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6 months ago
UPDATE 2-Miner Fresnillo's FY profit jumps six fold on higher output, prices
February 28, 2017 / 8:05 AM / 6 months ago

UPDATE 2-Miner Fresnillo's FY profit jumps six fold on higher output, prices

(Adds shares, CEO comments, details)

By Sanjeeban Sarkar

Feb 28 (Reuters) - Precious metal miner Fresnillo Plc reported on Tuesday a more than six-fold jump in its profit for the year, boosted by higher production and metal prices and a weak Mexican Peso, but warned that market conditions could be volatile.

The company, which produces silver and gold from six mines in Mexico, reported profit of $425.0 million for the year ended Dec. 31, compared with $69.4 million reported a year earlier. Total revenue rose 31.9 percent to $1.91 billion.

Fresnillo shares eased 2 percent in morning trading on the London Stock Exchange, largely in line with a wider fall in mining stocks.

The company's results were boosted almost equally by stronger production and cost-control, as they were by an increase in metal prices and depreciation of the peso, Chief Executive Octavio Alvídrez told reporters on a call.

"My enthusiasm for improved market conditions is somewhat tempered by their current unpredictability," he added.

Gold prices have risen as investors seek shelter from political shocks, while spot silver is forecast to post its strongest year since 2014, supported by stronger industrial demand and its attraction as a haven from risk.

Meanwhile, the peso has hit record lows, pressured by concerns over a potential trade war between the United States and Mexico under U.S. President Donald Trump.

The currency's slide has boosted revenues for miners, who incur most of their costs in pesos, while earning in dollars.

Some analysts say the worst may be over for peso, but the currency is expected to remain weak throughout this year, a Reuters poll showed this month.

As miners across the board resume handsome dividends, Fresnillo set a final dividend of 21.5 cents per share, compared with 3.35 cents a year earlier. The company said its full-year silver production rose 7.1 percent to 50.3 million ounces, while gold production for the year was up 22.8 percent to 935,513 ounces. Capital expenditure for the year was $434.1 million, 8.6 percent lower than 2015 and below guidance. (Reporting by Sanjeeban Sarkar in Bengaluru and Barbara Lewis in London; Editing by Amrutha Gayathri)

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