If investors were looking for some reassurance from Fresnillo yesterday, they were sorely disappointed. Despite the market flight to safe havens such as gold and silver, the precious metals miner warned that it could not predict a return to higher prices.
Precious metals have rebounded lately, helped by the rising level of unease in global markets, but although gold has enjoyed its best start to a year since 1980, the Mexico-focused Fresnillo sees no fundamental reason for a rise. “While we see long-term fundamental support for precious metals, we do not expect significant shifts in the factors driving volatility, nor does there appear to be a clear catalyst that would support a return to higher prices,” Octavio Alvídrez, its chief executive, said.
Fresnillo reported profits of $212 million, down from $251 million in 2014, reflecting lower prices for its silver and gold. The dividend was cut to 4.45 cents a share, having been boosted by special dividends to 14.8 cents a share in 2014.
“‘We do not expect significant shifts in the factors driving volatility’
The FTSE 100 miner has increased production dramatically in recent years, particularly in gold, which has nearly trebled since 2008. In the past two years, revenue from selling gold has overtaken that of the company’s traditional staple, silver. Total revenue at the company was down 2.2 per cent at $1.4 billion.
Gold prices rose $13.60 to $1,248 an ounce yesterday. Prices have risen by 16 per cent in the past three months. Silver prices are up 7 per cent over the same period.
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The shares fell 63p, or more than 6 per cent, to 937p yesterday.