Gold and silver have always attracted people - both as precious metals, and as assets for money investment. And in 2020, investors inserting in them were generously rewarded.
In the first half of 2020 and gold, and silver grown significantly. In the middle of the pandemic chaos, both valuable metal rose in price and reached a record for many years of values. In August, it is time to reap the fruits. However, in December, the growth resumed. Raising prices for these brilliant commodities led to a fair increase in profit for mining companies.
Therefore, today we will talk about FRESNILLO (LON: FRES) (OTC: FNLPF). The financial indicators of this company included in the FTSE 100 stock index of the United Kingdom are considered one of the best. Over the past year, FRES shares rose in price by more than 87%. On January 12, when closing the actions, 1,130p ($ 15.4 for shares traded in the United States) were worth 1,130p ($ 15.4).
For comparison, FTSE 100 for the last 52 weeks is still about 11% lower.
Located in Mexico, FRESNILLO is one of the most important silver hotels in the world. According to the company, "FRESNILLO Silver mines mined for more than five years of years." In addition, Fresnillo is the largest gold mine in the country. The market value of the company's capital is £ 8.7 billion (or $ 11.9 billion).
Investors are impressed by possible brilliant prospects that open in front of both metals, especially silver, and what Fres can achieve in the future. And that's why:
Thanks to which the current growth is reached
At the moment, FRESNILLO has seven working mines, three projects for the development of deposits and six search objects. Silver brings companies more than 15% of the final corrected amount of income.In July, the company published intermediate results for the half year, ending on June 30. Gross income amounted to $ 321.2 million, which means growth to 56.3% year by year. Profit before paying an income of $ 127.9 million increased by 136.6% year by year. Adjusted EPS rose by 40.5%, reaching 11.8 cents per share. Free cash flow in the first half of the year amounted to $ 242.6 million. The Board of Directors also declared an intermediate dividend of 2.3 cents per share.
On October 21, Fresnillo published a report on the production of products for the 3rd quarter. Chief Executive Officer Octavio Alvidres said:
"Our silver mines work in accordance with the forecasts made by us at the beginning of the year, and our approximate forecasts have not changed, despite the broken pandemic. As indicated in the results of the half year, we had to introduce additional restrictions on the work in the open way, and this affected the production of gold. Therefore, we slightly reduced the predicted mining of gold. "
We predict the rise in silver prices in the long run, and we like Fresnillo for the exhaust production and low cost of production.
However, taking into account the sharp increase in the price in 2020, it is likely to receive profits in the short term. The P / E and P / S ratios for the specified period are 18.90 and 5.41, which makes the price of the shale. A possible deviation of 5-7% of the current levels will improve the safety margin. We are seeing the period of strengthening and lateral traffic in the share price.
It is expected that on January 27, the company will publish a report on the production of products for the 4th quarter, and on March 2, it will announce preliminary results for 2020. Potential investors can familiarize themselves with these reports before investing in FRES shares.
Summarize
The precious metals have always been a "safe harbor" for investors, and 2020 proved that they are not mistaken. However, it is too early to talk about how the year 2021 will be formed. Nevertheless, economists discuss the impact on shiny metals with radical credit and monetary policy, negative real rates and unbearable debt. In the long run, these factors can easily support high prices for gold and silver.
Investors who want to invest in the shares of gold and silver companies can also consider the investment option in stock investment funds (ETF) specializing in extractive companies. Here are examples: Etfmg Prime Junior Silver Miners etf (NYSE: Silj), Global X Silver Miners ETF (NYSE: SIL), Ishares MSCI Global Gold Miners etf (Nasdaq: Ring), Ishares MSCI Global Silver and Metals Miners etf (NYSE: SLVP ) And Vaneck Vectors Gold Miners ETF (NYSE: GDX).
Over the past 52 weeks, these four funds brought 33.7%, 42.2%, 27.1% and 24.7%, respectively.
These funds provide access to shares of companies such as Barrick Gold (NYSE: GOLD), First Majestic Silver Corp (NYSE: AG), Franco-Nevada (NYSE: FNV), Newmont Goldcorp Corp (NYSE: NEM), Pan American Silver ( NASDAQ: PAAS), Polymetal (MCX: POLY) International (OTC: Poyyf), Wheaton Precious Metals (NYSE: WPM) and Yamana Gold (NYSE: AUY).