Fresnillo’s share price (LON:FRES) rose by +2.51% as the company published its fourth quarter production data which showed gold volumes rose.
Miner Fresnillo posted its Q4 2024 production update today but it was very much a mixed bag. Silver production fell by -5.10% to 13.70 million ounces whilst gold production jumped by +30.10% to 203.90 thousand ounces.
Lead and Zinc volumes also fell by -4.80% and -10.40% during the quarter, respectively. Though over 2024 as a whole, production of both these industrial metals was higher.
At an operational level, there have been several changes at Fresnillo with the San Julian DOB mine ceasing activities in November, whilst the miner’s Noche Buena facility is in wind-down. Elsewhere excavations at Saucito and San Julián Veins have shown improved grades and processing volumes. Whilst, operations at Herradura have shown marked improvement in both ore grades and recovery rates.
On balance, Fresnillo’s new operations seem to be offsetting any drag on performance incurred by its legacy mines and activities.
Gold production in Q4 was +30.10% higher than it was in Q3 which allowed the miner to exceed its internal production target of between 580 and 630 thousand ounces.
In fact Fresnillo mined 631.60 thousand ounces of the yellow metal thanks in no small part to increased efficiency and output at its Herradura facility the dip in Silver production can largely be attributed to the closure of San Julien DOB.
Though, improvements at two newer sites have helped to offset this shortfall, allowing Fresnillo’s silver production to fall within its target range of 55.0-62.0 million ounces.
Fresnillo’s share price has reacted positively to the update rising by +2.82% part of a +23.0% gain seen over the last 12-months.
That’s pretty impressive when you consider that a strong US dollar is normally negative for commodity prices and producers.
Looking out to 2025 Fresnillo expects to produce between 49 to 56 million ounces of Silver and between 525 and 580 thousand ounces of gold though production level forecasts for 2026 and 2027 are slightly lower than these figures.
That in combination with a PE ratio a fraction below 25 times and the impressive 12-month stock price performance, leads me to think that Fresnillo has had its run for now.
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