Fresnillo's Record H1: Peso Headwinds, Project Pipeline, and a New Silver Bet
Doubled EBITDA on surging metal prices, but cost inflation and FX pressure, plus a disciplined CapEx cut and Sinda investment, define the next phase.
FRES.L · Earnings Call · 2026-08-04
Record H1: Fueled by Precious Metal Prices
Fresnillo's H1 2026 was nothing short of exceptional. “As a matter of fact, the record high setting for a first half since we did the IPO 18 years ago.” — Mario Arreguín, CFO · 2026-08-04 Revenue surged on an average realized silver price of $76.3/oz (up 126% YoY) and gold at $4,647/oz (up 47%), driving gross profit up 131% and EBITDA nearly doubled. The price of silver alone added almost $1 billion to revenues. The interim dividend more than doubled, consistent with a policy that returns 50% of net income.Cost Pressures: Peso Strength and Inflation
The $138 million increase in adjusted production costs was meticulously dissected.The peso strengthened 12.5% (MXN 20 to 17.5), while cost inflation came in at just 3.25%—far below the ~6% guided earlier this year. As CFO Arreguín had noted in March: “For budgeting purpose, what we have considered for 2026 is approximately a 6% increase in cost inflation.” — Mario Arreguín, Chief Financial Officer · 2026-03-03 The actual H1 print was lower, helped by government measures on diesel. One-off items—the Saucito shaft deepening and Herradura stripping—added ~$22 million, but management expects these to reverse or stabilize.66% of the total variation in the cost of production was due to the combination of the revaluation of the Mexican peso and the – what we call the cost inflation.
Project Pipeline: Accelerating Brownfields, Advancing Greenfields
The operational highlight was the progress on brownfields. Valles is set to start production in Q3 2026, with a life-of-mine of 10 years, and Noche Buena is being reopened for fresh ore in H2 2027. COO Daniel Diezas said: “The good thing is about the grades that we have in Valles, it's a low capital intensity. The ore will be processed at the Herradura plant and the grades are very good.” — Daniel Diezas, COO · 2026-08-04 On the greenfield front, Rodeo's improved PEA points to 90-110k oz, while Guanajuato Sur is now guided at 15-17M oz of silver from 2033. The company also took a stake in Sinda, a U.S.-listed explorer adjacent to its Guanajuato Sur claims. CEO Octavio Alvidréz explained: “The mining claims of this company finishes where ours start, and that's further south to Guanajuato Sur.” — Octavio Alvidréz, CEO · 2026-08-04 This complements the earlier Probe Gold acquisition and the Novador project in Canada.Capital Discipline and Dividend Math
CapEx guidance was cut to $500-550M, reflecting a disciplined approach across operations. CFO Arreguín detailed the dividend: “We project our net income for the end of the year. We apply 50% on that. And since we consider this to be an advanced dividend payment, we simply apply 30% on that number” — Mario Arreguín, CFO · 2026-08-04, using conservative prices of $55/oz silver and $4,000/oz gold for H2. This echoes the CEO's earlier stance on shareholder returns: “we will continue to see that cash build up going on that north direction... And after we consider all of those needs, yes, it's something that we can consider as well. Some special dividends, as we mentioned before.” — Octavio M. Alvidrez, Chief Executive Officer (CEO) · 2025-08-05 With $2.5 billion in cash and a strong balance sheet, Fresnillo is balancing growth investments with returns. The key question is whether provisional tax payments will ease if prices soften, and whether the project pipeline finally delivers after years of delays.This has been an excellent first half 2026 for Fresnillo.