3rd Aug 2021 08:57
(Alliance News) - Fresnillo PLC on Tuesday reported a profit surge as metal prices improved in the first half of the year, and as the miner improved its gold and silver production.
The precious metals miner posted revenue for the first half of 2021 of USD1.47 billion, up 39% on a year ago. Cost of sales rose at a slower pace, up 17% to USD860.1 million. This helped pretax profit to triple to USD445.4 million from USD127.9 million a year ago.
The average realised silver price increased 57% from a year before to USD26.4 per ounce, while the average realised gold price rose 6.7% to USD1,789.2 per ounce. Gold was quoted at USD1,808.59 an ounce early Tuesday, lower than USD1,814.25 at the London equity market close on Monday.
"The combination of improved production performance and higher precious metals prices has seen a sharp increase in profitability during the period. This in turn, has enabled us to declare a dividend of USD73.0 million to shareholders, while continuing to invest in both our development and exploration projects," said Chief Executive Octavio Alvidrez.
Fresnillo declared an interim dividend of 9.90 cents per share, up sharply from 2.3 cents a year earlier.
Fresnillo shares were 1.4% higher at 834.00 pence each in London on Tuesday morning.
The FTSE 100-listed miner saw a 2.7% year-on-year increase in its first half attributable silver production to 27.5 million ounces. Attributable gold production for the same period was 428,356 ounces, a rise of 12% on a year prior.
Fresnillo reaffirmed its production forecast and said it remains to track to hit its full-year production guidance of between 675,000 and 725,000 ounces of gold and between 53.5 million to 59.5 million ounces of silver.
"We are assessing any potential impact that might result from the implementation of the new law restricting the ability to subcontract labour in Mexico. However, these new measures are not expected to materially impact second half production," said Fresnillo.
Exploration expenses for the year are expected to remain within the range of USD175 million to USD180 million, of which around USD15 million is anticipated to be capitalised. Fresnillo has reduced its estimated annual capital expenditure to about USD580 million from USD680 million.
At Fresnillo's joint-owned Juanicipio mine, development fell behind over the last three months but is now advancing as planned. Commissioning of the plant remains on track by the end of the year.
By Will Paige; [email protected]
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