It’s no shock that Fresnillo‘s (LSE:FRES) been one of the FTSE 100‘s best performers over the past week. The Mexican miner’s risen 17.8% as heightened macroeconomic fears have driven gold and silver prices through the roof.
Can Fresnillo share prices continue to take off, however? Let’s take a look.
Leveraged play
Fresnillo’s most famous as the world’s largest silver miner, producing 56.3m ounces of the stuff last year. But its range of gold assets has helped it to deliver a better return than silver so far in 2025, up 53.2%.
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Gold’s hit new peaks of around $3,245 per ounce in recent days, another new high. It’s up 23.1% in the year to date, while silver’s also risen a healthy 11.5%.
You’ll notice, however, that the Fresnillo share price has risen far more sharply than both these precious metals in 2025. This is because miners provide leveraged exposure — in other words, when commodity prices appreciate, their profit margins rise more rapidly as their fixed costs mean any revenue inceases have an outsized impact on earnings.
Operational strength
Fresnillo’s rocketing share price also reflects the company’s robust operating performance in recent times. Revenue and EBITDA leapt 29.3% and 136% respectively, in its latest year, results which perfectly demonstrate the ‘leverage’ effect in action.
The bottom line was bolstered too by $40m worth of cost savings, which pulled adjusted production costs 2.6% lower. On the production front, both silver and gold output rose, the latter by 3.6% and beating expectations.
Fresnillo also continued to demonstrate its reputation as an impressive cash creator, which meant it finished 2024 with net cash of $458.3m. It had recorded net debt of $304.4m a year earlier.
As well as giving it financial headroom to invest for growth, this is also allowing the business to furnish investors with some tasty dividends.
Fresnillo raised the ordinary dividend on its shares to 32.5 US cents per share from 5.6 cents in 2023. It also delivered a special dividend of 41.8 cents.
Risk vs rewards
This is not to say everything’s is perfect at the FTSE 100 miner.
Operational issues at Peñoles‘ Sabinas mine impacted Fresnillo’s proceeds under the ‘Silverstream’ contract last year. It’s possible that the contract’s book value could be substantially reduced later in 2025.
It’s also important to remember the complexity and unpredictability of metals mining, and that while the company is thriving today, the threat of production outages, soaring costs, and disappointing exploration results are a constant threat.
Yet on balance, I’m optimistic Fresnillo’s profits (and therefore its share price) can keep soaring. This is thanks chiefly to favourable conditions that could continue fuelling precious metal prices.
Tension over global trade wars — the primary driver for gold and silver more recently — isn’t likely to go away any time soon. Concerns over intensifying inflation and their impact on interest rates could also worsen, while growing geopolitical instability and escalating military conflict also looms in the background.
While it’s not without risk, I feel Fresnillo could be one of the best stocks to consider in the current climate.
