MS-Gold and Precious Metals Precious Metals-3Q25 Preview-20251015

The sharp rally in gold and silver prices has fueled a strong YtD re-rating across precious metals equities. However, Fresnillo’s (Underweight) outperformance looks stretched, with shares now implying a silver price of roughly US$55.5/oz - an 8%premium to spot. In contrast, Endeavour Mining (Overweight) appears better positioned to close the valuation gap (shares implying a gold price of US$3,020/oz -a 27% discount to spot), supported by a superior growth pipeline, stronger capital returns potential, and a 2026 spot FCF yield of 15% vs. 7% for Fresnillo. That said,3Q25 results may not serve as an immediate catalyst for Endeavour’s re-rating. We expect near-term market expectations to adjust modestly lower ahead of the release.

# Endeavour Mining (results due 13 November): We forecast group gold production ~2% below Visible Alpha consensus and total cash costs (TCC) ~4% above. While consensus EBITDA revisions may follow with a lag, our mine-level estimates imply group EBITDA ~15% below consensus ( Exhibit 3 ). We maintain that the company is well-placed to deliver on its FY25 production and cash cost guidance ( Exhibit 5 ).We will also watch for updates on Assafou, where a Definitive Study is expected in late 2025/early 2026, as well as potential political developments around Côte d’Ivoire’s presidential elections (representing ~60% of Endeavour’s attributable NAV), scheduled for 25 October (see here).

# Fresnillo (3Q25 production due 22 October): Our gold and silver production forecasts are within 2% of consensus. We’ll focus on mine-grade profiles, recovery trends, and any lingering operational impacts from the two fatalities at Ciénega and Juanicipio in June-July.