Loading ...FRES.L – Fresnillo Silver Mines
One of the largest and best capitalized silver producers on the planet. Supposedly.
So what’s wrong with this picture?
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FRES.L is developing the new mine for MAG Silver. They are also a part owner of MAG
I don’t hold FRES.L but I do hold its baby brother MAG – and MAG is expected be a the premium low cost producer.
MAG is doing OK, but just OK. I am beginning to wonder – is there something the matter with MAG?
Yikes on Fres.L but Mag looks good
How are Fresnillo’s finances? Very approximately 2005 I glanced at it as a possible silver investment. I remember being turned off by seeing financiers (Citigroup????) heavily represented on the board. I can’t remember for sure, but I wonder about whether I caught a whiff of a lot of hedging, perhaps in currencies as well as in metals. I had the sense that in buying shares I couldn’t be sure what I was buying. I had the impression I might be buying a bit of a hedge fund with mines but I wasn’t sure.
These are stale and vague memories–unreliable. I am horrible with things like plain vanilla balance sheets, all the more so if there is something clever going on such as derivatives, so I probably didn’t even look more than for a moment or two.
Long way of communicating that perhaps someone here who is good at reading financial statements might look into Fresnillo’s finances. Maybe the answer there, maybe not.
Disclosure: I have a some exposure to MAG for years. Haven’t looked hard at it recently–bad on my part.
When MAG’s earnings came out within about the past 2 weeks I did glance at them. I am totally unreliable at financial statements but was impressed at an apparent disparity between a statement to the effect that the were comfortable with the amount of cash they had on the one hand and the amount of cash they had listed (seemed not so much to my glance). Then I decided that what they were implying was that since Fresnillo was going to be the operator, responsible for the expenses, they did not have to worry about expenses–cash would be flowing in before too too many years. So I guess that if for some strange reason Fresnillo were to run in to some disaster MAG would have be loaded with trouble, but otherwise only has to sit back in comfort. People here like chart details more than I, but to my glances MAG’s chart is one of a strength, something that people have been buying enthusiastically, perhaps too much so if Ag is overbought, that could pull back with a silver pullback but is not especially ominous looking compared to other PM companies. Other opinions?
There’s always the question of political risk. Mexico is a complicated country, highly diverse in many ways. “Otto” has made comments at least to subscribers of which portions are probably best avoided and which companies have tended to alienated locals, but I have the impression that he has trouble following it as closely as, say, Peru, Chile, or Argentina. I have read a certain amount about recent political and economic turmoil that he has not covered, but he has provided one public piece relevant to all of Mexico. It addresses the political atmosphere of mining esp by US and Canadian companies there, but undoubtedly a Fresnillo might be affected by the sort of discourse he describes. I do not know what’s happening with Fresnillo and MAG though.
https://incakolanews.blogspot.com/2019/08/mexico-president-amlo-has-message-for.html
Fascinating Fresnillo chart — glad to see it posted.
Fres has cost inflation at all its mines and definitively needs the JV mine with MAD to come into production ASAP as this is a high grade low cost mine, so only positive for Mag!