JPMorgan maintains Fresnillo stock Overweight with GBP14.50 target

On Tuesday, JPMorgan reaffirmed its Overweight rating and a price target of GBP14.50 on Fresnillo Plc (LON:FRES:LN) (OTC:FNLPF). The endorsement comes in the wake of recent industry developments where Pan American Silver (NYSE:PAAS) announced on Monday that it would purchase MAG Silver (NYSE:MAG) for approximately $2.1 billion. This acquisition highlights ongoing mergers and acquisitions within the midcap gold and silver sector.

Fresnillo owns a majority 56% stake in the Juanicipio silver mine in Mexico, with the acquired MAG Silver holding the remaining 44%. This mine is significant to Fresnillo, contributing an estimated 18% to its 2025 expected EBITDA. JPMorgan’s analysis suggests that the deal assigns a value to MAG Silver and its share in Juanicipio at roughly 9.5 times its projected 2025 enterprise value to EBITDA (EV/EBITDA), a figure significantly higher than Fresnillo’s current trading multiple of about 4.5 times its forecasted 2025/26 EV/EBITDA.

Furthermore, the transaction suggests a complete valuation for the Juanicipio mine of around $4.3 billion, which is nearly 90% higher than JPMorgan’s own net present value (NPV) estimate of $2.2 billion for the mine. This discrepancy emphasizes the potential for a re-rating of Fresnillo’s value and highlights the investment opportunity within the EMEA Gold subsector.

JPMorgan’s commentary underscores their view of Fresnillo as undervalued, particularly in light of the valuation implied by the Pan American Silver and MAG Silver deal. The firm continues to recommend Fresnillo as its top choice among EMEA Gold Miners, signaling confidence in the company’s performance and the sector’s consolidation trend.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.