For Fresnillo, 2025 was a reminder of how swiftly fortunes can change in mining. The Mexican group - listed in London - reported record financial results as prices for both metals soared.
Adjusted revenue rose by 27.6% to $4.6bn, while reported revenue climbed 30.5% to $4.56bn. Pre-tax profit nearly tripled to $2.08bn. EBITDA jumped 80.7% to $2.8bn, lifting the EBITDA margin to a striking 61.3%, from 44.3% a year earlier. Net profit reached $1.57bn, up almost sixfold.
The arithmetic is straightforward. The average realised silver price rose 51.4% to $43.6 per ounce, while gold climbed 44% to $3,532.7 per ounce. In other words, Fresnillo sold fewer ounces but at far higher prices. Gold production slipped 5% to 600,287 ounces and silver output fell 13.5% to 48.7m ounces.
That combination - lower volumes, much higher prices - shows how sensitive miners are to commodity cycles. In Fresnillo's case, price effects added over $1.4bn to revenue, more than offsetting the drag from reduced volumes.
Cash gushes, dividends swell
High prices are a powerful tonic for miners' balance sheets. Fresnillo ended 2025 with $2.76bn in cash and a net cash position of $1.9bn, up sharply from the previous year. Operating cash flow rose 76% to $2.29bn.
Investors were handsomely rewarded. The group declared total dividends of 128.92 cents per share for 2025 - its highest since listing in London in 2008 - amounting to $950m. That exceeds its long-standing policy of distributing 33–50% of attributable profit.
For newcomers to the stock market, such payouts are eye-catching. On earnings per share of $1.88 (or $2.06 excluding certain non-cash effects), the dividend implies a payout ratio comfortably above 50%. Generosity is easier when margins are fat and cash piles high. It is harder when prices retreat.
Shares recently traded at about £40 (4,008p). With earnings of roughly $1.88 per share - about £1.50 at current exchange rates - that suggests a price/earnings (P/E) ratio in the mid-20s. That is not cheap for a miner, a sector known for volatile profits. The market appears to be pricing in sustained high metal prices - or at least strong cash returns.
The cycle turns, as it always does
Fresnillo has long pitched itself as a disciplined operator with a high-quality asset base. Founded in Mexico and controlled by the Baillères family, it listed in London in 2008 during the last commodities boom. Since then, its performance has ebbed and flowed with silver and gold prices.
The 2025 windfall owes much to macroeconomics rather than geology. Management notes that demand for precious metals has been buoyed by geopolitical uncertainty and the energy transition, which uses silver in solar panels and electronics . Yet such narratives are familiar from past cycles. When fear fades or supply rises, prices can fall abruptly.
Indeed, the company itself expects production to decline in 2026, guiding to 42–46.5m ounces of silver and 500,000–550,000 ounces of gold. Capital expenditure is set to rise to about $765m, roughly 30% above some analysts' expectations, as it invests in sustaining and growth projects.
There are risks beyond the commodity cycle. Fresnillo operates solely in Mexico, where regulatory uncertainty, security concerns and permitting delays are persistent challenges. The group itself flags government action, security and price volatility among its top principal risks.
To its credit, Fresnillo has used the boom to strengthen its balance sheet and acquire Probe Gold in Canada, adding geographical diversification and a sizeable gold resource base. Whether this proves astute will depend, as ever in mining, on execution and the next turn in prices.
