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Investing.com -- Shares of Fresnillo (LON:FRES) plc (BMV:FRES) were trading more than 3% higher on Tuesday after the company posted stronger-than-expected full-year results and provided an updated outlook on capital expenditures and projects.
The Mexican precious metals miner’s 2024 earnings before interest, taxes, depreciation, and amortization came in at $1.55 billion, exceeding the company’s consensus estimate of $1.5 billion.
Free cash flow also outperformed expectations at $929 million, 15% ahead of RBC’s projection. The company announced a full-year dividend of $0.74 per share, above estimates, boosted by a special payout of $0.41 per share.
Fresnillo is ramping up spending: they’ve increased their capital expenditure forecast for the next three years.
Specifically, 2025 capex is now projected at $530 million, a 15% jump above RBC’s previous estimate.
This surge comes from delayed 2024 projects and new expansion in the Herradura area. They’re also planning higher spending in 2026-2027, focusing on more exploration and development.
Despite these increased spending plans, analysts at RBC maintain a positive stance on the stock, rating it ’outperform’ with a price target of 810 pence.
They noted that the company has outperformed its silver mining peers by 10% year-to-date and trades at a discount, with a 4.3x forward enterprise value-to-EBITDA multiple compared to the peer average of 5.3x.
Operationally, Fresnillo continues to face some challenges, including delays in bringing two key projects—Rodeo and Orysivo—into production.
The Rodeo project’s timeline has been pushed back from 2026 to 2029, while Orysivo is now expected to begin production in 2031 instead of 2029.
However, the company has also added two underground gold projects, Valles and Herradura, to its development pipeline, which could contribute additional production in the coming years.
RBC analysts pointed out that Fresnillo remains one of the few large-cap precious metals options available to investors in London, and with a clearer production outlook and potential for a re-rating, the stock could attract more generalist interest.
The company is exploring potential mergers and acquisitions in Mexico and Canada, which could further strengthen its asset base.