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Shares in Mexico-focused precious metals miner Fresnillo (LON:FRES) shoot up almost 5% in afternoon trading in London after it announced a 12% increase in revenue to $1.12 billion in the first half of the year.
The miner, which is the world’s largest primary silver producer and Mexico’s second largest gold company, also raised its interim dividend by 0.9% to 10.7 cents a share.
Net profit, however, fell 25% due to the impact of a negative revaluation of its Silverstream contract, foreign-exchange headwinds and lower silver prices, it said.
Silverstream valuation had an adverse effect on profit before income tax, which came down 16.6% to $323 million.
Fresnillo booked a $21.8 million valuation loss related to its Silverstream indicator, which monitors total production levels at all of its mines and contributions from advanced development projects. This followed a decision to increase its reference discount rate to be in line with the London Interbank Offered Rate, or Libor.
The miner booked an $11.8 million foreign-exchange loss due to the marginal devaluation of the Mexican peso against the U.S. dollar. This compares to a $3.8 million foreign-exchange gain in the first half of 2017.
Fresnillo lowered its silver production guidance to between 65.5 million ounces and 67.5 million ounces, down from the 67 million to 70 million ounces it had expected before posting second-quarter results last week. It said the downward revision was driven mainly by issues associated with less availability of process water at San Julián.
The company, which floated in London in 2008, is 75% owned by Mexican billionaire Alberto Bailleres. The company’s flagship mine is Saucito, the world’s largest silver operation.
Shares in Fresnillo were still trading higher (4.68% to1,043.5p in London by 3:21 p.m. local time.
