JPM-Fresnillo Plc Q225 First Take：strong result with output beating JPMe 2025 volume guidance...-20250723

Our Take – Q2 gold & silver beat vs JPMe, all guidance maintained with goldguided to the upper end of the range: Q2’25 silver production was +2% vs JPMe,gold production was +10% vs JPMe. 2025 production guidance is unchanged at49-56Moz of attributable silver production (JPMe: 50.7Moz) and 525-580koz ofattributable gold production (JPMe: 569koz); however, management expects goldoutput to finish the year at the upper end of the guidance range. Since FRES’ gold/silver revenue mix at current prices is ~45%/40% respectively, we expect mid-single-digit upgrades to 2025 consensus EBITDA. At current gold and silverprices, we calculate FRES is trading on 2025E/26E EV/EBITDA 7.3x/6.5x and~6% FCF yield and we rate FRES OW.

•Noteworthy Areas: 1) Q2’25 output: Q2 total silver equivalent production isat 24.2Moz +6% vs JPMe: 22.8Moz). Q2 gold production of 158koz is +10%JPMe (+1% QoQ) and silver production of 12.5Moz is +2% JPMe (+1% QoQ).The key driver of the beat in gold and silver production is strong performanceat Herradura, Saucito and San Julian, partially offset by lower grades atFresnillo. 2) Silverstream: Silverstream Q2’25 production is at 452koz (-10%vs JPMe) due to continued decrease in ore processed and lower ore grade.Management suggests discussion on Sabinas mine with Penoles remainsongoing, details of which will be shared in due course.

•Outlook & Guidance: 2025 production guidance remains unchanged at 49.0-56.0 Moz of attributable silver production (incl.Silverstream) (JPMe:50.7Moz), but flagged risks due to lower Silverstream output & grades at theFresnillo mine. Attributable gold output has been guided to the upper end of the525-580koz range (JPMe: 569koz). Attributable lead and zinc production isalso unchanged at 56-62kt and 93-103kt respectively. 2026/27 volumeguidance is also unchanged. No commentary is provided on group capexguidance (previously guided at $530m for 2025) or any other financialguidance is updated in today’s release.

•Likely changes to consensus: With 2025-27 volume guidance unchanged, butgold output indicated to finish the year at the upper end of the range, we expectmid-single-digit upgrades to 2025 consensus EBITDA.

•Valuation: we calculate FRES is trading on 2025/26E EV/EBITDA 7.3x/6.5xand ~6% FCF yield and we rate FRES OW.