Sep 19 2026 03:01 AM EST

Fresnillo’s H1 2026 Earnings Boost Share Gains, Outpacing Benchmark

Fresnillo plc (LSE: FRES) reported record first‑half 2026 results on 4 August 2026, with revenue of $3,382.6 million and profit of $1,463.4 million. The earnings surge, together with a doubled interim dividend, has driven the shares to outpace the FTSE 100 benchmark by more than ten percentage points this year.

The headline numbers stem from a 74.7 % increase in revenue and a 213 % jump in profit year‑on‑year, powered by a 130.7 % rise in gross profit. EBITDA rose 113 % to $2,349.7 million, delivering an EBITDA margin of roughly 61 % for the period.

Silver price rally fuels earnings lift

Spot silver traded around $6,366 per ounce in early August 2026, well above the 2024 breakeven level of $26.86/oz. The price surge lifted attributable silver production to 22.0 million ounces, a key driver of the revenue jump. Gold prices, at roughly $4,350 per ounce, also contributed, with gold output of 290.9 thousand ounces.

Dividend and cash strength attract income investors

Management declared an interim dividend of US 43.4 cents per share, more than double the prior‑year payout. The company’s cash balance stood at approximately $2.5 billion as of 30 June 2026, providing ample liquidity to fund the dividend and the $550 million Probe Gold/Novador acquisition without dilutive financing.

Capital‑expenditure discipline and guidance

Fresnillo trimmed its annual capex outlook to $500‑$550 million, citing disciplined prioritisation of high‑return projects such as the Valles brownfield start‑up (Q3 2026) and the Noche Buena pre‑stripping programme. Management reiterated that 2026 guidance remains on track, with modestly higher gold output and slightly lower silver output expected for 2027‑28.

Macro and regulatory backdrop

The earnings lift coincided with a broader macro‑tailwind: elevated gold and silver prices were supported by inflation concerns, a weaker U.S. dollar and heightened geopolitical tension, all reinforcing safe‑haven demand. Domestic reforms – including the April 8 2026 mining‑law amendment and the February 3 2026 water‑compliance rules – raised compliance costs but were offset by the company’s strong cash flow and the regulatory certainty provided by Mexico’s “Plan Mexico 2030”.

Valuation and analyst sentiment

The London‑listed shares closed at $38.38, implying a price‑to‑NAV ratio of 1.5× and an implied return to base‑case fair value of about 22 %. Consensus analyst price targets have risen from £16.26 to a median of £28.86 (≈ 2,886 pence), reflecting expectations of continued precious‑metal strength and robust shareholder returns.

Risks and unanswered questions

Key risks include a potential reversal in silver and gold prices, which could compress margins given the company’s reliance on precious‑metal revenue. Ongoing cost pressures from peso revaluation and consumables inflation may erode the high EBITDA margin if not offset by further price gains. Additionally, the recent mining‑law and water‑compliance reforms could increase operating costs, while the Probe Gold integration carries execution risk. Finally, the unchanged 2027 guidance for silver and gold output leaves investors exposed to volume volatility.