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the FTSE 100 index 2025 has been a strong year, with the index up 18% so far. But this performance pales in comparison Fresnillo (LSE: FRES), which is up a staggering 321% over the same period. With gold prices holding above $4,000 and silver heading toward $60, can the Mexican precious metals miner continue to rise through the end of the year?
New mutation
Just over a month ago, the stock fell more than 20% in a matter of days after a massive after-hours sell-off in New York gold prices. At the time, I said this was a rare opportunity to consider for long-term investors willing to look beyond short-term volatility. So far, that bet seems to be paying off.
However, it is no longer gold that is leading the charge, but silver. The spot price is currently at $55, an all-time high. Silver has jumped 38% in just three months, comfortably outperforming all other major asset classes, including Magnificent 7 technology stocks.
Enhanced gameplay
Miners like these are essentially leveraged bets on silver and gold.
The company’s all-in sustaining cost (AISC) is around $17 per ounce for silver and $2,000 per ounce for gold, meaning every ounce mined generates a huge cash margin.
Over the next few years, the company is expected to produce 50 million ounces of silver and 600,000 ounces of gold. Multiply that by the margins per ounce, and it’s clear that the company is generating massive cash flow.
It’s no wonder interim earnings jumped 225%, with plenty of scope for strong payouts if production stays on track.
The following table provides a forecast for next year’s revenue, based on the company’s AISC numbers and production estimates. It shows how much cash a company can generate, supporting future dividend increases.
| Expected production | Cash margin per ounce (simplified) | Almost cash generated |
| 50,000,000 ounces (silver) | $38 | $1.9 billion |
| 600,000 ounces (gold) | $2000 | $1.2 billion |
For long-term investors, this is a typical example of commodity leverage: small changes in the production or performance of metals translate into huge gains for shareholders, both in share price and potential earnings.
Risks to consider
No investment comes without risk. Cash flow and stock price are highly sensitive to fluctuations in silver and gold prices, which can move sharply due to global economic conditions or investor sentiment.
Geopolitical and regulatory risks in Mexico, where most of its mines are located, could disrupt operations or raise costs. Mining is very energy and labor intensive, and both of these costs have been rising over the past few years.
Its large exploration portfolio carries uncertainty – new discoveries may underperform or take years to develop, which could disappoint investors. Operational problems, environmental challenges, or unexpected mine disruptions can also impact production. All of them have the potential to impact future profits.
Bottom line
With debt levels rising in Western economies and inflation remaining high, many investors are looking beyond traditional bonds and cash.
Precious metals offer a unique advantage: they benefit from central bank purchases, act as a hedge against inflation, and carry no counterparty risk – meaning their value does not depend on the obligations of any bank, company or government.
I fully expect continued fluctuations in stock prices. But with strong margins and disciplined operations, Fresnillo provides exposure to a market beyond anyone’s control. That’s why I recently raised my position.
