Mexico-focused precious metals miner Fresnillo (LSE: FRES) said first-half profit tripled as higher gold and silver prices more than offset lower production, underscoring how realized metal prices can still drive earnings even when grades and volumes weaken.

Net income rose to $1.46 billion from $467.6 million a year earlier, while revenue increased 74.7% to $3.38 billion, Fresnillo said Tuesday. The company said stronger realized prices for silver and gold drove revenue and earnings growth despite lower grades and lower sales volumes.

Fresnillo said its financial position allowed it to fund the acquisition of Probe Gold, which was completed in January, according to CEO Octavio Alvídrez. He said the company also continued capital spending and exploration and raised its interim dividend to 43¢ a share while maintaining a strong balance sheet.

Shares climbed 5.2% to 2,629 pence in London trading Tuesday, giving Fresnillo a market value of about £19.5 billion ($26 billion).

“Operationally, gold and silver production was in line with our expectations and plans across our mines are progressing well,” Alvídrez said. “We remain focused on managing costs within our control by driving efficiencies across our supply chain and advancing key infrastructure projects.”

Higher precious metals prices have continued to cushion miners from inflationary pressures and operational disruptions, even as producers face pressure to replace reserves and sustain output amid declining ore grades at mature operations.

Operations

Attributable silver production, including Silverstream, fell 11.4% year over year to 22 million oz., mainly because Silverstream’s contribution ended, ore grades declined at Saucito, Juanicipio, Fresnillo and the San Julián Veins, and less ore was processed at several operations.

Attributable gold production declined 7.3% to 290,900 oz. Lower grades at Herradura, a fissure in a ball mill at Dynamic Leaching Plant I, delays in commissioning leaching pad XV and adverse weather all reduced output.

By-product lead production rose 8.8% on higher grades at Fresnillo and Juanicipio, while zinc production was broadly unchanged.

Outlook

Fresnillo expects 2026 silver production of 42 million to 46.5 million oz. and gold production of 500,000 to 550,000 ounces. The company also revised expected 2026 capital spending to $500 million to $550 million and said exploration spending should be about $260 million.

Jefferies said the first-half results were a clean beat across the board, with earnings, cash flow and sales volumes above forecasts and capital spending guidance cut sharply. The broker said the shares appear fairly valued, trading at about 1.2 times forward net asset value and 6.2 times attributable enterprise value to earnings.