London-listed Mexican miner Fresnillo ranks as one of the world's best performing material stocks of any kind, given a lift of nearly 500% in its stock price from depths plumbed during November 2008, which witnessed some of the most intense general selling of investments in the aftermath of the peak (for now) of the so-called global markets crisis.Fresnillo currently ranks as the world's biggest producer of primary silver, in absolute terms it falls into third place after BHP Billiton and KGHM Polska Miedź, which both produce silver as co- or by-product. Fresnillo may more comprehensively be described as a diversified miner; as such, it produces one of the most coveted bouquets, given current metals pricing, in the forms of silver, gold, zinc and lead.Late in 2007, Fresnillo was listed in London, where it raised $ 902m after implementing a structure to consolidate the precious metals interests of Mexico's Industrias Peñoles, which, at the end of 2008, still held 77% of Fresnillo. The benefits to Peñoles, and Fresnillo's new shareholders, have been enormous, given Fresnillo's current market value of $ 5.82bn, ranking it No 50 among the world's most valuable mining stocks.Fresnillo's financial performance was apparently completely forgotten when the stock price was trashed during the closing months of 2008. Fresnillo's subsequent group numbers for 2008 show revenues of $840m, operating profit of $284m, and EBITDA (earnings before interest, tax, depreciation and amortisation) of $337m. No less than $407m was made in equity distributions to shareholders during the year, which ended on December 31 2008 with Fresnillo holding cash and cash equivalents of $212m. Just as important, at least, was debt at zero.Fresnillo operates the eponymous Fresnillo mine, the fabled global No 1 primary silver mine, with 2008 output of 33.8m ounces of silver, 24 000 ounces of gold, 11 300 tonnes of zinc and 8 700 tonnes of lead. The remaining life of mine is at least 12 years.Ciénega is an underground gold mine that in 2008 produced 950 000 ounces of silver, 117 000 ounces of gold, 11 200 tonnes of zinc and 9 100 tonnes of lead, with a remaining life of at least 13 years. The Herradura open pit mine in 2008 produced 124 000 ounces of silver, 123 000 ounces of gold, and has a remaining life of at least 12 years.Development project Soledad-Dipolos, to be an open pit gold mine, should reach total peak production of 100 000 gold ounces a year by the end of 2010. At Saucito, a silver and gold underground mine project, scheduled to commence production in 2011, resources stand at 233m ounces of silver and 1.1m ounces of gold.Advanced exploration projects include San Julián (silver and gold), with resources of  97.3m ounces of silver and 0.4m ounces of gold; Orisyvo, with resources of 2.8m ounces of gold, and San Juan, with resources of 9.8m ounces of silver and 0.3m ounces of gold.

Fresnillo as a group recorded at the end of 2008 some 1.1bn ounces of silver resources, and 12m ounces of gold resources.The smart money started to go back into Fresnillo's listed stock very late in 2008, at a point when an increasing number of brave investors started pricing in a more robust outlook for metals prices. The rewards continue to come through: gold bullion has been the most resilient of metals, while silver prices have so far moved up by more than 60% from lows; zinc has now bounced 54%, and lead by just over 70%.METAL PRICES

Low*

High*

Current

From low

Precious, $/oz

 

Gold

682.41

1006.29

912.46

33.7%

Platinum

744.25

2225.50

1163.25

56.3%

Palladium

160.75

478.50

234.25

45.7%

Silver

8.46

19.48

13.89

64.1%

Industrial, $/lb

Copper

1.28

4.06

2.15

68.6%

Aluminium

0.58

1.53

0.71

22.8%

Lead

0.39

1.16

0.66

70.6%

Tin

4.40

11.57

6.08

38.2%

Nickel

4.01

13.06

5.76

43.5%

Zinc

0.47

1.08

0.73

54.1%

* 12-month

Assuming current metal pricings apply across 2009, and that Fresnillo's 2009 output matches that posted for 2008, group revenue would compute at $786m, less than 10% below the actual number for 2008. With its huge 40% EBITDA margin recorded for 2008, there is no question that Fresnillo is going to again make good money during 2009, as things stand now. During the first quarter of 2009, Fresnillo's output of gold, zinc and lead fell back somewhat, in line with austerity measures taken by practically every mining company in the world, but silver output increased by 9% compared with both the first and fourth quarters of 2008.For those rare investors that take a longer-term view, Fresnillo's intention is to maintain its position as the world's largest primary silver producer with the aim of approximately doubling production, on a silver equivalent ounce basis by 2018 and increasing its gold production. Within that, Fresnillo no doubt will continue on the acquisition trail, most recently seen in its bid for MAG Silver.Selected silver stocks

Stock

From

From

Value

PRODUCERS

price

high*

low*

$ bn

Fresnillo

GBP 5.44

-5.4%

484.9%

5.898

Silver Wheaton

$ 8.92

-44.0%

255.4%

2.565

Pan American Silver

$ 18.96

-49.0%

112.3%

1.654

Hochschild Mining

GBP 2.27

-46.6%

248.8%

1.054

Silver Standard

$ 20.29

-36.0%

279.3%

1.392

Coeur d'Alene

$ 1.58

-54.6%

338.9%

0.965

Hecla Mining

$ 3.09

-71.1%

212.1%

0.673

Volcan

EUR 5.24

-57.2%

167.3%

0.585

Silvercorp

CAD 3.55

-57.6%

198.3%

0.490

ECU Silver

CAD 0.66

-66.2%

53.5%

0.158

Henan Yuguang

CNY 14.06

-36.6%

150.6%

0.470

First Majestic

CAD 2.08

-58.1%

139.1%

0.146

Silverstone

CAD 1.90

-34.3%

450.7%

0.200

S. Métallurgique d'Imiter

MAD 655.00

-21.7%

74.2%

1.284

Endeavour Silver

CAD 2.01

-44.2%

101.0%

0.089

Excellon

CAD 0.30

-81.0%

145.8%

0.055

Fortuna Silver

CAD 0.90

-61.2%

136.8%

0.066

Great Panther

CAD 0.47

-68.6%

158.3%

0.034

Genco Resources

CAD 0.26

-88.7%

36.8%

0.009

Impact Silver

CAD 0.50

-57.3%

185.7%

0.020

Revett Minerals

CAD 0.11

-85.7%

175.0%

0.010

US Silver Corp

CAD 0.15

-70.0%

400.0%

0.028

DEVELOPERS & EXPLORERS

Abcourt Mines

CAD 0.15

-70.6%

172.7%

0.007

Apogee Minerals

CAD 0.07

-82.4%

116.7%

0.003

Aquiline Resources

CAD 2.56

-70.9%

255.6%

0.149

Arian Silver

CAD 0.06

-78.6%

100.0%

0.013

Aura Silver

CAD 0.08

-73.3%

300.0%

0.003

Avino Silver

CAD 0.48

-68.2%

166.7%

0.008

Bear Creek Mining

CAD 1.65

-77.7%

189.5%

0.078

Esperanza Silver

CAD 0.66

-46.8%

112.9%

0.027

Klondike Silver

CAD 0.06

-78.2%

9.1%

0.005

MAG Silver

CAD 6.00

-54.4%

70.5%

0.252

Mexican Silver

CAD 0.18

-68.8%

169.2%

0.006

Minco Silver

CAD 1.82

-54.5%

506.7%

0.049

Mines Management

$ 1.64

-58.5%

241.6%

0.037

Oremex Silver

CAD 0.14

-53.4%

575.0%

0.006

Orko Silver

CAD 0.86

-54.0%

207.1%

0.079

Oro Silver

CAD 0.06

-90.5%

100.0%

0.002

San Anton Resources

CAD 0.21

-61.8%

600.0%

0.019

Silvercrest

CAD 0.69

-45.7%

263.2%

0.027

Silver Eagle Mines

CAD 0.08

-89.2%

166.7%

0.004

S American Silver

CAD 0.36

-44.5%

255.0%

0.016

Southern Silver

CAD 0.06

-78.6%

140.0%

0.002

Averages/total

-61.8%

219.6%

18.636

Weighted averages

-41.6%

234.8%

GOLDS WITH NOTABLE SILVER

JSC Polymetal

$ 6.56

-28.7%

556.0%

2.066

Minefinders

CAD 9.62

-20.8%

188.9%

0.485

Gammon Gold

CAD 8.69

-22.4%

224.3%

0.909

Kimber Resources

CAD 0.73

-63.1%

37.7%

0.039

High River

CAD 0.15

-93.0%

262.5%

0.073

New Gold

CAD 2.26

-76.8%

140.4%

0.411

Ovoca Gold

GBP 0.04

-65.1%

87.5%

0.024

 

BHP Billiton

GBP 15.69

-28.8%

114.5%

142.911

KGHM Polska Miedź

PLN 65.50

-42.3%

226.2%

4.020

Fresnillo

GBP 5.44

-5.4%

484.9%

5.898

Volcan

EUR 5.24

-57.2%

167.3%

0.585

Kazakhmys

GBP 7.14

-63.7%

318.3%

5.778

Pan American Silver

$ 18.96

-49.0%

112.3%

1.654

Goldcorp

$ 30.33

-42.4%

119.1%

22.146

Buenaventura

$ 24.78

-30.5%

175.3%

6.812

JSC Polymetal

$ 6.56

-28.7%

556.0%

2.066

Southern Copper

$ 20.81

-47.0%

128.2%

17.768

Hochschild Mining

GBP 2.27

-46.6%

248.8%

1.054

Rio Tinto

GBP 30.57

-57.3%

207.2%

66.736

Teck

$ 14.04

-73.8%

440.0%

6.704

Coeur d'Alene

$ 1.58

-54.6%

338.9%

0.965

Xstrata

GBP 7.06

-71.9%

144.5%

31.305

Spot silver/oz

$ 13.89

-28.7%

64.1%

Gold:silver ratio (times)

65.72

* 12 month

Source: market data; table compiled by Barry Sergeant

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