Investor FAQs

View Shareholder FAQs >

Company Strategy

The Fresnillo Group seeks to create value for stakeholders across precious metals cycles through ongoing investment in exploration, mine development, operational excellence and a strong commitment to disciplined and sustainable growth.

The four business model components of our value creation strategy are:

  1. Operate: Maximise the potential of existing operations while maintaining position as a leading low cost producer
  2. Develop: Deliver profitable growth by advancing projects towards commissioning, while optimising cash flow and returns
  3. Explore: Ensure business continuity and growth by replenishing depleted reserves and maintaining growth pipeline
  4. Sustainability: Uphold our licence to operate

When was the company incorporated

The company was incorporated on 15 August 2007 and was acquired by the Peñoles Group, for nominal consideration, on 11 January 2008. Prior to its acquisition by the Peñoles Group, the company had no operations.

Who does Fresnillo sell its products to

Fresnillo produces lead and zinc concentrates with high contents of precious metals as well as precious metals dore and precipitates. All of these are sold to Met-Mex under long-term agreements based on international market terms that are negotiated on a yearly basis. As this is a related party transaction the TRC's are overseen by the Audit Committee.

Comments on Arbitration Decision

The Arbitration Panel formed according to the Arbitration Rules of the International Chamber of Commerce has delivered its decision in respect of claims made by Vancouver-based MAG Silver Corp (TSX: MAG and NYSE:MVG), Fresnillo's joint venture partner in the advanced exploration stage Juanicipio silver project in Mexico.

The Arbitration Panel rejected MAG's claims that Fresnillo was deficient in the execution pace or performance of drilling at the project. The Arbitration Panel denied both of MAG's principal demands, specifically: (a) that Fresnillo be ordered to pay damages to MAG of up to US$61 million related to MAG's claims that delays by Fresnillo delayed the start of production; and (b) that Fresnillo be ordered to sell or transfer its equity participation in the Minera Juanicipio joint venture to MAG.

The Arbitration Panel upheld certain other MAG claims, including claims related to Fresnillo's announcement in December 2008 that it intended to make an unsolicited bid to acquire MAG. Fresnillo announced its intention based on the opinion of external legal counsel regarding a certain clause in the JV Agreement. The Arbitration Panel, based on a different interpretation of that clause, ordered Fresnillo to reimburse MAG for legal fees of US$1.86 million incurred by MAG in connection with the announcement of Fresnillo's intended offer.

The silver and gold markets

Demand for silver is primarily driven by fabrication (industrial applications, photography, jewellery and other applications) and investment, either directly through coins and bullion or via Exchange Traded Funds (ETFs). Mine output provides the majority of silver supply, while recycling and scrap amount for most of the remainder, with government sales a minor and unpredictable source.

Demand for gold has traditionally been driven by its status as a safe haven investment, along with jewellery demand led by China and India. Mine output accounts for the majority of the global gold supply, with the remainder coming from recycling.

Lord Davies' Report

Lord Davies of Abersoch, CBE, published the intial report to 'Women on Boards' in February 2011, the second annual progress report followed in April 2013. The Nominations Committee has reviewed and considered both reports. Fresnillo endorses the principle of boardroom diversity and will continue to recruit at all levels in line with our non-discrimination policy and, as always, on merit. We aim to provide more detail on the Board's approach to board composition (and diversity) in our Annual Report.

Women on Boards Report - Feb 2011
Women on Boards Report - Apr 2013

Our Dividend And Policy

The Group’s dividend policy takes into account the profitability of the business and underlying earnings, as well as its capital requirements and cash flows, whilst maintaining an appropriate level of dividend cover. Generally, a total dividend of between 33 and 50 per cent of profit after tax is paid out each year in the approximate proportion of one-third to be paid as an interim dividend, two-thirds to be paid as a final dividend. Dividends will be declared by the company in US$. Unless a shareholder elects to receive dividends in US$, they will be paid in pounds sterling with the US dollar dividend being converted into pounds sterling at exchange rates prevailing at the time of payment. The company may only pay dividends if distributable reserves are available for this purpose. The company is reliant upon receiving dividends from its subsidiaries in order to pay dividends to its Shareholders and its ability to pay dividends is affected by certain Mexican tax regulations. Dividend Information >


Fresnillo looks for additional growth opportunities and have entered into several purchase option agreements relating to early stage exploration projects. However, as metals prices have increased, so have the value of assets that may be available to purchase. Therefore, we are concentrating on organic growth by developing our own assets, whilst continuing to look for acquisitions opportunities at the right price.

Why such low cash cost

Our low cash cost position is a combination of the geological characteristics of the ore bodies in our mines. The use of productive mining metals with modern equipment and technology and the operational excellence attitude of our people, which generates solid cash flow from our high margin assets, resulting in a strong conservative and efficient balance sheet.

Our Objective

We are on track to achieve our goal of producing 65 million ounces of silver per year by 2018, having already surpassed our target of 750 thousand ounces of gold

Hedging Policy

Fresnillo does not hedge any of its precious metals. We hedge a portion of our by-product of lead and zinc production as well as our currency needs.

Labor Relation Issues in Mexico

All of the employees in the mining sector in Mexico belong to a national mining union, however each mine belongs to a section and negotiates with the company fringe benefits every 2 years and salary on a yearly basis. Fresnillo works very closely with members of the local sections, being aware of their needs and in addition to that we have a very good track record of no strikes since IPO.

Environment for mining in Mexico

Mexico is supportive of mining as an economic activity. It has a modern mining law reflected in the fact of many exploration mining companies and activity throughout the country. Mexico provides a favourable environment for mining: flexible and well-structured mining and environmental legislation; a favourable political climate; strong mining tradition and expertise; a skilled workforce (currently in high demand due to increased mining and exploration activity in the sector) and solid infrastructure. The country's appeal to mining companies stems from a combination of factors including a strong mining culture, excellent geology, political stability and favourable tax and permitting structures. Read more >

Corporate Social Responsibility Priorities

  1. Achieve full maturity of HSECR system as planned
  2. Continue implementation of the Safety Action Plan to improve, enhance and embed our safety culture and systems at all levels, to meet our zero fatalities target
  3. Mature our assessment protocol for health-related risks

Boiler Room Scams

Many companies have become aware that their shareholders have received unsolicited phone calls or correspondence concerning investment matters. These are typically from overseas based 'brokers' who target UK shareholders, offering to sell them what often turns out to be worthless or high risk shares in US or UK Investments. These operations are commonly known as 'boiler rooms'.

Shareholders are advised to be very wary of any solicited advice, offers to buy shares at a discount or offers of free company reports.

If you receive any unsolicited investment advice:

  1. Ensure you get the correct name of the person and organisation
  2. Check the FCA register before getting involved at
  3. Use the details on the FCA register to contact the firm
  4. If there are no contact details on the Register or you are told they are out of date, call the FCA Consumer Helpline on (0800 111 6768)
  5. Search FCA list of unauthorised firms / individuals to avoid doing business with

If you use an unauthorised firm to buy or sell shares or other investments, you will not have access to the Financial Ombudsman Services or Financial Services Compensation Scheme (FSCS) if things go wrong.