Fresnillo (LON:FRES) has announced strong results on the back of production increases. Silver production of 28mnoz was up 11.2% YoY in H1 and revenue of US$1,070m was up 11.5% YoY. Gold production of 446koz was broadly unchanged. The incremental production came primarily from the San Julian phase 1 ramp up.
EBITDA of US$523m was up 10% YoY due largely to the stronger top line as production costs were up at all assets bar Cienega. The key driver which resulted in a 14% increase in production costs to US$343m was the additional cost of the ramp up at San Julian. We also note a 23% increase in exploration costs to US$64m. Net income of US$310m was up 87% YoY owing to the stronger earnings and reduced non-cash charges. FRES increased the interim dividend by 23% YoY to 10.6c/sh. FRES maintained guidance for 58-61mnoz silver in 2017.