LONDON (ShareCast) - (ShareCast News) - Miner Fresnillo gave an upbeat outlook for this year after more than doubling its profits in 2016 as revenues surged due to record gold and silver production, high precious metals prices and the devaluation of the Mexican peso against the dollar.
Gross profit more than doubled in 2016 to £882.1m, compared to the previous year, from a 29.2% surge in adjusted revenue to $2.04bn due to a rise in volumes and higher metal prices.

While earnings before interest, tax, depreciation and amortisation (EBITDA) increased 88.5% to $1.03bn and adjusted earnings per share jumped 503.1% to $0.453.

Fresnillo recommended a final dividend of 21.5 cents per share, equivalent to about $158.4m.

Profit from continuing operations before net finance costs and income tax grew 237.5% to $676.5m.

The FTSE 100 company benefited from the recent devaluation of the peso against the dollar as it positively affected production costs, with the cost per tonne and cash costs decreased at all of its mines last year.

Capital expenditure fell 8.6% to $434.1m, which was below guidance mainly due to lower expenditure at the San Julián site in Mexico after a delay in phase two of development.

Last year, the company made record annual silver production, including Silverstream, of 50.3m ounces, up 7.1% due to the start-up phase of the San Julián site and higher ore grades at the Fresnillo and Ciénega sites.

While, gold production of 935.5 kilo ounces exceeded revised guidance due to a reduction of inventories at the Herradura site, production from San Julián and increased production at the Noche Buena site.

For 2017, Fresnillo expects further increases in production with silver reaching the 58-61m ounces range (including Silverstream) and gold production to be between 870-900 kilo ounces.

Capital expenditure is anticipated to be about $800m and exploration expenses $160m, including the capitalised portion.

Chief executive Octavio Alvídrez said: "We will continue to focus on delivering further cost reductions and productivity improvements in 2017 as well as improving our safety performance to meet our zero harm target.

"Our performance in 2016 again demonstrated the quality of our asset base and our low-cost and flexible operations. I am confident that with our focus on operational delivery, disciplined approach to investment and clear commitment to sustainable business practices, we can continue to optimise our performance and maintain our strong financial position to deliver considerable long-term value for our shareholders."

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