The share price ofFresnillo (LSE: FRES) the Mexican-based precious metals mining company is currently up 3.6%, following publication of the statement thatChairman Alberto Baillres will make at the companysAGM later today.
Mr Baillres says that 2014 was a challenging year for producers of precious metals, with all companies in the sector being affected by a decline in prices. However, he says that Fresnillo enjoyed some protection thanks to its high quality assets, low cost operations, strong balance sheet and solid pipeline of organic growth projects.
Fresnillos production of gold was strengthened by the acquisition of the remaining 44% of the Penmont Joint Venture, for $450m, which has enabled the company toraise its gold production target for 2018 by 50%, from 500,000ounces to 750,000 ounces.
Silver production exceeded budget in 2014, at 45m ounces, andMr Baillres says that there has been a strong start to 2015, with over 12m ounces of silver and 182,000 ounces of gold in the first quarter, and that the company remainsremains on track to achieve its production guidance for 2015.
Whilst the companys total investment in exploration in 2014 was significantly reduced from the original $225m million budgeted, to $184.5m,Mr Baillres says that thepace of progress was essentially unchanged from plan, thanks to declining costs forcontracted exploration and drilling. The company was able to increase its gold reserves by 45% and its silver reserves by 21%.
Mr Baillres says that Fresnillos top priority is firmly set on value creation and that he isconfident that the companyhas the operational and financial strength to address the challenges it faces.
But even with todays increase, at780p, Fresnillos share price is up just 1.7% on the year to date, in which time the FTSE 100 has risen 6.3%. And the longer-term story is even worse, with Fresnillo having lost 12% over the past five years, whilst the FTSE 100 has gained 32%.
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Jon Wallis has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.