The Fresnillo (LSE: FRES) share price perked up when the market opened Tuesday (4 March) on the again of a giant increase in 2024 full-year income and earnings. On the time of writing, it’s up 3.4%. And we’re a 25% rise up to now in 2025 for the world’s largest major silver producer.

Silver manufacturing for the 12 months was unchanged, with gold output up simply 3.4%. So it’s actually all about rising valuable metals costs. The silver price rose 21% in 2024, and it’s up nearly one other 10% up to now in 2025. Gold has carried out equally, up 40% because the begin of 2024.

CEO Octavio Alvídrez acknowledged the influence of costs, talking of “a solid financial performance for Fresnillo in 2024, underpinned by higher precious metal prices, operational discipline, and a continued focus on cost efficiencies.”

He added: “Our adjusted revenue grew by 26.9% to US$3.64 billion, while EBITDA more than doubled to US$1.55 billion.”

The underside line’s difficult by tax points associated to Fresnillo’s Silverstream settlement with Peñoles of Mexico. However excluding these results, Fresnillo reported a 17.4% rise in earnings per share.

Extra to come back?

Fresnillo’s manufacturing steerage for 2025 signifies a slight slowdown for its two key metals. The corporate says it expects attributable silver manufacturing of between 49 and 56 million ounces of silver, after recording 56.3 million ounces in 2024. Gold steerage suggests between 525,000 and 580,000 ounces, down from 2024’s 631,573 ounces.

Even with that, forecasts present EPS rising strongly within the subsequent few years. And it might be sufficient to drop the price-to-earnings ratio to beneath 13 in 2025 and 2026.

The query is, does that make the Fresnillo share price look low cost?

World outlook

If there’s one optimistic factor we are able to say concerning the tragic international state of affairs, it’s good for valuable metals costs as buyers search a hedge towards threat. However silver’s extra than simply that, because it’s in demand for industrial makes use of too. It’s utilized in making photo voltaic panels, and in a variety of client electronics. And I don’t see demand for both of these dropping off quickly.

I might simply see one other sturdy couple of years for silver and gold costs. However earnings for miners could be very cyclical in the long run, and I’d must suppose ahead additional than 2026. However that’s not straightforward.

I’m additionally cautious of what’s been occurring with Fresnillo’s Silverstream partnership. So I’d must dig deeper into that earlier than I thought of shopping for. And perhaps wait and see one other 12 months’s progress first.

Tempting

The largest attraction I see is that comparatively small share rises in metals costs can result in greater share rises in earnings. Due to that gearing impact, I feel buyers who’re bullish about silver and gold would possibly do nicely to contemplate Fresnillo shares.

The down aspect although, is that metals price declines can result in larger share revenue falls. It’s a sector for many who can stand volatility, I’d say.