Fresnillo plc

Fresnillo plc today announced its financial results for the full year ended 31 December 2024.

Octavio Alvídrez, CEO said:

"I am pleased to report a solid financial performance for Fresnillo in 2024, underpinned by higher precious metal prices, operational discipline, and a continued focus on cost efficiencies. This result is testament to the hard work and diligence of our teams on the ground, who have delivered another year of operational consistency.

"Our adjusted revenue grew by 26.9% to US$3.64 billion, while EBITDA more than doubled to US$1.55 billion, reflecting our ability to capitalise on market conditions and drive efficiencies across our operations. As a result of this strong financial performance, and in line with our dividend policy, we are returning US$192.3 million to shareholders as final ordinary dividend and an additional US$308.0 million as a one-off special dividend. These, together with the interim ordinary dividend, bring Fresnillo's total distribution to shareholders for 2024 to US$547.5 million, our highest return

"Operationally, we delivered silver production in line with guidance and gold production slightly ahead, with lead and zinc production also up strongly over the year. Meanwhile, we have made significant strides in improving efficiencies, optimising mine plans, and advancing key projects, including the full commissioning of the San Carlos shaft at our Fresnillo mine.

"Looking ahead, we remain committed to responsible growth with the safety of our people at its heart, further cost optimisation, and advancing our exploration pipeline to ensure long-term value creation for our stakeholders. Our financial position remains strong, with a net cash position of $458.3 million, allowing us to continue investing in the future while delivering returns to shareholders."

Financial Highlights - 12 months to 31 December 2024

 

$ million unless stated	2024	2023	% change
Silver Production1 (kOz)	56,307	56,282	0.0
Gold Production1 (Oz)	631,573	610,646	3.4
Total Revenue	3,496.4	2,705.1	29.3
Adjusted Revenue2	3,639.9	2,869.1	26.9
Gross Profit	1,246.3	503.2	147.7
EBITDA3	1,547.3	655.7	136.0
Profit Before Income Tax	743.9	114.0	552.5
Profit for the year	226.7	288.3	(21.4)
Basic and Diluted EPS excluding post-tax Silverstream effects (USD)4	0.364	0.310	17.4

1 Fresnillo attributable production, plus ounces registered in production through the Silverstream Contract.

2 Adjusted Revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges and lead and zinc hedging.

3 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as gross profit plus depreciation less administrative, selling and exploration expenses. The reconciliation of EBITDA to amounts determined in accordance with IFRS can be found in the Financial Review.

4. The weighted average number of ordinary shares was 736,893,589 for 2024 and 2023. See note 18 in the consolidated financial statements.

 

2024 Highlights

 

Increased profit margins and strong financial position underpinned by higher precious metal prices, operational discipline and focus on costs

 

·    Adjusted revenue of US$3,639.9 million, up 26.9% vs 2023 primarily due to the higher precious metals prices and higher volumes of all metals sold.

·    Revenue of US$3,496.4 million, up 29.3% vs 2023 driven by the increase in adjusted revenue and lower treatment and refining charges.

·    Adjusted production costs¹ of US$1,582.2 million, down 2.6% vs 2023 primarily driven by the efficiencies and economies of scale achieved and the favourable effect of the devaluation of the Mexican peso vs. US dollar, partly offset by cost inflation. 

·    Gross profit of US$1,246.3 million, up 147.7%; EBITDA2 of US$1,547.3 million, up 136.0%.

·    Exploration expenses of US$163.0 million, down 10.6%.

·      Profit from continuing operations of US$945.8 million, up 563.8%. as a result of higher gross profit and lower administrative and exploration expenses.

·      Silverstream revaluation loss, net of its amortisation and before taxes, of US$182.3 million as a result of the initial assessment of the possible implication of the operational and financial difficulties at the Sabinas mine on the Silverstream Agreement.

·      Income tax expense and mining rights of US$390.2 million and US$127.0 million, compared negatively to the tax income of US$205.0 million and mining rights of US$30.8 million in 2023, primarily as a result of the impact of the 20.0% devaluation of the spot Mexican peso/US dollar on the tax value of assets and liabilities in 2024.

·    Profit for the year attributable to equity shareholders of the Group of US$140.9 million, down 39.8% on 2023.

·    US$1,297.8 million in cash and other liquid funds as of 31 December 2024. Net cash position of US$458.3 million as of 31 December 2024.

·    Final ordinary dividend of 26.1 cents per share, amounting to US$192.3 million.

·    One-off special dividend of 41.8 cents per share, amounting to US$308.0 million.

 

Total 2024 dividend payment of 32.5 US cents per share, or US$239.5 million, plus a one-off special dividend of 41.8 US cents per share amounting to US$308.0 million.

 

·    Final ordinary dividend of 26.1 US cents per share, amounting to US$192.3million. This is in addition to the 2024 interim ordinary dividend of 6.4 US cents per share, amounting to US$47.2 million, which was paid in September 2024 and represented 1/3 of the expected total dividend for 2024. This brings the total ordinary dividend for the year to 32.5 US cents per share, amounting to US$239.5 million. This is in line with the Group's dividend policy to pay out 33-50% of the profit attributable to equity shareholders of the company after making certain customary adjustments to exclude extraordinary non-cash effects in the income statement.

·    One-off special dividend of 41.8 US cents per share, equivalent to US$308.0 million which will also be payable on 30 May 2025 to shareholders on the register as at 22 April 2025. This decision was made after a comprehensive review of the Group's financial position, its strong balance sheet and took into consideration the positive free cash flow that the Group is expecting to generate in the coming years.

 

1 Adjusted production costs are calculated as cost of sales less depreciation, profit sharing, hedging, change in inventories and unproductive costs. The Company considers this a useful additional measure to help understand underlying factors driving production costs in terms of the different stages involved in the mining and plant processes, including efficiencies and inefficiencies as the case may be and other factors outside the Company's control such as cost inflation or changes in accounting criteria.

2 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as profit for the year from continuing operations before income tax, less finance income, plus finance costs, less foreign exchange gain/(loss), less revaluation effects of the Silverstream contract and other operating income plus other operating expenses and depreciation.

 

Consistent operating performance with silver in line and gold slightly ahead of guidance

 

·    Full year attributable silver production of 56.3 moz (including Silverstream) in line with guidance and flat vs 2023 as the higher ore grades and increased volumes of ore processed at San Julián Veins and Saucito and, the higher contribution of Juanicipio were offset by the decreased production at San Julián DOB as it approached the end of its life, and lower contribution from Fresnillo and the Silverstream agreement.

·    Full year attributable gold production of 631.6koz, up 3.4% vs. FY23 mainly due to the higher ore grade at Fresnillo and increased ore processed and higher ore grades at Saucito and San Julián Veins.

·    Full year attributable by-product lead and zinc production up 14.8% and 8.3% vs. FY23 respectively, mainly due to higher ore grades at Fresnillo and Juanicipio and increased volume of ore processed and higher lead ore grade at Saucito, partly offset by the decreased contribution from San Julián DOB.

 

Ongoing focus on operational improvement and projects that will increase efficiencies

 

·    US$40.0 million in efficiencies and cost savings achieved, including efforts to rationalise the contractor base and increase the efficiency of the maintenance process across the Group.    

·    The connection of the two sections of the San Carlos shaft at Fresnillo was concluded and is fully operational, with reductions in haulage costs expected from 2025. Development rates increased to an average of 3,236 metres per month.

·    At Saucito, the project to deepen the Jarillas shaft from 630m to 1,000m progressed with completion expected in 2027.

·    Optimised plant operation at San Julián veins, together with improvements to the mine plan, enabled it to deliver a solid operational and cost performance.

·    The reassessment of the strategic mine plan at Herradura progressed and identified several optimisation projects that have been compiled in an Operational Excellence programme, with phase one implemented in 2024.

 

Continued progress at our advanced exploration projects and promising exploration results

 

·    Silver resources increased 1.4% vs 2023 to 2.25bn oz due to additional drill hole information and revised economic assumptions at the Guanajuato and Lucerito exploration projects and the Fresnillo mine, partly offset by depletion at most of our mines.

·    Gold resources increased 1.4% vs 2023 to 38.5 moz primarily driven by the positive exploration results at Guanajuato, Lucerito and Candameña, partly offset by depletion at our underground mines.

·    Proven reserves were reported at all mines.

·    Silver reserves decreased 7.1% vs 2023, mainly driven by mining depletion and a more conservative approach to reserve estimation at San Julián and Ciénega.

·    Gold reserves increased 2.5% vs 2023, mostly due to the higher price, and cut-off grades strategy at Herradura.

·    Several pre-feasibility level studies were completed at Orisyvo and are currently under review.

·    Conceptual studies continued at Tajitos and a preliminary economic assessment is in progress.

·    Resources increased at Guanajuato and a preliminary economic assessment of priority areas is ongoing.

·    Long-term land access with local communities was reached at Rodeo and drilling resumed, albeit in the last quarter.

 

 

Further improvement in the sustainability of our operations

 

·    Improved TRIFR to 7.59 and decreased Fatality Frequency Rate to 0.044.

·    Increased proportion of municipal wastewater consumption to 30.2%.

·    Increased our electricity supply from renewable sources from 53.3% in 2023 to 80.6% in 2024.

·    Generated a positive economic impact[1] of US$2,152.5 million in 2024.

 

2025 outlook and longer term prospects

 

·    Attributable silver production expected to be in the range of 49.0 to 56.0 moz (including Silverstream).

·    Attributable gold production expected to be in the range of 525 to 580 koz.

·    Expressed in silver equivalent ounces¹, production is expected to be 91-102 million ounces.

·    Capex for 2025 is anticipated to be approximately US$530 million and will continue to be primarily focused on mining works, sustaining capex, the deepening of the Jarillas shaft at Saucito and a haulage conveyor at Juanicipio.

·    Exploration expenses are expected to be c.US$190 million, maintaining our strategy to intensify exploration activities in specific target areas.

·    Continue to monitor costs closely and capture further efficiencies where possible.

·    Continue working towards reducing our TRIFR and Fatality rate to the ICMM range by 2026.

 

 

Board Committee changes

 

Fresnillo plc announces that its Board of Directors, on the recommendation of the Nomination Committee has approved changes to the composition of the Audit and Remuneration Committees effective as at today, 4 March 2025.

 

Ms Rosa Vázquez has been appointed as an additional member of the Audit Committee and Ms Georgina Kessel has been appointed as an additional member of the Remuneration Committee. Ms Vázquez and Ms Kessel are currently Independent Non-Executive Directors.

 

Ms Vázquez has proven previous experience in risk, audit and oversight committees and the Board believes that she brings valuable insight to the work of the Audit Committee.

 

Ms Georgina Kessel's experience in the finance sector will bring additional skills and relevant experience to the Remuneration Committee.  As part of this change, Ms Kessel will step down as a member of the Health, Safety, Environment and Community Relations (HSECR) Committee.

 

 

 

Analyst Presentation

 

Fresnillo plc will be hosting a webcast presentation for analysts and investors today at 9:00am (GMT). A link to the webcast will be made available on Fresnillo's homepage: www.fresnilloplc.com or can be accessed directly here: https://sparklive.lseg.com/Fresnillo/events/294a5f20-2bb7-4365-8dca-b7a2a299ac12/fresnillo-fy24-prelim-results

Event registration:  https://registrations.events/direct/LON387064  

For further information, please visit our website: www.fresnilloplc.com or contact:

 

Fresnillo plc
London Office Gabriela Mayor, Head of Investor Relations Mark Mochalski	Tel: +44(0)20 7339 2470
Mexico City Office Ana Belém Zárate	Tel: +52 55 52 79 3206
Sodali Peter Ogden	Tel: +44(0)7793 858 211

 

About Fresnillo plc

 

Fresnillo plc is the world's largest primary silver producer and Mexico's largest gold producer, listed on the London and Mexican Stock Exchanges under the symbol FRES.

Fresnillo plc has eight operating mines, all of them in Mexico - Fresnillo, Saucito, Juanicipio, Ciénega, Herradura, Soledad-Dipolos¹ and San Julián Veins and four advanced exploration projects - Orisyvo, Rodeo, Guanajuato and Tajitos as well as a number of other long term exploration prospects.

Fresnillo plc has mining concessions and exploration projects in Mexico, Peru and Chile.

Fresnillo plc's goal is to maintain the Group's position as the world's largest primary silver company and Mexico's largest gold producer.

 

¹ Operations at Soledad-Dipolos are currently suspended

 

Chairman's statement

Alejandro Baillères

 

 

Shaping our business for the opportunities and challenges ahead

 

This year we delivered a welcome increase in profitability as our positive production performance was complemented by high silver and gold prices. While we expect to continue facing challenges in the years ahead, the encouraging attitude towards mining shown by the new administration in Mexico, coupled with our own operational efficiencies and exciting project pipeline, are sources for cautious optimism.

 

Throughout our history, Fresnillo plc has proudly built a track record of managing the setbacks associated with mining and weathering storms not of our own making. Never was that resilience more relevant than in 2024, when our teams rose to the production challenges posed by rising costs and a range of operational issues, including decreasing ore grades. In addition, the possibility of greater regulation and a political climate not well disposed towards mining cast a shadow over our industry.

 

To have achieved the results outlined in this report is little short of outstanding, and I would like to pay tribute to the management and operating teams who worked hard to ensure that we delivered an excellent performance that repays the trust and support that all our stakeholders have placed in our company.

 

Steady production despite difficulties

Silver production was in line with our guidance for the year, while production of gold was marginally above the top end of guidance. Key factors affecting silver production included good performances at San Julián Veins, Saucito and Juanicipio, which helped to offset lower output at San Julián DOB and Fresnillo. Gold production rose on the back of a strong increase in production at Fresnillo, Saucito and San Julián Veins, as well as an effective turnaround at La Herradura following heavy rains and changes to the mine sequence.

 

The cost reductions and operational efficiencies we have introduced in our mines are yielding results in line with - or in some cases ahead of - our expectations. Perhaps the greatest example of turnaround has been at Ciénega, where both performance and prospects have been transformed. At the start of the year we believed that the mine had only a limited future, but the situation today could not be more different due to the successful execution of a high-quality plan. We have seen excellent results and positive cashflow, with exploration activities opening up new areas that have the potential to contribute to production in both the short and long term.

 

We achieved US$3,639.9 million in adjusted revenue during the year. This represented an increase of 26.9%, primarily due to the increase in silver and gold prices, supported by our positive production performance, which represented 19.2% of the increase. Gross profit more than doubled, with an increase of 147.7% year-on-year to US$1,246.3 million, mainly driven by higher adjusted revenue and decreased costs, primarily due to cost reduction initiatives and efficiencies and, to a lesser degree, by the effect of a weaker Mexican peso vs US dollar exchange rate. These factors partially offset inflationary headwinds during the year. Cash and other liquid funds increased from US$534.6 million to US$1,297.8 million primarily driven by cash generated from our mining operations, which more than offset the use of funds in capital expenditure and dividend payments.

 

Our well-established and respected dividend policy, which is the basis for continued shareholder returns, remains unchanged. We aim to pay out 33-50% of profit after tax each year, while making certain adjustments to exclude non-cash effects in the income statement. Dividends are paid in the approximate ratio of one-third as an interim dividend and two-thirds as a final dividend. Before declaring a dividend, the Board carries out a detailed analysis of the profitability of the business, underlying earnings, capital requirements and cash flow. Our goal is to maintain enough flexibility to be able to react to movements in precious metals prices and seize attractive business opportunities.

 

For 2024, we declared an interim ordinary dividend of 6.4 US cents per share, with a final ordinary dividend of 26.1 US cents per share, bringing the total for the year to 32.5 US cents per share.

 

Following a comprehensive review of the Group's financial position, its strong balance sheet, and in light of the positive free cash flow that we are expecting to generate in the coming years, we have decided to declare a one-off special dividend of 41.8 US cents per share, payable at the same time as the 2024 final ordinary dividend.

 

A changing political climate

 

We anticipate a more positive approach to mining from the team working under President Claudia Sheinbaum, given their increased focus on dialogue which bodes well for the future. Our belief and expectations are that we can now look forward to a more supportive business environment - one that will provide greater certainty over future mining concessions, while also helping us to achieve our ambitious targets around the use of renewable energy.

 

Preparing for the future

 

In addition to ongoing operational efficiencies, we anticipate that we will begin to reap the rewards of our exploration pipeline in the near future. Although Orisyvo may take longer than initially expected to become an operational mine, we have made good progress at Rodeo and Tajitos, as well as at Guanajuato, where the discovery of significant silver-rich veins is giving rise to optimistic forecasts.

 

We continue to invest in exploration activities across Mexico, notably on brownfield sites, as well as in South America. In Chile, we have progressed a joint venture with a local company, while in Peru we have begun drilling at several of our projects. At the same time, we are constantly identifying and evaluating good projects and M&A opportunities in Mexico and in other mining jurisdictions, such as Canada, where we see potential for acquiring late-stage exploration projects to complement our existing portfolio.

 

In a rapidly evolving world, sustainability remains central to how we create long-term value for our stakeholders. We believe that caring for society and the environment enhances, rather than detracts from profitability; and that by focusing on the challenges and opportunities most material to our business and the regions where we operate, we will be able to align our strategic goals to create meaningful, lasting and beneficial impact for society and the environment, as well as for our business.

 

The wellbeing of our workforce is the cornerstone of any sustainable future, and I am pleased to note that our underlying safety metrics again showed improvement. Performance at several of our mines is at or close to being within the ranges of the International Council on Mining and Metal (ICMM) safety indexes. However, the fact that we experienced the fatalities of two contractors during the year shows that we must do better.

 

We have continued to make advances in sustainability matters that are critical to our business and underline our commitment to be a responsible corporate citizen. For example, we have made significant progress in increasing our renewable electricity consumption and replacing freshwater with municipal treated wastewater in our industrial processes. Furthermore, we strengthened partnerships with the government through our contribution to the 2024-2030 National Water Plan, supporting the human right to water with a voluntary annual return of 300,000 m³ and a US$7 million investment in water treatment and potabilisation projects in the Fresnillo district.

 

One of the key challenges we face is around the operating environment in Mexico. As I have mentioned above, the early indicators of the new government's approach are broadly positive and I look forward to collaborating with them to ensure that the work we carry out at Fresnillo plc benefits all our stakeholders, including the people and economy of Mexico.

 

 

Board activities

During our regular meetings, the Board discussed a wide range of matters including operational efficiencies as well as how possible political developments could impact the business, as the election drew closer.

 

Three key themes guided our deliberations during the year. The theme of 'Re-balancing Focus' demonstrated our recognition that Board members should have a full and detailed understanding of how Fresnillo plc works as well as the challenges and opportunities we face. To this end, the key Board event of the year was a three-day visit to Mexico in July when members gained valuable knowledge of the mines at Saucito and Juanicipio and held two days of strategy discussions with the Executive Team.

 

'Managing Succession' was our second important theme. As I report below, the Board underwent a number of changes at the 2024 AGM and this process will continue, although to a lesser extent, at the 2025 AGM.

 

Finally, we focused on 'Reconnecting' in order to identify the most appropriate balance between online and in-person meetings. When we come together in person, for example at the meeting in July, we are able to forge and enhance vital personal relationships that will benefit the Board when it holds meetings online.

 

 

Changes to the Board

The AGM in May saw a number of changes to the Board.

 

Bárbara Garza Lagüera stepped down having served as an independent NED for ten years. Charlie Jacobs also ceased to be an independent NED, and Senior Independent Director, but remains on the Board as a Non-Independent NED, while Juan Bordes did not stand for re-election and therefore ceased to be a Director. I would like to thank all three for their past service and I look forward to continuing to work with Charlie in the years ahead.

 

We were pleased to appoint Judith Macgregor as Senior Independent Director, and also Ms Luz Adriana Ramírez and Ms Rosa Vázquez as Independent Non-Executive Directors. In addition, Georgina Kessel and Guadalupe de la Vega were appointed as members of the Nominations Committee in place of Bárbara Garza Lagüera and Charlie Jacobs.

 

The Board and I believe that these appointments will underpin the excellent progress we have made towards benefiting from a talented, diverse Board of Directors.

 

 

Outlook

We expect global geopolitics to continue dominating the months ahead, with the ongoing wars in Ukraine and the Middle East adding to the possibility of increased tensions between the US and China, as well as greater protectionism following the recent election in the US. We will continue to monitor developments and, where practicable, shape our business to meet any challenges and opportunities that emerge. Closer to home, we anticipate that a more business-friendly climate will begin to have an impact during the latter months of 2025 and in the following years.

 

The operational efficiencies initiated by our teams led to a good production performance in 2024 and I expect this to also be the case in 2025, with steady profitability underpinned by continued high prices for silver and gold.

 

The longer-term outlook is encouraging. We anticipate that at least one of the prospects in our exploration pipeline will join our development portfolio in the coming two to three years, and expect our investments in exploration in Mexico, Chile and Peru to also make good progress.

 

As always, our efforts will be guided by our Purpose 'to contribute to the wellbeing of people through the sustainable mining of silver and gold' and will be delivered by skilled, dedicated teams with the experience and expertise that is the envy of many of our peers. On behalf of the Board, I thank every employee at Fresnillo plc as well as our other stakeholders - suppliers, local communities, the government and shareholders - for their support during what has been a successful year. I look forward to working with you all in 2025 as we continue to navigate the challenges and opportunities ahead.

 

 

Alejandro Baillères

Chairman

 

 

Chief Executive's statement

Octavio Alvídrez

 

 

A positive performance, an optimistic outlook

 

2024 was a year in which events in Mexico and globally threatened to negatively impact our performance. However, due to the actions we undertook, together with a number of positive economic trends, we ultimately achieved a highly satisfactory outcome. Production was in line with expectations, while sustained high prices and a weaker exchange rate combined to ensure that we delivered a positive financial performance.

 

As the year began, several factors beyond our control threatened to make 2024 one of the most challenging years in Fresnillo plc's history. Although some of our assets, such as Juanicipio, were producing high volumes of good quality ore, decreasing grades elsewhere, together with a range of operational difficulties and external factors, threatened to come together and lead to a relatively poor financial outcome.

 

The response from our teams was to work diligently to systematically identify and implement a series of initiatives that targeted those levers under our control, such as costs and efficiencies, while mitigating where possible the geological factors that could cause difficulties. Our people worked tirelessly and with a high degree of skill, once again highlighting the value of the extensive pool of proven talent that has established Fresnillo plc as a global leader. The results of their efforts are reflected in our financial results, which also benefitted from sustained high prices for silver and gold throughout the year as well from a weaker Mexican peso vs US dollar exchange rate.

 

In addition to the good progress we made with our existing operations, we also advanced several exciting exploration projects along our pipeline. These provide significant optimism for the medium- and long-term future of Fresnillo plc, and we look forward to reporting more developments in due course.

 

Production highlights and price review

 

Overall, production was stable and consistent across the year, in line with the guidelines we set out in January.

 

Attributable silver production remained at 56.3 moz, driven by good results at San Julián Veins, Saucito and Juanicipio, as well as a strong turnaround at Ciénega. Although weather-related issues affected gold production at La Herradura earlier in the year, a recovery programme saw performance at this mine improve rapidly in the last half which, together with higher production at Fresnillo, Saucito and San Julián Veins, led to an increase in gold production of 3.4% to 631.6 koz.

 

Attributable by-product lead and zinc production increased 14.8% and 8.3% to 66,400 tonnes and 116,646 tonnes respectively, primarily due to the increased contribution of Juanicipio and Saucito and higher ore grades at Fresnillo.

 

During 2024, the increase in silver and gold prices was even more pronounced than in the previous year. The average realised silver price was US$28.78 and that for gold US$2,453.58, up 21.7% and 25.3% respectively. The average price for zinc increased by 8.7%, while that for lead decreased by 2.7%.

 

Demand for silver outweighed supply for the sixth consecutive year, driven by its role as an essential component in photovoltaic applications, 5G networks, and electric vehicles and their infrastructure. Despite some countries rowing back on their net zero ambitions, we believe that the world in general will continue to pursue these new technologies, underpinning demand for silver. Silver is also essential to many applications of nanotechnology in the food, medical and electronics sectors, all of which are forecast to grow in the years ahead.

 

Demand for gold remained healthy, in line with the increased global demand for consumer electronics as well as emerging applications in the automotive, aerospace and high-speed computing sectors. Gold is also valued as an investment and safe haven, and is vital to the jewellery sector.

 

For both metals, demand from investors was exacerbated by geopolitical tensions. These included the expectation of interest rate changes at the end of 2023 and again early in 2024, and uncertainties around the US election - followed by speculation about the measures that may or may not be implemented by the incoming President.

 

Executing our strategy

Our four strategic pillars guide every aspect of our actions, and shape the way in which we aim to seize the opportunities and rise to the challenges ahead.

 

Maximising the potential of existing operations

Our assets are one of our greatest strengths. They are the foundation upon which our past performance was built as well as the platform for future success - and we work hard to ensure that they operate as efficiently as possible.

 

During 2024, we made good progress at many of our mines. At Juanicipio, for example, the beneficiation plant is now operating at full capacity and the flotation plant has been optimised, leading to an increase in both the recovery rate and the volume of ore processed.

 

While volumes reduced at Fresnillo due to several factors, the preparation of new stopes is being expedited by the purchase and implementation of new equipment for the narrower veins we have been encountering. Furthermore, the commissioning of the new San Carlos shaft followed by the successful connection of the two sections of shaft towards the end of the year is already paying dividends in terms of reduced haulage and therefore lower costs.

 

At Saucito, increased productivity and greater availability of equipment have driven a strong comeback from the mine's low point in 2023. The Saucito team is now confident that they can not only maintain but also build upon the recent improvements in production.

 

Given the challenges faced, the most impressive performance was at Ciénega. Our previous view was that this mine had a limited lifespan in the Fresnillo plc portfolio, with sale or closure a possibility in the short term. However, now both performance and prospects have been transformed by a team of retrained miners rigorously implementing a set of efficiency, cost reduction and mitigation measures. These miners are now expected to become future leaders at other mines across the business.

 

A similarly important step change took place at San Julián, where the Disseminated Ore Body (DOB) approached the end of its life. Production at San Julián Veins increased during the year on the back of higher ore grades and improved dilution control, partially compensating for the fall in production at the DOB. Exploration activities have identified high grades of silver and also some gold, giving us renewed confidence in the future of the mine.

 

Performance at our open pit La Herradura mine remained a challenge, with the loss of skilled people in the previous year being further aggravated by floods and changes in the mine sequence in the first half of the year to impact preparation and development. However, a plan was put in place and production recovered in the fourth quarter and is now stable. We are continuing to define how best we can develop underground activities at La Herradura and expect operations to commence towards the end of 2025 or early in 2026, adding important production that is not currently included in our projections.

 

Towards the end of 2024, we received notification from our parent company Industrias Peñoles that operational difficulties at the Sabinas mine could impact the Silverstream Agreement between our companies. After assessing the possible implications of this situation, and based on the information available we reassessed the valuation of the Silverstream Agreement. This resulted in the recognition of a loss of US$182.3 million, net of its amortisation and before taxes, at the end of the year.  Please see note 14 to the financial statements for further details.

 

In the year ahead, we will continue working on increasing productivity and implementing cost reduction activities across all our mines with the objective of prioritising profitability, while optimising production levels. 

 

Delivering growth through development projects

As we reported last year, we have a number of very exciting exploration projects that are making good progress through our pipeline.

 

Many metallurgical and economic studies are currently underway across all the projects discussed in the strategic pillar below, as we work towards identifying those with the greatest operational and financial feasibility.

 

Extending the growth pipeline

We continue to benefit from a range of mining concessions and exploration projects in Mexico, Peru and Chile. These include four advanced exploration projects that all have the potential to become development projects.

 

Among these, Guanajuato is expected to be a stellar performer and to make an important contribution to the Group's silver production. Guanajuato is a historic, world-class silver and gold epithermal vein field stretching more than 40 kilometres along this central Mexican state. During the year, we carried out 101,521 metres of core drilling, with a focus on the emerging southern area where significant silver-rich veins have been discovered. A preliminary conceptual study has highlighted good economic potential for the development of this area, and we are therefore ramping up our step-out drilling, metallurgical, environmental permitting, and community engagement activities. Further exploration and studies will be carried out over the next five years with the aim of developing this project in 2030.

 

Over the last 12 months we concluded that the gold project at Orisyvo could take longer to come to fruition than previously expected. This is due to challenges associated with resources and the recovery rates required to increase production volumes, combined with the potentially large capital expenditure required. A disseminated gold deposit in the Sierra Madre mountains of Chihuahua state, Orisyvo was the subject of pre-feasibility studies in the first half of the year, which showed positive opportunities for an underground operation and associated infrastructure, including mineral processing and tailings storage facilities. We have also continued to engage with local communities and authorities around education, health, environmental care and entrepreneurship - and we expect to commence consultations with indigenous communities in 2025.

 

Tajitos will be a key focus for our efforts next year, in parallel with Rodeo. An open-pit, disseminated gold project in the Herradura Corridor of northwestern Sonora state, Tajitos was subject to a full evaluation of the main resource area in 2024, with encouraging results. This was followed by an update of the mineral resources and a preliminary economic assessment. We drilled 41,640 metres during the year and also started environmental studies as well as continuing our community relations programme.

 

At the Rodeo open pit gold project, in central Durango state, we commenced exploration activities following positive engagement with the local Ejidos. The drilling programme focused on increasing the resources in the main pit area and obtaining samples for detailed metallurgical testing. We expect to finalise exploration during the middle part of 2025 and will then be in a position to evaluate our options.

 

Brownfield exploration continued across the portfolio, specifically in the Fresnillo and San Julián districts, while greenfield activities at the Lucerito and Candameña projects showed positive results for both gold and silver.

 

Outside Mexico, we began drilling at some of our prospects in Peru, and we made progress in Chile with our joint gold-silver venture with Sociedad Química y Minera de Chile (SQM), the world's biggest lithium producer. We continue to monitor opportunities to acquire projects in the later stages of exploration, with recent efforts focusing on Canada.

 

At the end of the year, silver in consolidated overall mineral resources increased 1.4% vs 2023 at 2.25bn oz as the positive exploration results at the Guanajuato and Lucerito exploration projects and Fresnillo were offset by depletion. Gold in consolidated overall mineral resources also increased 1.4% vs 2023 to 38.5 moz primarily driven by the positive exploration results at Guanajuato, Lucerito and Candameña, partly offset by depletion at our operating mines.

 

Silver in consolidated overall ore reserves decreased 7.1% to 331.3 moz mainly from

mining depletion and a more conservative approach to resource estimation at San Julián and Ciénega. Gold in consolidated overall ore reserves increased 2.5% to 7.2 moz mostly as a result of the higher price and lower costs and cut-off grades at La Herradura.

 

For 2025, the exploration budget will increase to US$190 million.

 

Advancing and enhancing the sustainability of our operations

Although our injury frequency rates continue to move in a positive direction, with a steady overall improvement since 2017-a 37.2% reduction in TRIFR (7.59) and a 35.8% reduction in LTIFR (4.75)-we sadly experienced two fatalities during the year. No loss is acceptable, and we remain deeply committed to ensuring that everyone who works at our facilities returns home safely at the end of each day. Our hearts go out to their families, friends and colleagues during this difficult time, and we will honour their memory by continuing to strengthen our safety culture.

 

Both fatalities occurred in non-routine tasks involving contractor personnel, underlining the urgent need for greater rigor in planning, risk analysis, and control of activities both within and outside our productive value chain. We are strengthening engagement with business partners to bring them up to the same standards we uphold. Through the 'I Care, We Care' strategy, we will continue to consolidate our health and safety management system by minimising risks, improving safety and enhancing productivity.

 

Sustainability-related issues around water, community relations, the environment and the use of renewables remain critical to Fresnillo plc, but also to the Mexican incumbent administration. Continued dialogue with policymakers following the election supports the sustainable future of mining in Mexico.

 

In terms of our environmental performance, we have already met and in fact exceeded our ambitious target for 75% of renewable electricity consumption by 2030 - recording a new high of 80.6% during 2024 - and are continuing our efforts to maintain future levels above 75%. Additionally, the dual-fuel infrastructure at La Herradura is expected to be commissioned in 2025, further reducing our overall carbon intensity, which has already seen a 28% decrease versus 2023.

 

We earn and maintain the trust of communities through accountability, meaningful engagement, and support for their key concerns. In 2024, we launched three inaugural programmes to strengthen community relations: fostering collaboration between operational teams and communities, improving communication about Fresnillo plc's performance and responsible mining practices, and mitigating local social risks with a strong emphasis on ethics and human rights.

 

In 2025, we will have the opportunity to test our community relations model further when we accelerate engagement with several isolated communities. At Orisyvo, where alternatives to mining for sustainable employment are limited, our focus will be on listening carefully to local needs and clearly communicating the economic and social benefits of mining.

 

While mining has historically been a male-dominated industry, we have made significant strides in diversity and inclusion. Women now represent 12.46% of our total workforce and 9.43% of managerial positions, surpassing our 2025 goals. We eagerly anticipate welcoming a woman as a general manager of an operating mine in the near future, reflecting our commitment to inclusivity and leadership diversity. We are also proud to maintain our position as one of the Mexican public companies with the highest share of women on our Board of Directors.

 

Looking ahead

The global economy is in a state of flux, and as has been the case for several years, 2025 is expected to be a period of challenge and uncertainty. Geopolitical tensions are likely to increase, with the ongoing wars in Ukraine and the Middle East continuing to contribute to instability. Tensions between the US and China as well as in Korea may intensify, further fuelling negative sentiment.

 

Within Fresnillo plc, our challenges will centre around the structural changes in some of our mines, specifically at San Julián where there is greater onus on its Veins now that the DOB has been depleted. La Herradura could also see production fall compared to the levels achieved in 2024.

 

However, with challenges come opportunities - and we are committed to managing our operations efficiently without compromising on the safety of our people or on our continued investment into our longer-term growth pipeline.

 

Our financial situation is sound, with healthy cashflow able to fund the significant investments that are necessary in order to drive Fresnillo plc forward. For example, we will continue to invest in new operational and cost reduction measures, while also doing everything we can to make sure that our leading exploration prospects can take that important next step and become real development projects. Furthermore, we will remain alert to acquisition opportunities and work with the grain of government to ensure that the voice of mining continues to be part of the conversations around how best to support the Mexican economy.

 

Although metals prices are beyond our control, demand for silver and gold is increasing, largely in line with the shift towards green technologies, and we do not expect to see this trend reversed. In our view, prices will in all probability remain at high levels through the months ahead.

 

This was a year when our teams stepped up and showed themselves to be among the most talented and dedicated in our industry, and it has been a privilege to work alongside them. I would like to thank all stakeholders - from suppliers, government officials and local communities to the investors who continue to place their trust in us - for their support and encouragement. Together, we can face the future with confidence.

 

 

Octavio Alvídrez

Chief Executive

 

 

 

 

Financial review

 

The consolidated financial statements of Fresnillo plc are prepared in accordance with UK-adopted international accounting standards. This financial review intends to explain the main factors affecting performance as well as provide a detailed analysis of the financial results in order to enhance the understanding of the Group's financial statements. All comparisons refer to 2024 figures compared to 2023, unless otherwise noted. The financial information and year-on-year variations are presented in US dollars, except where otherwise indicated.

 

The following report presents how we have managed our financial resources.

 

Commentary on financial performance

The Group's financial performance in 2024 reflects the positive impact of higher precious metals prices coupled with a more stable operational performance, notwithstanding the challenges faced during the year.

 

Adjusted revenue¹ increased 26.9% vs 2023 to US$3,639.9 million. This was primarily due to higher gold, silver and zinc prices and the increase in volumes of all metals sold. Revenue increased 29.3% year-on-year to US$3,496.4 million, primarily due to the increase in Adjusted revenue.

 

Adjusted production costs ² decreased 2.6% vs 2023. This was mainly due to the efficiencies and economies of scale achieved, principally at Saucito, Juanicipio, Ciénega and San Julián veins, and the favourable effect of the devaluation of the Mexican peso vs. US dollar. These factors were partly offset by cost inflation of 2.3%, excluding the exchange rate devaluation, as well as the longer haulage distances associated with mining deeper in the earth, which increased maintenance, contractors' costs and diesel consumption, particularly at Herradura and Fresnillo.

 

As a result, gross profit and EBITDA³ more than doubled to US$1,246.3 million and US$1,547.3 million in 2024.

 

We maintained our strong financial position, with US$1,297.8 million in cash and other liquid funds as of 31 December 2024, a net increase of US$763.2 million over the period, having paid dividends of US$78.2 million in accordance with our policy (adjusted for extraordinary, non-cash items, in particular the revaluation of the Silverstream contract and the effect of the exchange rate on deferred taxes), invested US$370.5 million in capex, and spent US$163.0 million on exploration expenses.

 

 

Income statement highlights

	2024 US$ million	2023 US$ million	Amount change US$ million	Change %
Adjusted revenue1	3,639.9	2,869.1	770.8	26.9
Total revenue	3,496.4	2,705.1	791.3	29.3
Cost of sales	(2,250.1)	(2,201.8)	(48.3)	2.2
Gross profit	1,246.3	503.2	743.1	147.7
Exploration expenses	163.0	182.4	(19.4)	(10.6)
Operating profit	945.8	142.5	803.3	563.7
EBITDA3	1,547.3	655.7	891.6	136.0
Special mining rights	127.0	30.8	96.2	312.3
Income tax (Tax income)4	390.2	(205.0)	595.2	N/A
Profit for the period	226.7	288.3	(61.6)	(21.4)
Profit for the period, excluding post-tax Silverstream effects	354.3	282.9	71.4	25.2
Basic and diluted earnings per share (US$/share)5	0.191	0.317	(0.126)	(39.7)
Basic and diluted earnings per share, excluding post-tax Silverstream effects (US$/share)	0.364	0.310	0.054	17.4

 

 

1      Adjusted revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges and metals prices hedging.

2      Adjusted production costs are calculated as cost of sales less depreciation, profit sharing, hedging, change in inventories and unproductive costs. The Company considers this a useful additional measure to help understand underlying factors driving production costs in terms of the different stages involved in the mining and plant processes, including efficiencies and inefficiencies, as the case may be, and other factors outside the Company's control such as cost inflation or changes in accounting criteria.

3      Earnings before interest, taxes, depreciation and amortisation (EBITDA) is calculated as profit for the year from continuing operations before income tax, less finance income, plus finance costs, less foreign exchange gain/(loss), less revaluation effects of the Silverstream contract and other operating income plus other operating expenses and depreciation.

4      Tax income resulted from the favourable impact of the revaluation of the Mexican peso vs the US dollar.

5      The weighted average number of Ordinary Shares was 736,893,589 for 2024 and 2023. See note 18 to the consolidated financial statements.

 

 

The Group's financial results are largely determined by the performance of our operations. However, other factors beyond our control, including a number of macroeconomic variables, affect our financial results. These include:

 

Metals prices

The average realised silver price increased 21.7% from US$23.6 per ounce in 2023 to US$28.8 per ounce in 2024, while the average realised gold price rose 25.3% to US$2,453.6 per ounce. The average realised zinc by-product price increased 8.7% to US$1.28 per pound, with the lead by-product price decreasing 2.7% vs 2023 to US$0.92 per pound.

 

MX$/US$ exchange rate

 

Spot exchange rate at 31 December 2024	Spot exchange rate at 31 December 2023	Impact
$20.27 per US dollar	$16.89 per US dollar	The 20.0% spot devaluation had an adverse effect on deferred taxes and special mining rights

 

Average Mexican peso/US dollar exchange rate 2024	Average Mexican peso/US dollar exchange rate 2023	Impact
$18.30 per US dollar	$17.77	The 3.0 devaluation had a positive effect of US$29.8 million on the Group's costs denominated in Mexican pesos (approximately 45% of total costs) when converted to US dollars.

 

 

Cost inflation

The Mexican Consumer Price Index for 2024 was 4.3%. However, to evaluate the Group´s cost inflation for the year, we calculate the unit price increase for each component of adjusted production costs and take into consideration their weighted average within the Group's basket. The resulting cost inflation estimate for 2024 was 0.2%, which included the favourable effect of the 3.0% average devaluation of the Mexican peso against the US dollar. Underlying cost inflation (cost inflation excluding the revaluation of the Mexican peso vs. US dollar) was 2.3%.  We conduct the same exercise for each individual mine operation, whose basket components may carry different weightings.

The main components driving our cost inflation are listed below:

 

Labour

Unionised workers received on average a 7% increase in wages in Mexican pesos, while non-unionised employees received on average a 6% increase in wages in Mexican pesos; when converted to US dollars this resulted in a weighted average labour inflation of 0.5%.

 

Energy

Electricity

The weighted average cost of electricity in US dollars decreased 16.2% from US$9.70 cents per kW in 2023 to US$8.13 cents per kW in 2024.

 

Diesel

The weighted average cost of diesel increased 4.7% in US dollars to 111.9 US cents per litre in 2024, compared to 106.9 US cents per litre in 2023.

 

Contractors

Agreements are signed with each individual contractor company and include specific terms and conditions that cover not only labour, but also operating materials, equipment and maintenance, among others. Contractor costs are mainly denominated in Mexican pesos and are an important component of our total production costs. In 2024, increases per unit (i.e. per metre developed/per tonne hauled) granted to contractors whose agreements were due for review during the period, resulted in a weighted average increase of approximately 0.1% in US dollars, after considering the devaluation of the Mexican peso vs the US dollar.

 

The effects of the above external factors, combined with the Group's internal variables, are further described below through the main line items of the income statement.

 

Revenue

Consolidated revenue

	2024 US$ million	2023 US$ million	Amount US$ million	Change %
Adjusted revenue1	3,639.9	2,869.1	770.8	26.9
Treatment and refining charges	(143.6)	(164.0)	20.4	(12.4)
Total revenue	3,496.4	2,705.1	791.3	29.3

 

Adjusted revenue increased by US$770.8 million primarily driven by the higher gold and silver prices and the increased volumes of all metals sold. Changes in the contribution by metal were the result of the relative changes in metals prices and volumes produced. The effect by metal, both in terms of volume and price, is shown in the table below.

 

Adjusted revenue¹ by metal

	2024		2023
	US$ million	% contribution	US$ million	% contribution	Volume variance US$ million	Price variance US$ million	Total net change US$ million	Change %
Gold	1,514.7	41.6	1,186.2	41.4	27.7	300.8	328.5	27.7
Silver	1,673.9	46.0	1,310.6	45.7	61.2	302.2	363.3	27.7
Lead	139.8	3.8	121.5	4.2	21.9	(3.6)	18.3	15.1
Zinc	311.5	8.6	250.8	8.7	37.3	23.4	60.7	24.2
Total Adjusted revenue	3,639.9	100.0	2,869.1	100.0	148.2	622.7	770.8	26.9

 

1      Adjusted revenue is revenue as disclosed in the income statement adjusted to exclude treatment and refining charges and metals prices hedging.

 

 

Adjusted revenue by mine

The contribution by mine to Adjusted revenues is outlined in the table below. This is expected to change further in the future, as new projects are incorporated into the Group's operations and as precious metals prices fluctuate.

 

	2024		2023
	(US$ million)	% contribution	(US$ million)	% contribution	Change %
Herradura	884.7	24.3	708.7	24.7	24.8
Saucito	760.0	20.9	527.8	18.4	44.0
Juanicipio	662.8	18.2	492.5	17.2	34.6
Fresnillo	591.2	16.2	479.6	16.7	23.3
San Julián (Veins)	354.5	9.7	205.1	7.1	72.8
San Julián (DOB)	115.1	3.2	201.3	7.0	(42.8)
Ciénega	228.4	6.3	169.3	5.9	34.9
Noche Buena	43.4	1.2	84.8	3.0	(48.8)
Total	3,639.9	100	2,869.1	100	26.9

 

Treatment and refining charges

Treatment and refining charges¹ are reviewed annually using international benchmarks. Treatment charges per tonne of lead and zinc concentrate and silver refining charges decreased in dollar terms by 10.0%, 25.7% and 23.0%, respectively. These factors, combined with the higher volumes of lead and zinc concentrates shipped from our mines to Met-Mex, resulted in a 12.4% decrease in treatment and refining charges set out in the income statement in absolute terms when compared to 2023.

1                      Treatment and refining charges include the cost of treatment and refining as well as the margin charged by the refiner.

 

 

Cost of sales

Concept	2024 US$ million	2023 US$ million	Amount US$ million	Change %
Adjusted production costs2	1,582.2	1,624.1	(41.9)	(2.6)
Depreciation	619.8	497.3	122.5	24.6
Profit sharing	12.3	2.2	10.1	459.1
Hedging	0.0	(0.2)	0.2	(100.0)
Change in work in progress	35.8	52.6	(16.8)	(31.9)
Unproductive costs including inventory reversal and unabsorbed production costs3	0.0	25.9	(25.9)	(100.0)
Cost of sales	2,250.1	2,201.8	48.3	2.2

 

2      Adjusted production costs are calculated as cost of sales less depreciation, profit sharing, hedging, change in inventories and unproductive costs. The Company considers this a useful additional measure to help understand underlying factors driving production costs in terms of the different stages involved in the mining and plant processes, including efficiencies and inefficiencies, as the case may be, and other factors outside the Company's control such as cost inflation or changes in accounting criteria.

3      Unproductive costs primarily include unabsorbed production costs such as non-productive costs from the temporary suspension of activities at Herradura and non-productive fixed mine costs incurred at Noche Buena from the finalisation of mining activities.

 

 

Cost of sales increased 2.2% to 2,250.1 million in 2024. The main factors driving the US$48.3 million increase are listed below:

 

•  Adjusted production costs decreased by US$41.9 million as shown in the graph below:

 

   

 

 

 

The ongoing efforts to implement cost reduction initiatives generated positive results in 2024, driving US$40.0 million net worth of operating efficiencies. These included efficiencies and economies of scale (-US$69.8M) at Saucito and Juanicipio due to decreased contractor costs, and at Ciénega and San Julián as a result of the rationalisation of contractors together with initiatives to optimise the maintenance process. This achievement was offset by inefficiencies (+US$29.8M) at Herradura due to the longer haulage distances, and at Fresnillo as a result of increased haulage costs as ore was hauled via ramps while the two sections of the deepened San Carlos shaft were connected, and increased contractors' and maintenance costs.

 

•  Depreciation (+US$122.5 million) due to increased depreciation of the asset base at San Julián DOB as it approached the end of its life and, to a lesser extent, the depreciation of the additional asset base at Juanicipio and the increased depletion factor at Ciénega and Saucito.

 

 

Gross profit

Gross profit is a key financial indicator of profitability at each business unit and the Fresnillo Group as a whole.

 

Total gross profit doubled from US$503.2 million in 2023 to US$1,246.3 million in 2024.

 

The main factors driving the US$743.0 million increase in gross profit are shown in the graphic below:

 

 

 

 

The contribution by mine to the Group's consolidated gross profit and the year-on-year variations are outlined in the chart below:

 

Contribution by mine to consolidated gross profit

 

	2024		2023		Change
	US$ million	% contribution	US$ million	% contribution	US$ million	%
Juanicipio	384.8	31.0	202.8	41.0	182.0	89.7
Saucito	281.7	22.7	80.4	16.2	201.3	250.4
Herradura	274.2	22.0	124.2	25.1	150.0	120.8
Fresnillo	180.0	14.5	61.2	12.4	118.8	194.1
San Julián	89.3	7.2	56.3	11.4	33.0	58.6
Ciénega	29.6	2.4	(29.8)	(6.0)	59.4	(199.3)
Noche Buena	3.2	0.2	(0.1)	0.0	3.3	>100
Total for operating mines	1,242.8	100	495.0	100	747.8	151.1
Metal hedging and other subsidiaries	3.5		8.2		(4.7)	(57.3)
Total Fresnillo plc	1,246.3		503.2		743.1	147.7

 

Administrative and corporate expenses

Administrative and corporate expenses decreased 14.7% from US$128.4 million in 2023 to US$109.5 million in 2024, mainly due to the lower fees incurred for advisory and consulting services, the favourable effect of the devaluation of the Mexican peso vs the US dollar on administrative expenses denominated in pesos, including personnel salaries, and the cost reduction initiatives resulting from services provided in accordance with the Shared Services Agreement with Peñoles.

 

Exploration expenses

Exploration expenses decreased 10.6% from US$182.4 million in 2023 to US$163.0 million in 2024. In line with our strategy, exploration continued to focus on the Fresnillo and San Julián districts, with special emphasis on intensifying activities aimed at increasing the resource base, converting resources into reserves and improving the confidence of the grade distribution in reserves. An additional US$2.0 million was capitalised, mainly relating to exploration expenses at the Guanajuato project. As a result, risk capital invested in exploration totalled US$165.0 million in 2024, compared to US$185.9 million in 2023 (of which US$3.5 million was capitalised). This represents a year-on-year decrease of 11.2%.

 

EBITDA

EBITDA is a gauge of the Group's financial performance and a key indicator to measure debt capacity. It is calculated as profit for the year from continuing operations before income tax, less finance income, plus finance costs, less foreign exchange gain/(loss), less the net Silverstream effects and other operating income plus other operating expenses and depreciation

	2024 US$ million	2023 US$ million	Amount US$ million	Change %
Profit from continuing operations before income tax	743.9	114.0	629.9	552.5
- Finance income	(46.9)	(50.6)	3.7	(7.3)
+ Finance costs	73.6	88.8	(15.2)	(17.1)
- Revaluation effects of Silverstream contract	182.3	(7.7)	190.0	N/A
- Foreign exchange loss, net	(7.0)	(2.0)	(5.0)	250.0
- Other operating income	(39.2)	(35.3)	(3.9)	11.0
+ Other operating expense	21.0	51.2	(30.0)	(58.6)
+ Depreciation	619.8	497.3	122.5	24.6
EBITDA	1,547.3	655.7	891.6	136.0
EBITDA margin	44.3	24.2	-	-

 

In 2024, EBITDA more than doubled to US$1,547.3 million primarily driven by the higher gross profit and lower administrative and exploration expenses. As a result, EBITDA margin expressed as a percentage of revenue increased, from 24.2% in 2023 to 44.3% in 2024.

 

Other operating income and expense

In 2024, a net gain of US$18.3 million was recognised in the income statement primarily as a result of assigning the rights and obligations of the non-core  Guazapares mining concessions to Coeur Mining. In contrast, a loss of US$15.8 million was registered in 2023 mainly as a result of the illegal extraction of ore from the leaching pads at Soledad-Dipolos by third parties, which has now ceased.

 

Silverstream effects

The Silverstream contract related to Industrias Peñoles' Sabinas mine silver production is accounted for as a derivative financial instrument carried at fair value.

Following a notification from Industrias Peñoles that its Sabinas mine was experiencing operational and financial difficulties, which increased the risk of Peñoles' being unable to fully comply with the terms and conditions of the Silverstream, the Company has decided to incorporate this uncertainty into the model used to estimate the fair value of the financial derivative instrument. This resulted in a US$231.6 million loss before taxes and the period's profit amortisation of US$49.3 million, with an overall net impact of US$182.3 million in the income statement.

 

 

The Group expects that further unrealised gains or losses related to the valuation of the Silverstream contract will be taken to the income statement in accordance with silver price cyclicality or changes in the variables considered in valuing this contract. Further information related to the Silverstream contract is provided in the balance sheet section in notes 14 and 30 to the consolidated financial statements.

 

 

Net finance costs

Net finance costs of US$26.6 million compared favourably to the US$38.2 million recorded in 2023. The US$11.6 million decrease was primarily due to the lower interest paid as in 2024 net finance costs mainly reflected interest paid on the US$850 million principal amount of 4.250% Senior Notes due 2050. Conversely, in 2023 the Group paid interest on the outstanding US$317.9 million of 5.500% Senior Notes due 2023, in addition to the interests described above. Detailed information is provided in note 10 to the consolidated financial statements. During the year ended 31 December 2024 there were no capitalised borrowing costs (2023: US$2.1 million).

 

Taxation

Income tax expense for the year was US$390.2 million, which compared negatively to the tax income of US$205.0 million in 2023. The effective tax rate, excluding the special mining rights, was 52.5% (2023: -179.8%), compared to the 30% statutory tax rate. The reason for the variation in the effective tax rate is the difference between the tax and the accounting treatment related mainly to the effect of the spot exchange rate on the tax value of assets and liabilities. This adverse effect was mitigated by the effect of the Mexican inflation on the restatement of tax value of fixed assets as described in the table below:

 

	2024	2023
Spot exchange rate devaluation (revaluation)	20.0	(12.8)
Exchange rate effect on tax value of assets and liabilities	US$300.2 million	(US$214.5 million)
Inflationary uplift of the tax base of assets and liabilities	(US$55.2 million)	(US$54.8 million)

 

Mining rights in 2024 were US$127.0 million compared to mining rights of US$30.8 million charged in 2023. The significant increase is due to higher deferred mining rights driven by the devaluation of the Mexican peso/US dollar spot exchange rate in 2024 and the fact that the special mining right will increase from 7.5% to 8.5% from 2025 onwards.

 

Profit for the period

Profit for the year decreased year-on-year by 21.0% as a result of the factors described above.

 

 

	2024 US$ million	2023 US$ million	Amount change US$ million	Change %
Profit for the period	226.7	288.3	(61.6)	(21.4)
Profit for the period, excluding post-tax Silverstream effects	354.3	282.9	71.4	25.2
Profit due to non-controlling interests1	85.8	54.4	31.4	57.7
Profit attributable to equity shareholders of the Group	140.9	233.9	(93.0)	(39.8)
Basic and diluted earnings per share (US$/share)5	0.191	0.317	(0.126)	(39.7)
Basic and diluted earnings per share, excluding post-tax Silverstream effects (US$/share)	0.364	0.310	0.054	17.4

¹ The increase reflects the higher profit generated at Juanicipio, where MAG Silver owns 44% of the outstanding shares.

 

 

 

Cash flow

A summary of the key items from the cash flow statement is set out below:

 

	2024 US$ million	2023 US$ million	Amount US$ million	Change %
Cash generated by operations before changes in working capital	1,559.8	649.3	910.5	140.2
Decrease/Increase in working capital	(162.9)	20.6	(183.5)	N/A
Taxes and employee profit sharing paid	(97.1)	(244.0)	146.9	(60.2)
Net cash from operating activities	1,299.8	425.9	873.9	205.2
Silverstream contract	30.0	40.2	(10.2)	(25.4)
Proceeds from the sales of mining concessions (layback agreement in 2023) (see note 2 to the consolidated financial statements)	10.0	22.8	(12.8)	(56.1)
Purchase of property, plant and equipment	(370.5)	(483.4)	112.9	(23.4)
Dividends paid to shareholders of the Company	(78.2)	(108.4)	30.2	(27.9)
Financial expenses and foreign exchange effects	(9.8)	(6.4)	(3.4)	53.1
Repayment of interest-bearing loans	0.0	(317.9)	317.9	(100.0)
Net (decrease)/increase in cash during the period after foreign exchange differences	763.2	(434.5)	1,197.7	N/A
Cash and other liquid funds at 31 December1	1,297.8	534.6	763.2	142.8

 

1      Cash and other liquid funds are disclosed in note 17 to the consolidated financial statements.

 

Cash generated by operations before changes in working capital more than doubled to US$1,559.8 million, primarily due to higher precious metals prices and increased production volumes during the year. Working capital increased US$162.9 million, mainly due to: i) a US$196.2 million increase in trade receivables from related parties principally because of higher precious metals prices; and ii) a US$28.0 decrease in trade payables. This was partly offset by a decrease in ore inventories of US$50.6 million; and ii) a US$10.7 million decrease in prepayments mainly to contractors.

 

Taxes and employee profit sharing paid decreased 60.2% vs 2023 to US$97.1 million, mainly due to: i) a decrease in provisional tax payments paid in 2024; ii) the lower final income tax paid in 2024, net of provisional taxes paid, corresponding to the 2023 tax fiscal year; iii) a decrease in mining rights payments; and iv) lower profit sharing paid.

 

As a result of the above factors, net cash from operating activities increased 205.2% from US$425.9 million in 2023 to US$1,299.8 million in 2024.

 

Main uses of funds were:

i)   The purchase of property, plant and equipment for a total of US$370.5 million.

ii)  Dividends paid to shareholders of the Group in 2024 totalled US$78.2 million, a 27.9% decrease vs 2023, in line with our dividend policy which includes a consideration of profits generated in the year, adjusted for the extraordinary, non-cash items, in particular the revaluation of the Silverstream contract and the effect of the exchange rate on deferred taxes. The 2024 payment included the 2023 final ordinary dividend of 4.20 cents per share paid in May 2024, totalling US$31.0 million, and the 2024 interim ordinary dividend paid in September of US$47.2 million.

iii) Financial expenses and foreign exchange effects of US$9.8 million, an increase of 53.1% vs 2023. Financial expenses in 2024 included interest paid on the 4.250% Senior Notes due 2050. In addition, financial expenses in 2023 included interest paid on the outstanding US$317.9 million 5.500% Senior Notes due November 2023.

 

The sources and uses of funds described above resulted in an increase in net cash of US$763.2 million (net increase in cash and other liquid assets), which combined with the US$534.6 million balance at the beginning of the year resulted in cash and other liquid assets of US$1,297.8 million at the end of December 2024.

 

Balance sheet

Fresnillo plc continued to maintain a solid financial position during the period with cash and other liquid funds¹ of US$1,297.8 million as of 31 December 2024. Taking this and the US$839.5 million outstanding Senior Notes, Fresnillo plc's net cash was US$458.3 million as of 31 December 2024. This compares to the net debt of US$304.4 million as of 31 December 2023. In 2023 the Group had a net debt/EBITDA ratio of 0.46x¹.

 

Inventories decreased 9.5% to US$482.2 million, mainly due to: i) the decrease of gold inventories at Noche Buena, ii) a reduction in the gold content at the leaching pads and to be processed at the dynamic leaching plants at Herradura, iii) the decreased inventories of zinc concentrate at all our underground mines, and iv) a decrease in inventories of operating materials and spare parts.

 

Dividends

Based on the Group's 2024 performance, the Directors have recommended a final ordinary dividend of 26.1 US cents per Ordinary Share, which will be paid on 30 May 2025 to shareholders on the register on 22 April 2025. The dividend will be paid in UK pounds sterling unless shareholders elect to be paid in US dollars. This is in addition to the interim ordinary dividend of 6.40 US cents per share. This final ordinary dividend remains in line with the Group's dividend policy to pay out 33-50% of the profit attributable to equity shareholders of the company after making certain customary adjustments to exclude extraordinary non-cash effects in the income statement.

 

In addition, the Board has declared a one-off special dividend of 41.8 US cents per share, equivalent to US$308.0 million which will also be payable on 30 May 2025 to shareholders on the register as at 22 April 2025. This decision was made following a comprehensive review of the Group's financial position, its strong balance sheet and taking into consideration the positive cash flow that the Group is expecting to generate in the coming years.

 

 

As disclosed in previous reports, the corporate income tax reform introduced in Mexico in 2014 created a withholding tax obligation of 10% relating to the payment of dividends, including to foreign nationals. The 2024 final ordinary dividend and special dividend will be subject to this withholding obligation.

 

1      Net debt is calculated as debt at 31 December 2023 less Cash and other liquid funds at 31 December 2023 divided by the EBITDA generated in the last 12 months.