Tuesday 2 March 2021 9:49 am

Fresnillo triples profit on back of booming gold and silver prices

Mexican miner Fresnillo this morning said that its profit tripled in 2020 as booming gold and silver prices offset a slight fall in production.

The FTSE 100 firm said that profit before tax jumped to $551.3m (£397.3m) for the last financial year, up from $178.8m in 2019.

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That’s considerably ahead of analyst predictions of profit of $472.2m.

Fresnillo said it would pay out a final dividend of 23.5 cents per share, which is equivalent to $173.2m.

The mining giant has been the beneficiary of a months-long surge in the prices of precious metals thanks to the coronavirus pandemic.

With equities around the world in turmoil, investors looked to pump money into alternative “safe haven” assets such as gold instead.

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More recently, the same band of bedroom traders who took on short-sellers over Gamestop also combined to drive up the price of silver.

But despite the profit surge, Fresnillo’s chief executive Octavio Alvídrez warned that the outlook for the coming year was still uncertain.

Mexico has been one of the countries worst hit by the pandemic, which has had a knock on effect on the firm’s ability to produce metals.

Gold production fell 12 per cent in 2020, while silver output slipped 4.0 per cent amid the disruption.

“Given the ongoing pandemic, there is a relatively high degree of unpredictability about the year ahead, so we are cautious”, Alvídrez said.

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Investors were similarly cautious, with shares down 0.3 per cent in this morning’s trading.