert Insights
article
"Fresnillo is entering the final quarter with confidence, maintaining its full-year production guidance set earlier this year"
Expert Insights
Investor Materials
Access the most recent investor updates published by the company.
Key Documents
4Q24 Production Report
ArticleAnnual Report 2024
PDFInvestor Presentation
PDFExternal Insights
A curated collection of third-party content relevant to the company and sector to help inform your investment decision.
Precious Metals
The Case For Investing in Silver Over Gold: Bloomberg
ArticleResearch
JPMorgan names Fresnillo as top gold mining pick
JPMorgan has raised its target price for precious metals miner Fresnillo from 900p to 1,000p and named the stock its top pick among the EMEA-listed gold mining sector.
Endeavour Mining and Fresnillo among FTSE 100 top performers gold hits record highs
Gold miners Endeavour Mining PLC (LSE:EDV, TSX:EDV, OTCQX:EDVMF) and Fresnillo PLC (LSE:FRES)were among the top performers on the FTSE 100 as gold prices...
Team
Meet the experienced professionals leading our organization
Alejandro Baillères
Octavio Alvídrez
Mario Arreguín
Tomás Iturriaga
What the Pro's Are Asking
Here are the questions that professional investors are asking before making an investment decision.
How does Fresnillo plan to replace declining reserves and sustain long-term production?
Fresnillo is accelerating exploration efforts at key sites, with a particular focus on Guanajuato, Lucerito, and Orisyvo. The company has also started feasibility studies at Rodeo and Tajitos, two promising assets that could bolster silver and gold production post-2027. The recent 2.5% increase in gold reserves at Herradura is a positive signal, but further resource conversion and brownfield expansion will be necessary to avoid long-term output declines.
What impact does Mexico’s regulatory landscape have on Fresnillo’s growth potential?
The previous administration imposed strict restrictions on new mining concessions, which limited the company’s ability to expand organically. However, early signals from President Claudia Sheinbaum’s government suggest a more constructive approach to mining regulation. Investors are closely monitoring whether this translates into faster permitting, tax stability, or streamlined environmental approvals, which could enable Fresnillo to advance its growth projects more efficiently.
How is Fresnillo managing cost pressures, given inflation and currency fluctuations?
The company has implemented a $40 million efficiency program, reducing contractor costs, optimizing maintenance processes, and leveraging a weaker Mexican peso (which offsets dollar-denominated expenses). Additionally, the San Carlos shaft at Fresnillo mine is expected to lower haulage costs in 2025. Despite these efforts, inflation in energy and labor costs remains a concern, and investors will be watching how Fresnillo manages cost containment while maintaining production levels.
Can Fresnillo maintain its strong dividend payouts despite near-term production challenges?
With a net cash position of $458 million and free cash flow of $906 million in 2024, the company is in a strong position to continue returning capital to shareholders. However, sustainability depends on commodity prices and capital expenditure discipline. If silver or gold prices weaken, Fresnillo may need to adjust its payout ratio to ensure adequate reinvestment in exploration and project development.
What role does sustainability play in Fresnillo’s strategy, and how does it impact operations?
Fresnillo has committed to using 75%+ renewable electricity by 2030, a target it has already surpassed in 2024 (80.6%). It is also increasing the use of municipal wastewater in operations (now at 30.2%), reducing reliance on fresh water. While these initiatives improve ESG credentials and investor appeal, the key challenge is balancing sustainability investments with maintaining competitive production costs. The market is monitoring whether these initiatives will lead to long-term cost reductions or require additional capital expenditures.