JPM-Fresnillo Plc Outlining a pathway to ￡50sh fair...-20251229

On Friday, silver prices rose >10% to another record of ~US$79/oz and gold pricesalso rose to another record of >$4,500/oz. EMEA’s sole large-cap silver & goldminer Fresnillo (OW, Positive Catalyst Watch) last traded on Wednesday 24December (LSE closed on 25 th & 26 th ). As 2025 draws to a close, gold & silverprices have risen >70% & >170% YTD, helping to drive Fresnillo shares +460%YTD (in US$), outperforming MSCI Europe by ~420% & the Global Gold &Silver subsector by ~290%. Although JPM Commodities Research sees somemodest downside risks to silver prices in early January due to index rebalancing(link), they maintain a structural, long-term positive view on both gold & silverprices over 2026 and we see three key factors supporting our OW thesis forFresnillo into next year.

1) Spot commodity price fair value scenario = ~£50/sh: In September 2025,we outlined a pathway for Fresnillo shares to reach ~£50/sh (link) on (then)higher-than-spot commodity prices. However, based on current spotcommodity prices (gold & silver +20% & +90% since 16 Sept), we estimatea ~£49/sh fair value for FRES, implying >50% upside potential vs the currentshare price.

2) 40-50% mark-to-market upside to 2026/27 consensus EBITDA: On spotcommodity prices, we estimate 40-50% upside to Bloomberg 2026/27consensus EBITDA. Also, on spot, we estimate YE’25/26E net cashamounting to ~4% & ~7% of market cap, underscoring our Positive CatalystWatch call for upside to consensus dividend expectations into FRES’ 26 thJanuary Q4’25 results (link).

3) Re-rating scenario to pre-2018 avg multiple = ~80% upside potential:Our Sept’25 pathway to ~£50/sh (link) was predicated on our view that FREScould re-rate from ~8x spot EV/EBITDA (in Sept’25) to FRES’ pre-2018average of ~12x (prior to multi-year setbacks over 2018-23). Despite FRESoutperforming the sector and the wider market since Sept’25, FRES’ forwardspot EV/EBITDA has de-rated from ~8x then to ~6.6x today. This is ~20%discount to FRES’ 10 year average of ~8x ~40% discount to its pre-2018. Thisimplies ~80% upside potential if FRES can re-rate up to ~12x.