REG - Fresnillo PLC - Preliminary Results
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RNS Number : 0997V Fresnillo PLC 03 March 2026
Fresnillo plc
Financial results for the year ended 31 December 2025
Fresnillo plc today announced its financial results for the full year ended 31
December 2025.
Octavio Alvídrez, CEO said:
"I am pleased to report a record financial performance in 2025, as Fresnillo
continued to benefit from a high precious metals price environment, combined
with our ongoing focus on operational consistency. These results demonstrate
our ability to leverage our high-quality asset base while managing costs
carefully to expand margins, resulting in significant cash generation and
returns to our shareholders. I would like to thank our teams for their focus
and execution throughout the period.
"We are today reporting a 27.6% increase in Adjusted Revenues to US$4.6
billion and an 80.7% rise in EBITDA to US$2.8 billion. In line with this
robust performance, we are proposing a final ordinary dividend above the
traditional policy of paying 50% of the adjusted profit, bringing total
shareholder distributions for 2025 to US$950.0 million, or 128.92 US cents per
share, our highest to date as a listed company.
"Operationally, silver production was in line with guidance and gold
production exceeded expectations. We continued to implement structural
improvements across our mines to support future production and effectively
manage the cost base, while also laying the foundations for future growth by
advancing our exploration projects and enhancing our pipeline through the
announcement of the acquisition of Probe Gold.
"Looking ahead, we remain committed to responsible growth, with the safety of
our people as our top priority. We will continue to monitor and manage costs,
while advancing our exploration pipeline to support long-term value creation.
Our financial position remains solid, with a net cash position of US$1,916.6
million, enabling us to invest in future growth while maintaining attractive
returns to shareholders."
Financial Highlights - 12 months to 31 December 2025
$ million unless stated 2025 2024 % change
Silver Production(1) (kOz) 48,723 56,307 (13.5)
Gold Production (Oz) 600,287 631,573 (5.0)
Total Revenue 4,561.2 3,496.4 30.5
Adjusted Revenue(2) 4,645.3 3,639.9 27.6
Gross Profit 2,664.1 1,246.3 113.8
EBITDA(3) 2,796.2 1,547.3 80.7
Profit Before Income Tax 2,082.0 743.9 179.9
Profit for the year 1,573.8 226.7 594.3
Basic and Diluted EPS excluding post-tax Silverstream effects (USD)(4) 2.058 0.364 465.4
1 Fresnillo attributable production, plus ounces registered in production
through the Silverstream Contract.
2 Adjusted Revenue is revenue as disclosed in the income statement adjusted to
exclude treatment and refining charges.
3 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is
calculated as gross profit plus depreciation less administrative, selling and
exploration expenses. The reconciliation of EBITDA to amounts determined in
accordance with IFRS can be found in the Financial Review.
4. The weighted average number of ordinary shares was 736,893,589 for 2025 and
2024 See note 18 in the consolidated financial statements.
2025 Highlights
Significantly increased profit margins and strong financial position
underpinned by higher precious metal prices, operational discipline, and a
continued focus on costs.
· Adjusted revenue of US$4,645.3 million, up 27.6% vs 2024 primarily
due to the higher precious metals prices, mitigated by the lower volumes of
all metals sold.
· Revenue of US$4,561.2 million, up 30.5% vs 2024 driven by the
increase in adjusted revenue and lower treatment and refining charges.
· Adjusted production costs(1) of US$1,406.7 million, down 11.1% vs
2024 primarily driven by the lower volumes processed at Herradura, Fresnillo,
Ciénega and Saucito; the favourable effect of the devaluation of the average
Mexican peso vs. US dollar exchange rate; the cessation of mining activities
at San Julián DOB; and net efficiencies achieved, principally at
Herradura.
· Gross profit of US$2,664.1 million, up 113.8%; EBITDA2 of US$2,796.2
million, up 80.7%.
· Exploration expenses of US$173.5 million, up 6.4%.
· Profit from continuing operations of US$2,292.5 million, up
142.4%. as a result of higher gross profit.
· Non-cash Silverstream loss, net of taxes, of US$132.4 million
following the decision to end the Silverstream Contract in light of
operational and financial difficulties impacting the long-term viability of
the Sabinas mine.
· Income tax expense of US$315.0 million down 19.3% vs 2024,
primarily as a result of the 11.4% revaluation of the spot Mexican peso vs. US
dollar exchange rate on the tax value of assets and liabilities, the special
mining rights deductible for corporate income tax.
· Mining rights of US$193.2 million, up 52.1% vs. 2024 due to the
increase in the profit base used in the calculation along with the increase in
the mining rights from 7.5% to 8.5% in 2025.
· Profit for the year attributable to equity shareholders of the Group
of US$1,384.0 million vs US$140.9 million in 2024.
· US$2,756.5 million in cash and other liquid funds as of 31 December
2025. Net cash position of US$1,916.6 million as of 31 December 2025, compared
with US$458.3 million as of 31 December 2024.
1 Adjusted production costs are calculated as cost of sales less depreciation,
profit sharing, change in inventories and unproductive costs. The Company
considers this a useful additional measure to help understand underlying
factors driving production costs in terms of the different stages involved in
the mining and plant processes, including efficiencies and inefficiencies as
the case may be and other factors outside the Company's control such as cost
inflation or changes in accounting criteria.
2 Earnings before interest, taxes, depreciation and amortisation (EBITDA) is
calculated as profit for the year from continuing operations before income
tax, less finance income, plus finance costs, less foreign exchange
gain/(loss), less revaluation effects of the Silverstream contract and other
operating income plus other operating expenses and depreciation.
Total 2025 dividend payment of US$950 million, or 128.92 US cents per share
· Total ordinary dividend for the year amounting to US$950.0 million,
or 128.92 US cents per share, comprised of:
- The 2025 interim ordinary dividend of US$153.3 million, or 20.8 US
cents per share, which was paid in September 2025, and
- The 2025 final ordinary dividend of 108.12 US cents per share,
totalling US$796.7million.
· This is above the Group's traditional dividend policy to pay out 50%
of the profit attributable to equity shareholders of the company after making
certain customary adjustments to exclude extraordinary non-cash effects in the
income statement, and was permitted by strong cash generation throughout the
year, which resulted in a high cash balance at year end. The company continues
to maintain a healthy cash balance to invest in growth focused projects, along
with an additional buffer for any M&A opportunities that may present
themselves in the future. The dividend policy remains unchanged.
Consistent operating performance with silver in line and gold ahead of
guidance
· Full year attributable silver production of 48.7 moz in line with
guidance (including Silverstream) decreased 13.5% vs. 2024, mainly due to the
cessation of mining activities at San Julián DOB, the lower ore grade,
decrease in volume of ore processed, and lower recovery rate at Ciénega, and
the lower contribution from the Silverstream.
· Full year attributable gold production of 600.3 koz exceeded
guidance, down 5.0% vs. 2024 primarily due to the lower ore grades and
decreased volumes of ore processed at Saucito, Fresnillo and Herradura, and
the lower contribution from Noche Buena.
· Full year attributable by-product lead and zinc production decreased
vs. 2024, mainly due to: i) the lower ore grade and decreased volumes of ore
processed at Fresnillo; ii) the cessation of mining activities at San Julián
DOB; and iii) the discontinuation of zinc production at Ciénega from August
2025 onwards.
Continued focus on operational optimisation and efficiency-enhancing projects
· Significant efficiencies and cost reductions achieved at Herradura,
and to a lesser extent at Ciénega, partly offset by an increase in cost at
the Fresnillo district. The net operating efficiencies achieved in 2025
totalled US$13.8 million.
· Operational optimisation initiatives continued to progress at
Fresnillo, including dilution control, improved mine planning and contractor
rationalisation, with early benefits achieved. However, higher maintenance
costs due to lower equipment availability, and increased consumption of
explosives and milling balls more than offset the positive impact.
· Construction of supporting infrastructure and equipment placement at
the Jarillas shaft in Saucito continued during the year. The shaft connection
was deferred to 2026 to minimise disruption, it remains on track to be
completed by 2027.
· Implementation of the San Julián optimisation plan, including
cost-containment measures, continued.
· Efficient cost control, optimised drilling patterns, and improved
mine cycles delivered a good performance at Herradura.
· Construction of the Carbon in Column facility continued with full
operational capacity expected to be achieved in 2Q26, while the analysis for a
new sulphide crushing circuit was completed, and detailed engineering for this
facility and the Adsorption, Desorption and Recovery (ADR) plant is now
underway.
Laying the foundations for future growth through our commitment to exploration
and a disciplined approach to evaluate M&A opportunities
· Silver resources decreased 8.5% vs 2024 to 2.06bn oz, primarily
driven by the implementation of the Reasonable Prospects for Eventual Economic
Extraction (RPEEE) principle, in line with industry best practice, to classify
mineral resources based on their expected future economic extraction.
· Gold resources increased 14.3% vs 2024 to 44.0 moz, primarily driven
by the favourable impact of the higher price of gold at Herradura and the
Lucerito exploration project.
· Proven reserves were reported at all mines.
· Silver reserves increased 9.4% to 362.6 million ounces, mainly due to
higher metals prices and a lower cut-off grade together with the addition of
ounces through the infill campaign, primarily at the Fresnillo district.
· Gold reserves increased 7.4% to 7.8 million ounces vs 2024, as a
result of the higher gold price, principally at Herradura.
· Positive drilling results and higher gold prices increased mineral
resources to 2.3 million ounces of gold at Rodeo. Ongoing drilling and
metallurgical testwork continue to deliver a Preliminary Economic Assessment
in 2H26.
· Several opportunities identified to optimise capex and operating
costs at Orisyvo.
· An intensive core drilling programme was completed at Guanajuato,
while land acquisition, and mine development and mineral processing
evaluations continued. Total resources at our Guanajuato project amount to
approximately three million ounces of gold, and 388 million ounces of silver.
· Acquisition of Probe Gold was successfully completed in 1Q26,
providing immediate access to the prolific Val d'Or district in Quebec, with
established infrastructure and a skilled workforce, and adding 10 million gold
ounces to our resource base.
Safety remains our top priority as we further enhance the sustainability of
our operations
· Improved TRIFR from 7.59 to 6.26 and decreased Fatality Frequency
Rate to 0.046. However, the two fatalities recorded during the year underscore
that further improvements are required.
· Consumed 77.8% of electricity from renewable sources (2024: 80.6%).
· Generated a positive economic impact 1 (#_ftn1) of
US$2,173.8 million in 2025.
2026 outlook and longer term prospects
· Attributable silver production expected to be in the range of 42.0 to
46.5 moz.
· Attributable gold production expected to be in the range of 500 to
550 koz.
· Expressed in silver equivalent ounces(2), production is expected to
be 82-91 million ounces.
· Capex for 2026 is anticipated to be approximately US$765 million and
will continue to be primarily focused on mining works, sustaining capex,
optimisation projects at Herradura, the deepening of the Jarillas shaft at
Saucito, a haulage conveyor at Juanicipio, and tailings dams.
· Exploration expenses are expected to be c.US$260 million, supporting
intensified drilling at our operating mines, continued de-risking our advance
exploration projects, and starting drilling at Probe Gold.
· Continue to monitor costs closely and capture further efficiencies
where possible.
· Continue working towards reducing our TRIFR to the ICMM range and
achieve zero fatal accidents.
Board Committee changes
Fresnillo plc announces that its Board of Directors, on the recommendation of
the Nominations Committee has approved a change to the composition of the
Health, Safety, Environment and Community Relations (HSECR) Committee
effective as at 2 March 2026.
Ms Luz Adriana Ramírez has been appointed as an additional member of the
HSECR Committee. She currently is an Independent Non-Executive Director.
Ms Ramírez has experience in health, safety, environment and community
relations issues at an executive level as well as being a member of related
committees in other relevant companies and the Board believes that she brings
valuable insight to the work of the HSECR Committee.
Analyst Presentation
Fresnillo plc will be hosting a webcast presentation for analysts and
investors today at 9:00am (GMT). A link to the webcast will be made available
on Fresnillo's homepage: www.fresnilloplc.com or can be accessed directly
here: https://brrmedia.news/FRESFY25
To dial in via a phone line, please use the below dial-in details:
Conference call dial-in numbers: UK-Wide: +44 (0) 33 0551 0200
UK Toll Free: 0808 109 0700
USA Local: +1 786 697 3501
USA Toll Free: 866 580 3963
Gabriela Mayor, Head of Investor
Password (if prompted): Please quote 'Fresnillo FY25 Results' when prompted by the operator
For further information, please visit our website: www.fresnilloplc.com
(http://www.fresnilloplc.com) or contact:
Fresnillo plc
London Office Tel: +44(0)20 7339 2470
Gabriela Mayor, Head of Investor Relations
Mark Mochalski
Mexico City Office Tel: +52 55 52 79 3206
Ana Belém Zárate
Sodali Tel: +44(0)7793 858 211
Peter Ogden
About Fresnillo plc
Fresnillo plc is the world's largest primary silver producer and Mexico's
largest gold producer, listed on the London and Mexican Stock Exchanges under
the symbol FRES.
Fresnillo plc has eight operating mines, all of them in Mexico - Fresnillo,
Saucito, Juanicipio, Ciénega, Herradura, Soledad-Dipolos(1), Noche Buena and
San Julián Veins and five advanced exploration projects - Orisyvo, Rodeo,
Guanajuato, Tajitos, and Novador, as well as a number of other long term
exploration prospects.
Fresnillo plc has mining concessions and exploration projects in Mexico, Peru
and Chile.
Fresnillo plc's goal is to maintain the Group's position as the world's
largest primary silver company and Mexico's largest gold producer.
( )
(1) Operations at Soledad-Dipolos are currently suspended
Chairman's statement
Alejandro Baillères
Capitalising on today's opportunities, focusing on the future
This was an exceptional year for Fresnillo. Our efforts to boost performance
and reduce costs bore fruit and enabled us to achieve production and
efficiency targets, while a positive price environment drove a significant
increase in revenue.
When we first looked ahead to 2025, our initial thoughts were that it could be
challenging to surpass the achievements of 2024. However, a number of key
factors came together during the year to generate one of the most rewarding
periods in Fresnillo's history.
Our teams worked hard to address factors within our control, improving
performance, reducing costs and achieving production goals. Meanwhile,
external factors led to significant increases in the prices of precious metals
- and we have been able to capitalise on this positive tailwind.
However, there is no room for complacency. Towards the end of the year we
announced an important acquisition which has expanded our presence into an
exciting new territory and bolstered our already promising pipeline. In
addition, our performance and cost reduction initiatives continue at pace -
and these will help to underpin future performance regardless of external
factors.
Strong operational performance
Production of silver and gold were again in line with guidance. In fact we
exceeded our target for gold - with the team at Herradura continuing to
execute our plans consistently and with great expertise. Silver production was
towards the lower end of guidance, with performances above expectations at
Juanicipio and San Julián Veins and the recovery that began at Saucito in
2024 beginning to show positive signs.
We achieved US$4,645.3 million in Adjusted revenue during the year. This
represented an increase of 27.6%, primarily due to the increase in silver and
gold prices. Gross profit increased 113.8% year-on-year to US$2,664.1 million,
mainly driven by higher adjusted revenue and decreased costs, the latter
primarily due to lower volumes processed at some of our operations, including
at San Julián DOB following its closure, the devaluation of the average
exchange rate between the Mexican peso and US dollar, and cost reduction
initiatives and efficiencies.
These factors partially offset inflationary headwinds during the year. Cash
and other liquid funds increased from US$1,297.8 million to US$2,756.5 million
primarily driven by cash generated from our mining operations, which more than
offset the use of funds in capital expenditure, dividend payments, taxes and
mining rights.
Through the good times as well as those that prove more difficult our dividend
policy has remained stable and well-respected. It is the basis for continued
shareholder returns while also supporting the growth of the company. We aim to
pay out 33-50% of profit after tax each year, while making certain adjustments
to exclude non-cash effects in the income statement. Dividends are paid in the
approximate ratio of one-third as an interim dividend and two-thirds as a
final dividend. Before declaring a dividend, the Board carries out a detailed
analysis of the profitability of the business, underlying earnings, capital
requirements and cash flow. Our goal is to maintain enough flexibility to be
able to react to movements in precious metals prices and seize attractive
business opportunities. During 2025, for example, our strong balance sheet and
healthy cash position facilitated the proposal to acquire Probe Gold Inc.
The Board also considers paying special dividends in cases where we build up a
large cash balance, considering any extraordinary needs for cash, such as the
aforementioned acquisition, along with the outlook for metals prices and
expected cash generation in future periods.
For 2025, we declared an interim ordinary dividend of 20.8 US cents per share,
with a final ordinary dividend of 108.12 US cents per share, bringing the
total for the year to 128.92 US cents per share.
Making the most of today's opportunities…
In my statement last year, I reported that cost reduction and operational
initiatives had already had a beneficial impact, and I am pleased to say that
this continued through 2025, and we have again succeeded in managing our costs
while improving productivity.
Our efforts were significantly strengthened by a very positive price
environment, which was a major factor in the year's financial performance. The
price of gold hit all-time highs, while that for silver more than doubled,
following an increase of 21 per cent in 2024.
However, while we met our production objectives during the year, we failed to
succeed on the one measure that is unquestionably our most important: safety.
Despite achieving our lowest TRIFR (total recordable injury frequency rate)
and LTIFR (lost time injury frequency rate) since 2018, it is with great
sadness that I must report two fatalities in 2025, one unionised employee and
one contractor. Everybody at Fresnillo recognises that we can - and indeed we
must - do better.
…while focusing on the future
As expected, the political climate in Mexico has moved into more positive
territory following the appointment of the government led by President Claudia
Sheinbaum. Although clear direction is still required in some areas, such as
permitting for mining activities, the new administration is proving to be
broadly receptive to the business community. We are cautiously confident that
this new mood will continue into 2026 and beyond, underpinning our continued
commitment to the environment and supporting the development of the
communities in which we operate.
Our future focus includes further cost reduction initiatives and operational
efficiencies across the business, and these will be complemented by an
exploration pipeline that is expected to yield at least one and possibly more
projects that can move into our development portfolio within the next two to
three years.
The pipeline was enhanced during 2025 by our move to acquire of Probe Gold
Inc., a leading Canadian exploration company focused on the acquisition,
exploration, and development of highly prospective gold properties. Following
extensive due diligence to ensure it had the potential to add considerable
long-term value for our shareholders, we concluded the deal in January 2026
for an all-cash consideration of CAD$3.65 per share. The total equity value of
the transaction was approximately CAD$770 million, (approx. US$555 million) on
a fully diluted basis.
The acquisition of Probe is consistent with the disciplined approach to
M&As that we have consistently set out over time - including in my
statement last year - and meets our strict criteria of having a sizeable
resource base with upside optionality in a mining-friendly region with mining
history, skilled personnel, and existing infrastructure. Exploration is in the
DNA of both companies and we look forward to working closely together as we
advance the exciting Novador project. The Fresnillo team has visited the Probe
site on several occasions and has met directly with stakeholders including
employees, First Nations representatives and local, provincial and federal
authorities.
Board activities
Our regular Board meetings provide the opportunity for members to explore and
discuss a wide range of issues that impact the business. These include
operational matters and the prevailing political landscape at home and abroad,
amongst others. Key decisions this year have included the special dividend,
the decision to end the Silverstream Agreement, and the agreement to acquire
Probe. There was also considerable focus on safety, culture, the ERP system,
cyber security and cost reduction.
As in previous years, one of the highlights of 2025 was the three-day Working
Meeting in Mexico, which was held in July and provided a significant
opportunity for the Board to engage with longer-term strategic and stakeholder
issues. The meeting included a visit to Herradura, where we were able to see
for ourselves the tremendous improvements that the local team has been
implementing.
Changes to the Board
There were no Board changes during the year. A number of significant
developments for which the Audit Committee is responsible remain ongoing. The
Nomination Committee has therefore proposed that at the 2026 AGM, Alberto
Tiburcio (who was appointed to the Board in May 2016 and has chaired the Audit
Committee since 2018) should again stand for re-election as an Independent
Non-Executive Director for one further year.
In addition, the Board is recommending the re-election of Dame Judith
Macgregor as an Independent Non-Executive Director at the 2026 AGM,
notwithstanding that she will reach the ninth anniversary of her appointment
to the Board soon after that AGM. In view of the other Board changes being
made this year, we consider that it will be highly beneficial to the Company
for her to serve one further year in her role as Senior Independent Director.
We will be consulting with shareholders concerning the proposed re-election of
both Alberto and Dame Judith before publication of the notice of meeting for
the 2026 AGM.
Outlook
Uncertainty will in all likelihood continue to be the watchword regarding
global geopolitics, with ongoing conflicts such as the wars in Ukraine and the
Middle East being exacerbated by heightened tensions between the US, China and
Russia, along with developments in Venezuela that will have important
implications for the whole region. We expect tariffs to remain a key issue for
international trade, although these may evolve to become more negotiated and
targeted.
The acquisition of Probe Gold Inc. has expanded our presence into Canada and
the broader Western Hemisphere through our activities in Peru and Chile.
However, Mexico remains central to our operations, and we will continue to
engage proactively with the Government.
The new administration's more business-friendly approach has already had a
positive impact on our industry, and we anticipate that this might further
strengthen in the coming months.
In terms of our operations, our teams will again work hard to maintain and
enhance the initiatives that have driven stable production and cost
efficiencies in recent months. We will also focus on moving the most promising
advanced exploration projects further along our pipeline.
We expect the high price environment for silver and gold to be maintained
following the structural shift in prices seen in 2025. Advanced technologies,
notably those around the energy transition, are underpinning sustained
strength in silver prices. At the same time, ongoing global uncertainty is
leading many investors to seek safe haven assets, offering further support to
both gold and silver prices. Looking ahead, demand is forecasted to continue
to exceed supply.
I am confident that we have the people, the strategy and the determination to
capitalise on the many opportunities that will be presented in the months and
years to come. Following a year when Fresnillo recorded a set of exceptional
results, our ambitions to continue to deliver on our promises - to meet
expectations and where possible go beyond them - burn as brightly as ever.
I would like to end by putting on record my gratitude to all our stakeholders
- including those working in the supply chain and in government, as well as
local communities, investors and, of course, our talented workforce - for
their support over the past 12 months.
Alejandro Baillères
Chairman
Chief Executive's statement
Octavio Alvídrez
Exceptional performance in a positive price environment
I am delighted to report on what was an outstanding year for Fresnillo, as we
continued to execute our long-term strategy. The tremendous efforts of our
teams were complemented by sustained high prices for precious metals, with
gold in particular reaching all-time highs.
2025 saw our Company deliver strong operating and financial results.
Profitability increased on the back of our unrelenting focus on operational
efficiencies supported by rigorous cost discipline and given added momentum by
very favourable prices for precious metals. The outcome was the generation of
substantial free cash flow and a robust balance sheet with ample liquidity.
Our people again demonstrated their deep-seated commitment to the Company's
Purpose to contribute to the wellbeing of people through the sustainable
mining of silver and gold. Their continuing dedication and expertise will be
crucial in the years ahead, as a number of projects in our exciting pipeline
move towards becoming operational mines.
At the same time, we must strengthen our safety performance. While most of our
indicators continued to improve, two fatalities overshadowed that progress.
These incidents are painful reminders that zero fatalities is the only
acceptable outcome, and that our first and most important responsibility is to
ensure the safety of our colleagues.
Production highlights and price review
Total gold production was 600.3 koz, above our guidance range and, as
expected, down by 5.0% from 631.6 koz in the previous year. This was primarily
due to the lower ore grade and decreased ore throughput at Saucito and
Fresnillo, as well as at Herradura, where performance nevertheless exceeded
original plans.
Total silver production of 48.7 moz was towards the lower end of the guidance
range, down by 13.5% from 56.3 moz in 2024. While the ongoing turnaround at
Saucito has started to deliver the anticipated outcomes, there remain
significant opportunities for further
improvement. However, both production and ore grades were above plan at
Juanicipio and San Julián Veins, helping to offset challenges elsewhere,
including at Ciénega and Fresnillo.
Attributable by-product lead and zinc production decreased year-on-year,
mainly due to the lower ore grade and volumes of ore processed at Fresnillo
and the cessation of mining activities at San Julián DOB.
During 2025, silver and gold prices increased markedly for the third
consecutive year. The average realised silver price was US$43.6 per ounce, up
by 51.4%, while the price of gold hit record highs, rising by 44.0% to
US$3,532.7 per ounce during the year. Average prices for zinc increased by
3.2% while those for lead decreased by 5.3%.
Demand for silver and gold is continuing to outstrip supply, with the key
drivers of demand indicating good levels of support for prices in the medium
term. The world's increasing reliance on advanced technologies, particularly
those associated with the energy transition, is a major factor in demand for
both silver and gold. Silver is essential to a wide range of applications from
electric vehicle batteries and solar panels to 5G telecommunications, and also
in the food, medical and electronics sectors. Towards the end of 2025, the
importance of silver was underlined when the US and Chinese governments
officially categorised it as one of the world's essential metals.
Gold is a key component in consumer electronics as well as in rapidly growing
areas such as the automotive, aerospace and high-speed computing industries.
In addition, demand for gold - and increasingly also for silver - as a safe
haven has remained robust, among central banks as well as individual
investors.
Executing our strategy
Our strategy has been well defined and consistently applied for many years. It
is based on four strategic pillars that together enable us to maintain and,
where possible, enhance our track record of seizing the opportunities of today
while also preparing for the future.
Maximising the potential of existing operations
Improving the productivity and efficiency of our operational mines has been
the subject of great focus over the last two to three years. While some of our
operations are yet to fully achieve their targets, the trend is positive.
In last year's report, our Chief Operating Officers outlined a number of
specific plans to deliver greater efficiency and cost control in their
respective regions. In the Central Region, for example, a key task was to
consolidate operations at Juanicipio, confirm the turnaround at Saucito and
focus on greater control of the factors affecting ore grades at Fresnillo.
Successful actions against the first and second of these priorities formed the
basis for the region's silver production in 2025, with Juanicipio performing
above plan. MAG Silver, our joint venture partner at Juanicipio, was acquired
by Pan American during the year, and we have already started to work closely
with them to ensure that Juanicipio continues to fulfil its outstanding
potential.
At the Fresnillo mine, challenges are proving more complex to overcome.
Although ore grades improved, we processed a lower volume of mineral during
the year due to reduced contributions from deeper, narrower and more distant
veins. However, the San Carlos shaft is now beginning to reduce haulage costs
for the substantial amounts of ore we expect to mine from these areas in the
coming years.
At our operations in the Northern Region of Mexico, several improvement
initiatives have already paid dividends. Gold production at San Julián
Veins increased due to a greater volume of ore processed, driven by the
disciplined execution of plans to optimise plant operation . At Herradura, we
have continued the transformation that began in 2024, controlling costs and
focusing on planning and execution, including the recovery of gold content
from the oxidised high-grade ore deposited at the leaching pads. Our plans to
commence underground activities at Herradura have progressed well, with mining
works expected to commence in 2026 and production set to follow early in 2027.
We experienced challenges at Ciénega, where production decreased compared to
2024. Nevertheless, we remain confident in the mine's future, and expect cost
control measures, operational efficiencies and a renewed exploration programme
to successfully extend Ciénega's life beyond 2028.
Delivering growth through development projects
Although none of the projects discussed in the following section are yet quite
ready to move out of the exploration phase and become standalone development
projects, I look forward to reporting further progress in next year's Annual
Report.
Extending the growth pipeline
We currently have six advanced exploration projects in our pipeline, an
increase of two compared to this time last year.
A historic, world-class gold and silver epithermal vein field, our Guanajuato
project stretches more than 40 kilometres along the central Mexican state from
which it takes its name and is expected to make an important contribution to
the Group's future silver production. During 2025, exploration concentrated on
the southern part of the district where we drilled 107,759 metres. We
continued to carry out scoping level studies as well as community engagement
programmes which have already delivered access to key sections of land
required for the project.
We remain moderately confident in the potential of our underground gold
project at Orisyvo, despite the significant capital expenditure on
infrastructure - including roads, tailings storage facilities, accommodation
camps and land access - required to bring it to fruition. Following a review
at the end of 2025 into the results of pre-feasibility studies, we are
identifying possibilities to improve the project's cost-effectiveness and
anticipate presenting next stage proposals to the Board for approval in the
second half of 2026.
At Rodeo, an open pit, heap leaching gold project in central Durango state, we
aim to finalise exploration activities in the first half of 2026. Over 5,000
metres have now been collared, proving good continuity of the ore bodies.
Results of a preliminary economic assessment are expected in mid-2026, giving
us greater visibility of considerations including development layout, water
and energy supply as well as key technical issues.
Exploration continued progressing at the Tajitos gold project. In 2025 the
Mexican government began to grant permits for open pit mining, and this has
removed a degree of uncertainty for the project, paving the way for the new
preliminary economic assessment that we expect to conclude early in 2026.
We also made encouraging progress with our project at Lucerito during 2025,
and this has now joined Guanajuato, Orisyvo, Rodeo and Tajitos in the advanced
exploration project pipeline. More than 9,100 metres of drilling were carried
out at Lucerito over the last 12 months, and we have good grounds to believe
that the ore body there includes extensive resources with a positive
combination of gold, silver and zinc.
Our pipeline has been further enhanced by the acquisition, after the year end,
of Probe Gold Inc. Probe's assets include the Novador Gold Project, as well as
the early-stage Detour Gold project, both located in Quebec, Canada. In
addition to providing us with strategic entry into a world class Tier 1 mining
jurisdiction, Probe adds a large resource base of 10 million ounces of gold.
Novador alone has the potential to produce over 200,000 ounces per annum over
10+ years, and we are confident that this project, together with our advanced
exploration projects in Mexico, will underpin Fresnillo's long-term future,
further positioning us as one of the leading precious metals companies in the
world.
Exploration continued across the portfolio during the year, with positive
results yielded by brownfield exploration around the Fresnillo and San Julián
districts and by greenfield drilling at Candameña, in addition to activities
at those projects already mentioned. We also continued to make progress at our
mining concessions in South America. In Chile, we completed 1,654 metres of
drilling at Capricornio, a joint-venture project with SQM, while in Peru we
drilled 2,058 metres at the Chiclayo project, with modest results, and
strengthened our community relations plan.
At the end of the year, silver in consolidated overall mineral resources
decreased by 8.5% vs 2024 to 2.06bn oz. This was mainly due to
the application of a new approach, in line with industry best practice, to
classify mineral resources based on their expected future economic extraction,
which, although initially reduces the reported resource base, enhances
transparency and strengthens long-term confidence in the estimates. Gold in
consolidated overall mineral resources increased by 14.3% vs 2024 to 44.0 moz,
primarily driven by the favourable impact of the higher price of gold at
Herradura and the Lucerito exploration project.
Silver in consolidated overall ore reserves increased by 9.4% to 362.6 moz,
mainly due to higher metals prices and a lower cut-off grade together with the
addition of ounces through the infill campaign, primarily at the Fresnillo
district. Gold in consolidated overall ore reserves increased by 7.4% to 7.8
moz as a result of the higher gold price, principally at Herradura.
Advancing and enhancing the sustainability of our operations
Thanks to the commitment of our teams, we have achieved steady progress in our
safety journey since 2018, with a 69% decrease in TRIFR (total recordable
injury frequency rate) and 51% in LTIFR (lost time injury frequency rate). The
last year alone saw those indices decrease by 17.6% and 13.7%, respectively.
However, such progress cannot outweigh the loss of life. The two fatal
accidents we experienced during the year-one involving a unionised employee
and one a contractor-completely eclipse the gains. Our thoughts are with their
families, friends and colleagues. These tragedies underline the fact that our
work is far from finished: we can never be complacent about safety.
We have examined both incidents thoroughly and have begun to implement the
appropriate corrective actions to support our goal of zero fatalities.
Although mining carries intrinsic risks, we have the systems, the training and
the leadership to manage and mitigate them. Ultimately, however, safety
requires every person to fully embrace their responsibility-taking ownership
not only of their own wellbeing, but also that of their colleagues. This
principle is the foundation of our 'I Care, We Care' strategy.
As I reported last year, the new government administration has shown a greater
openness to dialogue with the mining industry. These exchanges have reinforced
that sustainability-related issues, including those most critical to local
communities, are central in advancing Mexico's environmental and social policy
agenda-from implementing the National Agreement for Forests, Jungles and
Mangroves to reducing GHG emissions by 35% by 2030 and safeguarding the
fundamental right of access to water. On key sustainability matters such as
these, Fresnillo has been - and will continue to be - a strategic partner.
On the decarbonisation front, we remain focused on sourcing 75% of our energy
consumption from renewables. While we have consistently surpassed this target
in recent years - including in 2025 - we recognise that it will become
increasingly challenging as exploration projects transition into operation and
demand more energy. We remain committed to ensuring that our environmental
ambition keeps pace with our business growth and that our energy supply
remains reliable, competitive and grounded in clean sources.
We have decided to pause the dual fuel project at Herradura, which introduced
several LPG-diesel trucks into the haulage fleet. Shifts in price and
performance dynamics mean that, unless conditions change significantly, we
will retire these units at the end of their operational life and either revert
to a diesel fleet or explore other technologies, such as electric trucks.
Mining operations not only require large quantities of water but are also
frequently situated in arid locations where the population is already
experiencing a high degree of water stress. Over the years we have advanced a
range of initiatives to reduce our water footprint and support infrastructure
and sanitation for local communities. For example, in 2025 the Proaño
Potabilisation Water Plant was inaugurated in partnership with the municipal
government of Fresnillo. This project diverts and treats mine water from the
Fresnillo mine to supplement the local potable water system.
Having exceeded our 2025 targets for the representation of women in both our
total workforce and managerial positions a year ahead of schedule, we have now
begun defining the next stage of our ambition. Inclusion is a great source of
strength and essential for attracting and developing the best talent at a time
when we are preparing for a new phase of growth-both within Mexico and beyond.
Looking ahead
We have indicated that production of silver and gold from our current
operations is expected to reduce in 2026, largely due to geological factors at
our operating assets. The goal is to improve the quality of the ounces we
produce by continuing to implement the wide range of initiatives introduced by
Tomás Iturriaga and Daniel Diez, our Chief Operating Officers, to increase
efficiency and reduce costs. At the same time, we will aim to move all five of
the advanced exploration projects further along our pipeline. We believe that
all of these projects show good potential - the goal now is to identify and
promote those that are best suited to the current economic and operational
situation, and I anticipate being able to provide a positive update in next
year's Annual Report.
More generally, cost control will continue to be a focus in 2026, given cost
pressures globally and the strength of the Mexican peso. On the other hand, we
anticipate that our operational performance will be enhanced by the
continuation of a high price environment for silver and gold, with global
production failing to meet the steady increase in demand for both metals.
Our optimism is based on experience and an understanding of both known and
unforeseen challenges, which we address through careful planning, precise
execution, and risk mitigation.
Finally, I would like to pay tribute to the fine work of our teams, who worked
with great skill and determination to execute our strategy over the last 12
months. I thank them unreservedly. The exceptional results we have posted this
year would not have been possible without them.
Octavio Alvídrez
Chief Executive
FINANCIAL REVIEW
"The Group's financial performance in 2025 reflects the positive impact of
higher precious metals prices together with a more stable operational
performance."
The consolidated financial statements of Fresnillo plc are prepared in
accordance with UK-adopted international accounting standards. This financial
review intends to explain the main factors affecting performance as well as
provide a detailed analysis of the financial results in order to enhance the
understanding of the Group's financial statements. All comparisons refer to
2025 figures compared to 2024, unless otherwise noted. The financial
information and year-on-year variations are presented in US dollars, except
where otherwise indicated.
The following report presents how we have managed our financial resources.
Commentary on financial performance
The Group's financial performance in 2025 reflects the positive impact of
higher precious metals prices coupled with a more stable operational
performance, which was achieved despite a number of challenges.
Adjusted revenue(1) increased 27.6% vs 2024 to US$4,645.3 million. This was
primarily due to higher gold and silver prices. Revenue increased 30.5%
year-on-year to US$4,561.2 million, principally due to the same factors as the
increase in Adjusted revenue and lower treatment and refining charges.
Adjusted production costs (2) decreased 11.1% vs 2024. This was mainly due
to the cessation of mining activities at San Julián DOB; the lower volumes
processed at Herradura, Fresnillo, Ciénega and Saucito; the favourable effect
of the devaluation of the average Mexican peso vs. US dollar exchange rate;
and net efficiencies achieved, principally at Herradura. These factors were
partly offset by cost inflation of 3.2%, excluding the exchange rate
devaluation.
As a result, gross profit more than doubled to US$2,664.1 million, while
EBITDA(3) increased by 80.7% to US$2,796.2 million in 2025.
We maintained our strong financial position, with US$2,756.5 million in cash
and other liquid funds as of 31 December 2025, a net increase of US$1,458.7
million over the period, having paid dividends of US$654.3 million: US$346.3
million in accordance with our policy (adjusted for extraordinary, non-cash
items, in particular the revaluation of the Silverstream contract and the
effect of the exchange rate on deferred taxes), in addition to US$308.0
million in extraordinary dividends. We also invested US$400.1 million in
capex, spent US$173.5 million on exploration expenses, and paid US$369.5
million in taxes, special mining rights, and profit sharing.
FINANCIAL REVIEW CONTINUED
Income statement highlights
2025 2024 Amount change US$ million Change %
US$ million US$ million
Adjusted revenue(1) 4,645.3 3,639.9 1,005.4 27.6
Total revenue 4,561.2 3,496.4 1,064.8 30.5
Cost of sales (1,897.1) (2,250.1) 353.0 (15.7)
Gross profit 2,664.1 1,246.3 1,417.8 113.8
Exploration expenses 173.5 163.0 10.5 6.4
Operating profit 2,292.5 945.8 1,346.7 142.4
EBITDA(3) 2,796.2 1,547.3 1,248.9 80.7
Special mining rights 193.2 127.0 66.2 52.1
Income tax (Tax income) 315.0 390.2 (75.2) (19.3)
Profit for the period 1,573.8 226.7 1,347.1 594.2
Profit for the period, excluding post-tax Silverstream effects 1,706.3 354.3 1,352.0 381.6
Basic and diluted earnings per share (US$/share)(4) 1.878 0.191 1.687 883.2
Basic and diluted earnings per share, excluding post-tax Silverstream effects 2.058 0.364 1.694 465.4
(US$/share)
1 Adjusted revenue is revenue as disclosed in the income statement
adjusted to exclude treatment and refining charges.
2 Adjusted production costs are calculated as cost of sales less
depreciation, profit sharing, change in inventories and unproductive costs.
The Company considers this a useful additional measure to help understand
underlying factors driving production costs in terms of the different stages
involved in the mining and plant processes, including efficiencies and
inefficiencies, as the case may be, and other factors outside the Company's
control such as cost inflation or changes in accounting criteria.
3 Earnings before interest, taxes, depreciation and amortisation
(EBITDA) is calculated as profit for the year from continuing operations
before income tax, less finance income, plus finance costs, less foreign
exchange gain/(loss), less revaluation effects of the Silverstream contract
and other operating income plus other operating expenses and depreciation.
4 The weighted average number of Ordinary Shares was 736,893,589 for
2025 and 2024. See Note 18 to the consolidated financial statements.
The Group's financial results are largely determined by the performance of our
operations. However, other factors beyond our control, including a number of
macroeconomic variables, also affect our financial results. These include:
Metals prices
The average realised silver price increased 51.4% from US$28.8 per ounce in
2024 to US$43.6 per ounce in 2025, while the average realised gold price rose
44.0% to US$3,532.7 per ounce. The average realised zinc by-product price
increased 1.6% to US$1.30 per pound, with the lead by-product price decreasing
4.6% vs 2024 to US$0.88 per pound.
MX$/US$ exchange rate
Spot exchange rate at 31 December 2025 Spot exchange rate at 31 December 2024 Impact
$18.00 per US dollar $20.27 per US dollar The 11.4% spot revaluation had a favourable effect on deferred taxes and
special mining rights
Average Mexican peso/US dollar exchange rate 2025 Average Mexican peso/US dollar exchange rate 2024 Impact
$19.22 per US dollar $18.30 per US dollar The 5.1% devaluation had a positive effect of US$51.6 million on the Group's
costs denominated in Mexican pesos (approximately 45% of total costs) when
converted to US dollars.
Cost inflation
The Mexican Consumer Price Index for 2025 calculated cost inflation at 3.9%.
However, to evaluate the Group's cost inflation for the year, we calculate the
unit price increase for each component of adjusted production costs and take
into consideration their weighted average within the Group's basket. The
resulting cost deflation estimate for 2025 was 0.2%, which included the
favourable effect of the 5.1% average devaluation of the Mexican peso against
the US dollar. Underlying cost inflation (cost inflation excluding the
devaluation of the Mexican peso vs. US dollar) was 3.2%. We conduct the same
exercise for each individual mine operation, whose basket components may carry
different weightings.
The main components driving our cost inflation are listed below:
Labour
Unionised workers received on average a 7% increase in wages in Mexican pesos,
while non-unionised employees received on average a 6% increase in wages in
Mexican pesos; when converted to US dollars this resulted in a weighted
average labour inflation of 1.5%.
Energy
Electricity
The weighted average cost of electricity in US dollars remained broadly stable
at US$8.18 cents per kW in 2025.
Diesel
The weighted average cost of diesel decreased 4.0% in US dollars to 107.4 US
cents per litre in 2025, compared to 111.9 US cents per litre in 2024.
Operating materials
Year-on-year change in unit price %
Steel balls for milling 4.3
Sodium cyanide 4.1
Explosives 3.3
Tyres 1.7
Other reagents 1.3
Steel for drilling (2.6)
Lubricants (7.6)
Weighted average of all operating materials 2.2
The weighted average unit prices of all operating materials increased by 2.2%
over the year as the unit prices of steel balls for milling, explosives and
reagents, including sodium cyanide, continued to increase in US dollar terms,
reflecting global inflationary pressures. This was partly offset by the
decrease in the unit price of lubricants. There has been no significant impact
on the unit cost of operating materials from the devaluation of the Mexican
peso/US dollar exchange rate as the majority of these items are
dollar-denominated.
Contractors
Agreements are signed with each individual contractor company and include
specific terms and conditions that cover not only labour, but also operating
materials, equipment and maintenance, among others. Contractor costs are
mainly denominated in Mexican pesos and are an important component of
our total production costs. In 2025, increases per unit (i.e. per metre
developed/per tonne hauled) granted to contractors whose agreements were due
for review during the period, resulted in a weighted average decrease of
approximately 1.3% in US dollars, after considering the devaluation of the
Mexican peso vs the US dollar.
The effects of the above external factors, combined with the Group's internal
variables, are further described below through the main line items of the
income statement.
Revenue
Consolidated revenue
2025 US$ million 2024 US$ million Amount US$ million Change %
Adjusted revenue(1) 4,645.3 3,639.9 1,005.40 27.6
Treatment and refining charges (84.1) (143.6) 59.50 (41.4)
Total revenue 4,561.2 3,496.4 1,064.80 30.5
1 Adjusted revenue is revenue as disclosed in the income statement
adjusted to exclude treatment and refining charges and metals prices hedging.
Adjusted revenue increased by US$1,005.4 million, driven by the higher gold
and silver prices, partly offset by the lower volumes of all metals sold.
Changes in the contribution by metal were the result of the relative changes
in metals prices and volumes produced. The effect by metal, both in terms of
volume and price, is shown in the table below.
Adjusted revenue(1) by metal
2025 2024
US$ million % contribution US$ million % contribution Volume variance US$ million Price variance US$ million Total net changeUS$ million Change %
Gold 2,071.2 44.6 1,514.7 41.6 (93.0) 649.4 556.5 36.7
Silver 2,161.9 46.5 1,673.9 46.0 (309.9) 797.9 488.0 29.2
Lead 124.6 2.7 139.8 3.8 (9.0) (6.2) (15.2) (10.9)
Zinc 287.6 6.2 311.5 8.6 28.8 4.9 (23.9) (7.7)
Total Adjusted revenue 4,645.3 100.0 3,639.9 100.0 (440.8) 1,446.1 1,005.4 27.6
1 Adjusted revenue is revenue as disclosed in the income statement
adjusted to exclude treatment and refining charges and metals prices hedging.
Adjusted revenue by mine
The contribution by mine to Adjusted revenues is outlined in the table below.
This is expected to change further in the future, as new projects are
incorporated into the Group's operations and as precious metals prices
fluctuate.
2025 2024
(US$ million) % contribution (US$ million) % contribution Change %
Herradura 1,241.2 26.7 884.7 24.3 40.3
Saucito 929.9 20.0 760.0 20.9 22.4
Juanicipio 922.6 19.9 662.8 18.2 39.2
Fresnillo 739.3 15.9 591.2 16.2 25.1
San Julián (Veins) 527.9 11.4 354.5 9.7 48.9
Ciénega 232.4 5.0 228.4 6.3 1.8
Noche Buena 52.0 1.1 43.4 1.2 19.8
San Julián (DOB) 0.0 0.0 115.1 3.2 (100.0)
Total 4,645.3 100 3,639.9 100 27.6
Treatment and refining charges
Treatment and refining charges(1) are reviewed annually using international
benchmarks. Treatment charges per tonne of lead and zinc concentrate and
silver refining charges decreased substantially in dollar terms by 40.7%,
41.8% and 41.6%, respectively. These factors, combined with the lower volumes
of lead and zinc concentrates shipped from our mines to Met-Mex, resulted in
an 41.4% decrease in treatment and refining charges set out in the income
statement in absolute terms when compared to 2024.
1 Treatment and refining charges include the cost of treatment and
refining as well as the margin charged by the refiner.
Cost of sales
Concept 2025 US$ million 2024 US$ million Amount US$ million Change %
Adjusted production costs(2) 1,406.7 1,582.2 (175.5) (11.1)
Depreciation 490.6 619.8 (129.2) (20.8)
Profit sharing 15.7 12.3 3.4 27.6
Change in work in progress (22.4) 35.8 (58.2) N/A
Unproductive costs including inventory reversal and unabsorbed production 6.5 0.0 6.5 100.0
costs(3)
Cost of sales 1,897.1 2,250.1 (353.0) (15.7)
2 Adjusted production costs are calculated as cost of sales less
depreciation, profit sharing, change in inventories and unproductive costs.
The Company considers this a useful additional measure to help understand
underlying factors driving production costs in terms of the different stages
involved in the mining and plant processes, including efficiencies and
inefficiencies, as the case may be, and other factors outside the Company's
control such as cost inflation or changes in accounting criteria.
3 Unproductive costs primarily include unabsorbed production costs
such as non-productive costs from the temporary suspension of activities at
Herradura and non-productive fixed mine costs incurred at Noche Buena from the
finalisation of mining activities.
Cost of sales decreased 15.7% to 1,897.1 million in 2025. The main factors
driving the US$353.0 million decrease are listed below:
Adjusted production costs decreased by US$175.5 million as shown in the graph
below:
Ongoing efforts to implement cost reduction initiatives have continued,
generating positive results in 2025 and driving US$13.8 million net worth of
operating efficiencies. These included efficiencies and cost reductions at
Herradura (-US$39.6 million), and decreased contractor costs for development
at Ciénega (-US$6.7 million). This achievement was offset by inefficiencies
and cost increases at Fresnillo as a result of increased contractor costs for
development, increased mechanical and electrical maintenance and higher
consumption of explosives and milling balls at Fresnillo (+US$27.5 million),
increased electrical and mechanical maintenance at Saucito (+US$3.4 million),
and higher IT costs and increased mechanical maintenance at Juanicipio
(+US$1.6 million).
Others reflect non-mining/core process costs converted from a commercial
arrangement to a tolling agreement.
The decrease in depreciation (-US$129.2 million) was mainly due to lower
depreciation of the asset base at San Julián as the DOB approached the end of
its life, with its assets being fully depreciated in 2024, and, to a lesser
extent, the reduced depletion factor at Ciénega and Saucito.
Gross profit
Gross profit is a key financial indicator of profitability at each business
unit and the Fresnillo Group as a whole.
Total gross profit doubled from US$1,246.3 million in 2024 to US$2,664.1
million in 2025.
The main factors driving the US$1,417.8 million increase in gross profit are
shown in the graphic below:
The contribution by mine to the Group's consolidated gross profit and the
year-on-year variations are outlined in the table below:
Contribution by mine to consolidated gross profit
2025 2024 Change
US$ million % contribution US$ million % contribution US$ million %
Herradura 716.2 26.9 274.2 22.0 442.0 161.2
Juanicipio 661.7 24.9 384.8 31.0 276.9 72.0
Saucito 543.1 20.4 281.7 22.7 261.4 92.8
Fresnillo 339.1 12.8 180.0 14.5 159.1 88.4
San Julián 289.3 10.9 89.3 7.2 200.0 224.0
Ciénega 77.7 2.9 29.6 2.4 48.1 162.5
Noche Buena 31.1 1.2 3.2 0.2 27.9 871.9
Total for operating mines 2,658.2 100.0 1,242.8 100.0 1,415.4 113.9
Metal hedging and other subsidiaries 5.9 3.5 2.4 68.6
Total Fresnillo plc 2,664.1 1,246.3 1,417.8 113.8
Administrative and corporate expenses
Administrative and corporate expenses increased 8.0% from US$109.5 million in
2024 to US$118.2 million in 2025, primarily due to an increase in personnel as
well as performance bonuses linked to operating and financial results paid to
administrative personnel, partly mitigated by the favourable effect of the
devaluation of the Mexican peso vs the US dollar on administrative expenses
denominated in pesos.
Exploration expenses
Exploration expenses increased 6.4% from US$163.0 million in 2024 to US$173.5
million in 2025. In line with our strategy, exploration continued to focus on
the Fresnillo district and the Ciénega and San Julián mines, prioritising
efforts to increase the resource base, convert resources into reserves and
improve the confidence of the grade distribution in reserves. An additional
US$2.6 million was capitalised, mainly relating to exploration expenses at the
Guanajuato and Orisyvo projects. As a result, risk capital invested in
exploration totalled US$176.1 million in 2025, compared to US$165.0 million in
2024 (of which US$2.0 million was capitalised). This represents a year-on-year
increase of 6.7%.
EBITDA
EBITDA is a gauge of the Group's financial performance and a key indicator to
measure debt capacity. It is calculated as profit for the year from continuing
operations before income tax, less finance income, plus finance costs, less
foreign exchange gain/(loss), less the net Silverstream effects and other
operating income plus other operating expenses and depreciation.
2025 US$ million 2024 US$ million Amount US$ million Change %
Profit from continuing operations before income tax 2,082.0 743.9 1,338.1 179.9
- Finance income (92.5) (46.9) (45.6) 97.2
+ Finance costs 68.5 73.6 (5.1) (6.9)
- Revaluation effects of Silverstream contract 189.2 182.3 6.9 3.8
- Foreign exchange loss/(gain), net 45.2 (7.0) 52.2 N/A
- Other operating income (20.2) (39.6) 19.4 (49.0)
+ Other operating expense 33.3 21.3 12.0 56.3
+ Depreciation 490.6 619.8 (129.2) (20.8)
EBITDA 2,796.2 1,547.3 1,248.9 80.7
EBITDA margin 61.3 44.3 - -
In 2025, EBITDA increased 80.7% to US$2,796.2 million, primarily driven by the
higher gross profit. EBITDA margin expressed as a percentage of revenue
increased, from 44.3% in 2024 to 61.3% in 2025.
Other operating income and expense
In 2025, a net loss of US$13.1 million was recognised in the income statement
primarily as a result of the assets derecognised in connection with new
projects which, in accordance with the energy supply agreement with the
state‑owned company (CFE), are required for grid connection and must be
transferred to CFE. However, this compared negatively with the net gain of
US$18.3 million recorded in 2024, mainly due to higher proceeds obtained from
the sale of the non-core Guazapares mining concessions to Coeur Mining.
Silverstream effects
As reported in the 2025 Interim Report, following a thorough evaluation of
strategic options, it was concluded that terminating the Silverstream contract
via a buyback was in the best interests of Fresnillo and its shareholders. The
decision to end the Agreement followed a comprehensive review by Fresnillo and
its independent advisers SRK, of the ongoing operational and financial issues
at the Sabinas mine. This resulted in a US$132.4 million net loss after taxes
in the income statement, including the impacts of amortisation. Further
information related to the Silverstream contract is provided in notes 14 and
30 to the consolidated financial statements.
Net finance income
Net finance income of US$24.0 million compared favourably to the US$26.6
million loss recorded in 2024. This was mainly driven by the increased
interest on short term deposits and investments, net of the interest paid on
the 4.250% Senior Notes due 2050.
Taxation
Income tax expense for the year was US$315.0 million, which compared
favourably to the tax expense of US$390.2 million in 2024. The effective tax
rate, excluding the special mining rights, was 15.1% (2024: 52.5%), compared
to the 30% statutory tax rate. The reason for the variation in the effective
tax rate is the difference between the tax and the accounting treatment
related mainly to: i) the effect of the spot exchange rate on the tax value of
assets and liabilities; ii) the special mining rights deductible for corporate
income tax; iii) the effect of the Mexican inflation on the restatement of tax
value of fixed assets; and iv) the benefit from the lower border tax, which
applied to the Herradura and Noche Buena mines, as described in the table
below:
2025 2024
Spot exchange rate (revaluation)/devaluation (11.4) 20.0
Exchange rate effect on tax value of assets and liabilities (US$192.5 million) US$300.2 million
Special mining right deductible for corporate income tax (US$58.4 million) (US$38.1 million)
Inflationary uplift of the tax base of assets and liabilities (US$50.7 million) (US$55.2 million)
Benefit from the lower border tax, which applied to Herradura and Noche Buena (US$24.0 million) -
mines
Mining rights in 2025 were US$193.2 million compared to mining rights of
US$127.0 million charged in 2024, mainly as a result of the the increase in
the profit base used in the calculation along with the increase from 7.5% to
8.5% in 2025.
Profit for the period
Profit for the year increased year-on-year by 594.2% as a result of the
factors described above.
2025 US$ million 2024 US$ million Amount change US$ million Change %
Profit for the period 1,573.8 226.7 1,347.1 594.2
Profit for the period, excluding post-tax Silverstream effects 1,706.3 354.3 1,352.0 381.6
Profit due to non-controlling interests(1) 189.8 85.8 104.0 121.2
Profit attributable to equity shareholders of the Group 1,384.0 140.9 1,243.1 882.3
Basic and diluted earnings per share (US$/share)(2) 1.878 0.191 1.687 883.2
Basic and diluted earnings per share, excluding post-tax Silverstream effects 2.058 0.364 1.694 465.4
(US$/share)
1 The increase reflects the higher profit generated at Juanicipio,
where Pan American owns 44% of the outstanding shares.
2 The weighted average number of Ordinary Shares was 736,893,589 for
2025 and 2024. See Note 18 to the consolidated financial statements.
Cash flow
A summary of the key items from the cash flow statement:
2025 US$ million 2024 US$ million Amount US$ million Change %
Cash generated by operations before changes in working capital 2,787.3 1,559.8 1,227.5 78.7
Increase in working capital (128.1) (162.9) 34.8 (21.4)
Taxes and employee profit sharing paid (369.5) (97.1) (272.4) 280.5
Net cash from operating activities 2,289.7 1,299.8 989.9 76.2
Disposal of equity instruments and dividends 178.3 3.6 174.7 >100
Silverstream contract 85.9 30.0 55.9 186.3
Financial gains/(expenses) and foreign exchange effects 48.7 (9.8) 58.5 N/A
Proceeds from the sales of mining concessions (see Note 2 to the consolidated 16.1 10.0 6.1 61.0
financial statements)
Dividends paid to shareholders of the Company (654.3) (78.2) (576.1) 736.7
Purchase of property, plant and equipment (400.1) (370.5) (29.6) 8.0
Dividends paid to non-controlling interests and loans by minority shareholders (105.2) (118.8) 13.6 (11.4)
Net (decrease)/increase in cash during the period after foreign exchange 1,458.7 763.2 695.5 91.1
differences
Cash and other liquid funds at 31 December(1) 2,756.5 1,297.8 1,458.7 112.4
1 Cash and other liquid funds are disclosed in Note 17 to the
consolidated financial statements.
Cash generated by operations before changes in working capital increased 78.7%
to US$2,787.3 million, primarily due to higher precious metals prices. Working
capital increased US$128.1 million, mainly due to: i) a US$208.3 million
increase in trade receivables from related parties principally because of
higher precious metals prices; ii) an increase in ore inventories of US$20.4
million; and iii) a US$20.1 million increase in prepayments. This was partly
offset by a US$120.7 million increase in trade payables.
Taxes and employee profit sharing paid increased to US$369.5 million, mainly
due to: i) the higher final income tax paid in 2025, net of provisional taxes
paid, corresponding to the 2024 tax fiscal year; ii) an increase in
provisional tax payments paid in 2025; iii) an increase in mining rights
payments; and iv) higher profit sharing paid.
As a result of the above factors, net cash from operating activities increased
76.2% to US$2,289.7 million in 2025.
In addition, the Group benefited from additional sources of cash, primarily
generated by:
i) Proceeds from the sale of Mag Silver shares and dividends received for
US$178.3 million.
ii) Proceeds from the Silverstream contract of US$85.9 million.
iii) Financial gains and foreign exchange effects of US$48.7 million, which
compared favourably to the financial expenses and foreign exchange effects of
US$9.8 million in 2024. This was primarily driven by the increased interest on
short term deposits and investments, net of interest paid on the 4.250% Senior
Notes due 2050.
Main uses of funds were:
i) Dividends paid to shareholders of the Group in 2025 totalled US$654.3
million, compared with US$78.2 million in 2024. The 2025 payment comprised: i)
the 2024 final ordinary dividend of 26.1 cents per share paid in May 2025,
totalling US$192.3 million, in line with our dividend policy, which includes a
consideration of profits generated in the year, adjusted for the
extraordinary, non-cash items, in particular the revaluation of the
Silverstream contract and the effect of the exchange rate on deferred taxes,
ii) a one-off special dividend of 41.8 cents per share also paid in May 2025,
totalling US$308.0 million, and iii) the 2025 interim ordinary dividend paid
in September of US$153.3 million, equivalent to 20.8 cents per share.
ii) The purchase of property, plant and equipment for a total of US$400.1
million.
iii) Dividends and loans paid to non-controlling interest US$105.2 million
decreased 11.4% vs 2024.
The sources and uses of funds described above resulted in an increase in net
cash of US$1,458.7 million (net increase in cash and other liquid assets),
which combined with the US$1,297.8 million balance at the beginning of the
year resulted in cash and other liquid assets of US$2,756.5 million at the end
of December 2025.
Balance sheet
Fresnillo plc continued to maintain a solid financial position during the
period with cash and other liquid funds of US$2,756.5 million as of 31
December 2025. Taking this and the US$839.9 million outstanding Senior Notes,
Fresnillo plc's net cash was US$1,916.6 million as of 31 December 2025. This
compares positively to the net cash of US$458.3 million as of 31 December
2024.
Inventories increased 4.2% to US$502.6 million, mainly due to the increased
inventories of lead and zinc concentrates at Fresnillo and Saucito.
Dividends
Based on the Group's 2025 performance, the Directors have recommended a final
ordinary dividend of 108.12 US cents per Ordinary Share, which will be paid on
29 May 2026 to shareholders on the register on 24 April 2026. The dividend
will be paid in UK pounds sterling unless shareholders elect to be paid in US
dollars. This is in addition to the interim ordinary dividend of 20.8 US cents
per share. This is above the Group's traditional dividend policy to pay out
33-50% of the profit attributable to equity shareholders of the company after
making certain customary adjustments to exclude extraordinary non-cash effects
in the income statement, and was permitted by strong cash generation
throughout the year, which resulted in a high cash balance at year end. The
company continues to maintain a healthy cash balance to invest in growth
focused projects, along with an additional buffer for any M&A
opportunities that may present themselves in the future. The dividend policy
remains unchanged.
As disclosed in previous reports, the corporate income tax reform introduced
in Mexico in 2014 created a withholding tax obligation of 10% relating to the
payment of dividends, including to foreign nationals. The 2025 final ordinary
dividend will be subject to this withholding obligation.
MANAGING OUR RISKS AND OPPORTUNITIES
Our approach to risk.
Effective risk management is an essential part of our culture and strategy. By
understanding, prioritising and managing risk, Fresnillo plc safeguards our
people, our assets, our values and reputation, and the environment, and
identifies opportunities to best serve the long-term interests of all our
stakeholders. We are focused on conducting our business responsibly, safely
and legally, while making risk-informed decisions when responding to the
opportunities or threats that are presented to us. Risk management is a key
accountability and performance criterion for our leaders.
Our risk management process helps us to manage risks that have the potential
to impact our business objectives, and timely risk monitoring is at the core
of our management practices. All employees have responsibility for identifying
and managing risks. Our risk management framework reflects the importance of
risk awareness across Fresnillo plc. It enables us to identify, assess,
prioritise and manage risks to deliver the value creation objectives defined
in our business model.
Risk appetite.
Defining risk appetite is key to embedding our risk management system into our
organisational culture. The Company's risk appetite statement helps to align
our strategy with the objectives of each business unit, clarifying which risk
levels are, or are not, acceptable. It promotes consistent decision-making on
risk, allied to the strategic focus and risk/reward balance approved by the
Board.
We define risk appetite as 'the nature and extent of risk Fresnillo plc is
willing to accept in relation to the pursuit of its objectives'. We look at
risk appetite in the context of the severity of the consequences should the
risk materialise, any relevant internal or external factors influencing the
risk, and the status of management actions to mitigate or control the risk. A
scale is used to help determine the limit of appetite for each risk,
recognising that risk appetite will change over time.
The risk appetite statement for each principal risk articulates what is an
acceptable level of exposure, relative to the amount of reward we are seeking,
and helps to determine how much control or mitigating actions may be required.
Risks that are approaching the limit of the Company's risk appetite may
require management actions to be accelerated or enhanced to ensure the risks
remain within appetite levels. If a risk exceeds appetite, it will threaten
the achievement of objectives and may require a change to strategy.
Risk management framework.
Our strategy, values and risk appetite inform and shape our risk management
framework. We embed risk management at every level of the organisation to
effectively manage threats and opportunities to our business and host
communities, and our environmental impact.
Fresnillo plc has an enterprise-wide risk management information system which
includes a set of integrated tools and applications to capture, manage and
communicate material risks to the business. This system incorporates three
lines of defence: 1(st) line - Unit leaders including mine, exploration and
project personnel, as well as leaders of corporate and support areas; 2(nd)
line - Corporate level oversight functions including the risk management team,
the Health, Safety, Security, Environment and Community Relations (HSECR)
team, the project oversight function and the Executive Committee; and 3rd line
- Group Internal Audit.
Governance structure.
This structure shown below supports our risk management framework and enables
the effective management of material risks.
Top down Bottom up Board and Committees
Board. Audit Committee / HSECR Committee. Int
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effective, entrepreneurial and prudent management of the business. it.
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strategy in line with Board appetite.
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Strategic risks People, operational, safety and communities' risks Financial risks
- Resources to reserves - People and culture* - Global macroeconomic developments*
- Potential actions by the government* - Union & labour relations* - Impact of metals prices and exchange rates*
- Exploration* - Operational, maintenance and planning - Liquidity
- Capital Project* - Health, safety and environment* - Market
- Technology, Cyber & AI* - Communities and social* - Credit
- Low-carbon transition - Ethics and compliance - Tax
- Climate change and natural disaster* - Tailings dams* - Disclosure
- Security*
*Principal risk
Risk management process.
Set strategy, objectives and risk appetite 1. Risk analysis 2. Controls and risk responses 3. Audit & assurance 4. Communication & monitoring 5. Improvement & embedding 6. Resilience
Identify, prioritise and evaluate risks to our strategy and objectives Implement controls and actions to manage risks within risk appetite Check and verify that controls and actions are effective in managing the risks Communicate principal and emerging risks and escalate as appropriate Build risk capability Develop the company's culture and capacity to adapt, resist, absorb and
recover from the impact of a risk
and culture so
active management
is embedded in how
we run our business
First line - Assess existing risks and assess new risks in the business units - Ensure continuous improvement of processes and controls. - Control self-certifications - Prepare risk dashboards and risk matrices presenting the status of - Comply with the highest international industry standards in areas such as
individual risks in the business units TSFs
- Implement corrective and preventive actions based on the results of
leadership team monitoring
Second line - Review Key Risk Indicators (KRIs) and mitigating actions - Implement controls and mitigations in response to risk scenarios - Monitor compliance with international risk standards - Carry out ongoing reviews of risks and threats. - Promote the risk culture across the Company through workshops and training - Create risk scenarios to anticipate impacts and prepare risk responses
- Prepare quarterly, half-yearly and annual reports and briefings to the Audit
and HSECR Committee
Third line - Execute the annual internal audit programme. - Provide advice and recommendations regarding the most exposed or new risks - Implement appropriate policies and guidelines to build resilience to risks
Culture & leadership
1. Risk analysis.
A complete view of our risk universe starts with the analysis of our business,
the external environment in which we operate, the regulatory landscape and our
internal operations. This includes the impacts on and of our strategy,
initiatives, governance, and processes.
The Board, the Audit Committee, the HSECR Committee, the Executive Committee
and Internal Audit periodically use working sessions and interviews to review
the evolution of principal and emerging risks, as well as the appetite for
each risk. At these working sessions, the views and suggestions of Board
members are considered, and adjustments are made according to the factors
influencing each risk.
We primarily use the following methods in risk assessment:
· Scenario planning
· Horizon scanning
· Real time risk management monitoring
· Social media monitoring
· Collaboration with other organisations such as third-party
suppliers
Aspects we review when assessing our principal and key risks:
· Risk ownership: each risk has an owner. In addition, each key
risk is sponsored by a member of the Executive Committee who drives the
monitoring and progress of mitigation measures.
· Probability and impact: five-by-five scoring matrix applied
globally.
· Gross risk: before preventive controls.
· Net risk: after preventive controls have been applied.
· Risk appetite: defined at the principal and emerging risk level
and approved by the Board.
· Risk tolerance: in data format, shows the amount of deviation
from risk appetite.
· Key risk indicators: quantitative and qualitative measures that
provide early signals of a change in the degree of risk.
· Actions: key controls in place and activities required to
mitigate them if necessary.
· Impact on the Company´s strategic pillars and interdependencies
between key risks.
· Any relevant risks where the principal risk is affected or may
affect the emerging risk.
All principal risks are detailed in a standardised statement. This ensures
effective review, understanding and monitoring across the Company, together
with consistency, both in terminology and in the underlying assessment itself.
Following the establishment of climate change as a separate principal risk in
2020/21, reviews have been carried out at various levels, including the
Executive Committee and the Board. These include the identification and
documentation of climate-related risks and the review and consideration of
appropriate risk responses. This consolidated view is an input to our review
of the Company's risk profile.
As part of the top-down process, an updated assessment was completed for each
principal risk by the relevant risk owner, working with the Executive
Committee risk sponsor and the risk function.
The framework is based on ISO 31000 (International standard that provides
guidelines and principles for managing risk), ISO 22301 (International
standard for Business Continuity Management Systems) and COSO ERM.(( 4
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Emerging risk considerations.
Emerging risks are very uncertain by nature. Given the diversity of our
operations and projects as well as our geographic footprint, we are exposed to
many highly uncertain, complex, and often interrelated risks. The Company
continues to focus on horizon scanning activity to inform and support the
identification of the most pertinent internal and external trends and
developments.
We monitor key indicators of emerging risks and their potential impact on our
business, markets and host communities. Many emerging risk topics are reviewed
on a recurring basis, alongside ongoing activity addressing their impacts.
However, it is acknowledged that the nature of the emerging risks will evolve
and could drive future trends which the Company will need to prepare for in
the long term.
2. Controls and risk responses.
We use five key processes to better address our risks: (i) a monthly procedure
for evaluating and mitigating principal risks; (ii) a process to identify and
analyse the impact of geopolitical instability on all the Company's risks,
including projects, with a main focus on safety and identification of new
risks; (iii) dashboards for each business unit to monitor mitigation actions
and risk level; (iv) impact and probability scenarios conducted for risks
related to security, supply chain of critical inputs for operations, cost
increases and projects, and (v) collaboration with government, the mining
sector and communities to ensure that we follow best practice.
We have an internal control framework in place to mitigate the impact of
principal and emerging risks. Our executives (including operations,
exploration and project managers, the controllership group, and the HSECR
team), regularly engage in strengthening the effectiveness of our current
controls.
In January 2024, the UK Corporate Governance Code was updated, introducing a
new requirement (applicable from 2026) for the Board to make an annual
declaration as to the effectiveness of the Group's material internal controls.
During 2025, with the support of a specialist team and external advice, the
comprehensive internal control framework was enhanced to document material
financial and non-financial controls, responsibilities and accountabilities
and align them with the Company's processes. The material controls related to
financial, operational, and information technology processes have already been
documented and evaluated, and improvements are planned for 2026 to make the
controls more efficient. This has improved risk management, reduced potential
negative impacts, and ensured compliance with regulatory requirements for
internal controls.
The challenges facing the Risk Department and Executive Committee include
changes to mining and water laws in Mexico; security issues near our business
units; extreme volatility of gold and silver prices, rising operating costs;
potential disruptions in the supply chain for critical inputs; geopolitical
instability; and matters relating to our social licence and access to land.
Due to the uncertainty surrounding these risks and those arising from new
projects such as the acquisition of mining companies, during 2025, in addition
to our established risk management activities, all strategic decisions were
analysed using risk scenarios that modelled their potential impacts.
3. Audit and assurance.
In pursuing the Company's business objectives, the Board cannot give absolute
assurance that the implementation of a risk management process will overcome,
eliminate, or mitigate all material risks. However, by developing and
implementing an annual and ongoing risk management process to identify, report
and manage significant risks, the Board intends to provide reasonable
assurance against material misstatement or loss.
We monitor how well we manage material risks to our objectives by checking and
verifying the implementation of our response plans (actions and controls) and
our actual performance against objectives. We enhance the "check and verify"
step by applying the three lines of defence approach.
The internal audit team consists of highly experienced professionals from
various specialties, who frequently review operational, financial, exploration
and project processes in the field, using international standard tests and
methodologies.
First line -Annual self-assessments of controls and bi-annual compliance assurance
statements.
Second line -As part of our ERM approach, the risk team conducts specialised reviews to
assess risks and controls to ensure compliance, focused on validating and
testing key controls to augment the first line attestations.
-The risk team annually reviews key controls for our principal risks,
significant local risks and response plans to identify and respond to any
significant changes in the control environment. While many controls are
tailored to business unit requirements, there are consistent themes across our
control environment. These include clear oversight and reporting by business
unit management teams, governance processes for operations, maintenance and
tenders, attention to health and safety, the wellbeing of our people and
prioritising the maintenance of integrity and a strong ethical culture.
Third line and external activities -We are supported by external partners in certain specialised areas.
Furthermore, we are subject to significant assurance activities and third line
audits conducted through our Internal Audit team, external third parties,
certification standards and customer requirements in our various business
lines.
-The work plan of the internal audit area considers all the Company's
operational and financial processes, continuously following up on the
recommendations made in each audit, with a particular focus on the most
exposed risks and those that have an impact on regulatory non-compliance or
business disruption.
-External reviews include those that support the range of ISO certifications
we manage across the business as well as independent performance and
regulatory reports on Fresnillo plc operations. Examples include:
- business continuity risk inspections of all business units by Zurick
& Marsh in 2025.
- ISO 45001 and ISO 14001 audits of Fresnillo and Saucito mines by BSI
Group auditors.
- certification that the Herradura mine leaching operations comply
with the Cyanide Code issued by the International Cyanide Code Institute.
Governance -The HSECR Committee meets before every Board meeting to review the
effectiveness of our risk management and internal control systems, with
particular attention paid to safety, climate, tailings dams and environmental
risks.
-The Audit Committee continues to focus closely on key financial processes,
material risks and internal control. Further close attention has been given to
the key areas of judgement and estimation in the financial statements. The
Committee receives regular reports from Internal Audit, Internal Control and
Risk Management, enabling it to determine whether internal controls and
processes are functioning appropriately.
4. Communication and monitoring.
Risk can be of any nature and manifest itself and escalate from any part of
the business as a threat or even an opportunity. When risks are material to
the Company, they are escalated to the Executive Committee and, where
appropriate, to the Board or its Committees. This requires a strong risk
culture, which we continue to develop and encourage.
Although we deploy controls to reduce the likelihood and consequences of
risks, some risks inherent in our business remain. These include natural
catastrophes, for which there is limited capacity in international insurance
markets. We monitor these threats closely and develop business resilience
plans.
The steps of the risk assessment process previously explained allow for
analyses, reports and briefings that communicate the results and main
findings; this information is mainly presented and discussed at Audit
Committee and Board meetings.
5 & 6. Improvement, embedding and resilience.
To ensure that we can prioritise our efforts and resources, we regularly
assess the potential consequences and likelihood of impact of our principal
risks, creating impact scenarios to implement prevention-mitigation measures
and response plans. These assessments, and the effectiveness of our associated
controls, reflect management's current expectations, forecasts and
assumptions. They involve subjective judgements and depend on changes in our
internal and external environment.
The Board confirms that:
- a robust assessment of principal and emerging risks has been carried out.
- with support from the Audit and the HSECR Committees, it has monitored the
risk management framework throughout the year.
- it has reviewed the planning, progress and preliminary results of the
enhancement of the comprehensive internal control framework.
Principal risks and uncertainties.
The principal risks and uncertainties outlined in this section reflect the
risks that could materially affect (negatively or positively) our ability to
meet our strategic objectives. They could materialise from a combination of
external or internal factors and manifest or escalate from any part of the
business as an opportunity or threat.
We define principal risk as "risk, or a combination of risks, which may
seriously affect the business model, performance, future or reputation of the
Company".
The Company's risk profile has been developed based on the most significant
risks in our business profiles. All of our principal risks were reviewed at
least twice during the year, including through Key Risk Indicators (KRIs),
which were developed to help embed the risk appetite framework in the business
and enhance the monitoring and mitigation of risks.
Due to the effects of geopolitical instability, the volatility of prices for
precious metals such as gold and silver, as well as insecurity and violence
near business units, threats of cyberattacks, and changes in mining industry
laws and regulations in Mexico, it has been necessary to reassess the
principal risks and reorder their importance, probability, and impact, as well
as reassess the related mitigation actions.
Our principal risks are summarised in the following table and shown in order
of maximum reasonable consequence, probability and change since 2024.
Current assessment of principal risks, as of February 2026
* Appetite determined by the Board in January 2026.
With attention. - Potential for increase in the short term.
(V) Risks that were considered for the viability assessment.
Emerging risks.
As mining is a long-term business, our strategy aims to create sustained value
over the life of our mining operations and beyond. This involves careful
allocation of key resource inputs - the natural, human, intellectual,
financial, manufactured, and social and relationship capitals - which are
essential to achieving this aim.
In the longer term, as the world transitions to a low-carbon future and
consumer demand for sustainable goods flows through the value chain, the
supply-demand dynamics of commodities are expected to shift. This will lead to
increasing demand for resources and solutions with low CO2 emissions, and
lower social and environmental footprints, in addition to a growing demand for
transparent, sustainable and circular value chains.
Fresnillo plc defines an emerging risk as "new manifestation of risk that
cannot yet be fully assessed, a risk that is known to some degree but is not
likely to materialise or have an impact for several years, or a risk that the
company is not fully aware of but that could, due to emerging macro trends in
the mid or long-term future, have significant implications for the achievement
of our strategic plan". Furthermore, we consider emerging risks in the context
of longer-term impact and shorter-term risk velocity. We have therefore
defined emerging risks as those risks captured on a risk register that: (i)
are likely to be of significant scale beyond a five-year timeframe; or (ii)
have the velocity to significantly increase in severity within the five-year
period.
Emerging risks constantly change, can materialise quickly, and can
significantly affect the company and its operations. Procedures must be in
place for continuous monitoring of these risks to allow the company to adapt
or develop appropriate actions.
To strengthen our emerging risks management framework, during 2025 we carried
out activities to: (i) identify new emerging risks in light of geopolitical
instability, technological disruption, the implications of artificial
intelligence for business strategy and climate change; (ii) re-assess the
emerging risks identified in 2024; (iii) deploy effective monitoring
mechanisms recognising the potential for emerging risks to evolve or
materialise quickly; (iv) carry out horizon scanning to consider disruptive
scenarios, and (v) implement mitigating control actions and enhance our risk
awareness culture.
This process involved workshops, surveys and meetings with the Board,
Executive Committee, business unit leaders, support and corporate areas, as
well as suppliers, contractors and customers. We also consulted third-party
information from global risk reports, academic publications, risk consulting
experts and industry benchmarks.
Emerging risks can impact our principal risks directly or can become elevated
to a standalone principal risk. The way we manage emerging risks is dynamic -
it reflects the outcomes of our monitoring and the evolution of the risk as
well as findings from our scenario analyses. Managing emerging risks involves
staying on top of technological advances in the mining industry and beyond;
seeking value-capturing innovations that focus on efficiencies; drawing on new
sources of information and working closely with universities specialising in
mining and geology; as well as training and upskilling our people.
Emerging Risk Description Timescale
Geopolitical instability The potential political, economic, military and social risks that can emerge < 1
from a nation's involvement in international affairs. These risks can have
far-reaching implications for both the country itself and the global community Year
at large. There are many factors that can contribute to geopolitical risks,
such as a nation's economic stability, its political relations with other
countries, and its military strength.
Transition to a low-carbon future The transition to a low-carbon future is a "transition risk" according to the > 5
Task Force on Climate-related Financial Disclosures (TCFD) and presents
challenges and opportunities for our portfolio in the short and long term. It Years
is considered within the climate change principal risk mitigation strategy.
However, we consider this risk to be an emerging risk due to the speed of
potential new climate change regulations and the obstacles that government may
place in the way of investment support for clean energy.
Technological disruption & the rapid proliferation of Artificial Generative Artificial Intelligence (AI) and advancing technologies have the < 3
Intelligence potential to unlock transformative opportunities for businesses through
enhancing efficiency, and data-driven insights to support decision making, Years
driving pace and breadth of innovation. It is also in its infancy, which
carries significant unknown risks. Our focus is on robust monitoring and
internal upskilling to understand this evolution, supported by strong
governance processes to support its use.
Increasing societal and investor expectations There is increasing expectation and focus on social equality, fairness and < 3
sustainability. Financial institutions are also placing greater emphasis on
Environmental, Social and Governance (ESG) considerations when making Years
investment decisions.
Replacement on depletion of ore reserves The inability to replace depleted ore reserves in key business units through > 5
exploration, projects or acquisitions.
Years
Unexpected mine-closure liabilities that have the potential to increase costs There is a possibility that government authorities could introduce more costly > 5
and rigorously applied environmental provisions and obligations in the mine
closure process. Years
Emerging risks are currently managed through the Group's risk management
framework, which regularly enhances controls and mitigating actions. Emerging
risk topics were discussed in executive level committees throughout 2025, with
key actions assigned to closely monitor their manifestation and potential
opportunities and, in some cases, also form part of the business planning
process.
1
Potential actions by the government (political, legal, regulatory, tax &
concessions)
Risk description
Regulatory initiatives or policies issued by the government, at all three
levels - federal, state and municipal - may have an adverse impact on the
operation of the Company. This could include new laws, regulations, rules or
guidelines with a negative impact on the mining industry in Mexico. The
prohibition on granting new mining concessions continues under the new federal
government administration.
There have also been complications around obtaining permits and licences for
construction and environmental matters from the Ministry of Economy and the
Ministry of Environment.
Recent changes to Mexico's water law could complicate the process of
maintaining and obtaining water concessions.
We paid special attention to the following aspects:
· Permits for building/expanding tailings dams and projects.
· Inability to obtain necessary water concessions due to government
control or private interests.
· Prohibition of new concessions for open-pit mining.
· Discrepancies in the criteria used in audits carried out by the
tax authority.
· Possible new environmental taxes or royalties on the mining
industry.
· Possible profit sharing with indigenous communities.
· Potential trade disputes and new labour regulations under the
United States-Mexico-Canada Agreement.
Factors contributing to risk
A considerable level of uncertainty is likely to dominate the Mexican legal
landscape for the foreseeable future, with potential impacts on the timing,
consistency and nature of legal decisions, including:
- Delays or failures in obtaining permits and licences from government
offices such as CONAGUA and SEMARNAT.
- Reorganisation of the Mexican Supreme Court and election of Justices
and Federal Judges by popular vote.
- New judicial administration body and new judicial discipline
tribunal.
- Legal reforms to the following laws: "Mining Law", "Law on National
Waters", "Law on Ecological Balance and Environmental Protection" and "General
Law for the prevention and integrated management of waste in the field of
mining and water concessions", impacting on the granting of new concessions
and their duration, exploration activities and consultation with communities
and indigenous peoples as well as payments of 5% of profits to the
communities.
- Tax audits and information requests have increased.
Controls, mitigating actions and outlook
1. As a result of the new mining law, risk scenarios were developed for each
change and impact, considering the legal and operational criteria to implement
the necessary mitigation and prevention measures. These scenarios are
constantly updated.
2. Commitment to constant communication with all levels of government.
3. Increased monitoring of the processes being implemented at the Ministry of
Energy, Environment, Labour and Economy and daily monitoring, follow-up and
attention to issues before the Congress of the Union that may affect the
mining industry.
4. Collaboration with other members of the mining community through the
Mexican Mining Chamber to lobby against any new harmful taxes, royalties or
regulations. Support for industry lobbying efforts to improve the general
public's understanding of the mining industry.
Link to strategy Risk appetite
1 - 2 - 3 - 4 Low
Risk owner Risk oversight
· Government Relations Department · The Board
· Legal Department · Audit Committee
· Taxes and royalties Department
· Mining and water concessions Department
Behaviour Risk rating (relative position)
Stable 2025: Very high (1)
2024: Very high (1)
2
Security
Risk description
In all our business units, we face the risk of theft, which can occur within
the mines or during transportation. Our employees, contractors and suppliers
are also at risk of violence due to insecurity in some of the regions in which
we operate.
According to information from the Ministry of Security and Citizen Protection
and the National Guard, the presence of organised crime and high impact crimes
(homicide, kidnapping and extortion) increased in 2025, especially in the
states where our business units are located such as Zacatecas, Sonora and
Guanajuato.
The main risks we face are:
· High-impact thefts in ore transportation, most notably of gold
doré and silver concentrates.
· Theft of assets such as vehicles, equipment, spare parts and
fuel.
· Homicide.
· Kidnappings.
· Extortion.
· Vandalism.
· Consumption and sale of toxic substances in our mining units.
Factors contributing to risk
The remote nature of many of our locations and projects.
Increase in mineral theft during transport on roads near business units.
Presence of organised crime in areas near business units that could lead to
theft and extortion.
Influence of and territorial disputes between drug cartels, organised crime
and anarchy in some regions of Mexico where we have operations, projects and
exploration camps, especially close to our operations in Fresnillo, Zacatecas;
Caborca, Sonora; and in the mountains of Durango and Chihuahua.
Controls, mitigating actions and outlook
1. Our property security teams closely monitor the security situation,
maintaining clear internal communications and coordinating work in areas of
greater insecurity.
2. We maintain close relationships with authorities at federal, state and
local levels.
3. We interact and meet regularly with representatives of the National Guard
and also the Army and the Navy in some cases. There are military installations
located near most of our operations.
4. We continue to implement greater technological and physical security at our
operations including:
- the use of a remote monitoring process at the Herradura, Noche
Buena, San Julián, Juanicipio, Saucito and Fresnillo mines;
- local operating and command centres for each business unit in the
Saucito, Fresnillo and Juanicipio mines;
5. Increase in logistical controls to reduce the potential for theft of
mineral concentrate such as:
- real-time tracking technology;
- surveillance cameras to identify alterations in the transported
material;
- protection and support services on distribution routes;
- reduction in the number of authorised stops to optimise delivery
times and minimise exposure of trucks transporting ore concentrates or doré.
6. We continue to invest in community programmes, infrastructure improvements
and government initiatives to support the development of legal local
communities and discourage criminal acts.
7. To combat drug consumption we have:
- increased the number of anti-doping tests conducted at the start of
the day in the mining units;
- carried out frequent inspections outside and inside the mines to
verify that drugs are not consumed or sold;
- introduced drug consumption prevention campaigns, focused on
employees.
Link to strategy Risk appetite
1 - 2 - 3 - 4 Low
Risk owner Risk oversight
· Security Department · Audit Committee
· Legal Department · Executive Committee
Behaviour Risk rating (relative position)
With attention 2025: Very high (2)
2024: Very high (2)
3
Impact of metals prices and exchange rates
Risk description
Our financial results are heavily dependent on commodity prices - principally
gold and silver. There is an inherent risk when investing or planning for the
future prices of these precious metals.
The volatility of these prices is high and unpredictable and are strongly
influenced by a variety of external factors, including wars, geopolitical
disruption, world economic growth, inventory balances, industry demand and
supply, and possible substitution, among others.
Our sales are mainly denominated in US dollars, although some of our operating
costs are in Mexican pesos. Thus, any strengthening of the Mexican peso may
negatively affect our financial results.
Factors contributing to risk
Gold and silver prices in 2025 experienced a historic increase, with silver
rising by up to 150% and gold increasing by more than 60%, driven by
safe-haven demand, geopolitical fears and strong industrial purchases. Silver
closed 2025 above $70-$75 per ounce, while gold reached record highs above
$4,500.
Macro-economic and geopolitical factors that directly affect the price of
commodities, both positively and negatively, such as the war between Ukraine
and Russia, trade tensions in the US-China relationship, US policy in Latin
America against drug cartels, especially the situation with Venezuela and
Mexico and change in US monetary policy, with the Federal Reserve making
multiple interest rate cuts during the year and markets betting on further
easing in 2026.
Increased attraction of investing in instruments such as cryptocurrencies
could lead to investors reducing their investment activities in precious
metals.
Controls, mitigating actions and outlook
1. We consider exposure to commodity price fluctuations an integral part of
our business and our usual policy is to sell our products at prevailing market
prices although we do have a hedging policy for precious metals.
2. We monitor the commodity markets closely to determine the effect of price
fluctuations on earnings, capital expenditure and cash flows., when we feel it
is appropriate, we use derivative instruments to manage our exposure
to commodity price fluctuations. We run our business plans through various
commodity price scenarios and develop contingency plans as required.
3. We have hedging policies for exchange rate risk, including those associated
with project-related capex.
4. We focus on cost efficiencies and capital discipline to deliver competitive
all-in sustaining cost.
Link to strategy Risk appetite
1 - 2 - 3 High
Risk owner Risk oversight
· Financial Planning · The Investment Committe
· Treasury · Audit Committee
Behaviour Risk rating (relative position)
Increasing 2025: Very High (3)
2024: High (4)
4
Cybersecurity
Risk description
Information is an asset that must always be protected. This requires
maintaining confidentiality and integrity and ensuring the availability of
information security management throughout all business processes. Breaches
in, or failures of, our information security management could adversely impact
our business activities. Malicious interventions (hacking) of our information
or operations' networks could affect our reputation and/or operational
continuity.
Poor information security could lead to loss or harm to our technical
infrastructure and the use of our technology by malicious persons or bodies.
The list below shows our top eight cybersecurity and privacy risks:
1. Corruption of data - Critical data where any unauthorised modification
can have adverse impacts.
2. Unauthorised access - Cybersecurity and privacy incidents due to
incorrect access permissions or system abuse, exploitation, or misuse.
3. Breach and data theft - Disclosure of critical and sensitive company
data by an internal or external source.
4. Business disruption - Disrupting key applications or systems for a
period.
5. Lack of cybersecurity ownership - Failure to assign responsibility for
implementing and adopting cybersecurity practices daily.
6. Non-compliance - Cybersecurity and privacy incidents resulting in
non-compliance with applicable regulations, including privacy.
7. Health and safety incidents - Breach of availability, integrity or
confidentiality of data which impacts health and safety.
8. Halt or loss of operations - Cybersecurity and privacy incidents which
result in loss of operating licence or closure of operations.
Factors contributing to risk
Globally, cyber-attacks have increased in frequency and impact across all
industries; we suffered a cybersecurity incident (partial disruption of
services) in July 2024, which had negative consequences for the Group
(Peñoles and Fresnillo plc).
Rising geopolitical tensions.
Heavy reliance on technology and automated systems to support operations
within the mining industry.
The industrial and mining sectors are seen to have a significantly weak level
of protection, while the damage that can be caused is very high.
Global and national cybersecurity and cybercrime regulations that could deter
criminals are still developing and are not yet sufficiently mature.
Controls, mitigating actions and outlook
Our cybersecurity programme, aligned with business strategies, is based on a
governance model with three lines of defence, involving all operational,
tactical, and strategic business levels to prevent and mitigate the effects of
computer risks. Our approach is also based on the NIST Cybersecurity Framework
which is used to assess and improve our ability to prevent, detect, and
respond to cyber-attacks.
1. We maintain continuous awareness of cybersecurity at all levels of the
organisation, through workshops, communications, campaigns, and exercises that
allow us to understand and increase our cybersecurity culture. As
cybersecurity is a risk that requires more active involvement of Executive
teams, we carried out awareness and training exercises focused on this level
during 2025.
2. The Security Operations Centre (SOC) provides analytics that correlate
information from multiple business unit sources, helping us to easily identify
the impact of a threat and address the incident in a timely manner.
3. Cybersecurity incident response plans are in place and regularly
assessed to ensure we can respond quickly and effectively to cybersecurity
incidents.
4. We conduct ongoing assessments of the technology controls implemented
in our operations and services.
5. Constant threat intelligence monitoring enables us to analyse
cybersecurity trends, and to adjust our operations to anticipate and apply
necessary controls.
6. In addition, our systems, networks, and assets are continuously
monitored through cybersecurity tools that use Artificial Intelligence and
Machine Learning technology to analyse behaviours in the organisation's
networks, identifying and mitigating advanced threats.
7. Controls are in place to comply with the 'Ley Federal de Protección de
Datos Personales en Posesión de Particulares' (LFPDPPP).
8. During the year, we carried out the second phase of auditing our
Personal Data Management System with the NYCE office, with the objective of
achieving certification in our business units.
Our plan for 2026 is to focus our efforts on mitigating cyber risks,
implementing and maturing controls in line with the threat landscape and
emphasising the importance of individual employee responsibility to remain
vigilant and alert to cyber threats.
Risk Assessment, Disaster Recovery Plans, Data Loss Prevention, Pen testing,
IT/OT Network Behavioural Analysis, and targeted security enhancements for
Operational Technology (OT) environments are among the initiatives that will
increase our Level of Cybersecurity Maturity (based on NIST CSF).
Link to strategy Risk appetite
2 - 3 Low
Risk owner Risk oversight
· IT & TO Department · The Cyber Security Committee
· Cybersecurity Office · Audit Committee
Behaviour Risk rating (relative position)
Stable 2025: High (4)
2024: High (3)
5
Safety (incidents due to unsafe acts or conditions could lead to injuries or
fatalities)
Risk description
The mining industry is inherently dangerous. Major hazards across our
operations and projects include process safety, underground mining, surface
mining and tailings and water storage.
Our workforce faces risks such as fire, explosion, electrocution and carbon
monoxide poisoning, as well as risks specific to each mine site and
development project. These include rockfalls caused by geological conditions,
cyanide contamination, explosion, becoming trapped, electrocution, insect
bites, falls, heavy or light equipment collisions involving machinery or
personnel and accidents occurring while personnel are being transported.
These risks have the potential to cause death, illness or injury, damage to
the environment, and disruption to communities. A poor safety record or
serious accidents could have a long-term impact on morale and on our
reputation and productivity, among these, the following stand out:
· Rockfall/terrain failure.
· Loss of vehicle/equipment control.
· Team-vehicle-person interaction.
Factors contributing to risk
In 2025, we unfortunately experienced two fatalities (one in Juanicipio and
another in Cienega), increasing the degree of risk.
Frequent transportation of our people to remote business units is an ongoing
feature of our operations. In many cases, these units have poor accessibility
by road.
Failure to comply with safety programmes, measures and audits or with the
findings of inspections.
High turnover of workforce, including contractors.
Controls, mitigating actions and outlook
1. Nothing is more important than the safety and wellbeing of our employees,
contractors and communities. Our objective is first and foremost to have zero
fatalities. We believe all incidents and injuries are preventable, so our
focus is on identifying, managing and, where possible, eliminating risks. We
constantly seek to improve our safety and health risk management procedures,
with focus on the early identification of risks and the prevention of
fatalities.
2. We are raising awareness of the risks generated by our operational
activities. This includes quarterly meetings on the main safety risks at each
mining unit, projects and exploration sites, overseen by the Executive
Committee.
3. Continuing the implementation of the "I Care, We Care" programme in all our
operations, including strengthening the programme's five lines of action.
4. We are reinforcing the four pillars of our "Safety and Occupational Health"
strategy:
a. Safety and health risk management: workers at all levels are able to
identify hazards and controls, so that all jobs are carried out safely.
b. Leadership: all employees and contractors are health and safety leaders,
and we demonstrate our commitment through each individual's responsible
behaviour.
c. Contractor management: our contractors are an integral part of our safety
team and culture, and we work together to improve.
d. Reporting, research and learning from our accidents: we share good
practices and learn from our mistakes.
5. We have implemented technical and safety standards and procedures for slope
geotechnical, tailings management, underground mining and process safety.
6. We are advancing the automation of hazardous processes.
7. The critical controls that reduce risk in the business units are
periodically updated and improved through inspections and performance
evaluations, which are carried out by the safety team, external auditors such
as 'Real Safety' and by government authorities such as the Ministry of Labour
and PROFEPA.
Link to strategy Risk appetite
3-4 Low
Risk owner Risk oversight
· Safety · HCSER Committee
· Human Resources
Behaviour Risk rating (relative position)
Increasing 2025: High (5)
2024: High (10)
6
Access to land (full access to plots of land)
Risk description
Significant failure or delay in accessing surface land above our mining
concessions and other lands of interest is a permanent risk to our strategy
and has a potentially high impact on our objectives.
The biggest risk is failing to gain full control of the lands where we explore
or operate.
Possible barriers to access to land include:
· Increasing landowner expectations.
· Refusal to comply with the terms of previous land acquisitions
and conditions regarding local communities.
· Influence of multiple special interests in land negotiations.
· Conflicts regarding land boundaries, and the subsequent
resolution process.
· Succession problems among landowners resulting in a lack of
clarity about the legal right to own and sell land.
· Risk of litigation, such as increased activism by agrarian
communities and/or judicial authorities.
· Presence of indigenous communities in proximity to lands of
interest, where prior and informed consultation and consent of such
communities are required.
Factors contributing to risk
The new mining law complicates efforts to regularise access to land and the
procedures for obtaining new permits.
It is becoming increasingly difficult to negotiate land prices, with
landowners demanding more money and benefits for access to land.
Social insecurity prevailing in the regions where our mining interests are
located may not allow the necessary work to be carried out to demonstrate the
minimum investments required by law, leading to the possible cancellation of
the concession.
The Federal Government is continuing its policy of not granting new mining
concessions.
Controls, mitigating actions and outlook
1. We undertake meticulous analysis of exploration objectives and construction
project designs to minimise land requirements.
2. Initiatives undertaken to secure access to land in areas of strategic
interest or value include:
· Judicious use of lease or occupation contracts with purchase
options, in compliance with legal and regulatory requirements.
· Early participation of our community relations teams during the
negotiation and acquisition of socially challenging objectives.
· Strategic use of our social investment projects to build trust.
· Close collaboration with our land negotiation teams, which
include specialists hired directly by Fresnillo and provided by Peñoles as
part of the service agreement.
3. We perform ongoing reviews of the legal status of our land rights,
identifying certain areas of opportunity and continuing to implement measures
to manage this risk on a case-by-case basis. Such measures include, wherever
possible, negotiations with agricultural communities for the direct purchase
of land.
4. We use mechanisms provided for in agricultural law as well as other legal
mechanisms under mining legislation that provide greater protection for land
occupation.
5. We negotiate carefully with the government on concessions with geological
mining interest that have already been granted.
Link to strategy Risk appetite
1 - 2 - 3 Low
Risk owner Risk oversight
· Legal Department · Audit Committee
· Community Relations
Behaviour Risk rating (relative position)
With attention 2025: High (6)
2024: High (6)
7
Projects (performance risk-greenfield projects)
Risk description
The pursuit of advanced exploration and project development opportunities is
essential to achieving our strategic goals. However, this carries certain
risks:
· Current or new government regulations that obstruct, limit or
restrict the granting of mining concessions; delay or failure to obtain
permits, licences, authorisations, etc.
· Economic viability: the impact of the cost of capital to develop
and maintain the mine; future metals prices; and operating costs throughout
the mine's life cycle.
· Access to land: a significant failure or delay in land
acquisition has a very high impact on our projects.
· Delivery risk: projects can exceed budget in terms of cost and
time; they cannot be built according to the required specifications or there
may be a delay during construction; and major mining teams cannot be delivered
on time.
· Other uncertainties such as: fluctuations in the degree of ore
and recovery; unforeseen complexities in the mining process; poor quality of
the ore; unexpected presence of groundwater or lack of water; lack of energy,
lack of community support; and inability or difficulty in obtaining and
maintaining the required building and operating permits.
The following risks relate specifically to prospective projects in Chile and
Peru:
· Government instability, especially in Peru.
· Potential actions by the government (political, legal, regulatory
and tax).
· Security.
· Licence to operate (community relations)
· Access to water (national regulation and geographic
complications).
· Environmental compliance.
· Competition for land (threat from green power generation
companies, for example thermosolar).
· Informal mining.
· Industrial safety compliance (National Geological and Mining
Service SERNAGEOMIN).
· Increased mining taxes and fees.
Factors contributing to risk
In 2025, progress on projects was hampered by the government's failure to
issue permits and licences, the presence of organised crime near the projects,
a lack of electricity and diesel fuel, a shortage of water, and the lack of
full land rights.
Prohibition of new open-pit mining concessions.
Uncontrolled increases in the costs of critical inputs directly affecting the
planning and progress of projects.
In some regions there are no specialised contractors or contractors with the
technology to develop the projects.
Contractor productivity may be lower than anticipated, causing delays in the
programme.
Increase in the number of high impact crimes (homicide, kidnapping, extortion)
in the regions of the projects.
We have identified the following threats to project development:
· Insufficient resources for project execution.
· Changes in operational priorities that can affect projects.
· Inadequate management structure for project supervision.
· Delays in obtaining necessary permits for construction and
operation.
· Lengthy procedures for land acquisition, electricity supply and
water.
Controls, mitigating actions and outlook
1. Our investment assessment process determines how best to manage available
capital using the following criteria:
• Technical: we evaluate and confirm the resource estimate; conduct
metallurgical research of mineral bodies to optimise the recovery of economic
elements; calculate and determine the investment required for the overall
infrastructure (including roads, energy, water, general services, housing) and
the infrastructure required for the mine and plant.
• Financial: we analyse the risk in relation to the return on the proposed
capital investments; set the expected Internal Rates of Return (IRR) per
project as thresholds for approving the allocation of capital based on the
current value of expected cash flows of invested capital; and perform
stochastic and probabilistic analyses.
• Qualitative: we consider the alignment of investment with our Strategic
Plan and business model; identify synergies with other investments and
operating assets; and consider the implications for safety and the
environment, the safety of facilities, people, resources and community
relations.
2. The management of our projects is based on the Project Management Body of
Knowledge (PMBOK) standard of the Institute of Project Management (PMI). It
allows us to closely monitor project controls to ensure the delivery of
approved projects on time, within budget and in accordance with defined
specifications. The executive management team and the Board of Directors are
regularly updated on progress.
3. Each advanced exploration project and major capital development project has
a risk record containing the project-specific identified and assessed risks.
Link to strategy Risk appetite
2 Medium
Risk owner Risk oversight
· Projects · Audit Committee
· Legal · The Investment Committee
· Community Relations
· Access to Land Department
Behaviour Risk rating (relative position)
Increasing 2025: High (7)
2024: High (9)
8
Global macroeconomic developments (energy and supply chain disruptions,
inflation and cost)
Risk description
Geopolitics has the potential to increase trade tensions, affecting
rules-based trading systems. Trade measures can impact our markets, operations
or key projects, limiting the advantages of being a multinational company with
a global presence and leading to increased costs.
Disruptions or restrictions in the supply of critical operating inputs such as
steel, cyanide, copper, diesel, transport equipment, oxygen and truck tyres,
electricity, diesel and gas, steel, sulphuric acid or mining equipment spare
parts (supplied mainly by land transport from the US and by sea from China and
Europe) could negatively affect production or increase costs.
Factors contributing to risk
The 2026 review of the USMCA (United States-Mexico-Canada Agreement) which
could lead to increased costs or shortages of critical supplies for
operations, as well as impacts on labour arrangements.
Indirect impacts of the war in Ukraine and conflict in Latin America due to US
policies against drug cartels, especially in Venezuela and Mexico.
Lack of electricity infrastructure of the state-owned company (Comisión
Federal de Electricidad CFE), which supplies energy in Mexico.
Possible inflation growth in Mexico.
Controls, mitigating actions and outlook
1. We execute operational excellence initiatives to counter inflation and
improve margins, and also enhance cost competitiveness by improving the
quality of the portfolio.
2. We maintain a rigorous, risk-based supplier management framework to ensure
that we engage solely with reputable product and service providers, supported
by the necessary controls to ensure the traceability of all supplies
(including avoiding any conduct related to modern slavery).
3. To achieve cost competitiveness, we endeavour to buy the greatest possible
proportion of our key inputs, such as fuel and tyres, on as variable a price
basis as possible and to link costs to underlying commodity indices where
this option exists.
4. We are committed to incorporating sustainable technological and innovative
solutions, such as using sea water and renewable power when economically
viable, to mitigate exposure to potentially scarce resources.
Link to strategy Risk appetite
1 - 2 - 3 Medium
Risk owner Risk oversight
· Procurement and contracts · Audit Committee
· Operational Comptrollers
· Financial Planning
Behaviour Risk rating (relative position)
With attention 2025: High (8)
2024: High (5)
9
Union relations (labour relations)
Risk description
Our highly skilled unionised workforce and experienced management team are
critical to sustaining our current operations, executing development projects
and achieving long-term growth without major disruption. We are committed to
safety, non-discrimination, diversity and inclusion, and compliance with
Mexico's strict labour regulations.
The Labour Reform allows the existence of several unions within a company and
gives freedom of choice to the employee. This has led to a complex, rarefied
work environment at the Fresnillo mine, with violent clashes between the union
and a group of workers seeking to register a new independent union. The risk
is that the fighting will continue and worsen, eventually reducing the mine's
workforce. There is also a risk that this conflict could spread to other
mines.
There is a risk of strikes or illegal work stoppages at some of our mining
units by workers who do not agree with profit sharing or some of its benefits,
mainly at the Herradura mine.
Factors contributing to risk
In 2026, elections will be held for important union positions in several
business units, and the collective labour agreement will be reviewed. This
could create tension in the workplace.
We run the risk of an outside union seeking to destabilise the current union.
We could also be adversely affected by national union politics.
Controls, mitigating actions and outlook
1. We remain attentive to any developments in labour or trade union issues.
Our executive leadership and the Executive Committee recognise the importance
of trade union relations and follow any developments with interest. Our
strategy is to integrate unionised personnel into each team in the business
unit. We achieve this by clearly assigning responsibilities and through
programmes aimed at maintaining close relations with trade unions in mines and
at the national level.
2. Long-term labour agreements (usually three years) are in place with all the
unions at our operations, helping to ensure labour stability.
3. We seek to identify and address labour issues that may arise throughout the
period covered by the labour agreements and to anticipate any potential issues
in good time. When appropriate, we hire experienced legal advisors to support
us on labour issues.
4. We have increased communication with trade union leaders in mining units to
monitor the working environment and conducted a review of the contractual
benefits for union members in our mines.
5. We maintain constructive relationships with our employees and their unions
through regular communication and consultation. We are proactive in our
interactions with trade unions, and their representatives and leaders at
various levels of the organisation are regularly involved in discussions
about:
- the future of the workforce.
- the economic situation facing the industry.
- our production results.
6. We encourage union participation in our security initiatives and other
operational improvements. These initiatives include the Security Guardians
programmes, certification partnerships, integration of high productivity
equipment, and family activities.
Link to strategy Risk appetite
2 - 3 Low
Risk owner Risk oversight
· Human Resources · Audit Committee
· Legal · People & Remuneration Committe
Behaviour Risk rating (relative position)
Stable 2025: High (9)
2024: High (7)
10
Human resources (attract and retain requisite skilled people / talent crisis)
Risk description
Our ability to achieve our operating strategy depends on attracting,
developing and retaining a wide range of skilled and experienced people, not
only our own employees but also those of our contractors.
Managing talent and maintaining a high-quality workforce in a rapidly changing
technological and cultural environment is a key priority for us. Any failure
in this regard could negatively impact current operating performance and
future growth prospects.
We face multiple risks in the processes of recruiting, hiring, training and
retaining talented, skilled and experienced people:
- Sourcing skilled labour in the mining sector has become a major
risk, and our industry requires an increasing number of people who are trained
and experienced in mining processes.
- Digital and technological innovation has the potential to generate
substantial improvements in the Company's productivity, safety and
environmental management. There is a risk that our workforce will be unable to
transform to the extent necessary or will be resistant to change and unwilling
to accept the impact of automation or to acquire new technological skills.
- The lack of reliable contractors with sufficient infrastructure,
machinery, performance history and trained personnel is also a risk that could
affect our ability to develop and build mine sites.
In addition, contractual terms prohibit us from hiring specialised personnel
from business partners or contractors.
Factors contributing to risk
In Mexico, federal labour law is in the process of gradually reducing the
working week from 48 to 40 hours. This change is being implemented gradually
between 2026 and 2030, without any reduction in salaries, resulting in the
need to create an additional shift.
The shortage of skilled and experienced technical labour in the mining
industry is leading to increased competition in the regions where we operate.
In certain regions, there are not enough candidates with the necessary skills
to operate mining equipment.
Several of our business units are located in remote regions with limited and
complex access, making it difficult to find skilled labour in those regions.
Evolving societal expectations are putting pressure on our corporate and
employer brand: who we are and what we stand for.
Controls, mitigating actions and outlook
1. We enhance the talent of our employees through training and career
development, invest in initiatives to broaden the talent pool and are
committed to our diversity and inclusion policy. Through these actions we aim
to increase employee retention, as well as the number of women, people with
disabilities and employees with international experience in the workplace.
2. Our employee performance management system is designed to attract and
retain key employees by creating appropriate reward and remuneration
structures and providing personal development opportunities. We have a talent
management system in place to identify and develop internal candidates for key
management positions, as well as to identify suitable external candidates
where appropriate.
3. We aim for continuous improvement, driven by opportunities for training,
development and personal growth; in short, we focus on fair recruitment, fair
pay and benefits, and gender equality.
4. Our goal is to be an employer of choice, and we recognise that in order to
be a profitable and sustainable business, we need to create value for our
employees and their families. We do this by providing a healthy, safe,
productive and team-oriented work environment that not only encourages our
people to reach their potential but also supports process improvement.
5. A renewed approach to talent management has been implemented in the human
resources areas of the business units. This ensures that all our employees
have a meaningful conversation about their performance, motivations and
experience, as well as a quality development plan that enables them to acquire
the skills and experience they need for the future.
6. Employees who live far away from the business units are permanently
supported with transportation, medical care for them and their families,
health and nutrition programmes with access to high quality food, and support
with clothing and accessories to protect them from changes in the weather.
7. A global graduate programme and strategic partnerships are in place to
establish mutually beneficial relationships with universities and schools
specialising in mining and geology.
8. We have established local internship training programmes as well as other
future skills development partnerships.
9. We have continued our performance appraisal process, reinforcing formal
feedback. We promote certification of key technical competencies for
operational staff and have implemented a leadership and management competency
development programme for required positions. We develop our high-potential
middle managers through the Leaders with Vision programme.
10. Ongoing training workshops are held for staff by business partners and
contractors, focusing on new technologies and best practices in the mining
industry. Our partners include Caterpillar, Matco, Epiroc, Robbins and
Sandvik, among others.
Link to strategy Risk appetite
1 - 2 - 3 - 4 Medium
Risk owner Risk oversight
· Human Resources · Audit Committee
· People & Remuneration Committe
Behaviour Risk rating (relative position)
Stable 2025: High (10)
2024: High (8)
11
Licence to operate (community relations)
Risk description
Locally and globally, the mining industry's stakeholders have high
expectations relating to social and environmental performance. These
expectations go beyond the responsible management of negative impacts to
include continuous engagement and contribution to stakeholder development.
Failure to adequately address these expectations increases the risk of
opposition to mining projects and operations. Negative sentiment towards
mining or specifically towards Fresnillo plc could have an impact on our
reputation and acceptability in the regions where we have a presence.
We monitor the following risks:
· Negative perception of the Company's social and environmental
performance.
· Failure to identify and address legitimate concerns and
expectations of the community and of society at large.
· Insufficient or ineffective engagement and communication.
· Failure to contribute purposefully to community development.
Factors contributing to risk
Higher expectations and scrutiny of social and environmental performance.
Increasing expectations of shared benefits associated with land agreements.
Perceived competition for access to natural resources, notably water.
Significant reduction in government spending on community infrastructure,
development programmes and services.
Anti-mining activism fuelling opposition to our industry.
Community concerns about insecurity, access to water and the environmental
impact of a. our operations.
Controls, mitigating actions and outlook
1. We hold regular meetings with key community stakeholders to share
information about the company, and its social and environmental practices.
2. An internet communication channel was implemented in 2025 which makes it
possible to capture concerns from the community, with cases remaining
anonymous if requested. This initiative has extended our ability to interact
virtually with communities as effectively as we do when issues are raised
in-person. The module is proving especially valuable in instances where people
are using digital technology to explore our company and key issues.
3. We closely monitor threats and opportunities in the communities associated
with our operations by maintaining constant and direct contact with the
leaders of each business unit, by carrying out social studies and media
monitoring, and through our complaints and claims process.
4. Governance over the complaints process is improving every year. Complaints
are received, assessed and managed, involving line managers, while
dissatisfied stakeholders are kept informed of the status of each case, until
satisfactory closure agreements are reached.
5. We deploy social programmes in the communities near the business units,
including support for schools, clinics and health, the supply of medicines,
nutrition and food, as well as maintenance of roads and bridges and water
supply.
LINK TO STRATEGY RISK APPETITE
1 - 2 - 3 - 4 Medium
Risk owner Risk oversight
· Community Relations · HCSER Committee
· Human Resources
BEHAVIOUR RISK RATING (RELATIVE POSITION)
Stable 2025: Medium (11)
2024: Medium (11)
12
Exploration (new ore resources)
Risk description
We are highly dependent on the success of the exploration programme to meet
our strategic value-creation targets and our goals for long-term production
and reserves.
Maintaining a reasonable investment in exploration, even when metals prices
are low, has been our policy through the years. While continuous investment
has always been a hallmark of our exploration strategy, replenishing exploited
reserves and increasing our total amount of resources could be a challenge in
the future.
The growing level of insecurity, a more challenging land access scenario, and
delays in obtaining government permits detailed previously, translates into a
longer timeframe to deliver new discoveries and improve the category of
resources. In addition, difficulties in obtaining new mineral concessions
could hamper exploration in new target areas.
Factors contributing to risk
In Mexico, the mining legislation enacted in 2024 establishes that exploration
activities in new concessions will be carried out only by the Mexican
Geological Services assigned to the Ministry of Economy.
New concessions would be granted through a bidding process following
exploration orders submitted to the Service. However, pre-existing concessions
may continue to be explored by their holders and may be commercialised upon
authorisation by the federal Ministry of Economy. Fresnillo plc's concessions
will allow the company to continue its brownfield and greenfield exploration
programmes, at least in the medium term. Access to new concessions will be
difficult.
This year, the exploration programme has been complicated and delayed mainly
for the following reasons:
· Restrictions on new mining concessions.
· Delays in procedures regarding access to land.
· Presence of organised crime (insecurity) in the regions where we
have projects and exploration camps.
· Delays and failures to obtain permits and licences from
government authorities.
· Increased exploration costs.
· In Chile, risk factors include: lack of water in the Atacama
Desert in the north and possibility of conflict with forestry or agricultural
interests in the south; overall higher costs compared to those in Mexico;
seasonal restrictions to exploration in the High Andes; scarcity of open
grounds for staking; poor infrastructure in remote zones; the presence of
anti-mining communities or NGOs; and strong competition for mining claims and
staff.
· In Peru, the main risk factors include: the long lead time
required to obtain social permits (emphasising the need for strong community
relations teams and programmes); delays in obtaining government permits; poor
infrastructure in mountainous regions; the presence of anti-mining communities
or NGOs; and the possibility of invasion by illegal miners.
Controls, mitigating actions and outlook
1. Increasing regional exploration drilling programmes to intensify
efforts in the districts with high potential.
2. Carrying out aggressive local exploration drilling programmes to
upgrade the resources category and convert inferred resources into reserves.
3. A team of highly trained and motivated geologists, including both
employees and long-term contractors.
4. Advisory technical reviews by international third-party experts and
routine use of up-to-date and integrated GIS databases, cutting edge
geophysical and geochemical techniques, large to small scale hyperspectral
methods, remote sensing imagery, and analytical software that identifies
favourable regions for field-checking by the team.
5. The maintenance of a pipeline of drill-ready high priority projects.
Link to strategy Risk appetite
1 High
Risk owner Risk oversight
· Exploration · The Board
· Projects · The Investment Committe
· Legal
BEHAVIOUR RISK RATING (RELATIVE POSITION)
Stable 2025: Medium (12)
2024: Medium (12)
13
Climate change
Risk description
The mining industry is highly exposed and sensitive to climate change:
- Societal responses to the transition to a low-carbon economy include
stricter regulations to reduce emissions, a transformation of the global
energy system, changes in behavioural and consumption choices, and emerging
technologies.
- Our operations and projects are expected to face severe physical
risks from extreme weather events, such as high temperatures, drought and
extreme rainfall from more frequent and intense hurricanes in the Pacific
Ocean. These potential natural disasters can affect the health and safety of
our people, damage access roads and mine infrastructure, disrupt operations
and impact our neighbouring communities.
The most significant risk we currently face relates to compliance with all
provisions and requirements of international agreements to reduce pollution
and greenhouse gas emissions, and regulatory disclosure standards in both
Mexico and the UK.
In addition, the mining industry is also expected to face chronic risks in the
coming years, such as rising temperatures, which may increase our demand for
water, or a decrease in annual rainfall, which is certain to exacerbate water
stress in the regions where we operate. These outcomes may also intensify
competition for access to water resources, increasing the risks to our social
licence to operate.
Factors contributing to risk
Burning fossil fuels adds greenhouse gases to the atmosphere, increasing the
greenhouse effect and global warming.
Deforestation by industrial logging in areas where we have operations and
projects adds greenhouse gases to the atmosphere.
Increased temperatures in desert areas where we operate can worsen air quality
and have effects on respiratory and cardiovascular health.
Changes in weather patterns can worsen air quality and cause respiratory and
cardiovascular issues.
Forest fires near units where we have operations or projects generate smoke
and other air pollutants harmful to health.
Oil and gas extraction is a major source of CO2 pollution.
Increasing farming of livestock such as cows and sheep produces large amounts
of methane when the animals digest their food.
Controls, mitigating actions and outlook
1. Understanding the exposure of each asset through assessment programmes,
such as our critical risk assessment and asset integrity assurance programme,
and climate change resilience assessments with support from external
consultants such as PWC, Marsh and Zurich.
2. Maintaining business resilience plans and emergency response plans,
training and annual exercises helps us to prepare for a natural disaster, for
example by deploying established communication plans and coordination with
local, regional and state agencies.
3. Using the latest generation of climate analyses (weather forecasts, climate
outlooks, modelling and disaster projections) to obtain quantitative
information on short-, medium- and long-term physical climate risks.
4. Applying protection principles rather than a compliance-based approach
across our operations, fostering proactive relationships with international
civil society organisations, governments and environmental departments to
support protective legislation.
5. Actively supporting and reporting on our practices in relation to the
commitments in the International Council on Mining and Metals statement on
water management.
Link to strategy Risk appetite
1 - 2 - 3 - 4 Medium
Risk owner Risk oversight
· ESG Department · HCSER Committee
· Legal Department
Behaviour Risk rating (relative position)
Stable 2025: Medium (13)
2024: Medium (13)
14
Tailings dams (overflow or collapse of tailings deposits)
Risk description
Ensuring the stability of our tailings storage facilities (TSFs) during their
entire lifecycles is central to our operations. A failure, collapse or
overtopping of any of our TSFs could result in fatalities, damage to the
environment, regulatory violations, reputational damage and disruption to the
quality of life of neighbouring communities as well as our operations.
Before constructing a dam, we conduct a series of studies to confirm the
suitability of the area. These studies include geotechnical, geological,
geophysical, hydrological, hydrogeological, and seismic analyses. Before
construction begins, the Ministry of Environment and Natural Resources
(SEMARNAT), through the Federal Office for Environmental Protection (PROFEPA),
conducts several assessments.
Most of our currently operational facilities were designed and constructed
under local and national controls and standards. Following investigation,
re-design, and construction processes during the last four years, they also
comply with our new tailings management policy and guidelines.
Obtaining permits, licences and certifications from the government to be able
to operate TSFs is a risk due to the time involved in carrying out these
procedures, together with any legal complications. Planning new TSFs with the
necessary time and to international standards is also a risk, due to the
limitations of the land around our mines and the costs and time involved in
construction. If we fail to manage these in a timely manner, we run the risk
of disrupting the operation.
Factors contributing to risk
The climate in recent years has become harsher in the regions where we
operate, for example with more severe and prolonged rainfall, more intense air
that degrades the geomembrane liners, snowfall, and frost that complicates
the operation, among other issues.
Controls, mitigating actions and outlook
1. The Global Industry Standard on Tailings Management (GISTM) was
published in 2020 and is best practice. We understand the value and importance
it brings to our industry, and we continually review and assess the impact of
compliance. Taking GISTM into account, we have updated our risk assessment
methods with a focus on more detailed risk identification, failure modes, and
controls to avoid catastrophic failures.
2. We launched a new tailings policy in 2023, based on industry best
practices, reinforcing our commitment to the safety and health of our
workforce, communities, and the environment. Every year, internal audit and
external auditors specialised in tailings dams, such as Hawcroft Consulting
and Knight Piésold Consulting, check our compliance with the policy.
3. Catastrophic failures of TSFs are unacceptable and their potential for
failure is evaluated and addressed throughout the life of each facility. We
manage our TSFs in a manner that allows the effectiveness of their design,
operation and closure to be monitored at the highest levels of the Company:
- Our TSFs are constantly monitored, and all relevant information is
provided to the authorities, regulating bodies, and the communities that could
be affected.
- We manage our TSFs using data, modelling, and construction and
operating methods validated and recorded by qualified technical teams and
reviewed by independent international experts, whose recommendations we
implement to strengthen the control environment.
- Risk management includes timely risk identification, control
definition, and verification. Controls are based on the consequences of the
potential failure of the TSFs.
4. In 2025 we continuedinitiatives to align our governance practices with
current best practices:
- Updating the inventory of TSFs and validating the data log.
- Reviewing findings of the Independent Tailings Review Panel (ITRP) and
prioritising recommendations arising from inspections.
External sources of confidence
- Compliance with the Independent Tailings Review Panel (ITRP) annual
review programme. This panel is comprised of renowned international experts.
- Periodically, we are inspected by the ITRP, which issues corrective
and preventive recommendations to ensure that the tailings dams remain in good
condition. In 2025, the ITRP visited all Fresnillo plc tailings dams.
Link to strategy Risk appetite
4 Low
Risk owner Risk oversight
· TSFs Department · HSECR Committee
· Safety & Environmental Department · Executive Committe
Behaviour Risk rating (relative position)
Stable 2025: Medium (14)
2024: Medium (14)
15
Environmental incidents (cyanide spills and chemical contamination)
RISK DESCRIPTION
Environmental incidents are an inherent risk in our industry. These incidents
include possible cyanide spills and dust emissions, which could have a high
impact on our people, communities and businesses. We seek to achieve
operational excellence to ensure that our employees and contractors go home
safe and healthy, and that there are no adverse impacts on the communities and
the environment where we operate.
An operating incident that damages the environment could affect both our
relationship with local stakeholders and our reputation, reducing the social
value we generate.
We continue to be alert to the following risks:
· Cyanide management.
· Impact on the environment through erosion/deforestation/forest
loss or disturbance of biodiversity because of the operations of the business
unit or project activities.
· An event involving a leak or spill of cyanide or SO2, which due
to its chemical properties could generate an event of major consequence on the
premises of the business unit and / or in the nearby area.
Environmental issues directly related to climate change and tailings storage
are considered in our specific principal risks 'Climate Change' and 'Tailings
dams'.
FACTORS CONTRIBUTING TO RISK
Climate change in the regions where we operate is beginning to increase the
risk of incidents impacting the environment, mainly due to more extreme
rainfall.
We operate in challenging environments, including forests and agricultural
areas in Chihuahua and Durango, and also the Sonora Desert, where water
scarcity is a key problem.
Disruptions and lack of supply of critical inputs for the operation.
Failure to address the recommendations of external audits, especially those
related to the environment.
CONTROLS, MITIGATING ACTIONS AND OUTLOOK
1. We work to raise awareness among employees and contractors, providing
training to promote operational excellence.
2. The potential environmental impact of a project is a key consideration when
assessing its viability, and we encourage the integration of innovative
technology in the project design to mitigate such impacts.
3. We have an environmental management system in place. We have strengthened
the regulatory risk pillar of this system, incorporating monthly updates of
environmental regulations. Furthermore, we now regularly monitor the
Environmental Authority inspection processes to assure compliance with our
environmental commitments and action plans.
4. Each site maintains updated environmental emergency preparedness and
detailed closure plans with appropriate financial provisions to ensure
physical and chemical stability once operations have ceased.
5. We comply with international best practices as promoted by the
International Cyanide Management Institute (ICMI) and the Mexican standard
NOM-155SEMARNAT-2007, which establishes environmental requirements for gold
and silver leaching systems.
External sources of confidence
Fresnillo, Saucito, Herradura and Noche Buena are ISO 14001 and ISO 45001
certified.
In addition, Fresnillo and Saucito achieved the badge of environmental
excellence issued by the Environmental Protection Attorney's Office (PROFEPA).
Our Herradura and Noche Buena leaching operations comply with the Cyanide Code
issued by the International Cyanide Code Institute with the respective
certification.
Link to strategy Risk appetite
4 Low
Risk owner Risk oversight
· Safety & Environmental Department · HSECR Committee
Behaviour Risk rating (relative position)
Stable 2025: Medium (15)
2024: Medium (15)
Statement of Directors' responsibilities
The Directors are responsible for preparing the annual report and the Group
and Parent Company financial statements in accordance with applicable United
Kingdom law and regulations.
The Directors are required to prepare financial statements for each financial
year which present a true and fair view of the financial position of the
Company and of the Group and the financial performance and cash flows of the
Company and of the Group for that period. The Directors have elected to
prepare the Group and Parent Company financial statements in accordance with
UK-adopted International Accounting Standards.
In preparing those financial statements, the Directors are required to:
• select suitable accounting policies in accordance with IAS 8:
'Accounting Policies, Changes in Accounting Estimates and Errors' and then
apply them consistently;
• make judgements and accounting estimates that are reasonable and
prudent;
• present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
• provide additional disclosures when compliance with the specific
requirements in IFRSs is insufficient to enable users to understand the impact
of particular transactions, other events and conditions on the Company and of
the Group's financial position and financial performance;
• state whether UK-adopted international accounting standards have been
followed, subject to any material departures disclosed and explained in the
financial statements; and
• prepare the accounts on a going concern basis unless, having assessed
the ability of the Company and the Group to continue as a going concern it is
appropriate to presume that the Company and/or the Group will not continue in
business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's and Group's transactions and
which disclose with reasonable accuracy at any time the financial position of
the Company and of the Group and enable them to ensure that the financial
statements comply with the Companies Act 2006. They are also responsible for
safeguarding the assets of the Company and the Group and hence for taking
reasonable steps for the prevention and detection of fraud and other
irregularities.
Under applicable UK law and regulations, the Directors are responsible for the
preparation of a Strategic report, Directors' report, Directors' Remuneration
report and Corporate Governance statement that comply with that law and
regulations. In addition, the Directors are responsible for the maintenance
and integrity of the corporate and financial information included on the
Company's website. Legislation in the UK governing the preparation and
dissemination of financial statements may differ from legislation in
other jurisdictions.
Neither the Company nor the Directors accept any liability to any person in
relation to the annual financial report except to the extent that such
liability could arise under English law. Accordingly, any liability to a
person who has demonstrated reliance on any untrue or misleading statement or
omission shall be determined in accordance with section 90A and schedule 10A
of the Financial Services and Markets Act 2000.
Directors' responsibility statement under the UK Corporate Governance Code
In accordance with Provision 25 of the UK Corporate Governance Code, the
Directors consider that the annual report and accounts, taken as a whole, is
fair, balanced and understandable and provides information necessary to enable
shareholders to assess the Company's position, performance, business model and
strategy.
Responsibility statement of the Directors in respect of the annual report and
accounts
Each of the Directors confirm that to the best of their knowledge:
a) the consolidated financial statements, prepared in accordance with
UK-adopted international accounting standards give a true and fair view of the
assets, liabilities, financial position and profit and loss of the Company and
the undertakings included in the consolidation taken as a whole; and
b) the annual report (including the Strategic report encompassed within the
'Overview', 'Strategic report', 'Performance' and 'Governance' sections)
includes a fair review of the development and performance of the business, and
the position of the Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks and
uncertainties that they face.
For and on behalf of the Board.
Alberto Tiburcio
Independent Non-executive Director
2 March 2026
Z Year ended 31 December 2025 Year ended 31 December 2024
Notes US$ thousands US$ thousands
Pre-Silverstream Silverstream Total Pre-Silverstream Silverstream Total
revaluation
revaluation
revaluation
revaluation
effect
effect
effect
effect
Revenues 5 4,561,231 4,561,231 3,496,385 3,496,385
Cost of sales 6 (1,897,120) (1,897,120) (2,250,112) (2,250,112)
Gross profit 2,664,111 2,664,111 1,246,273 1,246,273
Administrative expenses (118,237) (118,237) (109,514) (109,514)
Exploration expenses 7 (173,531) (173,531) (163,048) (163,048)
Selling expenses (66,770) (66,770) (46,154) (46,154)
Other operating income 9 20,229 20,229 39,559 39,559
Other operating expenses 9 (33,338) (33,338) (21,296) (21,296)
Profit before net finance costs and income tax 2,292,464 2,292,464 945,820 945,820
Finance income 10 92,549 92,549 46,936 46,936
Finance costs 10 (68,541) (68,541) (73,571) (73,571)
Revaluation effects of Silverstream contract 14 - (189,212) (189,212) - (182,276) (182,276)
Foreign exchange (loss)/gain (45,278) (45,278) 6,993 6,993
Profit before income tax 2,271,194 (189,212) 2,081,982 926,178 (182,276) 743,902
Corporate income tax 11 (371,739) 56,764 (314,975) (444,870) 54,683 (390,187)
Special mining right 11 (193,178) (193,178) (127,024) (127,024)
Income tax 11 (564,917) 56,764 (508,153) (571,894) 54,683 (517,211)
Profit for the year 1,706,277 (132,448) 1,573,829 354,284 (127,593) 226,691
Attributable to:
Equity shareholders of the Company 1,516,436 (132,448) 1,383,988 268,513 (127,593) 140,920
Non-controlling interest 189,841 189,841 85,771 85,771
1,706,277 (132,448) 1,573,829 354,284 (127,593) 226,691
Earnings per share: (US$)
Basic and diluted earnings per Ordinary Share 12 1.878 0.191
Adjusted earnings per share: (US$)
Adjusted basic and diluted earnings per Ordinary Share 12 2.058 0.364
( )
Year ended 31 December
Notes 2025 2024
US$ thousands
US$ thousands
Profit for the year 1,573,829 226,691
Other comprehensive income/(expense)
Items that may be reclassified subsequently to profit or loss:
Foreign currency translation 2 (3,366)
Net other comprehensive loss that may be reclassified subsequently to profit 2 (3,366)
or loss:
Items that will not be reclassified to profit or loss:
Changes in the fair value of cash flow hedges, net of tax (1,394) (201)
Total effect of cash flow hedges (1,394) (201)
Changes in the fair value of equity investments at fair value through other 70,855 35,309
comprehensive income (FVOCI)
Remeasurement loss on defined benefit plans 22 (2,439) (199)
Income tax effect on items that will not be reclassified to profit or loss 11 (20,733) (10,502)
Net other comprehensive income that will not be reclassified to profit or loss 46,289 24,407
Other comprehensive income, net of tax 46,291 21,041
Total comprehensive income for the year, net of tax 1,620,120 247,732
Attributable to:
Equity shareholders of the Company 1,430,419 162,022
Non-controlling interests 189,701 85,710
1,620,120 247,732
.
As at 31 December
Notes 2025 2024
US$ thousands
US$ thousands
ASSETS
Non-current assets
Property, plant and equipment (PPE) 13 2,466,034 2,538,665
Equity instruments at FVOCI 30 (b) 34,537 139,968
Silverstream contract 14 - 214,437
Deferred tax asset 11 610,367 466,734
Inventories 15 69,760 69,760
Other receivables 16 41,510 5,264
Other assets 3,608 3,101
3,225,816 3,437,929
Current assets
Inventories 15 432,838 412,417
Trade and other receivables 16 830,585 674,211
Prepayments 33,450 13,881
Silverstream contract 14 - 44,204
Derivative financial instruments 103 -
Short-term investments 17 92,733 187,403
Cash and cash equivalents 17 2,663,743 1,110,413
4,053,452 2,442,529
Total assets 7,279,268 5,880,458
EQUITY AND LIABILITIES
Capital and reserves attributable to shareholders of the Company
Share capital 18 368,546 368,546
Share premium 18 1,153,817 1,153,817
Capital reserve 18 (526,910) (526,910)
Hedging reserve 18 (470) (92)
Fair value reserve of financial assets at FVOCI 18 26,168 66,594
Foreign currency translation reserve 18 (7,568) (7,570)
Retained earnings 18 3,619,311 2,800,956
4,632,894 3,855,341
Non-controlling interests 441,793 355,029
Total equity 5,074,687 4,210,370
As at 31 December
Notes 2025 2024
US$ thousands
US$ thousands
Non-current liabilities
Interest-bearing loans 20 839,926 839,507
Lease liabilities 25 6,183 7,581
Provision for mine closure cost 21 262,521 233,748
Pensions and other post-employment benefit plans 22 17,732 11,454
Deferred tax liability 11 145,507 209,213
1,271,869 1,301,503
Current liabilities
Trade and other payables 23 375,175 223,779
Notes payable 30 (a) - 2,055
Income tax payable 523,046 113,221
Derivative financial instruments 30 741 189
Lease liabilities 25 4,864 4,312
Provision for mine closure cost 21 9,961 11,781
Employee profit sharing 18,925 13,248
932,712 368,585
Total liabilities 2,204,581 1,670,088
Total equity and liabilities 7,279,268 5,880,458
These financial statements were approved by the Board of Directors on 2 March
2026 and signed on its behalf by:
Dr Arturo Fernández
Non-executive Director
2 March 2026
Year ended 31 December
Notes 2025 2024
US$ thousands
US$ thousands
Net cash from operating activities 29 2,289,707 1,299,802
Cash flows from investing activities
Purchase of property, plant and equipment 3 (400,141) (370,542)
Proceeds from the sale of property, plant and equipment and other assets 462 2,563
Proceeds from the sale of mining concessions 9 16,050 10,000
Proceeds from Silverstream contract 14 85,945 29,957
Purchase of equity instruments at FVOCI(1) 30 (b) - (1,466)
Disposal of equity instruments at FVOCI (1) 30 (b) 176,584 5,098
Dividends received from equity instruments at FVOCI 1,754 -
Decrease/(increase) in short-term investments 17 94,670 (187,403)
Interest received 92,113 46,333
Net cash used in investing activities 67,437 (465,460)
Cash flows from financing activities
Payment of notes payable 30(a) (2,055) (92,361)
Principal element of lease payments 25 (a) (4,689) (5,443)
Dividends paid to shareholders of the Company(2) 19 (654,313) (78,156)
Dividends paid to non-controlling interests in subsidiaries 4 (a) (103,400) (26,400)
Capital contribution from non-controlling interest 278 -
Interest paid(3) (40,625) (45,917)
Net cash used in financing activities (804,804) (248,277)
Net Increase in cash and cash equivalents during the year 1,552,340 586,065
Effect of exchange rate on cash and cash equivalents 990 (10,232)
Cash and cash equivalents at 1 January 1,110,413 534,580
Cash and cash equivalents at 31 December 17 2,663,743 1,110,413
(1) (Following the investment strategy of the Group, during 2025, the Group
decided to dispose the shares held in MAG Silver Corp. The Group disposed
9,314,877 owned shares. The gain on the disposal of US$128.6 million has been
transferred from the Fair value reserve of financial assets at FVOCI to
retained earnings, net of tax amounting to US$38.6 million.)
(2) (Includes the effect of hedging of dividend payments made in currencies
other than US dollar (note 19).)
(3) (As of 31 December 2025 includes US$1.2 million (2024: US$1.2 million)
related to a commitment fee in respect of undrawn amounts of the syndicated
revolving credit facility entered by the Group. No amounts have been drawdown
from the credit facility as of 31 December 2025.)
Attributable to the equity holders of the Company
Notes Share Share premium Capital reserve Hedging reserve Fair value reserve of financial assets at FVOCI Foreign currency translation reserve Retained earnings Total Non-controlling interests Total
capital
equity
US$ thousands
Balance at 1 January 2024 368,546 1,153,817 (526,910) 50 42,591 (4,204) 2,737,962 3,771,852 295,345 4,067,197
Profit for the year - - - - - - 140,920 140,920 85,771 226,691
Other comprehensive income, net of tax - - - (95) 24,716 (3,366) (153) 21,102 (61) 21,041
Total comprehensive income for the year - - - (95) 24,716 (3,366) 140,767 162,022 85,710 247,732
Hedging loss transferred to the carrying value of PPE purchased during the - - - (47) - - - (47) (1) (48)
year
Transfer of gain on disposal of equity investments at FVOCI to retained 30 (b) - - - - (713) - 713 - - -
earnings (net of tax)
Recognition of non-controlling interest 4 (a) - - - - - - (375) (375) 375 -
Dividends declared and paid 19 - - - - - - (78,111) (78,111) (26,400) (104,511)
Balance at 31 December 2024 368,546 1,153,817 (526,910) (92) 66,594 (7,570) 2,800,956 3,855,341 355,029 4,210,370
Profit for the year - - - - - - 1,383,988 1,383,988 189,841 1,573,829
Other comprehensive income, net of tax - - - (1,137) 49,598 2 (2,032) 46,431 (140) 46,291
Total comprehensive income for the year - - - (1,137) 49,598 2 1,381,956 1,430,419 189,701 1,620,120
Hedging loss transferred to the carrying value of PPE purchased during the - - - 759 - - - 759 185 944
year
Transfer of gain on disposal of equity investments at FVOCI to retained 30 (b) - - - - (90,024) - 90,024 - - -
earnings (net of tax)
Capital contribution - - - - - - - - 278 278
Dividends declared and paid 19 - - - - - - (653,625) (653,625) (103,400) (757,025)
Balance at 31 December 2025 368,546 1,153,817 (526,910) (470) 26,168 (7,568) 3,619,311 4,632,894 441,793 5,074,687
1. Corporate information
Fresnillo plc. ("the Company") is a public limited company and registered in
England and Wales with registered number 6344120 and is the holding company
for the Fresnillo subsidiaries detailed in note 5 of the Parent Company
accounts ('the Group').
Industrias Peñoles S.A.B. de C.V. ('Peñoles') currently owns 75 percent of
the shares of the Company and the ultimate controlling party of the Company is
the Baillères family, whose beneficial interest is held through Peñoles. The
registered address of Peñoles is Calzada Legaria 549, Mexico City 11250.
Copies of Peñoles' accounts can be obtained from www.penoles.com.mx. Further
information on related party balances and transactions with Peñoles' group
companies is disclosed in note 27.
The consolidated financial statements of the Group for the year ended 31
December 2025 were authorised for issue by the Board of Directors of Fresnillo
plc on 2 March 2026.
The financial information for the year ended 31 December 2025 and 2024
contained in this document does not constitute statutory accounts as defined
in section 435 of the Companies Act 2006. The financial information for the
years ended 31 December 2025 and 2024 have been extracted from the
consolidated financial statements of Fresnillo plc for the year ended 31
December 2025 which have been approved by the directors on 2 March 2026 and
will be delivered to the Registrar of Companies in due course. The auditor's
report on those financial statements was unqualified and did not contain a
statement under section 498 of the Companies Act 2006.
The Group's principal business is the mining and beneficiation of non-ferrous
minerals, and the sale of related production. The primary contents of this
production are silver, gold, lead and zinc. During 2025 99.8% of the
production were sold to Peñoles' metallurgical complex, Met-Mex (2024: 99.6%
of the production), for smelting and refining. Further information about the
Group operating mines and its principal activities is disclosed in note 3.
2. Significant accounting policies
(a) Basis of preparation and consolidation, and statement of compliance
Basis of preparation and statement of compliance
The Group consolidated financial statements have been prepared in accordance
with UK-adopted international accounting standards in accordance with the
provisions of the Companies Act 2006.
The consolidated financial statements have been prepared on a historical cost
basis, except for trade receivables, derivative financial instruments, equity
securities and defined benefit pension scheme assets which have been measured
at fair value.
The consolidated financial statements are presented in dollars of the United
States of America (US dollars or US$) and all values are rounded
to the nearest thousand ($000) except when otherwise indicated.
Going concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position are set out above in the
Strategic Review. The financial position of the Group, its cash flows and
liquidity position are described in the Financial Review. In addition, note 31
to the financial statements includes the Group's objectives, policies and
processes for managing its capital; its financial risk management objectives;
details of its financial instruments; and its exposures to credit risk and
liquidity risk.
In making their assessment of the Group's ability to manage its future cash
requirements, the Directors have considered the Company and Group budgets, and
the cash flow forecasts for the period to 31 December 2027 (being the going
concern assessment period). In addition, they reviewed a more conservative
cash flow scenario using lower silver and gold prices of US$37.2 /Oz and
US$2,549 /Oz respectively throughout this period, whilst maintaining current
budgeted expenditure while only considering projects approved by the Executive
Committee. This resulted in our current cash balances reducing over time but
maintaining sufficient liquidity throughout the period.
The Directors have further calculated metal prices for a reverse stress test
(US$20.0 /Oz and US$1,570 /Oz for silver and gold respectively), which are
assumed to be maintained until the end of 2027. This would result in cash
balances decreasing to minimal levels by the end of 2027, without applying
mitigations and not using the revolving credit facility.
Should metal prices remain below the stressed prices above for an extended
period, management have identified specific elements of capital and
exploration expenditure which could be deferred without adversely affecting
production profiles throughout the period. On the other hand, management could
amend the mining plans to concentrate on production with a higher margin to
accelerate cash generation without affecting the integrity of the mine plans.
Finally, to maintain a strong liquidity, in January 2024 management acquired a
committed revolving credit facility of US$350M, which could be used if needed.
After reviewing all of the above considerations, the Directors have a
reasonable expectation that management have sufficient flexibility in adverse
circumstances to maintain adequate resources to continue in operational
existence for the foreseeable future. The Directors, therefore, continue to
adopt the going concern basis of accounting in preparing the annual financial
statements.
Basis of consolidation
The consolidated financial statements set out the Group's financial position
as of 31 December 2025 and 2024, and the results of operations and cash flows
for the years then ended.
Entities that constitute the Group are those enterprises controlled by the
Group regardless of the number of shares owned by the Group. The Group
controls an entity when it is exposed to, or has the right to, variable
returns from its involvement with the entity and has the ability to affect
those returns through its power over the entity. Entities are consolidated
from the date on which control is transferred to the Group and cease to be
consolidated from the date on which control is transferred out of the Group.
The Group applies the acquisition method to account for business combinations
in accordance with IFRS 3.
All intra-group balances, transactions, income and expenses and profits and
losses, including unrealised profits arising from intra-group transactions,
have been eliminated on consolidation. Unrealised losses are eliminated in the
same way as unrealised gains except that they are only eliminated to the
extent that there is no evidence of impairment.
Non-controlling interests in the net assets of consolidated subsidiaries are
identified separately from the Group's equity therein. The interest of
non-controlling shareholders may be initially measured either at fair value or
at the non-controlling interest's proportionate share of the acquiree's
identifiable net assets. The choice of measurement basis is made on an
acquisition by-acquisition basis. Subsequent to acquisition, non-controlling
interests consist of the amount attributed to such interests at initial
recognition and the non-controlling interest's share of changes in equity
since the date of the combination. Any losses of a subsidiary are attributed
to the non-controlling interests even if that results in a deficit balance.
Transactions with non-controlling interests that do not result in loss of
control are accounted for as equity transactions - that is, a transaction with
the owners in their capacity as owners. The difference between fair value of
any consideration paid and the relevant share acquired of the carrying value
of net assets of the subsidiary is recorded in equity. Gains or losses on
disposals to non-controlling interest are also recorded in equity.
(b) Changes in accounting policies and disclosures
The accounting policies adopted in the preparation of the consolidated
financial statements are consistent with those applied in the preparation of
the consolidated financial statements for the year ended 31 December 2024.
New standards, interpretations and amendments (new standards) adopted by the
Group
A number of new or amended standards became applicable for the current
reporting period. The Group did not have to change its accounting policies or
make retrospective adjustments as a result of adopting these standards.
The Group has evaluated the applicability of Pillar II rules considering that
the Parent Company and the main subsidiaries of the Group are tax resident in
Mexico, management also assessed the status of the Pillar II legislation in
the country, however no laws or regulations have been enacted to the date of
this report.
Standards, interpretations and amendments issued but not yet effective
The International Accounting Standards Board (IASB) has issued new standards,
interpretation and other amendments resulting from improvements to IFRSs that
management considers do not have any impact on the accounting policies,
financial position or performance of the Group except for the new standard
IFRS 18-Presentation and Disclosure in Financial Statements; this new standard
replaces IAS 1-Presentation of Financial Statements, with a focus on updates
to the statement of profit or loss. This new standard is applicable for
periods commencing 1 January 2027, early adoption is permitted. The Group
plans to adopt the new standard on the required effective date. The Group has
assessed the expected impact of IFRS 18 on its consolidated financial
statements and anticipates that the standard will primarily affect the
presentation and disclosure of income and expenses, including the
classification of operating and non‑operating results. The Group do not
expect it to have a material impact on the amounts recognised for financial
performance or cash flows. However, the presentation of comparative
information may change in future periods.
The Group has not early adopted any standard, interpretation or amendment that
was issued but is not yet effective.
(c) Significant accounting judgements, estimates and assumptions
The preparation of the Group's consolidated financial statements in conformity
with UK-adopted IFRS requires management to make judgements, estimates
and assumptions that affect the reported amounts of assets, liabilities and
contingent liabilities at the date of the consolidated financial statements
and reported amounts of revenues and expenses during the reporting period.
These judgements and estimates are based on management's best knowledge of the
relevant facts and circumstances, with regard to prior experience, but actual
results may differ from the amounts included in the consolidated financial
statements. Information about such judgements and estimates is contained in
the accounting policies and/or the notes to the consolidated financial
statements.
Judgements
Areas of judgement, apart from those involving estimations, that have the most
significant effect on the amounts recognised in the consolidated financial
statements for the year ended 31 December 2025 are:
Recoverability of Soledad and Dipolos assets:
In 2009, five members of the El Bajio agrarian community in the state of
Sonora, who claimed rights over certain surface land in the proximity of the
operations of Minera Penmont ('Penmont'), submitted a legal claim before the
Unitarian Agrarian Court #28 (Tribunal Unitario Agrario) of Hermosillo,
Sonora, to have Penmont vacate an area of this surface land. The land in
dispute (the 'Original Claim Land') encompassed a portion of surface area
where part of the operations of the Soledad & Dipolos mines are located,
in particular, the Dipolos pit. The litigation resulted in a definitive court
order with which Penmont complied by vacating the Original Claim Land,
comprising 1,824 hectares, in 2013, resulting in the suspension of operations
at Soledad & Dipolos. The claim and the definitive court order did not
affect the Group's legal title over the mining concession, the ore currently
held in leaching pads near the mine site, or Penmont's property title over the
lands where the Soledad pit is located.
Penmont is the legal and registered owner of a separate parcel of land where
the leaching pads are located but has not yet been able to gain physical
access to these pads due to opposition by certain local individuals and
security concerns. This land was purchased by Penmont from the Federal
Government of Mexico in accordance with established legal procedures. The
Group has a reasonable expectation that Penmont will eventually regain access
to the Soledad & Dipolos assets and process the ore content in the Soledad
& Dipolos leaching pads. This expectation is supported by several
elements, including but not limited to the different legal proceedings that
Penmont has presented as well other actions taken by the Company. Therefore,
the Group continues to recognise property, plant & equipment and inventory
related to Soledad & Dipolos, as disclosed in Note 13 and Note 15,
respectively. Due to the fact that it is not yet certain when access may be
obtained, so that the inventory can be processed, this inventory is classified
as a non-current asset.
In addition, claimants from the El Bajío community have also presented claims
against occupation agreements they entered with Penmont, in respect of land
parcels different to both the Original Claim Land and the area where the
leaching pads are located. Penmont neither carried out extraction of minerals
nor has a specific geological interest in these parcels (the 'Unmined Claim
Land') and therefore the Unmined Claim Land is not considered strategic for
Penmont. The Agrarian Court has issued rulings declaring the occupation
agreements over the Unmined Claim Land to be null and void, and that Penmont
must remediate such lands and return any minerals extracted from the Unmined
Claim Land, regardless that no minerals were extracted therein. The litigation
remains subject to final conclusion. Pursuant to the foregoing, in the same
litigation of the Unmined Claim Land, in April 2025 the Agrarian Court issued
an order that Penmont considers to be highly irregular in form and substance,
ordering Penmont to pay approximately MXP$13,330 million Pesos (US$ 742
million) for the extraction of minerals carried out in the Dipolos pit, which
is part of the Original Claim Land and not the Unmined Claim Land. This matter
was already the subject of a different (final and unappealable) judicial
ruling relating to the Original Claim Land which is mentioned in the first
paragraph above which ruling did not include restitution of any minerals
extracted from the Dipolos pit. Penmont has presented appeals before the
Federal Courts which Penmont expects to be successful. Such Federal Courts
have granted Penmont stay orders so that no further execution by the Agrarian
Court against Penmont is made pending resolution of the appeals procedures.
The outcome of such proceedings would still be subject to further review and
appeals at the Federal level in Mexico. At this stage, the Company considers
that it holds strong arguments that support its position that the Agrarian
Court's decision will eventually be overturned by the higher Federal Courts;
therefore, no provision has been recorded in respect of this matter. There are
no material assets, liabilities or provisions recognised in respect of the
Original Claim Land at 31 December 2025.
Climate change:
In the climate disclosure in the Strategic Report, the Group set out its
assessment of climate risks and opportunities (CROs). The Group recognises
that there may be potential financial statement implications in the future in
respect of the mitigation and adaptation measures to the physical and
transition risks. The potential effect of climate change would be in respect
of assets and liabilities that are measured based on an estimate of future
cash flows. The Group specifically considered the effect of climate change on
the valuation of property, plant and equipment, deferred tax assets, and the
provision for mine closure cost. The Group does not have any assets or
liabilities for which measurement is directly linked to climate change
performance (for example: Sustainability-Linked Bonds).
The main ways in which climate has affected the preparation of the financial
statements are:
• The Group has already made certain climate-related strategic decisions,
such as to focus on decarbonisation and to increase the use of wind energy.
Where decisions have been approved by the Board, the effects were considered
in the preparation of these financial statements by way of inclusion in future
cash flow projections underpinning the estimation of the recoverable amount of
property, plant and equipment and deferred tax assets, as relevant.
• Further information about the potential effect of CROs on the provision
for mine closure cost is set out in Note 21.
The Group's strategy consists of mitigation and adaptation measures. To
mitigate the impacts by and on climate change the Company relies on renewable
electricity, fuel replacement and efficiency opportunities to reduce the
carbon footprint. The approach to adaptation measures is based on climate
models to produce actionable information for the design, construction,
operation and closure of its mining assets, considering climate change. In
addition, societal expectations are driving government action that may impose
further requirements and cost on companies in the future. Future changes to
the Group's climate change strategy, global decarbonisation signposts and
regulation may impact the Group's significant judgements and key estimates and
result in material changes to financial results and the carrying values of
certain assets and liabilities in future reporting periods. However, as at the
balance sheet date the Group believes there is no material impact on balance
sheet carrying values of assets or liabilities. Although this is an estimate,
it is not considered a critical estimate.
Uncertain tax positions:
The current income tax charge is calculated on the basis of the tax laws
enacted or substantively enacted at the end of the reporting period in the
countries where the company and its subsidiaries operate and generate taxable
income. Management periodically evaluates positions taken in tax returns with
respect to situations in which applicable tax regulation is subject to
interpretation, and it considers whether it is probable that a taxation
authority will accept an uncertain tax treatment. The Group measures its tax
balances based on either the most likely amount or the expected value,
depending on which method provides a better prediction of the resolution of
the uncertainty.
Estimates and assumptions
Significant areas of estimation uncertainty considered by management in
preparing the consolidated financial statements include:
Estimated recoverable ore reserves and mineral resources, note 2(e):
Ore reserves are estimates of the amount of ore that can be economically and
legally extracted from the Group's mining properties. Mineral resources are an
identified mineral occurrence with reasonable prospects for eventual economic
extraction. The Group estimates its ore reserves and mineral resources based
on information compiled by appropriately qualified persons relating to the
geological and technical data on the size, depth, shape and grade of the ore
body and suitable production techniques and recovery rates, in conformity with
the Joint Ore Reserves Committee (JORC) code 2012. Such an analysis requires
complex geological judgements to interpret the data. The estimation of
recoverable ore reserves and mineral resources is based upon factors such as
geological assumptions and judgements made in estimating the size and grade of
the ore body, estimates of commodity prices, foreign exchange rates, future
capital requirements and production costs.
As additional geological information is produced during the operation of a
mine, the economic assumptions used and the estimates of ore reserves and
mineral resources may change. Such changes may impact the Group's reported
balance sheet and income statement including:
· The carrying value of property, plant and equipment and mining
properties may be affected due to changes in the recoverable amount, which
consider both ore reserves and mineral resources, refer to note 13;
· Depreciation and amortisation charges in the income statement may
change where such charges are determined using the unit-of-production method
based on ore reserves, refer to note 13;
· Stripping costs capitalised in the balance sheet, either as part
of mine properties or inventory, or charged to profit or loss may change due
to changes in stripping ratios, refer to note 13;
· Provisions for mine closure costs may change where changes to the
ore reserve and resources estimates affect expectations about when such
activities will occur, refer to note 21;
· The recognition and carrying value of deferred income tax assets
may change due to changes regarding the existence of such assets and in
estimates of the likely recovery of such assets, refer to note 11.
Estimate of recoverable ore on leaching pads, note 15:
In the Group's open pit mines, certain mined ore is placed on leaching pads
where a solution is applied to the surface of the heap to dissolve the gold
and enable extraction. The determination of the amount of recoverable gold
requires estimation with consideration of the quantities of ore placed on the
pads, the grade of the ore (based on assay data) and the estimated recovery
percentage (based on metallurgical studies and current technology).
The grades of ore placed on pads are regularly compared to the quantities of
metal recovered through the leaching process to evaluate the appropriateness
of the estimated recovery (metallurgical balancing). The Group monitors the
results of the metallurgical balancing process and recovery estimates are
refined based on actual results over time and when new information becomes
available. Any potential future adjustment would be applicable from the point
of re-estimation and would not by itself change the value of inventory and as
such no sensitivity is included.
The Group monitors the metallurgical balances to confirm the grade and
recovery of the ore in inventories. Based on new technical information and the
reconsideration of actual recovery grades and updated leaching targets, the
Group updated its estimate of gold content in leaching pads of Noche Buena
mine, increasing this by 20.7 thousand ounces of gold as at 1 January 2025.
This change in estimation was incorporated prospectively in inventory from 1
January 2025. The increase in the number of ounces in Noche Buena inventory
reduced the weighted average cost of inventory. Had the estimation not
changed, production cost during 2025 would have been US$13.4 million higher,
with an offsetting impact against the work-in-progress inventory balance as of
31 December 2025.
Silverstream, note 14:
Until 31 December 2024, the valuation of the Silverstream contract as a
derivative financial instrument requires estimation by management. The term of
the derivative was based on the Sabinas life of mine and the value of this
derivative was determined using a number of estimates, including the estimated
future silver production, which was based on the ore that management considers
possible to extract, as a market participant would.. In August 2025 the Group
entered into a buyback agreement with Peñoles to terminate the Silverstream
agreement for a one-off payment of US$40 million. Further detail of the
buyback agreement and the valuation of this derivative are included in note
14.
Income tax, notes 2 (r) and 11:
The recognition of deferred tax assets, including those arising from
un-utilised tax losses, requires management to assess the likelihood that the
Group will generate taxable earnings in future periods, in order to utilise
recognised deferred tax assets. Estimates of future taxable income are based
on forecast cash flows from operations and the application of existing tax
laws in each jurisdiction. Considering that tax losses expire in ten years and
models show short term recoveries, estimated cash flows are not significantly
sensitive to reasonably possible changes to key assumptions on which
management bases the recoverable value calculations. The carrying value of
deferred tax assets is disclosed in note 11.
Provision for mine closure cost, notes 2 (k) and 21:
The Group assesses its mine closure cost provision annually. Significant
estimates and assumptions are made in determining the provision for mine
closure cost as there are numerous factors that will affect the ultimate
liability. These factors include estimates of the extent and costs of
rehabilitation activities, technological changes, regulatory changes, cost
increases, mine life and changes in discount rates. Those uncertainties may
result in future actual expenditure differing from the amounts currently
provided. The provision at the balance sheet date represents management's best
estimate of the present value of the future closure costs required.
(d) Foreign currency translation
The Group's consolidated financial statements are presented in US dollars,
which is the Parent Company's functional currency. The functional currency for
each entity in the Group is determined by the currency of the primary economic
environment in which it operates. The determination of functional currency
requires management judgement, particularly where there may be more than one
currency in which transactions are undertaken and which impact the economic
environment in which the entity operates. For all operating entities, this is
US dollars.
Transactions denominated in currencies other than the functional currency of
the entity are translated at the exchange rate ruling at the date of
the transaction. Monetary assets and liabilities denominated in foreign
currencies are re-translated at the rate of exchange ruling at the balance
sheet date. All differences that arise are recorded in the income statement.
Non-monetary items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rates as at the dates of the
initial transactions. Non-monetary items measured at fair value in a foreign
currency are translated into US dollars using the exchange rate at the date
when the fair value is determined.
For entities with functional currencies other than US dollars as at the
reporting date, assets and liabilities are translated into the reporting
currency of the Group by applying the exchange rate at the balance sheet date
and the income statement is translated at the average exchange rate for the
year. The resulting difference on exchange is included as a cumulative
translation adjustment in other comprehensive income. On disposal of an
entity, the deferred cumulative amount recognised in other comprehensive
income relating to that operation is recognised in the income statement.
(e) Property, plant and equipment
Property, plant and equipment is stated at cost less accumulated depreciation
and impairment, if any. Cost comprises the purchase price and any costs
directly attributable to bringing the asset into working condition for its
intended use. The cost of self-constructed assets includes the cost of
materials, direct labour and an appropriate proportion of production
overheads.
The cost less the residual value of each item of property, plant and equipment
is depreciated over its useful life. Each item's estimated useful life
has been assessed with regard to both its own physical life limitations and
the present assessment of economically recoverable reserves of the mine
property at which the item is located. Estimates of remaining useful lives are
made on a regular basis for all mine buildings, machinery and equipment, with
annual reassessments for major items. Depreciation is charged to cost of sales
on a unit-of-production (UOP) basis for mine buildings and installations,
plant and equipment used in the mine production process (except mobile
equipment) or on a straight-line basis over the estimated useful life of the
individual asset that are not related to the mine production process. Changes
in estimates, which mainly affect unit-of-production calculations, are
accounted for prospectively. Depreciation commences when assets are available
for use. Land is not depreciated.
The average expected useful lives based on actual life of mines are as
follows:
Years
Buildings 6
Plant and equipment 10
Mining properties and development costs(1) 10
Other assets 5
(1 Depreciation of mining properties and development cost are determined using
the unit-of-production method.)
An item of property, plant and equipment is de-recognised upon disposal or
when no future economic benefits are expected from its use or disposal. Any
gain or loss arising at de-recognition of the asset (calculated as the
difference between the net disposal proceeds and the carrying amount
of the asset) is included in the income statement in the year that the asset
is de-recognised.
Non-current assets or disposal groups are classified as held for sale when it
is expected that the carrying amount of the asset will be recovered
principally through sale rather than through continuing use. Assets are not
depreciated when classified as held for sale.
Disposal of assets
Gains or losses from the disposal of assets are recognised in the income
statement when all significant risks and rewards of ownership are transferred
to the customer, usually when title has been passed.
Mining properties and development costs
Payments for mining concessions are expensed during the exploration phase of a
prospect and capitalised during the development of the project when incurred.
Purchased rights to ore reserves and mineral resources are recognised as
assets at their cost of acquisition or at fair value if purchased as part
of a business combination.
Mining concessions, when capitalised, are amortised on a straight-line basis
over the period of time in which benefits are expected to be obtained from
that specific concession.
Mine development costs are capitalised as part of property, plant and
equipment. Mine development activities commence once a feasibility study
has been performed for the specific project. When an exploration prospect has
entered into the advanced exploration phase and sufficient evidence of the
probability of the existence of economically recoverable minerals has been
obtained pre-operative expenses relating to mine preparation works are also
capitalised as a mine development cost.
The initial cost of a mining property comprises its construction cost, any
costs directly attributable to bringing the mining property into operation,
the initial estimate of the provision for mine closure cost, and, for
qualifying assets, borrowing costs. The Group ceases the capitalisation of
borrowing costs when the physical construction of the asset is complete and is
ready for its intended use.
Ore generated as part of the development stage may be processed and sold,
giving rise to revenue before the commencement of commercial production. Where
such processing is necessary to bring mining assets into the condition
required for their intended use (for example, in testing the plants at the
mining unit in development), revenues from metals recovered from such
activities are recognised in profit or loss.
Upon commencement of production, capitalised expenditure is depreciated using
the unit-of-production method based on the estimated economically proven and
probable reserves to which they relate.
Mining properties and mine development are stated at cost, less accumulated
depreciation and impairment in value, if any.
Construction in progress
Assets in the course of construction are capitalised as a separate component
of property, plant and equipment. On completion, the cost of construction is
transferred to the appropriate category of property, plant and equipment. The
cost of construction in progress is not depreciated.
Subsequent expenditures
All subsequent expenditure on property, plant and equipment is capitalised if
it meets the recognition criteria, and the carrying amount of those
parts that are replaced, is de-recognised. All other expenditure including
repairs and maintenance expenditure is recognised in the income statement as
incurred.
Stripping costs
In a surface mine operation, it is necessary to remove overburden and other
waste material in order to gain access to the ore bodies (stripping activity).
During development and pre-production phases, the stripping activity costs are
capitalised as part of the initial cost of development and construction of the
mine (the stripping activity asset) and charged as depreciation or depletion
to cost of sales, in the income statement, based on the mine's units of
production once commercial operations begin.
Removal of waste material normally continues throughout the life of a surface
mine. At the time that saleable material begins to be extracted from the
surface mine the activity is referred to as production stripping.
Production stripping cost is capitalised only if the following criteria are
met:
· It is probable that the future economic benefits (improved access
to an ore body) associated with the stripping activity will flow to the Group;
· The Group can identify the component of an ore body for which
access has been improved; and
· The costs relating to the improved access to that component can
be measured reliably.
If not all of the criteria are met, the production stripping costs are charged
to the income statement as operating costs as they are incurred.
Stripping activity costs associated with such development activities are
capitalised into existing mining development assets, as mining properties and
development cost, within property, plant and equipment, using a measure that
considers the volume of waste extracted compared with expected volume, for a
given volume of ore production. This measure is known as "component stripping
ratio", which is revised annually in accordance with the mine plan. The amount
capitalised is subsequently depreciated over the expected useful life of the
identified component of the ore body related to the stripping activity asset,
by using the units of production method. The identification of components and
the expected useful lives of those components are evaluated as new information
of reserves and resources is available.
The capitalised stripping activity asset is carried at cost less accumulated
depletion/depreciation, less impairment, if any. Cost includes the
accumulation of costs directly incurred to perform the stripping activity that
improves access to the identified component of ore, plus an allocation of
directly attributable overhead costs. The costs associated with incidental
operations are excluded from the cost of the stripping activity asset.
(f) Impairment of non-financial assets
The carrying amounts of non-financial assets are reviewed for impairment if
events or changes in circumstances indicate that the carrying value may not be
recoverable. At each reporting date, an assessment is made to determine
whether there are any indicators of impairment. If there are indicators
of impairment, an exercise is undertaken to determine whether carrying values
are in excess of their recoverable amount. Such reviews are undertaken on an
asset by asset basis, except where such assets do not generate cash flows
independent of those from other assets or groups of assets, and then the
review is undertaken at the cash generating unit level.
If the carrying amount of an asset or its cash generating unit exceeds the
recoverable amount, a provision is recorded to reflect the asset at
the recoverable amount in the balance sheet. Impairment losses are recognised
in the income statement.
The recoverable amount of an asset
The recoverable amount of an asset is the greater of its value in use and fair
value less costs of disposal. In assessing value in use, estimated future cash
flows are discounted to their present value using a pre-tax discount rate that
reflects current market assessments of the time value of money and the risks
specific to the asset. The cash flows used to determine the recoverable amount
of mining assets are based on the mine plan for each mine. The mine plan is
determined based on the estimated and economically proven and probable
reserves, as well as certain other resources that are assessed as highly
likely to be converted into reserves. Fair value less cost of disposal is
based on an estimate of the amount that the Group may obtain in an orderly
sale transaction between market participants. For an asset that does not
generate cash inflows largely independently of those from other assets, or
groups of assets, the recoverable amount is determined for the cash generating
unit to which the asset belongs. The Group's cash generating units are the
smallest identifiable groups of assets that generate cash inflows that are
largely independent of the cash inflows from other assets or groups of assets.
Reversal of impairment
An assessment is made each reporting date as to whether there is any
indication that previously recognised impairment losses may no longer exist or
may have decreased. If such an indication exists, the Group makes an estimate
of the recoverable amount. A previously recognised impairment loss is reversed
only if there has been a change in estimates used to determine the asset's
recoverable amount since the impairment loss was recognised. If that is the
case, the carrying amount of the asset is increased to the recoverable amount.
That increased amount cannot exceed the carrying amount that would have been
determined, net of depreciation, had no impairment loss been recognised in
previous years. Such impairment loss reversal is recognised in the income
statement.
(g) Financial assets and liabilities
Financial assets
The Group classifies its financial assets in the following measurement
categories:
· those to be measured at amortised cost.
· those to be measured subsequently at FVOCI, and.
· those to be measured subsequently at fair value through profit or
loss.
The classification depends on the Group's business model for managing the
financial assets and the contractual terms of the cash flows.
For assets measured at fair value, gains and losses will either be recorded in
profit or loss or OCI. For investments in equity instruments that are not held
for trading, this will depend on whether the group has made an irrevocable
election at the time of initial recognition to account for the equity
investment at FVOCI.
The Group reclassifies debt investments when and only when its business model
for managing those assets changes.
Purchases or sales of financial assets that require delivery of assets within
a time frame established by regulation or convention in the market place
(regular way trades) are recognised on the trade date, i.e., the date that the
Group commits to purchase or sell the asset.
At initial recognition, the Group measures a financial asset at its fair value
plus, in the case of a financial asset not at fair value through profit or
loss (FVPL), transaction costs that are directly attributable to the
acquisition of the financial asset. Transaction costs of financial assets
carried at FVPL are expensed in profit or loss.
Financial assets with embedded derivatives are considered in their entirety
when determining whether their cash flows are solely payment of principal and
interest.
Subsequent measurement of debt instruments depends on the Group's business
model for managing the asset and the cash flow characteristics of the asset.
Classification
The Group holds the following financial assets:
Amortised cost
Assets that are held for collection of contractual cash flows where those cash
flows represent solely payments of principal and interest are measured at
amortised cost. Interest income from these financial assets is included in
finance income using the effective interest rate method. Gains and losses are
recognised in profit or loss when the asset is derecognised, modified or
impaired.
The Group's financial assets at amortised cost include receivables (other than
trade receivables which are measured at fair value through profit and loss).
Equity instruments designated as fair value through other comprehensive income
Upon initial recognition, the Group can elect to classify irrevocably its
equity investments as equity instruments designated at fair value through OCI
when they meet the definition of equity under IAS 32 Financial Instruments:
Presentation and are not held for trading. The classification is determined on
an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or
loss. Dividends are recognised as other income in the statement of profit or
loss when the right of payment has been established, except when the Group
benefits from such proceeds as a recovery of part of the cost of the financial
asset, in which case, such gains are recorded in OCI. Equity instruments
designated at fair value through OCI are not subject to impairment
assessment.
The Group elected to classify irrevocably its listed equity investments under
this category.
Fair value through profit or loss
Assets that do not meet the criteria for amortised cost or FVOCI are measured
at FVPL. A gain or loss on a debt investment that is subsequently measured at
FVPL is recognised in profit or loss and presented net within other
gains/(losses) in the period in which it arises.
Changes in the fair value of financial assets at FVPL are recognised in other
gains/(losses) in the statement of profit or loss as applicable.
The Group's trade receivables and derivative financial instruments, including
the Silverstream contract, are classified as fair value through profit or
loss.
De-recognition of financial assets
Financial assets are derecognised when the rights to receive cash flows from
the financial assets have expired or have been transferred and the Group has
transferred substantially all the risks and rewards of ownership.
Impairment of financial assets
The Group assesses on a forward-looking basis the expected credit losses
associated with its debt instruments carried at amortised cost and FVOCI. The
impairment methodology applied depends on whether there has been a significant
increase in credit risk.
For receivables (other than trade receivables which are measured at FVPL), the
Group applies the simplified approach permitted by IFRS 9, which requires
expected lifetime losses to be recognised from initial recognition of the
receivables.
Financial liabilities
The Group classifies its financial liabilities as follows:
Financial liabilities are classified, at initial recognition, as financial
liabilities at fair value through profit or loss, loans and borrowings,
payables, or as derivatives designated as hedging instruments in an effective
hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the
case of loans and borrowings and payables, net of directly attributable
transaction costs.
The Group's financial liabilities include trade and other payables, loans and
borrowings and derivative financial instruments.
Measurement
For purposes of subsequent measurement, financial liabilities held by the
Group are classified as financial liabilities as amortised cost.
After initial recognition, interest-bearing loans and borrowings are
subsequently measured at amortised cost using the effective interest rate
(EIR) method. Gains and losses are recognised in profit or loss when the
liabilities are derecognised as well as through the EIR amortisation process.
Amortised cost is calculated by considering any discount or premium on
acquisition and fees or costs that are an integral part of the EIR. The EIR
amortisation is included as finance costs in the statement of profit or loss.
De-recognition of financial liabilities
A financial liability is derecognised when the obligation under the liability
is discharged or cancelled or expires. When an existing financial liability is
replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original
liability and the recognition of a new liability. The difference in the
respective carrying amounts is recognised in the statement of profit or loss.
(h) Inventories
Finished goods, work in progress and ore stockpile inventories are measured at
the lower of cost and net realisable value. Cost is determined using the
weighted average cost method based on cost of production which excludes
borrowing costs.
For this purpose, the costs of production include:
- personnel expenses, which include employee profit sharing;
- materials and contractor expenses which are directly attributable to the
extraction and processing of ore;
- the depreciation of property, plant and equipment used in the extraction
and processing of ore; and
- related production overheads (based on normal operating capacity).
Work in progress inventory comprises ore in leaching pads as processing is
required to extract benefit from the ore. The recovery of gold is achieved
through the heap leaching process. The leaching process may take months to
obtain the expected metal recovery and mainly depends on the continuity of the
leaching process. When the ore in leaching pads is in active leaching, it is
classified as current. When the leaching process has stopped and not expected
to restart within twelve months, ore in the leaching pads affected is
classified as non-current.
Operating materials and spare parts are valued at the lower of cost or net
realisable value. An allowance for obsolete and slow-moving inventories is
determined by reference to specific items of stock. A regular review is
undertaken by management to determine the extent of such an allowance.
Net realisable value is the estimated selling price in the ordinary course of
business less any further costs expected to be incurred to completion and
disposal.
(i) Short-term investments
Where the Group invests in short-term instruments with a maturity higher than
three months and which are either not readily convertible into known amounts
of cash or are subject to risk of changes in value that are not insignificant,
these instruments are classified as short-term investments.
(j) Cash and cash equivalents
For the purposes of the balance sheet, cash and cash equivalents comprise cash
at bank, cash on hand and short-term deposits held with banks that are readily
convertible into known amounts of cash and which are subject to insignificant
risk of changes in value. Short-term deposits earn interest at the respective
short-term deposit rates between one day and three months.
(k) Provisions
Mine closure cost
A provision for mine closure cost is made in respect of the estimated future
costs of closure, restoration and for environmental rehabilitation costs
(which include the dismantling and demolition of infrastructure, removal of
residual materials and remediation of disturbed areas) based on a mine closure
plan, in the accounting period when the related environmental disturbance
occurs. The provision is discounted and the unwinding of the discount is
included within finance costs. At the time of establishing the provision, a
corresponding asset is capitalised where it gives rise to a future economic
benefit and is depreciated over future production considering proven and
probable reserves from the mine to which it relates. The provision is reviewed
on an annual basis by the Group for changes in cost estimates, discount rates
or life of operations based on the estimated mine production which includes
ore reserves and a certain amount of mineral resources. Changes to estimated
future costs are recognised in the balance sheet by adjusting the mine closure
cost liability and the related asset originally recognised. If, for mature
mines, the revised mine assets net of mine closure cost provisions exceed the
recoverable value, the portion of the increase is charged directly as an
expense. For closed sites, changes to estimated costs are recognised
immediately in profit or loss.
(l) Employee benefits
The Group operates the following plans for its employees based on Mexico:
Defined benefit pension plan
This funded plan is based on each employee's earnings and years of service.
This plan was open to all employees in Mexico until it was closed to new
entrants on 1 July 2007. The plan is denominated in Mexican Pesos. For members
as at 30 June 2007, benefits were frozen at that date subject to indexation
with reference to the Mexican National Consumer Price Index (NCPI).
The present value of defined benefit obligations under the plan is determined
using the projected unit credit actuarial valuation method and prepared by an
external actuarial firm as at each year-end balance sheet date. The discount
rate is the yield on bonds that have maturity dates approximating the terms of
the Group's obligations and that are denominated in the same currency in which
the benefits are expected to be paid. Actuarial gains or losses are recognised
in OCI and permanently excluded from profit or loss.
Past service costs are recognised when the plan amendment or curtailment
occurs and when the entity recognises related restructuring costs or
termination benefits.
The defined benefit asset or liability comprises the present value of the
defined benefit obligation less the fair value of plan assets out of which
the obligations are to be settled directly. The value of any asset is
restricted to the present value of any economic benefits available in the form
of refunds from the plan or reductions in the future contributions to the
plan.
Net interest cost is recognised within finance cost and return on plan assets
(other than amounts reflected in net interest cost) is recognised in OCI and
permanently excluded from profit or loss.
Defined contribution pension plan
A defined contribution plan is a post-employment benefit plan under which the
Group pays fixed contributions into a separate entity and has no legal or
constructive obligation to pay further amounts. Obligations for contributions
to defined contribution pension plans are recognised as an employee benefit
expense in profit or loss when they are due. The contributions are based on
the employee's salary.
This plan started on 1 July 2007 and it is voluntary for all employees to join
this scheme.
Seniority premium for voluntary separation
This unfunded plan corresponds to an additional payment over the legal
seniority premium equivalent to approximately 12 days of salary per year
for those unionised workers who have more than 15 years of service.
Non-unionised employees with more than 15 years of service have the right
to a payment equivalent to 12 days for each year of service. For both cases,
the payment is based on the legal current minimum salary.
The cost of providing benefits for the seniority premium for voluntary
separation is determined using the projected unit credit actuarial valuation
method and prepared by an external actuarial firm as at each year-end balance
sheet date. Actuarial gains or losses are recognised as income or expense in
the period in which they occur.
Other
Benefits for death and disability are covered through insurance policies.
Termination payments for involuntary retirement (dismissals) are charged to
the income statement, when incurred.
(m) Employee profit sharing
In accordance with the Mexican legislation, companies in Mexico are subject to
pay for employee profit sharing ('PTU') equivalent to ten percent of the
taxable income of each fiscal year capped to three months of salary or average
of the profit sharing paid in the last three years.
PTU is calculated based on the services rendered by employees during the year,
considering their most recent salaries. The liability is recognised as it
accrues and is charged to the income statement as personnel expenses. PTU,
paid in each fiscal year, is deductible for income tax purposes.
(n) Leases
Group as a lessee
The Group assesses at contract inception whether a contract is, or contains, a
lease. That is, if the contract conveys the right to control the use of an
identified asset for a period of time in exchange for consideration.
Assets and liabilities arising from a lease are initially measured on a
present value basis. Lease liabilities include the net present value of the
following lease payments:
- fixed payments (including in-substance fixed payments), less any lease
incentives receivable variable lease payment that are based on an index or a
rate;
- amounts expected to be payable by the lessee under residual value
guarantees;
- the exercise price of a purchase option if the lessee is reasonably
certain to exercise that option; and
- payments of penalties for terminating the lease, if the lease term
reflects the lessee exercising that option.
The lease payments are discounted using the interest rate implicit in the
lease. If that rate cannot be determined, the lessee's incremental borrowing
rate is used, being the rate that the lessee would have to pay to borrow the
funds necessary to obtain an asset of similar value in a similar economic
environment with similar terms and conditions.
Right-of-use assets are measured at cost comprising the following:
- the amount of the initial measurement of lease liability;
- any lease payments made at or before the commencement date less any
lease incentives received;
- any initial direct costs; and
- restoration costs.
Each lease payment is allocated between the liability and finance cost. The
finance cost is charged to profit or loss over the lease period so as to
produce a constant periodic rate of interest on the remaining balance of the
liability for each period. The right-of-use asset is depreciated over the
shorter of the asset's useful life and the lease term on a straight-line
basis.
The Group is exposed to potential future increases in variable lease payments
based on an index or rate, which are not included in the lease liability until
they take effect. When adjustments to lease payments based on an index or rate
take effect, the lease liability is reassessed and adjusted against the
right-of-use asset.
Variable lease payments that are not linked to price changes due to changes in
a market rate or the value of an index and are linked to future performance or
use of an underlying asset are not included in the measurement of the lease
liability. Such costs are recognized in profit and loss as incurred.
Payments associated with short-term leases and leases of low-value assets are
recognised on a straight-line basis as an expense in profit or loss.
Short-term leases are leases with a lease term of 12 months or less. Low-value
assets comprise IT-equipment.
(o) Revenue from contracts with customers
Revenue is recognised when control of goods or services transfers to the
customers based on the performance obligations settle in the contracts with
customers.
Sale of goods
Revenue associated with the sale of concentrates, doré, slag, precipitates
and activated carbon (the products) is recognised when control of the asset
sold is transferred to the customers. Indicators of control transferring
include an unconditional obligation to pay, legal title, physical possession,
transfer of risk and rewards and customers' acceptance. This generally occurs
when the goods are delivered to the customer's smelter or refinery agreed with
the buyer; at which point the buyer controls the goods.
The revenue is measured at the amount to which the Group expects to be
entitled, being the estimate of the price expected to be received in the
expected month of settlement and the Group's estimate of metal quantities
based on assay data, and a corresponding trade receivable is recognised. Any
future changes that occur before settlement are embedded within the
provisionally priced trade receivables and are, therefore, within the scope of
IFRS 9 and not within the scope of IFRS 15.
Given the exposure to the commodity price, these provisionally priced trade
receivables will fail the cash flow characteristics test within IFRS 9 and
will be required to be measured at fair value through profit or loss up from
initial recognition and until the date of settlement. These subsequent changes
in fair value are recognised in revenue but separately from revenue from
contracts with customers.
Invoiced revenues to our customers for products other than refined silver and
gold, are derived from the value of metal content which is determined by
commodity market prices and adjusted for the treatment and refining charges to
be incurred by the metallurgical complex of our customers. Refining and
treatment charges represent an element of the cost that will be incurred by
our customers in processing the products further to extract the metal content
for onward sale to its customers (See note 5(c)).
(p) Exploration expenses
Exploration activity involves the search for mineral resources, the
determination of technical feasibility and the assessment of commercial
viability of an identified resource.
Exploration expenses are charged to the income statement as incurred and are
recorded in the following captions:
Cost of sales: costs relating to in-mine exploration, that ensure continuous
extraction quality and extend mine life, and
Exploration expenses:
- Costs incurred in geographical proximity to existing mines in order to
replenish or increase reserves, and
- Costs incurred in regional exploration with the objective of locating
new ore deposits, which are identified by project, in areas where the Group
carriers out exploration activity. Currently the Group carries out exploration
activities in Mexico and Latin America.
- Costs incurred are charged to the income statement until there is
sufficient probability of the existence of economically recoverable minerals
and a feasibility study has been performed for the specific project from which
time further expenses are capitalised as exploration costs on balance sheet as
Property, plant and equipment.
(q) Selling expenses
The Group recognises in selling expenses a levy in respect of the
Extraordinary Mining Right as sales of gold and silver are recognised. The
Extraordinary Mining Right consists of a 1.0% (2024: 0.5%) rate, applicable to
the owners of mining titles in Mexico. The payment must be calculated over the
total sales of all mining concessions. The payment of this mining right must
be remitted no later than the last business day of March of the following year
and can be credited against corporate income tax.
The Group also recognises in selling expenses a discovery premium royalty
equivalent to 1% of the value of the mineral extracted and sold during the
year from certain mining titles granted by the Mexican Geological Survey (SGM)
in the San Julian mine. The premium is settled to SGM on a quarterly basis.
(r) Taxation
Current income tax
Current income tax assets and liabilities for the current and prior periods
are measured at the amount expected to be recovered from or paid to the
taxation authorities. The tax rates and tax laws used to compute the amount
are those that are enacted or substantively enacted, at the reporting date in
the country in which the Group operates.
Deferred income tax
Deferred income tax is provided using the liability method on temporary
differences at the balance sheet date between the tax bases of assets
and liabilities and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable temporary
differences, except:
· where the deferred income tax liability arises from the initial
recognition of goodwill or of an asset or liability in a transaction that is
not a business combination and, at the time of transaction, affects neither
the accounting profit nor taxable profit loss; and
· in respect of taxable temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures, where
the timing of the reversal of the temporary differences can be controlled and
it is probable that the temporary differences will not reverse in the
foreseeable future.
Deferred income tax assets are recognised for all deductible temporary
differences, carry forward of unused tax credits and unused tax losses, to
the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, and the carry forward of unused
tax credits and unused tax losses can be utilised, except:
· where the deferred income tax asset relating to deductible
temporary differences arise from the initial recognition of an asset or
liability in a transaction that is not a business combination and, at the time
of the transaction, affects neither the accounting profit nor taxable profit
or loss; and in respect of deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint ventures,
deferred income tax assets are recognised only to the extent that it is
probable that the temporary differences will reverse in the foreseeable future
and taxable profit will be available against which the temporary differences
can be utilised.
The carrying amount of deferred income tax assets is reviewed at each balance
sheet date and reduced to the extent that it is no longer probable
that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at each balance sheet
date and are recognised to the extent that it has become probable that future
taxable profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the tax rates that
are expected to apply to the year when the asset is realised or the liability
is settled, based on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Deferred income tax relating to items recognised directly in other
comprehensive income is recognised in equity and not in the income statement.
Deferred income tax assets and deferred income tax liabilities are offset, if
a legally enforceable right exists to set off current tax assets against
current income tax liabilities and the deferred income taxes relate to the
same taxable entity and the same taxation authority.
Mining Rights
The Special Mining Right is considered an income tax under IFRS and states
that the owners of mining titles and concessions in Mexico are subject to pay
an annual mining right of 8.5% (2024: 7.5%) of the profit derived from the
extractive activities (note 11 (e)). The Group recognises deferred tax assets
and liabilities on temporary differences arising in the determination of the
Special Mining Right ( note 11).
Sales tax
Expenses and assets are recognised net of the amount of sales tax, except when
the sales tax incurred on a purchase of assets or services is not recoverable
from the taxation authority, in which case, the sales tax is recognised as
part of the cost of acquisition of the asset or as part of the expense item.
The net amount of sales tax recoverable from, or payable to, the taxation
authority is included as part of receivables or payables in the balance sheet.
(s) Derivative financial instruments and hedging
The Group uses derivatives to reduce certain market risks derived from changes
in foreign exchange which impact its financial and business transactions.
Such derivative financial instruments are initially recognised at fair value
on the date on which a derivative contract is entered into and are
subsequently remeasured at fair value. Derivatives are carried as assets when
the fair value is positive and as liabilities when the fair value is negative.
The full fair value of a derivative is classified as non-current asset or
liability if the remaining maturity of the item is more than 12 months.
Any gains or losses arising from changes in fair value on derivatives during
the year that do not qualify for hedge accounting are taken directly to
the income statement as finance income or finance cost respectively.
Derivatives are valued using valuation approaches and methodologies (such as
Black Scholes and Net Present Value) applicable to the specific type
of derivative instrument. The fair value of forward currency and commodity
contracts is calculated by reference to current forward exchange rates
for contracts with similar maturity profiles, European foreign exchange and
commodity options are valued using the Black Scholes model. The Silverstream
contract is valued using a Net Present Value valuation approach.
The documentation includes identification of the hedging instrument, the
hedged item, the nature of the risk being hedged and how the Group will assess
whether the hedging relationship meets the hedge effectiveness requirements
(including the analysis of sources of hedge ineffectiveness and how the hedge
ratio is determined). A hedging relationship qualifies for hedge accounting if
it meets all of the following effectiveness requirements:
• There is 'an economic relationship' between the hedged item and the
hedging instrument.
• The effect of credit risk does not 'dominate the value changes' that
result from that economic relationship.
• The hedge ratio of the hedging relationship is the same as that resulting
from the quantity of the hedged item that the Group actually hedges and the
quantity of the hedging instrument that the Group actually uses to hedge that
quantity of hedged item.
Hedges which meet the criteria for hedge accounting are accounted for as cash
flow hedges.
For derivatives that are designated and qualify as cash flow hedges, the
effective portion of changes in the fair value of derivative instruments is
recorded as in other comprehensive income and are transferred to the income
statement when the hedged transaction affects profit or loss, such as when a
forecast sale or purchase occurs. For gains or losses related to the hedging
of foreign exchange risk these are included, in the line item in which the
hedged costs are reflected. Where the hedged item is the cost of
a non-financial asset or liability, the amounts recognised in other
comprehensive income are transferred to the initial carrying amount of the
non-financial asset or liability. This is not a reclassification adjustment
and will not be recognised in OCI for the period. The ineffective portion of
changes in the fair value of cash flow hedges is recognised directly as
finance costs, in the income statement of the related period.
If the hedging instrument expires or is sold, terminated or exercised without
replacement or rollover, or if its designation as a hedge is revoked, any
cumulative gain or loss recognised directly in other comprehensive income from
the period that the hedge was effective remains separately in other
comprehensive income until the forecast transaction occurs, when it is
recognised in the income statement. When a forecast transaction is no longer
expected to occur, the cumulative gain or loss that was reported in other
comprehensive income is immediately transferred to the income statement.
When hedging with options, the Group designates only the intrinsic value
movement of the hedging option within the hedge relationship. The time value
of the option contracts is therefore excluded from the hedge designation. In
such cases, changes in the time value of options are initially recognised in
OCI as a cost of hedging. Where the hedged item is transaction related,
amounts initially recognised in OCI related to the change in the time value of
options are reclassified to profit or loss or as a basis adjustment to
non-financial assets or liabilities upon maturity of the hedged item, or, in
the case of a hedged item that realises over time, the amounts initially
recognised in OCI are amortised to profit or loss on a systematic and rational
basis over the life of the hedged item.
When hedging with forward contracts, the forward element is included in the
designation of the financial instrument. Therefore, there is no cost of
hedging in relation to forward contracts.
(t) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or
production of an asset that necessarily takes 12 or more months to get ready
for its intended use or sale (a qualifying asset) are capitalised as part of
the cost of the respective asset. Borrowing costs consist of interest and
other costs that an entity incurs in connection with the borrowing of funds.
Where funds are borrowed specifically to finance a project, the amount
capitalised represents the actual borrowing costs incurred. Where surplus
funds are available for a short term from funds borrowed specifically to
finance a project, the income generated from the temporary investment of such
amounts is also capitalised and deducted from the total capitalised borrowing
cost. Where the funds used to finance a project form part of general
borrowings, the amount capitalised is calculated using a weighted average of
rates applicable to relevant general borrowings of the Group during the
period.
All other borrowing costs are recognised in the income statement in the period
in which they are incurred.
(u) Fair value measurement
The Group measures financial instruments at fair value at each balance sheet
date. Fair values of financial instruments measured at amortised cost are
disclosed in note 30(b).
Fair value is the price that would be received to sell an asset or paid to
transfer a liability in an orderly transaction between market participants at
the measurement date. The fair value measurement is based on the presumption
that the transaction to sell the asset or transfer the liability takes place
either:
In the principal market for the asset or liability, or;
In the absence of a principal market, in the most advantageous market for the
asset or liability.
The principal or the most advantageous market must be accessible to the Group.
The fair value of an asset or a liability is measured using the assumptions
that market participants would use when pricing the asset or liability,
assuming that market participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market
participant's ability to generate economic benefits by using the asset in its
highest and best use or by selling it to another market participant that would
use the asset in its highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances
and for which sufficient data are available to measure fair value, maximising
the use of relevant observable inputs and minimising the use of unobservable
inputs.
All assets and liabilities for which fair value is measured or disclosed in
the financial statements are categorised within the fair value hierarchy,
described as follows, based on the lowest level input that is significant to
the fair value measurement as a whole:
Level 1 - Quoted (unadjusted) market prices in active markets for identical
assets or liabilities
Level 2 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is directly or indirectly observable
Level 3 - Valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on
a recurring basis, the Group determines whether transfers have occurred
between levels in the hierarchy by re-assessing categorisation (based on the
lowest level input that is significant to the fair value measurement as a
whole) at the end of each reporting period.
For the purpose of fair value disclosures, the Group has determined classes of
assets and liabilities based on the nature, characteristics and risks of the
asset or liability and the level of the fair value hierarchy as explained
above. Further information on fair values is described in note 30.
(v) Dividend distribution
Dividends on the Company's ordinary shares are recognised when they have been
appropriately authorised and are no longer at the Company's discretion.
Accordingly, interim dividends are recognised when they are paid and final
dividends are recognised when they are declared following approval by
shareholders at the Company's Annual General Meeting.
3. Segment reporting
For management purposes, the Group is organised into operating segments based
on producing mines.
At 31 December 2025, the Group has seven reportable operating segments as
follows:
The Fresnillo mine, located in the state of Zacatecas, an underground silver
mine;
The Saucito mine, located in the state of Zacatecas, an underground silver
mine;
The Cienega mine, located in the state of Durango, an underground silver-gold
mine;
The Herradura mine, located in the state of Sonora, a surface gold mine;
The Noche Buena mine, located in state of Sonora, a surface gold mine;
The San Julian mine, located on the border of Chihuahua / Durango states, an
underground silver-gold mine, and
The Juanicipio mine, in the State of Zacatecas, an underground silver mine.
The operating performance and financial results for each of these mines are
reviewed by management. As the Group´s chief operating decision maker (CODM)
does not review segment assets and liabilities, the Group has not disclosed
this information.
Management monitors the results of its operating segments separately for the
purpose of performance assessment and making decisions about resource
allocation. Segment performance is evaluated without taking into account
certain adjustments included in Revenue as reported in the consolidated income
statement, and certain costs included within Cost of sales and Gross profit
which are considered to be outside of the control of the operating management
of the mines. The table below provides a reconciliation from segment profit to
Gross profit as per the consolidated income statement. Administrative
expenses, Exploration expenses, Selling expenses, and Other income and
expenses not related to production activities included in the consolidated
income statement are not allocated to operating segments. Also, the Group's
financing (including finance cost and finance income) and income taxes are
managed on a Group basis and are not allocated to operating segments.
Transactions between reportable segments are accounted for on an arm's length
basis similar to transactions with third parties.
In 2025 99.8% of revenue was derived from customers based in Mexico (2024:
99.6% of revenue was derived from customers based in Mexico)
Operating segments
The following tables present revenue and profit information regarding the
Group's operating segments for the year ended 31 December 2025 and 2024,
respectively. Revenues for the year ended 31 December 2025 and 2024 include
those derived from contracts with customers and other revenues, as shown in
note 5.
Year ended 31 December 2025
US$ thousands Fresnillo Herradura Cienega Saucito Noche San Julian Juanicipio Other(4) Adjustments and eliminations Total
Buena
Revenues:
Third party(1) 632,318 1,239,748 230,101 1,007,973 51,793 524,360 874,938 - - 4,561,231
Inter-segment 67,461 - - - - - 17,534 50,278 (135,273) -
Segment revenues 699,779 1,239,748 230,101 1,007,973 51,793 524,360 892,472 50,278 (135,273) 4,561,231
Segment profit(2) 437,685 767,366 123,856 649,423 30,929 366,021 746,965 48,166 3,170,411
Depreciation and amortisation in cost of sales (490,647)
Employee profit sharing in cost of sales (15,653)
Gross profit as per the income statement 2,664,111
Capital expenditure(3) 91,837 89,873 17,555 92,149 - 49,704 54,412 4,611 400,141
(1 During 2025 all segment revenues were derived from Met-Mex, except in
Juanicipio which includes sales of iron concentrate to another external
customers of US$8.5 million.)
(2 The Group's CODM primarily uses this measure to monitor the operating
results directly related to the production of its business units separately to
make decisions about resource allocation and performance assessment. Segment
profit excludes , depreciation and amortisation and employee profit sharing.)
(3 Capital expenditure represents the cash outflow in respect of additions to
property, plant and equipment, excluding additions relating to changes in the
mine closure provision. Significant additions include expansions of tailings
dams at Saucito, Fresnillo, Juanicipio, San Julian and Herradura; mining works
at San Julian, Fresnillo and Saucito and stripping cost and construction of
leaching pads at Herradura mine.)
(4 Other inter-segment revenue corresponds to leasing services provided by
Minera Bermejal, S.A. de C.V; capital expenditure mainly corresponds to Minera
Bermejal, S. de R.L. de C.V.)
Year ended 31 December 2024
US$ thousands Fresnillo Herradura Cienega Saucito Noche San Julian Juanicipio Other(4) Adjustments and eliminations Total
Buena
Revenues:
Third party(1) 499,519 883,571 222,455 764,708 42,923 455,995 627,214 - - 3,496,385
Inter-segment 36,409 - - - - - 152 50,839 (87,400) -
Segment revenues 535,928 883,571 222,455 764,708 42,923 455,995 627,366 50,839 (87,400) 3,496,385
Segment profit(2) 277,333 323,696 92,898 405,077 4,348 253,494 475,113 49,102 (2,662) 1,878,399
Depreciation and amortisation in cost of sales (619,779)
Employee profit sharing in cost of sales (12,347)
Gross profit as per the income statement 1,246,273
Capital expenditure(3) 90,335 55,049 17,111 97,270 - 49,429 59,263 2,085 370,542
(1 During 2024 all segment revenues were derived from Met-Mex, except in
Juanicipio which includes sales of iron concentrate to another external
customers of US$14.7 million.)
(2 The Group's CODM primarily uses this measure to monitor the operating
results directly related to the production of its business units separately to
make decisions about resource allocation and performance assessment. Segment
profit excludes depreciation and amortisation and employee profit sharing.)
(3 Capital expenditure represents the cash outflow in respect of additions to
property, plant and equipment, excluding additions relating to changes in the
mine closure provision. Significant additions include expansions of tailings
dams at Saucito, Fresnillo, Juanicipio and San Julian, mining works at San
Julian, Fresnillo and Saucito and stripping cost and construction of leaching
pads at Herradura mine.)
(4 Other inter-segment revenue corresponds to leasing services provided by
Minera Bermejal, S.A. de C.V; capital expenditure mainly corresponds to Minera
Bermejal, S. de R.L. de C.V.)
4. Group information
The list of the Company's subsidiaries included in the consolidated financial
statements and its principal activities are shown in Note 5 on the Parent
Company's separate financial statements. The country of incorporation or
registration is also their principal place of business.
(a) Material partly-owned subsidiaries
The table below shows the detail of non-wholly owned subsidiaries of the Group
that have non-controlling interests:
Portion of ownership interest held by non-controlling interest Profit (loss) allocated to non-controlling interest Accumulated non-controlling interest
31-Dec-25 31-Dec-24 31-Dec-25 31-Dec-24 31-Dec-25 31-Dec-24
Minera Juanicipio, S. A. de C.V. 44% 44% 170,903 90,616 335,908 266,153
Equipos Chaparral, S. A. de C.V. 44% 44% 21,773 (10,891) 106,079 86,443
Other subsidiaries with non-controlling interests not considered to be - - (2,835) 6,046 (194) 2,433
material(1)
(1 In October 2024 the Group entered into an exploration joint venture in
Chile through its subsidiary Minera Capricornio, SCM (Capricornio) and
Sociedad Quimica y Minera de Chile, S.A. de C.V. (SQM), a Chilean mining
company. The agreement considers a transfer of 25% ownership which represent a
net share of US$0.4 million.)
Set out below is the summarised financial information for each subsidiary that
has non-controlling interests that are material to the Group. Figures are
presented in thousands of US dollars unless otherwise indicated.
Summarised income statement for the year ended 31 December 2025 and 2024
Minera Juanicipio, S. A. de C.V. Equipos Chaparral, S. A. de C.V.
31-Dec-25 31-Dec-24 31-Dec-25 31-Dec-24
Revenue 892,472 627,366 - -
Profit/(loss) before income tax 562,738 366,541 55,114 (21,698)
Income tax charge 174,323 160,595 5,630 3,054
Profit/(loss) for the year 388,415 205,946 49,484 (24,752)
Other comprehensive (loss)/gain (43) (30) (54) 90
Total comprehensive income/(loss) 388,372 205,916 49,430 (24,662)
Attributable to non-controlling interests 170,884 90,603 21,749 (10,851)
Dividends paid to non-controlling interests (101,200) (26,400) (2,200) -
Summarised statement of financial position as at 31 December 2025 and 2024
Minera Juanicipio, S. A. de C.V. Equipos Chaparral, S. A. de C.V.
31-Dec-25 31-Dec-24 31-Dec-25 31-Dec-24
Current
Assets 532,955 161,736 22,822 29,462
Liabilities (308,024) (82,572) (12,037) (7,919)
Total current net assets 224,931 79,164 10,785 21,543
Non-current
Assets 720,588 730,074 230,314 174,871
Liabilities (182,092) (204,266) (11) (6)
Total non-current net assets 538,496 525,808 230,303 174,865
Net assets 763,427 604,972 241,088 196,461
Attributable to:
Equity holders of parent 427,519 338,819 135,009 110,018
Non-controlling interest 335,908 266,153 106,079 86,443
Summarised cash flow information for the year ended 31 December 2025 and 2024
Minera Juanicipio, S. A. de C.V. Equipos Chaparral, S. A. de C.V.
31-Dec-25 31-Dec-24 31-Dec-25 31-Dec-24
Operating 532,088 354,895 8,262 17,521
Investing (24,583) (40,104) 383 692
Financing (272,087) (297,489) (9,774) (24,485)
Net increase/(decrease) in cash and cash equivalents 235,418 17,302 (1,129) (6,272)
5. Revenues
Revenues reflect the sale of goods, being concentrates, doré, slag,
precipitates and activated carbon of which the primary contents are silver,
gold lead and zinc.
(a) Revenues by source
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Revenues from contracts with customers 4,512,948 3,503,662
Revenues from other sources:
Provisional pricing adjustment on products sold 48,283 (7,277)
4,561,231 3,496,385
(b) Revenues by product sold
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Lead concentrates (containing silver, gold, lead and by-products) 2,167,423 1,652,909
Doré and slag (containing gold, silver and by-products) 816,695 753,747
Zinc concentrates (containing zinc, silver and by-products) 346,705 380,169
Precipitates (containing gold and silver) 747,014 522,077
Activated carbon (containing gold, silver and by-products) 474,847 172,747
Iron concentrates (containing silver, gold, lead and by-products) 8,547 14,736
4,561,231 3,496,385
(c) Value of metal content in products sold
Invoiced revenues are derived from the value of metal content which is
determined by commodity market prices and adjusted for the treatment and
refining charges to be incurred by the metallurgical complex of our customer.
The value of the metal content of the products sold, before treatment and
refining charges is considered as an alternative performance measure for the
Group. The Group considers this a useful additional measure to help understand
underlying factors driving revenue in terms of volumes sold and realised
prices. The value of production sold by metal is as follows:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Silver 2,161,932 1,673,901
Gold 2,071,175 1,514,702
Zinc 287,594 311,557
Lead 124,587 139,789
Value of metal content in products sold 4,645,288 3,639,949
Refining and treatment charges(1) (84,057) (143,564)
Total revenues(2)(,) 4,561,231 3,496,385
(1 The methodology to determine the refining and treatment charges takes into
account industry benchmark charges and adjustments to reflect ore composition
and transport costs (refer to note 27(b).)
(2 Includes provisional price adjustments which represent changes in the fair
value of trade receivables resulting in a gain of US$48.2 million (2024: loss
of US$7.2 million). For further detail, refer to note 2(o).)
(
)
( )
The average realised prices for the gold and silver content of products sold,
prior to the deduction of treatment and refining charges, were:
Year ended 31 December
2025 2024
US$ per ounce
US$ per ounce
Gold 3,532.74 2,453.58
Silver 43.60 28.78
( )
6. Cost of sales
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Depreciation and amortisation 490,647 619,779
Contractors 339,766 351,474
Maintenance and repairs 288,284 289,475
Operating materials 243,640 304,946
Personnel expenses (note 8(a)) 232,099 230,312
Energy 202,633 249,517
Mining concession rights and contributions 28,873 27,192
Surveillance 21,352 21,705
Insurance 14,911 12,727
Mine equipment leased (1) 13,577 59,156
IT services 12,106 10,785
Freight 6,948 7,607
Other 24,708 29,672
Cost of production 1,919,544 2,214,347
Change in work in progress and finished goods (ore inventories) (2) (22,424) 35,765
1,897,120 2,250,112
(1 Corresponds to mine equipment leased to contractors, the lease payments are
based on a variable rate linked to the usage of the assets.)
(2 Refer to note 2 (c) for more detail related to change in work in progress
inventories for the year ended 31 December 2025 following a change in
estimation.)
( )
(
)
( )
( )
7. Exploration expenses
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Contractors 112,002 101,514
Mining concession rights and contributions 29,055 30,437
Personnel expenses (note 8(a)) 15,921 15,461
Assays 6,585 5,746
Administrative services 2,167 1,406
Rentals 1,380 869
Other 6,421 7,615
173,531 163,048
These exploration expenses were mainly incurred in the operating mines located
in Mexico; the Guanajuato and Orisyvo projects; and the Tajitos prospect.
Exploration expenses of US$13.6 million (2024: US$17.6 million) were incurred
in the year on projects located in Peru and Chile.
Cash flows relating to exploration activities are as follows:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Operating cash outflows related to exploration activities 172,925 162,837
8. Personnel expenses
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Salaries and wages 112,100 108,800
Statutory healthcare and housing contributions 49,086 48,214
Bonuses 48,675 36,547
Other benefits 25,048 29,704
Employees' profit sharing 15,859 13,609
Post-employment benefits 9,762 9,684
Legal contributions 6,477 5,625
Vacations and vacations bonus 6,305 8,727
Training 2,431 1,923
Other 4,473 4,625
280,216 267,458
(a) Personnel expenses are reflected in the following line items:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Cost of sales (note 6) 232,099 230,312
Administrative expenses 32,196 21,685
Exploration expenses (note 7) 15,921 15,461
280,216 267,458
(b) The monthly average number of employees during the year was as follows:
Year ended 31 December
2025 2024
No.
No.
Mining 3,526 3,572
Plant 932 1,040
Exploration 155 101
Maintenance 1,314 1,261
Administration and other 1,268 1,266
Total 7,195 7,240
9. Other operating income and expenses
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Other income:
Gain on sale of mining concessions(1) 13,050 24,149
Insurance claims recovered 200 6,302
Gain on sale of property, plant and equipment and other assets 286 1,004
Selling of sundry materials and scrap 907 1,549
Change in mine closure cost provision(2) 344 1,222
Rentals 1,934 543
Dividends from Equity instruments at FVOCI 1,754 -
Other 1,754 4,790
20,229 39,559
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Other expenses:
Allowance for obsolete and slow-moving inventories 3,652 6,165
Donations 2,909 4,517
Maintenance(3) 6,158 3,554
Indemnities to suppliers - 2,151
Write-off of PPE assets(4) 15,988 1,704
Change in mine closure cost provision(2) - 1,214
Environmental activities(5) 392 599
Consumption tax expensed 960 709
Other 3,279 683
33,338 21,296
(1.) (In 2025 the Group sold certain mining concession that on an individual
basis are not material amounts. In July 2024, the Group entered into a
contract to assign the rights and obligations of certain mining concessions to
Coeur Mexicana, S.A. de C.V., subsidiary of Coeur Mining Inc. The total
consideration amounted US$25.0 million. The settlement considers three
payments: US$10.0 million that was paid upon ratification of the contract,
US$10.0 million that was paid on 3 July 2025, and US$5.0 million that will be
paid no later than 30 June 2026.)
(2 Relates to changes in estimates after the completion of mining activities
and adjustment to the value of mine closure assets.)
(3 Costs relating to the rehabilitation of the facilities of Compañía Minera
las Torres, S.A. de C.V. (a closed mine).)
(4 In 2025, mainly corresponds to assets derecognised in connection with new
projects which, in accordance with the energy supply agreement with the
state)(‑)(owned company (CFE), are required for grid connection and must be
transferred to CFE. (2024: mainly corresponds to mobile equipment damaged).)
(5 Main activities were related to improvement in tailings dam in Cienega
(2024: Main activities were related to improvement in tailing dams in
Cienega).)
10. Finance income and finance costs
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Finance income:
Interest on short-term deposits and investments 84,088 42,210
Interest on tax receivables 3,856 3,117
Other 4,605 1,609
92,549 46,936
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Finance costs:
Interest on interest-bearing loans and notes payable 39,675 43,845
Unwinding of discount on provisions (note 21) 22,360 24,997
Interest on lease liabilities (note 25(a)) 1,031 1,574
Other 5,475 3,155
68,541 73,571
11. Income tax expense
a) Major components of income tax expense:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Consolidated income statement:
Corporate income tax
Current:
Income tax charge 567,703 187,027
Amounts (over) / under provided in previous years(1) (23,030) (158)
544,673 186,869
Deferred:
Origination and reversal of temporary differences (172,933) 258,001
Effects of Silverstream contract (56,765) (54,683)
(229,698) 203,318
Corporate income tax 314,975 390,187
Special mining right
Current:
Special mining right charge (note 11 (e)) 191,417 66,469
Amounts (over)/under provided in previous years 151 (238)
191,568 66,231
Deferred:
Origination and reversal of temporary differences 1,610 60,793
Special mining right 193,178 127,024
Income tax expense reported in the income statement 508,153 517,211
(1 During 2025, the Group received a favourable resolution to apply the
incentive for the North border region to prior years, resulting in a decrease
in current income tax of US$ 23.0 million.)
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Consolidated statement of comprehensive income:
Deferred income tax (charge)/credit related to items recognised directly in
other comprehensive income:
Changes in fair value of cash flow hedges 135 60
Changes in fair value of equity investments at FVOCI (21,257) (10,593)
Remeasurement losses on defined benefit plans 389 31
Income tax effect reported in other comprehensive income (20,733) (10,502)
(b) Reconciliation of the income tax expense at the Group's statutory income
rate to income tax expense at the Group's effective income tax rate:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Accounting profit before income tax 2,081,982 743,902
Tax at the Group's statutory corporate income tax rate 30.0% 624,595 223,171
Exchange rate effect on tax value of assets and liabilities(1) (192,494) 300,243
Expenses not deductible for tax purposes 9,023 7,122
Inflationary uplift of the tax base of assets and liabilities (50,670) (55,170)
Special mining right deductible for corporate income tax (58,359) (38,107)
Non-taxable/non-deductible foreign exchange effects (6,233) (18,601)
Update of tax values(2) - (13,468)
Incentive for Northern Border Zone (note 11 (e)) 425 (12,921)
Deferred tax asset not recognised 10,890 6,392
Inflationary uplift of tax losses (1,870) (4,701)
Current income tax (over)/underprovided in previous years (22,879) (1,977)
Inflationary uplift on tax refunds (1,157) (935)
Other 3,704 (861)
Corporate income tax at the effective tax rate of 15.1% (2024: 52.5%) 314,975 390,187
Special mining right 193,178 127,024
Tax at the effective income tax rate of 24.4% (2024: 69.5%) 508,153 517,211
(1 Mainly derived from the tax value of property, plant and equipment.)
(2 Correspond to the update of tax values of Juanicipio's property, plant and
equipment for assets expensed during 2021 to 2023.)
The most significant items reducing the effective tax rate are: a) the
exchange rate effect on the tax value of assets and liabilities. This amount
reflects the impact of converting the tax base of non-monetary assets (mainly
PPE) denominated in Mexican pesos into US dollars at closing foreign exchange
rate (instead of historical rates), b) the inflationary uplift of the tax base
of assets and liabilities as allowed under Mexican tax regulations, and c) the
deduction of the Special Mining Right. The future effects of inflation and
exchange rate will depend on future market conditions.
(c) Movements in deferred income tax liabilities and assets:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Opening net asset/(liability) 257,521 532,100
Income statement credit / (charge) arising on corporate income tax 229,698 (203,318)
Income statement charge arising on special mining right (1,610) (60,793)
Exchange differencewhy (16) 34
Net charge related to items directly charged to other comprehensive income (20,733) (10,502)
Closing net asset 464,860 257,521
The amounts of deferred income tax assets and liabilities as at 31 December
2025 and 2024, considering the nature of the related temporary differences,
are as follows:
Consolidated balance sheet Consolidated income statement
2025 2024 2025 2024
US$ thousands
US$ thousands
US$ thousands
US$ thousands
Related party receivables (430,412) (352,650) 77,762 171,414
Other receivables (4,452) (11,656) (7,205) 5,423
Inventories 150,911 148,629 (2,282) 3,749
Prepayments (4,847) (2,939) 1,908 (560)
Derivative financial instruments including Silverstream contract 191 (71,833) (71,889) (66,278)
Property, plant and equipment arising from corporate income tax 478,359 300,222 (178,137) 66,472
Exploration expenses and operating liabilities 106,974 90,201 (16,774) 17,510
Other payables and provisions 81,745 73,659 (8,086) 14,046
Losses carried forward 46,441 90,124 43,683 50,999
Post-employment benefits 2,819 1,821 (610) 310
Deductible profit sharing 6,089 3,974 (2,115) (3,121)
Special mining right deductible for corporate income tax 92,552 39,886 (52,666) (32,441)
Equity investments at FVOCI (676) (10,017) (30,598) 792
Other (9,739) 7,580 17,310 (24,996)
Net deferred tax asset related to corporate income tax 515,955 307,001
Deferred tax credit related to corporate income tax (229,698) 203,319
Related party receivables arising from special mining right (120,219) (99,487) 20,732 54,524
Inventories arising from special mining right 41,996 41,664 (332) (4,540)
Property plant and equipment arising from special mining right (10,688) (22,444) (11,757) 10,756
Other 37,816 30,787 (7,033) 52
Net deferred tax liability related to special mining rights (51,095) (49,480)
Deferred tax (charge)/credit (228,088) 264,111
Reflected in the statement of financial position as follows:
Deferred tax assets 610,367 466,734
Deferred tax liabilities (145,507) (209,213)
Net deferred tax asset 464,860 257,521
Deferred income tax assets and liabilities are offset when there is a legally
enforceable right to offset current tax assets against current tax liabilities
and when the deferred income tax assets and liabilities relate to the same
fiscal authority. Under Mexican tax legislation, tax losses cannot be offset
against taxable profits from other legal entities within the same group.
Based on management's internal forecast, a deferred tax asset of US$31.9
million (2024: US$79.6 million) has been recognised in respect of tax losses
amounting to US$106.4 million (2024: US$265.3 million). If not utilised,
US$15.7 million (2024: US$7.8 million) will expire within five years and
US$139.1 million (2024: US$292.6 million) will expire between six and ten
years. Of the total deferred tax asset related to losses, US$37.2 million
(2024: US$21.7 million) is covered by the existence of taxable temporary
differences, the remaining US$9.2 million (2024: US$57.9 million) corresponds
to Fresnillo plc which maintained a deferred net asset position. Management
has considered the taxable profit generated in the current year of US$190.3
million and based on a consideration of this, combined with future financial
and tax projections, Management considers that there is evidence that
sufficient taxable profits will be available against which these unused tax
losses can be utilised. Management has performed a sensitivity assessment on
key inputs of the deferred tax asset assessment, such as interest income or
finance expense. Management concluded that there are no reasonably possible
changes to these key inputs that could result in the deferred tax asset
recognised in respect of tax losses not being recoverable.
The Group has also performed an assessment of the recoverability of tax losses
from mining entities based on financial projections that are consistent with
the Group's impairment assessment (refer to note 13), together with relevant
tax projections which consider the amount and timing of certain tax
deductions. Based on those assumptions, the Group expects to fully utilise its
recognised losses.
The Group has further tax losses and other similar attributes carried forward
for companies out of Mexico of US$146.9 million (2024: US$119.7 million) on
which no deferred tax is recognised due to insufficient certainty regarding
the availability of appropriate future taxable profits. Based on the
applicable tax legislation the tax losses are not subject to expiry.
(d) Unrecognised deferred tax on investments in subsidiaries
The Group has not recognised all of the deferred tax liability in respect of
distributable reserves of its subsidiaries because it controls them and only
part of the temporary differences is expected to reverse in the foreseeable
future. The temporary differences for which a deferred tax liability has not
been recognised aggregate to US$1,544.9 million (2024: US$1,139.3 million).
(e) Corporate Income Tax ('Impuesto Sobre la Renta' or 'ISR') and Special
Mining Right ("SMR")
The Group's principal operating subsidiaries are Mexican residents for
taxation purposes. The rate of current corporate income tax is 30%.
On 30 December 2018, the Decree of tax incentives for the northern border
region of Mexico was published in the Official Gazette, which provided a
reduction of income tax by a third and also a reduction of 50% of the value
added tax rate, for taxpayers that produce income from business activities
carried out within the northern border region. The tax incentives were
applicable since 1 January 2019 and remained in force until 31 December 2020.
On 30 December 2020 an extension of the Decree was published in the Official
Gazette which remained in force until 31 December 2024. On 31 December 2025 a
further extension of the Decree was published in the Official Gazette which
remains in force until 31 December 2026. Some of the Group companies which
produce income from business activities carried out within Caborca, Sonora,
which is considered for purposes of the Decree as northern border region,
applied for this Decree tax incentives before the Mexican tax authorities, and
were granted authorization for income tax and value added tax purposes.
The special mining right "SMR" states that the owners of mining titles and
concessions are subject to pay an annual mining right of 8.5% of the profit
derived from the extractive activities and is considered as income tax under
IFRS. The 8.5% tax applies to a base of income before interest, annual
inflation adjustment, taxes paid on the regular activity, depreciation and
amortization, as defined by the new ISR. This SMR can be credited against the
corporate income tax of the same fiscal year and its payment must be remitted
no later than the last business day of March of the following year.
12. Earnings per share
Earnings per share ('EPS') is calculated by dividing profit for the year
attributable to equity shareholders of the Company by the weighted average
number of Ordinary Shares in issue during the period.
The Company has no dilutive potential Ordinary Shares.
As of 31 December 2025 and 2024, earnings per share have been calculated as
follows:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Earnings:
Profit attributable to equity holders of the Company 1,383,988 140,920
Adjusted profit attributable to equity holders of the Company 1,516,436 268,513
Adjusted profit is profit as disclosed in the Consolidated Income Statement
adjusted to exclude revaluation effects of the Silverstream contract of
US$189.2 million loss (US$132.4 million net of tax) (2024: US$240.3 million
loss (US$168.2 million net of tax)).
Adjusted earnings per share have been provided in order to provide a measure
of the underlying performance of the Group, prior to the revaluation effects
of the Silverstream contract, a derivative financial instrument.
2025 2024
thousands
thousands
Number of shares:
Weighted average number of Ordinary Shares in issue 736,894 736,894
2025 2024
US$
US$
Earnings per share:
Basic and diluted earnings per share 1.878 0.191
Adjusted basic and diluted earnings per Ordinary Share 2.058 0.364
13. Property, plant and equipment
Year ended 31 December 2025(1)
Land and Plant and equipment(2) Mining properties and development costs Other assets(3) Construction in progress Total
buildings
US$ thousands
Cost
At 1 January 2025 478,595 3,238,079 3,430,657 395,029 269,613 7,811,973
Additions - 6,994 4,056 4,250 422,812 438,112
Disposals(4) (3,366) (48,596) (266,703) (1,286) - (319,951)
Transfers and other movements 66,032 56,520 202,934 5,352 (330,838) -
At 31 December 2025 541,261 3,252,997 3,370,944 403,345 361,587 7,930,134
Accumulated depreciation
At 1 January 2025 (282,128) (2,230,801) (2,463,157) (297,222) - (5,273,308)
Depreciation for the year(5) (79,209) (143,682) (253,385) (16,506) - (492,782)
Disposals(4) 1,466 37,101 262,548 875 - 301,990
At 31 December 2025 (359,871) (2,337,382) (2,453,994) (312,853) - (5,464,100)
Net book amount at 31 December 2025 181,390 915,615 916,950 90,492 361,587 2,466,034
(1 Amounts include Right-of-use assets as described in note 25.)
(2 The amount of Property, plant and equipment related to Soledad &
Dipolos at 31 December 2025 is US$33.4 million and reflects capitalised mining
works and the amount recognised in the cost of)
(Property plant and equipment related to estimated remediation and closure
activities.)
(3 From the additions in "other assets" category US$6.1 million corresponds to
the reassessment of mine closure rehabilitations costs, see note 21.)
(4 From the total net amount of disposals, US$16.0 million correspond to a
write off of assets as disclosed in note 9.)
(5 Depreciation for the year includes US$491.6 million recognised as an
expense in the income statement and US$1.1 million capitalised as part of
construction in progress.)
Year ended 31 December 2024(3)
Land and Plant and equipment(4) Mining properties and development costs Other assets(2) Construction in progress Total
buildings
US$ thousands
Cost
At 1 January 2024 435,884 3,132,445 3,240,706 453,048 285,473 7,547,556
Additions 40,627 32,215 144,041 (51,426) 136,565 302,022
Disposals(5) (70) (27,069) (4,148) (6,318) - (37,605)
Transfers and other movements 2,154 100,488 50,058 (275) (152,425) -
At 31 December 2024 478,595 3,238,079 3,430,657 395,029 269,613 7,811,973
Accumulated depreciation
At 1 January 2024 (246,713) (1,991,095) (2,185,700) (263,132) - (4,686,640)
Depreciation for the year(1) (35,483) (265,219) (281,539) (40,119) - (622,360)
Disposals(4) 68 25,513 4,082 6,029 - 35,692
At 31 December 2024 (282,128) (2,230,801) (2,463,157) (297,222) - (5,273,308)
Net book amount at 31 December 2024 196,467 1,007,278 967,500 97,807 269,613 2,538,665
(1 Amounts include Right-of-use assets as described in note 25.)
(2 The amount of Property, plant and equipment related to Soledad &
Dipolos at 31 December 2024 is US$30.4 million and reflects capitalised mining
works and the amount recognised in the cost of)
(Property plant and equipment related to estimated remediation and closure
activities.)
(3 From the additions in "other assets" category US($42.7) million corresponds
to the reassessment of mine closure rehabilitations costs, see note 21.)
(4 From the total net amount of disposals, US$1.4 million correspond to a
write off of assets as disclosed in note 9.)
(5 Depreciation for the year includes US$620.9 million recognised as an
expense in the income statement and US$1.2 million capitalised as part of
construction in progress.)
( )
(
)
( )
( )
The table below details construction in progress by operating mine and
development projects
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Fresnillo 62,755 60,674
Saucito 84,346 81,712
Juanicipio 60,138 48,846
Cienega 8,058 13,843
San Julian 28,371 15,820
Herradura 117,513 48,422
Other(1) 406 296
361,587 269,613
(1) (Mainly) (corresponds to Minera Bermejal, S.A. de C.V. (2024: Minera
Bermejal, S.A. de C.V.).)
14. Silverstream contract
On 31 December 2007, the Group entered into an agreement with Peñoles through
which the Group is entitled to receive the proceeds received by the Peñoles
Group in respect of the refined silver sold from the Sabinas Mine ('Sabinas'),
a base-metal polymetallic mine owned and operated by the Peñoles Group. The
agreement required an upfront payment of US$350 million by Fresnillo. In
addition, a per ounce cash payment of US$2.00 in years one to five and US$5.00
thereafter (subject to an inflationary adjustment that commenced from 31
December 2013) is payable to Peñoles. The cash payment to Peñoles per ounce
of silver for the year ended 31 December 2025 was US$5.83 per ounce (2024:
$5.74 per ounce). Under the contract, the Group has the option to receive a
net cash settlement from Peñoles attributable to the silver produced and sold
from Sabinas, to take delivery of an equivalent amount of refined silver or to
receive settlement in the form of both cash and silver. If, by 31 December
2032, the amount of silver produced by Sabinas were to be less than 60 million
ounces, a further payment would have been due from Peñoles to the Group of
US$1.0 per ounce of shortfall.
On 12 November 2024 Fresnillo announced it had received notification from
Peñoles, the owner and operator of the Sabinas mine, that the mine was
experiencing operational and financial difficulties impacting silver
production and the long-term viability of the mine and consequently of the
Agreement. Fresnillo and Peñoles immediately set up a working group to assess
the extent of the challenges faced by the mine and identify a realistic and
sustainable solution for the Sabinas mine and the Agreement. As a result,
Fresnillo reported a revaluation loss of the Agreement, net of its
amortisation and before taxes, of US$182.3 million in its 2024 accounts,
valuing the Agreement at US$258.6 million before taxes.
In May 2025 the Group received an updated reserves report that was based on
additional information obtained in 2025 from Peñoles for the Sabinas mine,
audited independently by SRK Consulting in July, which used a rigorous
criterion, including higher cut off grades and new analysis of infill
exploration data. This showed a significant reduction in reserves from
previous reports (more than 50%). In light of this additional information, a
revised mine plan and sequencing programme were drawn up which materially
impacted future production and free cash flow projections.
The Group together with Peñoles assessed strategic options for Sabinas given
the financial profile of the mine whereby revenues did not cover its
operational costs, nor the obligations imposed by the Agreement. These options
included changing the terms and conditions of the Silverstream Agreement
(increasing the strike price), the transfer of ownership of the mine to
Fresnillo (becoming the owner and operator) and other ownership structures, in
lieu of the Agreement, or immediate suspension of mine operations for an
indefinite period. Based on the analysis and after careful consideration, it
was concluded there was no realistic prospect of increasing the expected value
of the mine and therefore the options listed above were not considered viable
options, nor was continuing the Agreement in its current form viable
Finally, Peñoles offered US$40 million to terminate the Silverstream
agreement as an additional alternative. Based on the above-mentioned analysis
Management considered this to be the best option in terms of risk and rewards.
The Independent Directors of Fresnillo received financial advice from Bank of
America Securities in relation to the consideration payable by Peñoles to
Fresnillo to buy back the Silverstream agreement. The Independent Directors
considered the valuation offered by the buyback of the Silverstream Agreement
was fair and in the best interests of Fresnillo shareholders given the
considerable challenges identified.
On 26 August 2025, Fresnillo received the final US$40 million one-off payment
from Peñoles, which considers the buyback date to be the 31 July 2025.
Until 31 July 2025, the Silverstream contract represented a derivative
financial instrument which had been recorded at FVPL and classified within
non-current and current assets as appropriate. In the year ended 31 December
2025 total proceeds received in cash were US$45.9 million, plus US$40 million
relating to the final settlement payment (2024: US$30.0 million) of which,
US$16.5 million was in respect of proceeds receivable as at 31 December 2024
(2024: US$5.0 million in respect of proceeds receivable as at 31 December
2023). Cash received in respect of the year of US$69.5 million (2024: US$24.9
million) corresponds to 2.0 million ounces of payable silver (2024: 1.4
million ounces). As at 31 December 2025 no amount was due As at 31 December
2024, a further US$16.5 million of cash receivable corresponding to 713,061
ounces of silver was due.
A reconciliation of the beginning balance to the ending balance is shown
below:
2025 2024
US$ thousands
US$ thousands
Balance at 1 January 258,641 482,340
Cash received in respect of the year (69,429) (24,907)
Cash receivable - (16,515)
Remeasurement losses recognised in profit and loss (189,212) (182,276)
Balance at 31 December - 258,641
Less - Current portion - 44,204
Non-current portion - 214,437
The US$189.2 million realised loss recorded in the income statement (31
December 2024: US$182.3 million loss) mainly resulted from the decrease in
reserves in Sabinas mine which underlies the change in the final proceeds.
As of 31 December 2024, the fair value of Silverstream contract was based on
the following significant assumptions:
- Forecasted volumes (millions of ounces/moz)
- Silver to be produced and sold over the life of mine 29.0 moz
- Average annual silver to be produced and sold 2.9 moz
- Weighted average discount rate 20.1%
- Future silver prices (US$ per ounce)
Year ended 31 December Year 1 Year 2 Year 3 Year 4 Year 5 Long-term
2024 29.70 31.36 32.74 33.31 33.77 24.5
15. Inventories
As at 31 December
2025 2024
US$ thousands
US$ thousands
Finished goods(1) 69,704 36,766
Work in progress(2) 259,577 274,936
Ore stockpile(3) 11,087 6,281
Operating materials and spare parts 179,001 177,043
519,369 495,026
Allowance for obsolete and slow-moving inventories (16,771) (12,849)
Balance as 31 December 502,598 482,177
Less - Current portion 432,838 412,417
Non-current portion(4) 69,760 69,760
(1 Finished goods include metals contained in concentrates, doré bars and
activated carbon on hand or in transit to a smelter or refinery.)
(2 Work in progress includes metals contained in ores on leaching pads for an
amount of US$218.3 million (2024: US$253.5 million) and in stockpiles US$41.3
million (2024: US$21.4 million) that will be processed in dynamic leaching
plants (note 2(c)).)
(3 Ore stockpile includes ore mineral obtained at Juanicipio.)
(4 Non-current inventories relate to ore in leaching pads where the leaching
process has stopped and is not expected to restart within twelve months. As at
31 December 2025 and 2024 non-current inventories corresponds to Soledad &
Dipolos mine unit (note 2 (c)).)
Concentrates are a product containing sulphides with variable content of
precious and base metals and are sold to smelters and/or refineries. Doré is
an alloy containing a variable mixture of gold and silver that is delivered in
bar form to refineries. Activated carbon is a product containing variable
mixture of gold and silver that is delivered in small particles.
The amount of inventories recognised as an expense in the year was US$1,897
million (2024: US$2,254 million). During 2025 and 2024, there was no
adjustment to net realisable value allowance against work-in-progress
inventory. The adjustment to the allowance for obsolete and slow-moving
inventory recognised as an expense was US$3.9 million (2024: US$6.2 million).
16. Trade and other receivables
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Trade receivables from related parties (note 27) 760,177 548,760
Value Added Tax receivable 46,419 89,441
Other receivables from related parties (note 27a) 1,355 17,339
Other trade receivables 6,312 2,079
Other receivables 16,618 16,885
830,881 674,504
Expected credit loss of 'Other receivables' (296) (293)
Trade and other receivables classified as current assets 830,585 674,211
Other receivables classified as non-current assets:
Other receivables 411 5,264
Value Added Tax receivable 41,099 -
Trade and other receivables classified as non-current assets 41,510 5,264
Total trade and other receivables 872,095 679,475
Trade receivables are shown net of any corresponding advances, are
non-interest bearing and generally have payment terms of 46 to 60 days.
The total receivables denominated in US dollars were US$783.4 million (2024:
US$584.1 million), and in Mexican pesos US$87.5 million (2024: US$95.4
million)
Balances corresponding to Value Added Tax receivables and US$3.3 million
within Other receivables (2024: US$2.3 million) are not financial assets.
As of 31 December for each year presented, except for 'other receivables' in
the table above, all trade and other receivables were neither past due nor
credit-impaired. The amount past due and considered as credit-impaired as of
31 December 2025 is US$1.4 million (2024: US$0.3 million). Trade receivables
from related parties and other receivables from related parties (see note 14)
are classified as financial assets at FVTPL and are therefore not considered
in the expected credit loss analysis. In determining the recoverability of
receivables, the Group performs a risk analysis considering the type and age
of the outstanding receivable and the credit worthiness of the counterparty,
see note 31(b).
17. Cash and cash equivalents and short-term investments
The Group considers cash and cash equivalents when planning its operations and
in order to achieve its treasury objectives.
As at 31 December
2025 2024
US$ thousands
US$ thousands
Cash at bank and on hand 7,070 2,194
Short-term deposits 2,656,673 1,108,219
Cash and cash equivalents 2,663,743 1,110,413
Cash at bank earns interest at floating rates based on daily bank deposits.
Short-term deposits are made for varying periods of between one day and three
months, depending on the immediate cash requirements of the Group, and earn
interest at the respective short-term deposit rates. Short-term deposits can
be withdrawn at short notice without any penalty or loss in value.
As at 31 December
2025 2024
US$ thousands
US$ thousands
Short-term investments 92,733 187,403
Short-term investments are made for fixed periods longer than three months and
earn interest at fixed rates without an option for early withdrawal. As at 31
December 2025 short-term investments are held in fixed-term bank deposits of
US$92.7million (31 December 2024: US$187.4 million).
18. Equity
Share capital and share premium
Authorised share capital of the Company is as follows:
As at 31 December
2025 2024
Class of share Number Amount Number Amount
Ordinary Shares each of US$0.50 1,000,000,000 $500,000,000 1,000,000,000 $500,000,000
Sterling Deferred Ordinary Shares each of £1.00 50,000 £50,000 50,000 £50,000
Issued share capital of the Company is as follows:
Ordinary Shares Sterling Deferred Ordinary Shares
Number US$ Number £
At 1 January 2024 736,893,589 $368,545,586 50,000 £50,000
At 31 December 2024 736,893,589 $368,545,586 50,000 £50,000
At 31 December 2025 736,893,589 $368,545,586 50,000 £50,000
As at 31 December 2025 and 2024, all issued shares with a par value of US$0.50
each are fully paid. The rights and obligations attached to these shares are
governed by law and the Company's Articles of Association. Ordinary
shareholders are entitled to receive notice and to attend and speak at any
general meeting of the Company. There are no restrictions on the transfer of
the Ordinary shares.
The Sterling Deferred Ordinary Shares only entitle the shareholder on winding
up or on a return of capital to payment of the amount paid up after repayment
to Ordinary Shareholders. The Sterling Deferred Ordinary Shares do not entitle
the holder to payment of any dividend, or to receive notice or to attend and
speak at any general meeting of the Company. The Company may also at its
option redeem the Sterling Deferred Ordinary Shares at a price of £1.00 or,
as custodian, purchase or cancel the Sterling Deferred Ordinary Shares or
require the holder to transfer the Sterling Deferred Ordinary Shares. Except
at the option of the Company, the Sterling Deferred Ordinary Shares are not
transferrable.
Reserves
Share premium
This reserve records the consideration premium for shares issued at a value
that exceeds their nominal value.
Capital reserve
The capital reserve arose as a consequence of the Pre-IPO Reorganisation as a
result of using the pooling of interest method.
Hedging reserve
This reserve records the portion of the gain or loss on a hedging instrument
in a cash flow hedge that is determined to be an effective hedge, net of tax.
When the hedged transaction occurs, the gain or the loss is transferred out of
equity to the income statement or the value of other assets.
Fair value reserve of financial assets at FVOCI
The Group has elected to recognise changes in the fair value of certain
investments in equity securities in OCI, as explained in note 2(g) . These
changes are accumulated within the FVOCI reserve within equity. The Group
transfers amounts from this reserve to retained earnings when the relevant
equity securities are derecognised.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange
differences arising from the translation of the financial information of
entities with a functional currency different to that of the presentational
currency of the Group.
Retained earnings
This reserve records the accumulated results of the Group, less any
distributions and dividends paid.
19. Dividends declared and paid
The dividends declared and paid during the years ended 31 December 2025 and
2024 are as follows:
US cents per Amount
Ordinary Share
US$ thousands
Year ended 31 December 2025
Final dividend for 2024 declared and paid during the year(1) 26.1 192,329
Special dividend for 2024 declared and paid during the year(2) 41.8 307,992
Interim dividend for 2025 declared and paid during the year(3) 20.8 153,274
88.7 653,595
Year ended 31 December 2024
Final dividend for 2023 declared and paid during the year(4) 4.2 30,950
Interim dividend for 2024 declared and paid during the year(5) 6.4 47,161
10.6 78,111
(1 This dividend was approved by the Shareholders on 20 May 2025 and paid on
30 May 2025)
(2 This dividend was approved by the Shareholders on 20 May 2025 and paid on
30 May 2025)
(3 This dividend was approved by the Board of Directors on 28 July 2025 and
paid on 17 September 2025)
(4 This dividend was approved by the Shareholders on 21 May 2024 and paid on
29 May 2024)
(5 This dividend was approved by the Board of Directors on 29 July 2024 and
paid on 17 September 2024)
A reconciliation between dividend declared, dividends affected to retained
earnings and dividend presented in the cash flow statements is as follows:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Dividends declared 653,595 78,111
Foreign exchange effect 30 -
Dividends recognised in retained earnings 653,625 78,111
Foreign exchange and hedging effect 688 45
Dividends paid 654,313 78,156
The directors have proposed a final dividend of US$108.12 cents per share,
which is subject to approval at the annual general meeting and is not
recognised as a liability as at 31 December 2025. Dividends paid from the
profits generated from 1 January 2014 to residents in Mexico and to
non-resident shareholders may be subject to an additional tax of up to 10%,
which will be withheld by the Group.
20. Interest-bearing loans
Senior Notes
On 2 October 2020, the Group completed its offering of US$850 million
aggregate principal amount of 4.250% Senior Notes due 2050 in the Euronext
Dublin. Movements in the year in the debt recognised in the balance sheet are
as follows:
As at 31 December
2025 2024
US$ thousands US$ thousands
Opening balance 839,507 839,002
Accrued interest 37,986 38,093
Interest paid(1) (37,986) (37,986)
Amortisation of discount and transaction costs 419 398
Closing balance 839,926 839,507
(1 Interest is payable semi-annually on 2 April and 2 October for 4.250%
senior notes.)
The Group has the following restrictions derived from the issuance of all
outstanding Senior Notes:
Change of control:
Should the rating of the senior notes be downgraded as a result of a change of
control (defined as the sale or transfer of 35% or more of the common shares;
the transfer of all or substantially all the assets of the Group; starting a
dissolution or liquidation process; or the loss of the majority in the board
of directors) the Group is obligated to repurchase the notes at an equivalent
price of 101% of their nominal value plus the interest earned at the
repurchase date, if requested to do so by any creditor.
Pledge on assets:
The Group shall not pledge or allow a pledge on any property that may have a
material impact on business performance (key assets). Nevertheless, the Group
may pledge the aforementioned properties provided that the repayment of the
Notes keeps the same level of priority as the pledge on those assets.
21. Provision for mine closure cost
The provision represents the discounted values of the risk-adjusted estimated
cost to decommission and rehabilitate the mines at the estimated date of
depletion of mine deposits. Uncertainties in estimating these costs include
potential changes in regulatory requirements, decommissioning, dismantling and
reclamation alternatives, timing; the effects of climate change, and the
discount, foreign exchange and inflation rates applied. Closure provisions are
typically based on conceptual level studies that are refreshed at least every
three years. As these studies are renewed, they incorporate greater
consideration of forecast climate conditions at closure.
The Group has performed separate calculations of the provision by currency,
discounting at corresponding rates. As at 31 December 2025, the discount rates
used in the calculation of the parts of the provision that relate to Mexican
pesos range from 7.53% to 9.84% (2024: range from 9.84% to 10.50%). The range
for the current year parts that relate to US dollars range from 3.33% to 4.03%
(2024: range from 3.69% to 4.00%).
Mexican regulations regarding the decommissioning and rehabilitation of mines
are limited and less developed in comparison to regulations in many other
jurisdictions. It is the Group's intention to rehabilitate the mines beyond
the requirements of Mexican law, and estimated costs reflect this level of
expense. The Group intends to fully rehabilitate the affected areas at the end
of the lives of the mines.
The provision is expected to become payable at the end of the production life
of each mine, based on the estimation of reserves and resources, which ranges
from 2 to 25 years from 31 December 2025 (1 to 22 years from 31 December
2024). As at 31 December 2025 the weighted average term of the provision is 13
years (2024: 12 years).
As at 31 December
2025 2024
US$ thousands
US$ thousands
Opening balance 245,529 292,316
Decrease to existing provision (30,397) (4,072)
Effect of changes in discount rate 11,858 (28,736)
Unwinding of discount rate 22,360 24,997
Payments (2,512) (3,093)
Foreign exchange 25,644 (35,883)
Closing balance 272,482 245,529
Less - Current portion 9,961 11,781
Non-current portion 262,521 233,748
The provision is sensitive to a reasonably possible change in discount rates,
exchange rate US Dollar compared to Mexican peso, change in future costs, and
change in the expected life of mine (years). The sensitivity of these key
inputs is as follows:
Discount rate Foreign currency Estimated costs Change in LOM
Year ended 31 December Basis point increase/ Effect on provision: increase/ Strengthening/ Effect on provision: increase/ Increase/ Effect on provision: increase/ Increase/ Effect on provision: increase/
(decrease) (decrease) (weakening) (decrease) (decrease) (decrease) (decrease) (decrease)
in interest rate US$ thousands of US dollar US$ thousands in estimated costs US$ thousands in years US$ thousands
2025 50 3,112 10% (24,624) 10% 32,072 2 (10,179)
(50) (3,480) (5%) 14,256 (10%) (32,072) (2) 11,764
2024 50 8,783 10% (19,030) 5% 12,991 2 (9,751)
(50) (11,708) (5%) 11,017 (5%) (12,991) (2) 11,764
Change in the provision would be principally offset by a change to the value
of the associated asset unless the asset is fully depreciated, in which case
the change in estimate is recognised directly within the income statement.
22. Pensions and other post-employment benefit plans
The Group has a defined contribution plan and a defined benefit plan.
The defined contribution plan was established as from 1 July 2007 and consists
of periodic contributions made by each Mexican non-unionised worker and
contributions made by the Group to the fund matching workers' contributions,
capped at 8% of the employee's annual salary.
The defined benefit plan provides pension benefits based on each worker's
earnings and years of services provided by personnel hired up to 30 June 2007
as well as statutory seniority premiums for both unionised and non-unionised
workers.
The overall investment policy and strategy for the Group's defined benefit
plan is guided by the objective of achieving an investment return which,
together with contributions, ensures that there will be sufficient assets to
pay pension benefits and statutory seniority premiums for non-unionised
workers as they fall due while also mitigating the various risks of the plan.
However, the portion of the plan related to statutory seniority premiums for
unionised workers is not funded. The investment strategies for the plan are
generally managed under local laws and regulations. The actual asset
allocation is determined by current and expected economic and market
conditions and in consideration of specific asset class risk in the risk
profile. Within this framework, the Group ensures that the trustees consider
how the asset investment strategy correlates with the maturity profile of the
plan liabilities and the respective potential impact on the funded status of
the plan, including potential short-term liquidity requirements.
Death and disability benefits are covered through insurance policies.
The following tables provide information relating to changes in the defined
benefit obligation and the fair value of plan assets:
Pension cost charge to income statement Remeasurement gains/(losses) in
OCI
Balance at Net Foreign Sub-total recognised Benefits Return on plan assets (excluding amounts included Actuarial changes arising from changes in financial assumptions Sub-total included Contributions by employer Defined benefit decrease due to personnel transfer Balance at
1 January Service cost interest exchange in the year paid in net in OCI(1) 31 December
2025 interest 2025
US$ thousands
Defined benefit obligation (29,110) (1,618) (2,688) (3,884) (8,190) 1,859 (761) (1,462) (2,223) (56) (37,720)
Fair value of plan assets 17,656 1,519 2,390 3,909 (1,859) (216) (216) 481 17 19,988
Net benefit liability (11,454) (1,618) (1,169) (1,494) (4,281) - (977) (1,462) (2,439) 481 (39) (17,732)
Pension cost charge to income statement Remeasurement gains/(losses) in OCI
Balance at Net Foreign Sub-total recognised Benefits Return on plan assets (excluding amounts included Actuarial changes arising from changes in financial assumptions Sub-total included Contributions by employer Defined benefit decrease due to personnel transfer Balance at
1 January Service cost interest exchange in the year paid in net in OCI(1) 31 December
2024 interest 2024
US$ thousands
Defined benefit obligation (32,671) 222 (2,664) 5,713 3,271 1,458 (672) (672) (496) (29,110)
Fair value of plan assets 19,460 1,486 (2,914) (1,428) (1,458) 474 474 256 352 17,656
Net benefit liability (13,211) 222 (1,178) 2,799 1,843 0 474 (672) (198) 256 (144) (11,454)
Of the total defined benefit obligation, US$17.5 million (2024: US$12.1
million) relates to statutory seniority premiums for unionised workers which
are not funded. The expected contributions to the plan for the next annual
reporting period are nil. The principal assumptions used in determining
pension and other post-employment benefit obligations for the Group's plans
are shown below:
As at 31 December
2025 2024
%
%
Discount rate 9.09 10.14
Future salary increases (National Consumer Price Index) 5.25 5.25
The life expectancy of current and future pensioners, men and women aged 65
and older will live on average for a further 25 and 29 years respectively
(2024: 22.5 years for men and 23.7 for women). The weighted average duration
of the defined benefit obligation is 8.0 years (2024: 7.8 years).
The fair values of the plan assets were as follows:
As at 31 December
2025 2024
US$ thousands
US$ thousands
State owned companies 618 279
Mutual funds (fixed rates) 19,370 17,377
19,988 17,656
As at 31 December 2025 and 2024, all the funds were invested in quoted debt
instruments.
The pension plan has not invested in any of the Group's own financial
instruments nor in properties or assets used by the Group.
A quantitative sensitivity analysis for significant assumptions as at 31
December 2025 is as shown below:
Assumptions Discount rate Future salary increases Life expectancy of pensioners
(NCPI)
Sensitivity Level 0.5% 0.5% 0.5% + 1
0.5% Decrease increase decrease Increase
Increase
Year ended 31 December 2025 (1,378) 1,477 476 (456) (149)
(Decrease)/increase to the net defined benefit obligation (US$ thousands)
Year ended 31 December 2024 (1,026) 1,101 270 (260) 167
(Decrease)/increase to the net defined benefit obligation (US$ thousands)
The sensitivity analysis above has been determined based on a method that
extrapolates the impact on net defined benefit obligation as a result of
reasonable changes in key assumptions occurring at the end of the reporting
period. The pension plan is not sensitive to future changes in salaries other
than in respect of inflation.
23. Trade and other payables
As at 31 December
2025 2024
US$ thousands
US$ thousands
Trade payables 200,696 110,891
Other payables to related parties (note 27(a)) 40,720 39,203
Accrued expenses 68,210 38,188
Other taxes and contributions 65,549 35,497
375,175 223,779
Trade payables are mainly for the acquisition of materials, supplies and
contractor services. These payables do not accrue interest and no guarantees
have been granted. The fair value of trade and other payables approximate
their book values.
Balances corresponding to Accrued expenses and Other taxes and contributions
are not financial liabilities.
The Group's exposure to currency and liquidity risk related to trade and other
payables is disclosed in note 31.
24. Commitments
A summary of capital expenditure commitments by operating mines and
development project is as follows:
As at 31 December
2025 2024
US$ thousands
US$ thousands
Saucito 36,974 28,030
Fresnillo 41,934 20,324
San Julian 5,303 4,785
Juanicipio 23,963 21,776
Herradura 19,285 16,167
Cienega 3,047 2,603
Other(1) 841 657
131,347 94,342
(1 Mainly corresponds to Minera el Bermejal, S. de R.L. de C.V.
)
( )
25. Leases
(a) The Group as lessee
The Group leases various offices, buildings, plant and equipment and IT
equipment. The resulting lease liability is as follows:
As at
31 December 2025 31 December 2024
US$ thousands
US$ thousands
IT equipment 5,228 5,925
Plant and equipment 3,198 3,123
Buildings 2,621 2,845
Total lease liability 11,047 11,893
Less - Current portion 4,864 4,312
Non-current portion 6,183 7,581
The total cash outflow for leases for the year ended 31 December 2025, except
short term and low value leases, amounts to US$3.0 million (2024: US$7.0
million), including finance costs of US$1.0 million (2024: US$1.6 million).
The table below details right-of-use assets included as property plant and
equipment in note 13.
Year ended 31 December 2025
Buildings Computer equipment Plant and Equipment Total
US$ thousands
Cost
At 1 January 2025 5,907 15,788 4,139 25,834
Additions - 4,056 144 4,200
Disposals - (921) - (921)
At 31 December 2025 5,907 18,923 4,283 29,113
Accumulated depreciation
At 1 January 2025 (3,729) (10,301) (1,390) (15,420)
Depreciation for the year (640) (3,519) (502) (4,661)
Disposals - 179 - 179
At 31 December 2025 (4,369) (13,641) (1,892) (19,902)
Net book amount at 31 December 2025 1,538 5,282 2,391 9,211
Year ended 31 December 2024
Buildings Computer equipment Plant and Equipment Total
US$ thousands
Cost
At 1 January 2024 5,035 19,279 4,056 28,370
Additions 942 1,329 83 2,354
Disposals (70) (4,820) - (4,890)
At 31 December 2024 5,907 15,788 4,139 25,834
Accumulated depreciation
At 1 January 2024 (3,034) (11,155) (801) (14,990)
Depreciation for the year (763) (3,926) (589) (5,278)
Disposals 68 4,780 - 4,848
At 31 December 2024 (3,729) (10,301) (1,390) (15,420)
Net book amount at 31 December 2024 2,178 5,487 2,749 10,414
Amounts recognised in profit and loss for the year, additional to depreciation
of right-of-use assets, included US$1.1 million (2024: US$1.6 million)
relating to interest expense, US$15.7 million (2024: US$62.1 million) on
relating variable lease payments (note 6) of which US$2.1 million (2024:
US$2.9 million) were capitalised as a part of stripping cost, US$0.1 million
(2024: US$0.3 million) relating to short-term leases and US$3.1 million
(2024:US$2.7 million) relating to low-value assets.
(b) The Group as a lessor
Operating leases, in which the Group is the lessor, relate to mobile equipment
owned by the Group with lease terms of between 12 to 36 months. All operating
lease contracts contain market review clauses in the event that the lessee
exercises its option to renew. The lessee does not have an option to purchase
the equipment at the expiry of the lease period. The Group's leases as a
lessor are not material.
26. Contingencies
As of 31 December 2025, the Group has the following contingencies:
- The Group is subject to various laws and regulations which, if not
observed, could give rise to penalties.
- Tax periods remain open to review by the Mexican tax authorities
(SAT, by its Spanish acronym) in respect of income taxes for five years
following the date of the filing of corporate income tax returns, during which
time the authorities have the right to raise additional tax assessments
including penalties and interest. Under certain circumstances, the reviews may
cover longer periods. As such, there is a risk that transactions, and in
particular related party transactions, that have not been challenged in the
past by the authorities, may be challenged by them in the future.
It is not practical to determine the amount of any potential claims or the
likelihood of any unfavourable outcome arising from this or any future
inspections that may be initiated. However, management believes that its
interpretation of the relevant legislation is appropriate and that the Group
has complied with all regulations and paid or accrued all taxes and
withholding taxes that are applicable.
- On 8 May 2008, the Company and Peñoles entered into the
Separation Agreement (the 'Separation Agreement'). This agreement relates to
the separation of the Group and the Peñoles Group and governs certain aspects
of the relationship between the Fresnillo Group and the Peñoles Group
following the initial public offering in May 2008 ('Admission'). The
Separation Agreement provides for cross-indemnities between the Company and
Peñoles so that, in the case of Peñoles, it is held harmless against losses,
claims and liabilities (including tax liabilities) properly attributable to
the precious metals business of the Group and, in the case of the Company, it
is held harmless by Peñoles against losses, claims and liabilities which are
not properly attributable to the precious metals business. Save for any
liability arising in connection with tax, the aggregate liability of either
party under the indemnities shall not exceed US$250 million in aggregate.
- In 2011, following a flooding in the Saucito mine, Group filed an
insurance claim in respect of the damage caused (and in respect of business
interruption). This insurance claim was rejected by the insurance provider. In
early 2018, after the matter had been taken to mutually agreed arbitration,
the insurance claim was declared valid; however, there is disagreement about
the appropriate amount to be paid. In October 2018 the Group received US$13.6
million in respect of the insurance claim, however this does not constitute a
final settlement and management continues to pursue a higher insurance
payment. Due to the fact that negotiations are on-going and there is
uncertainty regarding the timing and amount involved in reaching a final
settlement with the insurer, it is currently not practicable to determine the
total amount expected to be recovered.
- On 4 July 2024, the SAT issued the tax assessment ruling regarding
the 2016 tax audit of Comercializadora de Metales Fresnillo where it confirmed
its findings on the tax treatment of the Silverstream premium payment
amounting to US$16.8 million, which includes the effect of time value of the
money, penalties and surcharges. The Company filed an administrative appeal on
30 August 2024 to challenge the SAT assessment.
- On 11 April, 2025, Comercializadora de Metales Fresnillo reached
an agreement with the SAT, so the SAT confirmed that the tax treatment applied
by the company is correct for considering the transaction as a financial
derivative transaction for tax purposes, and the premium paid by the company
and allocated in 2016, 2017 and 2018, is deductible for income tax purposes.
The company will not make any tax amendment for the years 2016 to 2018, and
the SAT also confirmed its tax treatment for the year 2019. Currently, the
agreement reached with the SAT is still being implemented as follows: The
administrative appeal filed by the Company to challenge the SAT assessment for
2016 is in the process of being revoked; the 2017, 2018 and 2019 tax audits
have been concluded by the SAT.
Regarding the Minera Fresnillo, Minera Penmont, and Minera Saucito tax audits
for the year 2019, findings were shared by the SAT on 9 December 2025,11
December 2025, and 15 December 2025, respectively. The SAT´s findings relate
mainly to consider non-deductible expenses for income tax purposes, the union
payments, the travel expenses and in the case of Minera Fresnillo, also the
administrative services payments. In addition, in the case of Minera Penmont
and Minera Saucito, the SAT is challenging the VAT vs Income Tax Compensation
(Compensación Universal). Also, the SAT is challenging the transfer pricing
analysis of certain transactions made by the companies with its related
parties. The companies responded to the SAT on January 2026 and began a
Conclusive Agreement procedure before the Mexican tax ombudsman (PRODECON).
It is not practical to determine the amount of any potential claims or the
likelihood of any unfavourable outcome arising from this or any future
inspections that may be initiated.
The Directors and their external tax advisors consider management´s
interpretation of the relevant legislation and assessment of taxation to be
appropriate, that the Group has complied with all regulations and paid or
accrued all taxes and withholdings that are applicable and that it is probable
that the Group's tax position will be sustained.
- It is probable that interest income will be earned on the Group's
outstanding income and value added tax receivable balances; however, there is
no certainty that this interest will be realised until the underlying balance
is recovered. Due to that uncertainty, it is also not practicable to estimate
the amount of interest income earned but not recovered to date.
27. Related party balances and transactions
The Group had the following related party transactions during the years ended
31 December 2025 and 2024 and balances as at 31 December 2025 and 2024.
Related parties are those entities owned or controlled by the ultimate
controlling party, as well as those who have a minority participation in Group
companies and key management personnel of the Group.
(a) Related party balances
Accounts receivable Accounts payable
As at 31 December As at 31 December
2025 2024 2025 2024
US$ thousands
US$ thousands
US$ thousands
US$ thousands
Trade:
Metalúrgica Met-Mex Peñoles, S.A. de C.V. 760,177 548,760 - 6,622
Other:
Industrias Peñoles, S.A.B. de C.V.(1) - 16,516 - -
Metalúrgica Met-Mex Peñoles, S.A. de C.V. - 322 1,886 1,791
Servicios Administrativos Peñoles, S.A. de C.V. - - 10,688 6,420
Servicios Especializados Peñoles, S.A. de C.V. - - 8,995 10,374
Fuentes de Energía Peñoles, S.A. de C.V. - - 10,624 6,373
Termoeléctrica Peñoles, S. de R.L. de C.V. - - - 439
Peñoles Tecnología, S.A. de C.V. - - 1,282 1,640
Eólica de Coahuila S.A. de C.V. - - 4,076 2,693
Minera Capela, S.A. de C.V. - - - 2
Grupo Nacional Provincial, S.A. B. de C.V.(2) 995 357 - -
Other 360 144 3,169 2,849
Sub-total 761,532 566,099 40,720 39,203
Less-current portion 761,532 566,099 40,720 39,203
Non-current portion - - - -
(1 This balance corresponds to the cash receivable related to the Silverstream
contract, see note 14.)
(2 This balance corresponds to excess payments to the defined contribution
plan which will be refunded.)
Related party accounts receivable and payable will be settled in cash.
Other balances with related parties:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Silverstream contract:
Industrias Peñoles, S.A.B. de C.V. - 258,641
As of 31 December 2025, the Silverstream contract has been settled in cash. As
of 31 December 2024, the Silverstream contract can be settled in either silver
or cash. Details of the Silverstream contract are provided in note 14.
(b) Principal transactions with affiliates, including Industrias Peñoles
S.A.B de C.V., the Company's parent, are as follows:
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Income:
Sales:
Metalúrgica Met-Mex Peñoles, S.A. de C.V. (1) 4,552,684 3,481,650
Insurance recovery
Grupo Nacional Provincial, S.A. B. de C.V. 246 8,317
Other income 7,574 4,678
Total income 4,560,504 3,494,645
(1 Invoiced revenue are derived from the value of metal content which is
determined by commodity market prices and adjusted for the treatment and
refining charges to be incurred by the metallurgical complex (refer to note
5(c)).)
(
)
( )
( )
( )
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Expenses:
Administrative services:
Servicios Administrativos Peñoles, S.A. de C.V. (2) 51,171 52,352
Servicios Especializados Peñoles, S.A. de C.V. (3) 14,938 18,738
Peñoles Tecnología, S.A. de C.V. 6,387 4,970
72,496 76,060
Energy:
Termoeléctrica Peñoles, S. de R.L. de C.V. - 7,295
Fuentes de Energía Peñoles, S.A. de C.V. 38,410 35,711
Eólica de Coahuila S.A. de C.V. 39,561 46,057
77,971 89,063
Operating materials and spare parts:
Wideco Inc 5,652 5,315
Metalúrgica Met-Mex Peñoles, S.A. de C.V. 15,038 55,525
20,690 60,840
Equipment repair and administrative services:
Serviminas, S.A. de C.V. 750 2,760
Insurance premiums:
Grupo Nacional Provincial, S.A. B. de C.V. 25,598 21,068
Other expenses: 3,513 2,755
Total expenses 201,018 252,546
(2 Includes US$0.9million (2024: US$0.9 million) corresponding to expenses
reimbursed.)
(3 Includes US$8.6 million (2024: US$8.5 million) relating to engineering
costs that were capitalised.)
(c) Compensation of key management personnel of the Group
Key management personnel include the members of the Board of Directors and the
Executive Committee.
Year ended 31 December
2025 2024
US$ thousands
US$ thousands
Salaries and bonuses 7,612 6,044
Post-employment benefits 432 395
Other benefits 388 342
Total compensation paid in respect of key management personnel 8,432 6,781
As at 31 December
2025 2024
US$ thousands
US$ thousands
Accumulated accrued defined benefit pension entitlement 5,393 4,325
This compensation includes amounts paid to directors disclosed in the
Directors' Remuneration Report.
The accumulated accrued defined pension entitlement represents benefits
accrued at the time the benefits were frozen. There are no further benefits
accruing under the defined benefit scheme in respect of current services.
28. Auditor's remuneration
Fees due by the Group to its auditor during the year ended 31 December 2025
and 2024 are as follows:
Year ended 31 December
Class of services 2025 2024
US$ thousands
US$ thousands
Fees payable to the Group's auditor for the audit of the Group's annual 2,077 2,048
accounts
Fees payable to the Group's auditor and its associates for other services as
follows:
The audit of the Company's subsidiaries pursuant to legislation 892 975
Audit-related assurance services(1) 860 748
Total 3,829 3,771
(1 Includes US$0.7 million (2024: US$0.6 million) for the limited review of
the Half Yearly financial report, US$0.1 (2024: US$0.2 million) for the
Mexican tax audit opinions and US$0.1 million (2024: US$0.1 million) for the
limited assurance services over certain GHG's KPIs.)
29. Notes to the consolidated statement of cash flows
Notes 2025 2024
US$ thousands
US$ thousands
Reconciliation of profit for the year to net cash generated from operating
activities
Profit for the year 1,573,829 226,691
Adjustments to reconcile profit for the period to net cash inflows from
operating activities:
Depreciation and amortisation 13 491,636 620,867
Employee profit sharing 8 15,859 13,609
Deferred income tax (credit)/expense 11 (224,789) 264,111
Current income tax expense 11 732,942 253,100
Write-off of assets 9 15,988 1,704
Gain on the sale of property, plant and equipment and other assets (286) (1,004)
Net finance costs (24,238) 25,131
Unrealised foreign exchange loss/(gain) 30,261 (2,200)
Difference between pension contributions paid and amounts recognised in the 1,657 (63)
income statement
Dividends received from equity instruments at FVOCI (1,754) -
Non-cash movement on derivatives (297) (301)
Changes in fair value of Silverstream 14 189,212 182,276
Change in mine closure cost provision 9 344 8
Gain on sale of mining concessions 9 (13,050) (24,149)
Other - -
Working capital adjustments
Increase in trade and other receivables (208,292) (196,196)
(Increase)/decrease in prepayments and other assets (20,076) 10,741
(Increase)/decrease in inventories (20,421) 50,556
Increase/(decrease) in trade and other payables 120,664 (28,016)
Cash generated from operations 2,659,189 1,396,865
Income tax paid(1) (357,561) (94,957)
Employee profit sharing paid (11,921) (2,106)
Net cash from operating activities 2,289,707 1,299,802
(1) (Income tax paid includes US$294.3 million corresponding to corporate
income tax (2024: US$72.1 million) and US$63.2 million corresponding to
special mining right (2024: US$22.9 million), for further information refer to
note 11.)
30. Financial instruments
(a) Fair value category
As at 31 December 2025
US$ thousands
Financial assets: Amortized Fair value through OCI Fair value (hedging instruments) Fair value through profit or loss
cost
Trade and other receivables(1) 21,341 - - 760,177
Equity instruments at FVOCI - 34,537 - -
Silverstream contract (note 14) - - - -
Derivative financial instruments - - 103 -
Financial liabilities: Amortized Fair value (hedging instruments) Fair value through profit or loss
cost
Interest-bearing loans (note 20) - 839,926 - -
Trade and other payables (note 23) - 241,416 - -
Derivative financial instruments - - 741 -
As at 31 December 2024
US$ thousands
Financial assets: Amortized Fair value through OCI Fair value (hedging instruments) Fair value through profit or loss
cost
Trade and other receivables(1) 8,542 - - 565,276
Equity instruments at FVOCI - 139,968 - -
Silverstream contract (note 14) - - - 258,641
Financial liabilities: Amortized Fair value (hedging instruments) Fair value through profit or loss
cost
Interest-bearing loans (note 20) 839,507 - -
Notes payable(2) 2,055 - -
Trade and other payables (note 23) 150,094 - -
Derivative financial instruments - 189 -
(
)
( )
( )
(1 Trade and other receivables and embedded derivative within sales contracts
are presented net in Trade and other receivables in the balance sheet.)
(2 Corresponds to interest-bearing notes payable received from Minera los
Lagartos, S.A. de C.V. which holds a non-controlling interest in Juanicipio
project. The notes are denominated in US Dollars and bear interest at a of
6.76%. Interest paid amounted to US$5.0 million.)
(b) Fair value measurement
The value of financial assets and liabilities other than those measured at
fair value are as follows:
As at 31 December
Carrying amount Fair value
2025 2024 2025 2024
US$ thousands
US$ thousands
US$ thousands
US$ thousands
Financial assets:
Trade and other receivables 21,341 8,542 21,341 8,542
Financial liabilities:
Interest-bearing loans(1) (note 20) 839,926 839,507 678,215 605,396
Trade and other payables 241,416 150,094 241,416 150,094
Notes payable - 2,055 - 2,055
(1 Interest-bearing loans are categorised in Level 1 of the fair value
hierarchy.)
The financial assets and liabilities measured at fair value are categorised
into the fair value hierarchy as at 31 December as follows:
As of 31 December 2025
Fair value measure using
Quoted prices in active markets Level 1 Significant observable Level 2 Significant unobservable Level 3 Total
US$ thousands US$ thousands
US$ thousands
US$ thousands
Financial assets:
Trade receivables - - 760,177 760,177
Derivative financial instruments:
Option and forward foreign exchange contracts - 103 - 103
Other financial assets:
Equity instruments at FVOCI 34,537 - - 34,537
-
(1 This balance corresponds to the cash receivable related to the Silverstream
contract, see note 14.)
(
)
( )
As of 31 December 2024
Fair value measure using
Quoted prices in active markets Level 1 Significant observable Level 2 Significant unobservable Level 3 Total
US$ thousands US$ thousands
US$ thousands
US$ thousands
Financial assets:
Trade receivables - - 548,760 548,760
Other receivables from related parties(1) - - 16,516 16,516
Derivative financial instruments:
Silverstream contract - - 258,641 258,641
Other financial assets:
Equity instruments at FVOCI 139,968 - - 139,968
139,968 - 823,917 963,885
(1 This balance corresponds to the cash receivable related to the Silverstream
contract, see note 14.)
There have been no transfers between Level 1 and Level 2 of the fair value
hierarchy, and no transfers into and out of Level 3 fair value measurements.
A reconciliation of the opening balance to the closing balance for Level 3
financial instruments other than Silverstream (which is disclosed in note 14)
is shown below:
2025 2024
US$ thousands
US$ thousands
Balance at 1 January: 548,760 306,668
Sales 4,512,967 3,503,662
Cash collection (4,349,814) (3,254,312)
Changes in fair value 83,129 32,638
Realised embedded derivatives during the year (34,865) (39,896)
Balance at 31 December 760,177 548,760
The fair value of financial assets and liabilities is included at reflects the
amount at which the instrument could be exchanged in a current transaction
between willing parties, other than in a forced or liquidation sale.
The following valuation techniques were used to estimate the fair values:
Option and forward foreign exchange contracts
The Group enters into derivative financial instruments with various
counterparties, principally financial institutions with investment grade
credit ratings. The foreign currency forward (Level 2) contracts are measured
based on observable spot exchange rates, the yield curves of the respective
currencies as well as the currency basis spreads between the respective
currencies. The foreign currency option contracts are valued using the Black
Scholes model, the significant inputs to which include observable spot
exchange rates, interest rates and the volatility of the currency.
Silverstream contract
Further information relating to the valuation techniques used to estimate the
fair value of the Silverstream contract as well as the sensitivity of the
valuation to the key inputs are disclosed in note 14.
Equity investments:
The fair value of equity investments is derived from quoted market prices in
active markets (Level 1). These investments were irrevocably designated at
fair value through OCI as the Group considers these investments to be
strategic in nature. As of 31 December 2025, approximately 58.6% of the
investments correspond to 2,800,0000 shares (2024: 2,800,000 shares) of
Endeavor Silver Corp. for an amount of US$26.3 million (2024: US$10.3
million). These equity investments are listed on the Toronto stock Exchange.
The price per share as 31 December 2025 were US$12.91 (2024: US$3.66).
During May and June 2025, the Group disposed its equity investment of
9,314,877 shares in MAG Silver, Corp. The shares sold had a fair value of
US$176.6 million and the Group realised a gain of US$128.6 million which had
already been included in OCI. This gain has been transferred to retained
earnings, net of tax amounting to US$38.6 million.
Interest-bearing loans
The fair value of the Group's interest-bearing loan is derived from quoted
market prices in active markets (Level 1).
Trade receivables:
Sales of concentrates, precipitates doré bars and activated carbon are
'provisionally priced' and revenue is initially recognised using this
provisional price and the Group's best estimate of the contained metal.
Revenue is subject to final price and metal content adjustments subsequent to
the date of delivery (see note 2 (o)). This price exposure is considered to be
an embedded derivative and therefore the entire related trade receivable is
measured at fair value.
At each reporting date, the provisionally priced metal content is revalued
based on the forward selling price for the quotational period stipulated in
the relevant sales contract. The selling price of metals can be reliably
measured as these metals are actively traded on international exchanges but
the estimated metal content is a non-observable input to this valuation.
31. Financial risk management
Overview
The Group's principal financial assets and liabilities, other than
derivatives, comprise trade and other receivables, cash, equity instruments at
FVOCI, interest-bearing loans, notes payable and trade payables.
The Group has exposure to the following risks from its use of financial
instruments:
- Market risk, including foreign currency, commodity price, interest
rate and equity price risks
- Credit risk
- Liquidity risk
This note presents information about the Group's exposure to each of the above
risks and the Group's objectives, policies and processes for assessing and
managing risk. Further quantitative disclosures are included throughout the
financial statements.
The Board of Directors has overall responsibility for the establishment and
oversight of the Group's risk management framework.
The Group's risk management policies are established to identify and analyse
the risks faced by the Group, to set appropriate risk limits and controls, and
to monitor risks and adherence to limits. Risk management policies and systems
are reviewed regularly to reflect changes in market conditions and the Group's
activities. The Group, through its training and management standards and
procedures, aims to develop a disciplined and constructive control environment
in which all employees understand their roles and obligations.
The Fresnillo Audit Committee has responsibility for overseeing how management
monitors compliance with the Group's risk management policies and procedures
and reviews the adequacy of the risk management framework in relation to the
risks faced by the Group. The Audit Committee is assisted in its oversight
role by Internal Audit, which undertakes both regular and ad hoc reviews of
risk management controls and procedures, the results of which are reported to
the Audit Committee.
(a) Market risk
Market risk is the risk that changes in market factors, such as foreign
exchange rates, commodity prices or interest rates will affect the Group's
income or the value of its financial instruments.
The objective of market risk management is to manage and control market risk
exposures within acceptable parameters, while optimising the return on risk.
In the following tables, the effect on equity excludes the changes in retained
earnings as a direct result of changes in profit before tax.
Foreign currency risk
The Group has financial instruments that are denominated in Mexican peso and
other foreign currencies which are exposed to foreign currency risk.
Transactions in currencies other than the US dollar include the purchase of
services, fixed assets, spare parts and the payment of dividends. As a
result, the Group has financial assets and liabilities denominated in
currencies other than functional currency and holds cash and cash equivalents
in Mexican peso.
In order to manage the Group's exposure to foreign currency risk on
expenditure denominated in currencies other than the US dollar, the Group has
entered into certain forward and option derivative contracts.
The following table demonstrates the sensitivity of cash and cash equivalents,
trade and other receivables, trade and other payables and derivatives
financial instruments (excluding Silverstream which impact is disclosed in
note 14) to a reasonably possible change in the US dollar exchange rate
compared to the Mexican peso, reflecting the impact on the Group's profit
before tax and equity, with all other variables held constant. It is assumed
that the same percentage change in exchange rates is applied to all applicable
periods for the purposes of calculating the sensitivity with relation to
derivative financial instruments.
Year ended 31 December Strengthening/ Effect on Effect on equity:
(weakening)
profit before tax: increase/
increase/
of US dollar
(decrease)
(decrease)
US$ thousands
US$ thousands
2025 5% 1,356 (19,031)
(5%) (3,418) 23,312
2024 10% 955 (582)
(5%) (2,228) 582
The Group's exposure to reasonably possible changes in other currencies is not
material.
Commodity risk
The Group has exposure to changes in metals prices (specifically silver, gold,
lead and zinc) which have a significant effect on the Group's results. These
prices are subject to global economic conditions and industry-related cycles.
The table below reflects the aggregate sensitivity of financial assets and
liabilities (excluding Silverstream which impact is disclosed in note 14) to a
reasonably possible change in commodities prices, reflecting the impact on the
Group's profit before tax with all other variables held constant.
The sensitivity shown in the table below relates to changes in fair value of
commodity derivatives financial instruments contracts (excluding Silverstream)
and embedded derivatives in sales.
Year ended 31 December Increase/(decrease) in commodity prices Effect on
profit before tax: increase/
(decrease)
US$ thousands
Gold Silver Zinc Lead
2025 20% 40% 10% 5% 175,345
(20%) (40%) (10%) (5%) (175,347)
2024 10% 15% 10% 10% 38,509
(10%) (15%) (10%) (10%) (38,509)
Interest rate risk
The Group is exposed to interest rate risk from the possibility that changes
in interest rates will affect future cash flows or the fair values of its
financial instruments, principally relating to the cash balances.
Interest-bearing loans and notes payable are at a fixed rate, therefore the
possibility of a change in interest rate only impacts its fair value but not
its carrying amount. Therefore, interest-bearing loans, notes payable and
loans from related parties are excluded from the table below.
The following table demonstrates the sensitivity of financial assets and
financial liabilities (excluding Silverstream which impact is disclosed in
note 14) to a reasonably possible change in interest rate applied to a full
year from the balance sheet date. There is no impact on the Group's equity
other than the equivalent change in retained earnings.
Year ended 31 December Basis point increase/ Effect on profit before tax: increase/
(decrease)
(decrease)
in interest rate
US$ thousands
2025(1) - -
(50) (13,826)
2024(1) - -
(50) (6,556)
The sensitivity shown in the table above primarily relates to the full year of
interest on cash balances held as at the year end.
(1 Based on actual market conditions management considers an increase in
interest rates is likely remote.)
Equity price risk
The Group has exposure to changes in the price of equity instruments that it
holds as equity investments at FVOCI.
The following table demonstrates the sensitivity of equity investments at
FVOCI to a reasonably possible change in market price of these equity
instruments, reflecting the effect on the Group's profit before tax and
equity:
Year ended 31 December Increase/ Effect on Effect on equity: increase/
(decrease)
profit before tax: increase/
(decrease)
in equity price
(decrease)
US$ thousands
(US$ thousands)
2025 100% - 34,537
(20%) - (6,907)
2024 80% - 111,958
(20%) - (27,989)
(b) Credit risk
Exposure to credit risk arises as a result of transactions in the Group's
ordinary course of business and is applicable to trade and other receivables,
cash and cash equivalents and derivative financial instruments.
The Group's policies are aimed at minimising losses as a result of
counterparties' failure to honour their obligations. Individual exposures are
monitored with customers subject to credit limits to ensure that the Group's
exposure to bad debts is not significant. The Group's exposure to credit risk
is influenced mainly by the individual characteristics of each counter party.
The Group's financial assets are with counterparties whom the Group considers
to have an appropriate credit rating. As disclosed in note 27, the
counterparties to a significant proportion of these financial assets are
related parties. At each balance sheet date, the Group's financial assets were
neither credit-impaired nor past due, other than 'Other receivables' as
disclosed in note 16. The Group's policies are aimed at minimising losses from
foreign currency hedging contracts. The Company's foreign currency hedging
contracts are entered into with large financial institutions with strong
credit ratings.
The Group has a high concentration of trade receivables with one counterparty
Met-Mex Peñoles, the Group's principal customer throughout 2025 and 2024.
Met-Mex is a subsidiary in the Peñoles group which currently owns 75 per cent
of the shares of the Company and is considered by management to be
of appropriate credit rating.
The Group's surplus funds are managed by Servicios Administrativos Fresnillo,
S.A. de C.V., which manages cash and cash equivalents, including short-term
investments investing in several financial institutions. Accordingly, on an
ongoing basis the Group deposits surplus funds with a range of financial
institutions, depending on market conditions. In order to minimise exposure to
credit risk, the Group only deposits surplus funds with financial institutions
with a credit rating of MX-1 (Moody´s) and mxA-1+ (Standard and Poor's) and
above. As at 31 December 2025, the Group had concentrations of credit risk as
22.9 percent of surplus funds were deposited with one financial institution of
which the total investment was held in short term deposits.
The maximum credit exposure at the reporting date of each category of
financial asset above is the carrying value as detailed in the relevant notes.
See note 17 for the maximum credit exposure to cash and cash equivalents and
short-term investments, note 16 for other receivables and note 27 for related
party trade and other receivables.
(c) Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its
financial obligations as they fall due.
The Group monitors its risk of a shortage of funds using projected cash flows
from operations and by monitoring the maturity of both its financial assets
and liabilities.
The table below summarises the maturity profile of the Group's financial
liabilities based on contractual undiscounted payments.
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2025
Interest-bearing loans 37,986 75,973 75,973 1,609,727 1,799,659
Trade and other payables 241,416 - - - 241,416
Lease liabilities 5,368 5,349 920 - 11,637
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2024
Interest-bearing loans 37,986 75,973 75,973 1,647,713 1,837,645
Trade and other payables ,150,094 - - - 150,094
Notes payable 2,055 - - - 2,055
Lease liabilities 4,994 6,092 2,604 - 13,691
The payments for financial derivative instruments are the gross undiscounted
cash flows. However, those amounts may be settled gross or net. The following
table shows the corresponding estimated inflows based on the contractual
terms:
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2025
Inflows 437,947 - - - 437,947
Outflows (439,562) - - - (439,562)
Net (1,615) - - - (1,615)
US$ thousands
Within 1 year 2-3 years 3-5 years > 5 years Total
As at 31 December 2024
Inflows 13,191 - - - 13,191
Outflows (12,403) - - - (12,403)
Net 788 - - - 788
The above liquidity tables include expected inflows and outflows from currency
option contracts which the Group expects to be exercised during 2026 as at 31
December 2025 and during 2025 as at 31 December 2024, either by the Group or
counterparty.
Management considers that the Group has adequate current assets and forecast
cash from operations to manage liquidity risks arising from current
liabilities and non-current liabilities.
Capital management
The primary objective of the Group's capital management is to ensure that it
maintains a strong credit rating and healthy capital ratios that support its
business and maximise shareholder value. Management considers capital to
consist of equity and interest-bearing loans, excluding net unrealised gains
or losses on revaluation of derivatives financial instruments and equity
instruments at FVOCI. Refer to notes 18, 20 and 30 respectively for a
quantitative summary of these items.
In order to ensure an appropriate return for shareholders' capital invested in
the Group, management thoroughly evaluates all material projects and potential
acquisitions and approves them at its Executive Committee before submission to
the Board for ultimate approval, where applicable. The Group's dividend policy
is based on the profitability of the business and underlying growth in
earnings of the Group, as well as its capital requirements and cash flows
including the cash flows from the Silverstream up to its buy back in August
2025.
One of the Group's metrics of capital is cash and other liquid assets which in
2025 and 2024 consisted of only cash and cash equivalents, which details are
disclosed in note 17.
In January 2024 the Group entered into a syndicated revolving credit facility
("the facility") with a term from January 2024 to January 2029. The maximum
amount available under the facility is US$350.0 million. The facility is
unsecured and has an interest rate on drawn amounts of SOFR plus an interest
margin of 1.15%. The terms of this facility include financial covenants
related to leverage and interest cover ratios. No amounts have been drawn from
the facility to date.
32. Subsequent event
On 31 October 2025, the Company entered into a definitive arrangement to
acquire 100% of the issued and outstanding shares of Probe Gold Inc for an
all-cash consideration of CAD$3.65 per share. On 21 January 2026 the Group
completed the acquisition of 100% of the issued and outstanding shares of
Probe Gold Inc., for a total consideration of US$555 million (CAD$770
million).
Probe is a Canadian exploration company focused on the acquisition,
exploration, and development of highly prospective gold properties. It is the
100% owner of the multimillion-ounce Novador Gold Project, as well as an
early-stage Detour Gold project, both located in Quebec.
The Group has applied its judgment to weigh the characteristics of Probe's
acquisition and conclude whether it constitutes the acquisition of a business
or a set of assets and activities under IFRS 3 "Business combinations". The
Group has applied the optional concentration test outlined in the standard and
on this basis, concluded that the acquisition of Probe does not constitute the
acquisition of a business but the acquisition of a set of assets.
1 (#_ftnref1) Economic Value Distributed is considered to be a social
performance measure and includes wages, taxes and payments to suppliers.
2 Silver eq. ounces are calculated converting only gold into silver ounces
with an Au:Ag ratio of 80:1. Lead and zinc production is not included in
silver eq. ounces.
2 (#_ftnref2) Main areas of executive management
3 (#_ftnref3) All the Company's risks are considered
4 (#_ftnref4) The Committee of Sponsoring Organizations (COSO) of the
Treadway Commission Enterprise Risk Management (ERM) framework.
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