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Fresnillo ups interim dividend as H1 profit surges 87%

Fresnillo Plc increased the first-half dividend to 10.6 U.S. cents per share, from 8.6 cents apiece a year ago, after posting an 87.2% surge in profit.

The company's profit in the first half of the year swelled 87.2% to US$310.1 million compared to the year-ago half, as commodity prices increased year over year, according to the Aug. 1 earnings release.

Revenue in the six months increased 12.3% year over year to US$995.8 million on the back of higher metals prices and increased sales volumes of silver and zinc.

Gross profit for the period jumped 16.6% compared to the year-ago half to US$460.0 million as the increase in revenues more than offset the increase in cost of sales.

EBITDA in the half improved 10.2% on a yearly basis to US$522.5 million.

The results included a non-cash loss of US$35.2 million over a gold hedging program and a positive revaluation of the silverstream of US$54.8 million mainly due to the reclassification of silver resources into reserves at the Sabinas mine and a higher silver price.

Fresnillo's first-half silver production, including silverstream, increased 11.2% year over year to 28 million ounces, while gold production declined 0.4% to 445,769 ounces.

In 2018, the company expects to hit its silver production target of 65 million ounces, it noted.

Exploration expenses rose 23.4% over the first half of 2016 to US$64.2 million as the company undertook intensive exploration programs.

Capital expenditure in the half totaled US$264.3 million, a 33% year-over-year increase, mainly for construction at the San Julian project, the pyrites plant and second line of the dynamic leaching plant at Herradura, development at Fresnillo and Saucito and construction of leaching pads at the open pit mines.

The company revised the CapEx guidance for the full year to US$700 million, from US$800 million previously, due to the deferred development and mining works mainly at Fresnillo and Herradura, together with deferred CapEx at the Juanicipio project.

Fresnillo said it expects a feasibility study for the under-construction Juanicipio project to be finished by end of the year.

The project will be developed on a stand-alone basis and is expected to be commissioned in 2020, with an annual average production of 10 million ounces of silver and 30,000 ounces of gold.