Fresnillo Stock

[Audio Gap] half '26 was another record financial performance for the company, and I have said the key highlights out here. In particular, we saw revenues up sharply, driven by higher precious metal prices, with gross profit and EBITDA more than doubling alongside a strong increase in margins. This financial strength has allowed us to more than double the interim dividends versus the prior year. Again, paying out in line with our long-standing dividend policy. We have returned over $2 billion to shareholders over the past 5 years, a record of which we are very proud. We have also used this balance sheet strength to selectively and strategically advance our business with the acquisition of Probe Gold at the beginning of the year and more recently, an investment in the project Sinda. Like Probe, Sinda meets our disciplined strict and targeted criteria, giving us additional exposure to geological silver district that complement our portfolio.

Turning to precious metal [ price ] environment going forward. The outlook for silver remains equally constructive with analysts forecasting an average 2026 silver price of $76 per ounce. In addition to our production, controlling of the cost, this [ pan ] metal prices gives us further confidence in our strategy.

Now turning to the performance of our mines. As you know, Tomás Iturriaga has stepped down from his role as COO of the central region. And so I will present the operational overview for the central mines. Gabriel Durán, a seasoned and experienced professional mining engineer, who has been with the company for more than 30 years, and he has been coordinating the [ 3 ] for the central district for 3 years, will temporarily assume responsibility for the region in addition to reporting directly to me.

Fresnillo saw a solid first half in line with expectations. In fact, we raised guidance on expected gold grade from the Fresnillo mine, as seen on the slide, where gold production increased 47.6% versus first half '25. It is worth noting the mine development rates increased 13.3% versus first half '25, supported by improved equipment availability. We are also closely managing costs. I would like to note here that the higher cost is primarily an arithmetic effect of our silver equivalent reporting under higher silver prices, but costs are a focus for us in the second half of the year.

Turning on to Saucito, it was also in line with expectations with both silver and gold slightly below last year. The key factor remains the ongoing Jarillas shaft connection, which reduced ore volumes and increased haulage costs. This will be completed in the third quarter, improving operating efficiency and the cost profile going forward. While we optimize the mine sequence, we are reviewing the medium-term production outlook, although our 2026 guidance remains unchanged.

And Juanicipio, continues to perform in line with our expectations with lower silver production, reflecting the planned mine sequence and expected ore grade. Gold production was in particular highlight increasing 19.1% year-on-year as a result of higher grades. Overall, Juanicipio continues to demonstrate its strong operational performance.

I will now hand over to Daniel for him to give a short review on the rest of the operating assets, Herradura, Ciénega, San Julián, but also the brownfield and greenfield development projects.

Thanks, Octavio. Good morning, everybody. With respect to the Northern region operations, starting with Herradura, as you know, one of our most relevant assets. We have a slight decrease in gold production as expected during the first half of this year. This is compared to an extraordinary first semester during last year in terms of production, but also the normal decrease in head grades that we were expecting. And that is not affecting our ability to deliver on our guidance during the year in gold production.

In second half, we expect compared to the production of the first half, a slight decrease in the production because we have a major maintenance in one of the main plants. We're replacing one of the ball mills. And that will hit us slightly on production. However, again, the guidance that we have for the year in gold production and in production for Herradura is not at risk at all.

I would say the most relevant part in the Herradura mine and district is the evolution of the structural projects that we are developing in there. As mentioned in the slide, the Leaching Pad XV and the CIC plant that you can see on the pictures were completely built last year and are at full production now. And the ADR plant, the Sulphides Crushing Circuit and some other structural projects that we're progressing in there are advancing in the engineering phase. So we're preparing the infrastructure in Herradura for the next 20 years coming and for the development of the district.

The average grades that we expect, you can see in there, not significant changes compared to the previous years. And in terms of cost efficiency and operational performance, the results in Herradura has been sustained. Diesel is hitting us somehow, and you can see that reflected in the cost. Diesel price, of course, it's a relevant factor and inflation in Mexico also has an effect. However, we are at very competitive levels of cost in Herradura. So we're very optimistic about what's coming.

In Ciénega, the news are quite positive. What we have been mentioning about the plan of reshuffling the operation, spending more on exploration given that we still have potential is starting to deliver. The gold production increased 15% compared to the first half of previous year, and that is because the team was able to accelerate the development of the discovery, the Victoria area, that is the new high-grade gold area that we have in Ciénega. And it's going to be the support of the next 3 years of production in La Ciénega, which are very good news.

Silver production as expected. We are increasing gold rates, but silver is decreasing. So the decrease in silver production is the consequence of that. No surprises there, which is good news. And in terms of the ranges of grades expected moving forward, we increased slightly the range for gold grade this year to something close to 1.7 and silver remains at the same levels. In terms of cost containment and efficiency also, Ciénega has delivered very good results, decreasing the cost base and sustaining the overall expenditure and increasing production, hence, the results that you can see on the screen.

And finally, in San Julián. San Julián, as you probably remember, has been transitioning during the last 2 years, moving to just one operating plant, the Veins facility. Cost structure is sustainable right now. We are very confident about the long term and the results support that. Production is slightly lower compared to last year. Grades decreased somehow. However, what we are foreseeing for the future are -- these are the levels of production that we can sustain in San Julián moving forward with costs under control. And hence, we have a cash flow generating operation for the next -- for what we see now 4 to 5 years, but exploration is still providing good results. So we expect to have a long-term operation there as well.

That's on the operations side. And to give a quick brief on the project side. For Fresnillo, let's start with the brownfields. As we mentioned in the last couple of meetings, we are putting in the company a strong effort, both in cost containment, efficiencies and also putting some production forward from brownfield opportunities, marginal increases in production in our operations and in particular, from 2 of our brownfield projects that are Valles and Noche Buena. Happy to mention that those projects already started.

In the case of Valles, the engineering was completed. We've finalized the operational model for the mine. And the final mine plan now is showing us a life of mine of 10 years compared to the original 7 that we had original. So that's good news. We already have the contractor in place. We're starting development right now. And production, we expect to start in Q3 of this year, actually. The production range, it's important to have a range in there. It's between -- it's going to be in the long run between 50,000 and 90,000 ounces of gold per year with an average of 65,000. The good thing is about the grades that we have in Valles, it's a low capital intensity. The ore will be processed at the Herradura plant and the grades are very good. So the cost of production will be lower and will complement the delivery from the Herradura District in gold production.

And Noche Buena, that, as you remember, is a mine that was in care and maintenance planning to be closed. We reassessed with the new gold prices and the evaluation was quite positive. So we are reopening the operation. We continue re-leaching the old heaps. However, the restart of operations is going to be during the last quarter of this year with pre-stripping of the new phases that we will have in Noche Buena. Delivery of ore -- fresh ore will start next year in Q2 and fresh production we expect in the second half of next year coming from Noche Buena, also complementing the gold production profile from the district in Herradura that we'll see and we will start communicating moving forward the profile that we expect from the district moving forward in the next coming years.

Herradura underground, it's the deepest part of the main Herradura open pit. It's a longer-term project. However, we expect larger production from there, ranging 120,000 to 160,000 additional ounces when it starts production. We are assessing what is the right timing for the transition with the open pit and with Valles as well. But for what we're seeing right now, we expect that to be in 2032, complementing production as well.

In the case of Tajitos, Tajitos, it's a satellite pit 30 kilometers away from Herradura, we are progressing with metallurgical information. We needed to have some better information there to move forward, and we are scheduling the PEA for the first quarter of next year. However, in that area also, what we're thinking in the Herradura District is that 40 kilometers corridor in total, we have good exploration potential. And some of that exploration potential, we see it reflected on the latest campaign in Tajitos. We're finding a new gold high-grade veins area. It's different to what we had before. So good possibilities in there under development.

And in the case of greenfield projects, Rodeo is the first one. We mentioned this before, we were reassessing the quality of the asset and the engineering. We just completed the revised PEA and the results are quite positive. The new PEA is showing us that we have a possibility to increase the production levels from the previous ranges between 75,000 and 90,000 to an average between 90,000 and 110,000 ounces from that project. So that's good news. The critical path here will be driven by the permitting process for sure, and we're starting that as we speak, actually. And according to the schedule and of course, subject to permitting, we expect to have the new operation up and running by the end of '29 and early 2030.

Guanajuato Sur, we have mentioned this project for some time now. Now we have a better grasp of what it is in terms of production potential. It's a high-quality silver asset for the company. It will take some time to be developed given its depth. However, the most relevant thing is that we are progressing with the pre-feasibility study and now we can confirm that the production range that we expect in average in the long term is going to be between 15 million and 17 million ounces of silver per year, starting according to our current plan in 2033. However, we are assessing a few alternatives in order to bring that production forward at least a year, we are assessing that.

Again, permitting subject to permits, we expect to start early works, main shaft and the main ramp for the project during somewhere in the second half of next year. Orisyvo continues its development. Metallurgy, as we have mentioned before, it's one of the critical things, good results so far. So pre-feasibility B stage continues advancing during the rest of this year, and we expect early next year. Most efforts right now in Orisyvo are around land acquisition and government and community engagement. That is an important part for the development of Orisyvo. It's a large project, significant production around 200,000 ounces of gold.

However, large capital. So we are optimizing right now. That's part of the review, optimizing the capital expenditure in the project. And finally, Novador, our latest project in the portfolio, the acquisition with Probe Gold. The updated PFS, it's ongoing. We expect to have that completed before the end of this year, condemnation drilling started this year, good progress in there. You can see a picture of the harsh winter. However, during the first half of this year, the condemnation drilling continued for the engineering efforts. Project activities are continued today. However, we have some delays about the possibility of obtaining the permits in order to continue drilling. We expect a solution on that relatively soon. However, we have to wait and see.

And coming from Novador, again, production potentially starting in 2033 according to the current plan, to the current plan production that we expect is around 200,000 ounces per year. So what you can see is a summary of our portfolio of projects, sizable portfolio, gold -- mostly gold. However, we have a very high-quality asset in Guanajuato in terms of silver production. So a lot of activity moving forward.

Handing over to Mario for the financials.

Thank you. And if you don't mind, I'll just stay here. It's very pleasant to be here in London with this unusual hot and sunny weather. But it's nicer to be here and to be able to share with you what I believe are truly exceptional financial numbers. As a matter of fact, the record high setting for a first half since we did the IPO 18 years ago. And of course, this goes along with the fact that the price of silver reached almost $120 per ounce in the first half of this year and the price of gold reached above $5,000, which at least I haven't seen.

Unfortunately, prices have come down a little. So the good news is our record-setting first half of the year numbers. Second half, if prices remain where they are at the current spot price, obviously, would not be as good. But having said that, and if you look at the lines outlined in yellow, which are the different profit levels, you will be able to appreciate that gross profit was 131% above last year. Operating profit was 149% above last year. Profit for the period was almost tripled compared to last year, and EBITDA was almost doubled compared to last year.

So let's just briefly go back to the gross profit. which was $1.3 billion above last year. And if you move up that same column, second from right to left, you will see that the main reason clearly was the increased level of adjusted revenues of $1.4 billion. And if we move very briefly to the next slide, and we look at what was behind that increase of $1.4 billion, you will see that price was -- and not surprisingly, price was the main reason, in particular, silver, where we had a benefit of almost $1 billion. The price of silver -- the average realized price of silver for us during the first half of the year was $76.3 per ounce versus $33 that we saw in the first half of 2025. That's a 126% increase.

So this was the main factor behind the increase in revenues. Of course, gold, the average realized price for us was $4,647 versus $3,169. That's a 47% increase. So that was also a very important reason behind the increase in revenues. And even zinc did very well, 27% above last year. So prices in general, as you can see, had a very important impact. In terms of sales volume, as we knew it was going to happen, we had a lower sales volume in both gold and silver. But I do want to emphasize that we were above our budget. So this was perfectly predictable.

If we go back to the income statement very briefly, I think it's worthwhile commenting on adjusted production costs. And as you can see there, we had an increase of almost 21% or $138 million. And I believe the best way to look at this is if we go to what we call the rainbow analysis, which is on Page 4. So on the right-hand side, in the green bar, you have the total variation of $138 million. And I want to draw your attention to the first 2 graphs in -- I mean, bars in yellow, which represent, firstly, the behavior of the Mexican peso. And here, we're talking about the average exchange rate for the first half compared to the previous year. And we had a 12.5% revaluation. -- just to make it clear, the average exchange rate in the first half of last year was MXN 20 per dollar. And what we saw this year was only MXN 17.5, which is, as a matter of fact, the current spot price or exchange rate.

And on the second column, you can see the impact of what we call cost inflation, and this is based on our own basket of consumables. And we're talking here about the increase in the unit price of the different items that come from our basket. And that wasn't actually too bad. It was only 3.25%, but that had an impact -- a negative impact of $33 million. So when you add these 2 factors, that's how you get to what we call our cost inflation. Do we have that slide? Here, no. In the appendix, Okay. So I think the main message here is to convey to you that 66% of the total variation in the cost of production was due to the combination of the revaluation of the Mexican peso and the -- what we call the cost inflation.

Now of course, we had some operating issues that we would like to talk about. If you look at column # 5, for example, you will see that we had an increase in our operating cost at Saucito. And as you probably know, we are currently deepening the shaft there. It's a very important project, which obviously will generate very important benefits when we conclude it later on this year. But for the time being, what we're doing is we're extracting the mineral using contractors and using mobile equipment to take it all the way up to surface. And we're no longer crushing a mineral below the ground where we typically do it before we hoist it up to the surface. So we're doing that also at the surface and using contractors. So temporarily, our cost of contractors has gone up and it's obviously at a higher cost compared to when you operate normally your shaft. So this is a onetime. Hopefully, like I said, we will see the benefits of the new deepened shaft when we conclude that project. But this had a temporarily negative effect of $10.5 million.

Now in bar # 4, what we show there is the effect of the higher stripping that we recognized in our income statement related to Herradura. So as you know, every year, once reserves and resources are calculated and reviewed and the new mine plan is also defined, we calculate or estimate the stripping that will take on in the future. And what came out of that is that this year, we're not capitalizing any stripping at all. 100% of the stripping is taken directly to the income statement, which was not the case in the first half of last year where we did capitalize. So as you can see, it's just an allocation when you look at -- when you sum what is capitalized and what is taken to the income statement, it's basically the same 1 year versus the other, but it's the way that we accounted for that change to applying this criteria that I just described to you. And also the fact that we have longer haulage distances now at Herradura, those 2 factors had a negative impact of $11.4 million.

And lastly, on bar # 3, we had higher maintenance independently of exchange rates or inflation. We just used more maintenance, if you will, at several of our mines, and that had an impact of $15.2 million. So in conclusion, 2/3 outside factors, $10 million, a temporary factor, onetime. And Bar 3 and 4, those look like they're going to stick around for a while.

If we go back very briefly to the income statement, just to comment on some of the lines perhaps. So we already spoke about gross profit, right? And we saw that the main reason for that was the increase in the prices. Now if we move to the operating profit, I think the item to comment on is the exploration expenses. We invested -- for me, it's an investment more than a cost, but anyhow, it was $109 million, which was $32 million higher compared to last year, but well within the budget. As a matter of fact, below our budget, and you already have the guidance that we have given for the full year. But when compared to the previous year, we are seeing an important increase.

If we move further down the income statement, one important item, perhaps just because of the significance in the variation is the finance income. So in 2025, you see a negative number of almost $180 million. And I'm sure you remember that back then, we simply canceled the Silverstream that we had, and we had that negative impact. This year, we are only recognizing $25 million, which is basically the difference between the interest that we received on our cash balance and the interest that we pay on our long-term debt of $850 million, which is due in 25 years from now.

Moving on down, of course, you will see higher income tax and mining rights. Remember, the mining rights that we recognize here is what we call the special mining right, which is 8% of a base that is very similar to EBITDA. So with the better prices, obviously, that mining right increases. And obviously, income tax expense with a higher price and higher profit before taxes, it's natural to see higher taxes.

I think now we can move on to the cash flow statement. And I would like to start with the very, very first line because this is the cash generated by our operations, which was almost $2.36 billion, again, record high. And we more than doubled what we saw last year. So pretty good cash generated by our operations. But this first half, we had important uses, too. I'm going to mention the most important ones. Income tax and special mining rights and profit sharing. So here, we have 3 main items: provisional tax payments that are made from January to June, which are related to this fiscal year, and you simply apply a factor over sales, and that's what you have to pay monthly, and let's say that, that is a tax paid in advance related to this year. Also, we presented our tax returns in March for 2025. And after taking out the provisional payments that we paid last year, we still had to pay around $300 million just for the 2025 fiscal year.

And of course, mining rights, which were much higher compared to last year. So that pretty much describes the $890 million that you see there. Another very important use and that I'm sure you're very happy about our dividends. If you look at dividends paid, we paid almost $800 million, and that's only what we paid in May, which was related to the final dividend for 2025. But we also paid dividend to our minority shareholders. Here, we're talking about Pan American Silver, who owns 44% of Juanicipio. So we paid them almost $200 million. So in total dividends between what we paid to our own shareholders and to minority shareholders, we're talking about $1 billion in dividends.

Of course, another important use that you see there is the purchase of Probe Gold, almost $550 million. And my peers here have already talked about that important investment and a very important project for us. And five and last, I would say, important use of funds is the purchase of property, plant and equipment CapEx, which for this first half of the year, we used $236 million, which is higher compared to last year. So all in all, these 5 uses that I just described to you, if you add them up, it is $2.7 billion. And that's why you see a small reduction in the cash balance compared to what we began the year with, which was $2.76 billion, and we closed in June with $2.5 billion, which is a very healthy cash balance.

And with that, I think I will leave it at that. But before I pass it on to Octavio, I would like to make an important announcement here. Gabriela Mayor, who has been here in London for the last 14 years as Head of the London office and also Head of Investor Relations, is finally returning back to Mexico for different responsibilities now. She will now be the Vice President of Financial Planning. And I would like to introduce to you Juan Pablo Rojas, if you want to stand up, please. Juan Pablo Rojas will be now as of Monday, as of yesterday, your new Investor Relations person and the Head of the London office. So I want to thank Gaby for a great job during those 14 years, great effort. And I would like to ask your support as analysts and as investors for Juan Pablo, who has been with the company now for 18 years, and he was until yesterday, the Vice President of Financial Planning. So we're basically switching. So people get new experiences. So that's the announcement.

Thank you, Mario. Thank you very much, Gaby, for all these years, serving our London office. I think it was an outstanding time for you, but also for the company, of course. And we are very glad to have you back in Mexico with additional responsibilities, of course. So thank you, Mario. Now turning to the outlook. Expected production, we have already confirmed we remain on track to meet our guidance for 2026. Expected production for '27 and '28 expressed in silver equivalent ounces remains unchanged. However, we expect a slightly higher production of gold as we have seen from the trends in Herradura and importantly, in Fresnillo and a slightly lower production of silver from Saucito. As usual, a more detailed update regarding individual metal production expectations for 2027 and 2028 is expected to be issued in Q4 production report.

In terms of CapEx, a good and continued experience on rationalizing and optimizing our CapEx numbers coming down to the range of $500 million to $550 million. This is through a very disciplined approach and exercise that we run across all of our operations as we go on the year -- operating year. Just a brief comments on the timeline on the different projects. Daniel mentioned already that we expect some production out of Valles this year. First, on the brownfields, Noche Buena, very good news as well, extending the mine -- the life of the mine and seeing some production coming on next year. And then the rest of the projects that Daniel already mentioned, Rodeo, Tajitos, Herradura underground, Novador, Orisyvo, importantly, on the silver side, Guanajuato that continues to give us very good exploration surprises.

So just to conclude, this has been an excellent first half 2026 for Fresnillo. We have delivered another solid operational performance, which has resulted in a record financial performance. We have remained committed to foster a strong safety culture, protecting the environment and maintaining open engagement with our communities. While there is always more to do, I'm delighted by the way our people have embraced these priorities.

Coming, and this is important from 2 years, 2024 and 2025, in which we had the adjusted production costs very much at the total production cost at the same level. We have maintained our disciplined focus on cost control, and this will remain a key priority throughout the remainder of the year and beyond. We continue to invest across the portfolio and as set out today, we are advancing fantastic new projects to production over the coming years. Finally, we are delivering significant returns for our shareholders in line with our dividend policy while preserving our capital for disciplined future growth.

With that, we are happy to take your questions.

Jason?

Jason Fairclough, Bank of America. Just a couple of questions on the growth projects. So could you talk a little bit about the Canadian assets? Like it seems like there's many, many years between now and when we might see production. And I mean you paid a lot of money for this. Why is it taking so long to bring these things into production, Octavio?

I didn't catch which project you were...

The Canadian projects, Novador.

Novador. This is a strategic move of course. Number one, the quality of the project. Number two, that goes along the lines that we try to develop all the time. Number two, Novador project, which is the center piece of the acquisition with 8 million ounces of gold already in resources comes along with a large land package as well for exploration. So we believe this will come as another mining district in the future, having a centerpiece as Novador with 110,000, 120,000 hectares of exploration ground.

So with that, we will have the Fresnillo district, of course, the Herradura district, as Daniel explained, in which we have several operating assets. Guanajuato goes along the lines of a district in the future. We not only have Guanajuato Sur already with sizable resources, but also another 4 or 5 different exploration targets for the future and then Novador. So all in all, it complements our strategy in -- for Fresnillo [ plc ].

Okay. I'm just going to push you a little bit. Why does it take so long to bring it into production?

Well, it's a combination in which we are right now at the stage of pre-feasibility. We're reviewing that pre-feasibility as well. We're going through the -- some of the permitting process, as Daniel mentioned, some of the combination drilling. And then it's just the time that we believe is good to bring that kind of project in the future.

So to follow up on a similar note, one of the other projects you're still talking about is Orisyvo. And I feel like that's been in your project pyramid since the time of the IPO, certainly been more than 10 years, help me out here, Mario, maybe even 15.

Since the IPO.

Since the IPO. So it's taking a long time. So could you maybe just talk a little bit about why that is taking so long?

Yes. Orisyvo is a special case. But you're right. I mean, in the first 10 years, as you very well know, of Fresnillo, we had our full -- our hands full with different projects, almost one project, greenfield project or expansion at each one of our operating assets from 2008 to 2018. Orisyvo at that time was a sizable project with sizable resources, almost 10 million ounces in resources. We thought about that as open pit future operation, complex metallurgical process and recoveries.

It took us long to really go and nail down the metallurgy there, refractory ore as well. Now we are in a way, strengthening the project that has ahead of us additional challenges, indigenous consultation, high infrastructure investment, roads. It's on top of that Rarámuri Mountains range in Chihuahua. So it takes time. But I mean, we like to go about developing our projects once we have everything in place so that we improve drastically the probabilities of success for this kind of projects.

Richard Hatch from Berenberg. A few questions. Firstly, just on the CapEx, it's a pretty big cut, $200 million in your CapEx. So can you just help us to know where that $200 million has come from just because I also know you haven't increased '27 or '28. So where is that $200 million go?

In general terms, across various areas of investment. We make sure that those investments that our operations need are deployed. The connection of the Jarillas shaft that is going to be concluded. The conveyor belt at Juanicipio as well. Mining works importantly, I mean, that's number one. Mobile equipment, some of the sustaining CapEx, we'll review it through the year. And if we can, we extend it and cut the CapEx numbers. Tailings storage facilities as well, we review the original design, the engineering and everything. And if we can regrow some of the operating design for the tailings storage facility, we do and postpone that investment. What else, Daniel?

I think you covered most of the relevant factors. It's a combination between the ability to execute in some of the projects, the ability to actually purchase some equipment that is not -- was not available for this year. And the other is the continuous effort on reducing and reviewing what we expand on.

Okay. But some of the important CapEx is our priority, that is deployed.

Okay. But you're confident that you're not going to -- we're not going to see a creep in '27 and '28 as some of that comes back in.

No.

No, okay. Mario, just on the costs, can you help us with a bit of a steer for what you're thinking in the second half? You've been pretty good at controlling costs. The peso has been against you, but recently, it's been a bit more stable. So what are you thinking on costs into the second half?

Right. We haven't yet seen the most important impact of the increase of the price in oil. Diesel, as you know, is one very important consumable for us. Fortunately, it's become a, I would say, a political issue in Mexico. So the President has tried to keep the diesel price more or less stable in peso terms. And she's been lucky because given the fact that the peso revaluated, when you look at the average price expressed in dollars of diesel, even though in Mexico, it was -- it remained constant.

In dollar terms, it went up, but not nearly the percentage that worldwide price has experienced. So in that regard, I think we're going to be able to maintain that. But it all depends how long and how much more the price of oil could go up, and it's very uncertain. I'm sure you know a lot more about that than I do. In terms of wages, we have already negotiated with the union. So we're not going to -- we don't have any risk there.

In terms of other materials, like explosives and operating materials in general, again, they're more or less linked to oil prices directly or indirectly. We only saw a 3.1% increase in the first half. Maybe there's a lag effect there that we might see in the second half of the year. But at least from our side, what we're budgeting is something pretty much like what we saw -- I mean, budgeting for the next 6 months, pretty much what we saw in the first half.

Okay. Helpful. And then just a couple more, if I may. Just the first one is just on cash tax second half. Should we expect any -- how are you thinking about cash taxes in the second half of the year?

Cash, what?

Cash taxes. And also, you mentioned that you pay some of your tax ahead of time, right? So with the...

The provisional tax payment...

Yes. So with the gold and silver price coming lower, does that mean that you perhaps pay slightly less in the second half or not?

Yes. Look, provisional taxes are basically paid as a percentage, a small percentage, a factor that is defined at the beginning of the year using a formula that is defined by the Mexican tax authority. It's the same formula every year. So if you did very well in the previous year, that factor certainly will go up, which is what actually happened. And you simply apply that factor to your sales. And when you do your tax return on the following year in March, you do your actual calculations and you compare that to whatever provisional taxes were paid. So if the price of silver and gold go down and revenues come down and you apply exactly the same factor for -- that you applied in the first half, that should come down as a use of cash for the second half of the year.

Okay. And then last one, I was just curious, on Saucito, it seemed to be that you sold quite a lot less than you produced. Was there any reason for that? Sold 4.4 million ounces of silver versus 6.2 million produced, 26,000 ounces of gold, [ unsold ]. Any reason for that?

I think that's just probably some of the -- I'm guessing a bit. Sometimes it takes time to settle the assays exchange with the Met-Mex. So that might be the case. Nothing that I remember importantly.

We'll probably recuperate that in the second half.

This is Alain Gabriel at Morgan Stanley. A couple of questions. Firstly, on capital returns. The first half dividend came in slightly below what the market was expecting. And your dividend policy is a bit formulaic. How should we think about the framework of the year-end distribution to shareholders? How are you thinking about it? How should the market think about it? That's the first question.

Sure. In relation to the interim dividend, what we actually did is very, very simple. We simply applied our dividend policy. And as you know, our dividend policy has been for the last 18 years since we did the IPO is paying out basically 50% of our net income. So what we do is we project our net income for the end of the year. We apply 50% on that. And since we consider this to be an advanced dividend payment, we simply apply 30% on that number that we are estimating, and that is the interim dividend. So it's just pure math applied over our policy.

Now I don't know what the market is thinking about the second half, but as we are using conservative prices, pretty much close to the spot price. So for the next 6 months, we're projecting around $55, the price of silver and around $4,000 the price of gold. So that's what we're projecting for the next 6 months. And based on that, like I said, we just simply applied the math.

That's very clear. And the second question is on your greenfield projects. You have 4 major greenfield projects. How do these -- the spending on these projects feed into your CapEx budget for '27 and '28? What's included and what's excluded from your -- the outlook slide that you have laid out?

'27 and '28 is not including the growth projects CapEx there. And whenever we have a project approved, then we include it in the expected CapEx.

Any initial budgets that we can think of? Any ceiling of spending that you are thinking of, including the projects for '27, '28?

In '27, we don't see significant expenditure. As we mentioned on the presentation, the larger capital, but we're talking about something between $40 million and $50 million will be the start of the decline and the shaft in Guanajuato. For the rest of the greenfield projects, we don't see construction work actually starting. So next year, nothing significant. '28 is something that we will start reviewing.

Patrick Jones, JPMorgan. Maybe just a quick one on Rodeo, given obviously, similar to Orisyvo's one that's been in the portfolio for a long time. It looks like the time lines moved out just a little bit, again, closer to 2030, but the production has changed a little bit. So are you kind of building a little bit more confidence this is going to be happening? And also, how long do you envision the permitting process to be if you think this could be online by late '29, early 2030?

I think permitting process, as you're aware, has been relatively complex in Mexico during the last few years. Things are improving. The reception from authorities in terms of workout with the companies, the relevant permits, it's improving. However, there is some uncertainty there. In terms of the confidence, let me call it, the technical confidence of the project, the work we conducted last year, and we're just finishing now, it's very solid, particularly around metallurgy that was the critical point for the project to go on. And that's why we're confident about the numbers that we're showing in terms of increasing the production expectation.

Rodeo is, there is no simple project, but it's a relatively simple project to build. That's why the execution time once we have the permits, it's well under control. We think something between 18 and 20 months for construction. So that allow us to be in the time frame that we're mentioning. However, it's going to be permit depending.

And maybe just a follow-up on that. Anything from an environment or community relations issue that is particularly outstanding as part of that permitting process?

One of the most complex permits are around water management in Mexico. The area around the project, we have one water stream that it's probably what we will have to deal with in more detail. We started already conversations with the relevant authorities. But we don't see communities being an issue. We have a very good relationship with the close communities. Part of the investment is about water management in the area, building treatment plants for the existing communities. So we don't foresee complications on that area. I would say about water management on the water stream could be something to be aware of.

The last federal administration was not really supporting mining. This administration is being different. They started first approving some of the permits, environmental permits for the current operations. And we saw some of the long-standing permits from the previous one being approved for San Julián, for Fresnillo, for Herradura as well. And now they moved into approving some greenfields, even open pit mining already or open pit future mining projects. And just recently, a large one, which is San Nicolás, an investment by Teck and Agnico. So I think they are getting a good pace in terms of understanding the importance of mining and therefore, approving the permits for new mining projects.

Maybe just on another topic. It's been about a year or so since the MAG Silver deal closed for Pan American. Can you just talk a little bit about the working relationship with Pan American?

It's been working well. We have regular meetings, and they are being supportive of our mining plans and investments as well. We may, in this kind of relationship, improve or increase the exploration or budget for exploration among some other things. So all in all, it's working very, very well.

Do you see any other areas to cooperate either in the Juanicipio area or outside of the concession or potentially internationally with Pan American?

Well, I think that will come. We have visited them, and they have visited with a larger group of mining professionals. They will also get a conveyor belt in some of the operations, something that we are doing right now. So those kind of technical exchanges we are doing. They have some of the projects. But for the time being, I mean, we are not going in that scope yet.

And maybe just lastly then also on Novador, given this would be your first project outside of Mexico, how do you feel about doing that either alone yourselves? Do you think that would be one that maybe down the road, you'd look at potentially bringing in a partner?

Which one, sorry?

For Novador in Canada.

Novador. I think it's manageable. I think it's manageable. We have the experience. We did since the due diligence, a very good review of what Probe had done in terms of the first stage of the pre-feasibility study. We modified some of their assumptions there. We reviewed even the future underground operation. Initially, we didn't see it with that much of something that we would do. But now, I mean, we believe it's something that we will do as well. The price also has helped growing the resources along the lines of some of the exploration, initial exploration we've done. So I think that is something that can be managed by ourselves. And as I mentioned, the large land package may present opportunities to do something with another mining company probably.

If we can just shift online. We've just got 2 questions online, and we'll come back to the room to wrap up. So Gavin, can you get go for our first question, please?

You have a question from the line of Marina Calero from RBC Capital Markets.

Can you hear me?

Yes.

I just have a couple of follow-up questions. First, on your capital returns. Can you share with us the gold and silver prices that you've used to estimate the -- your net income for the full year?

Yes, of course. The price of silver that we're using for the 6 remaining months is $55 per ounce, the price of gold, USD 4,000 per ounce.

Yes. That's great. Very clear. And my second question is on Guanajuato. I think you mentioned the possibility of perhaps bringing these projects earlier. What will need to happen for this to materialize? And you gave us today a production guidance range. Can you comment on the potential CapEx and cost profile for this project?

Sure. To your -- if I understood correctly, Marina, the possibility of bringing forward some months, eventually a year, the project will depend strongly of the ability of develop at higher rates, the main shaft and also the ramp. We are assessing that. The average rates that we're using now are, let me call them, average. We are trying to think of different ways to accelerate that, but we will be able to confirm once the detailed engineering is completed.

Your next question about -- was about the production range. That's fine. And in terms of capital, in terms of capital intensity, we are still at pre-feasibility level, but what we can comment is that we expect this project to be in the -- between $700 million and $900 million capital in total. That is the range that I can give you for now. But again, we are finalizing the engineers, and we will be able to confirm final numbers when we finish.

You have a question from the line of Daniel Major from UBS.

Can you hear me okay?

Yes.

The first one is a clarification. You've provided the same 3-year gold and silver production guidance that you provided at the interim results in February. Two parts to the question. Is the Valles underground and the Noche Buena gold incremental volumes that are essentially going to happen at the end of this year and next year included in that gold production guidance is the first part of the question.

And then the second part, if you were to think about the risks to the up and the downside around the gold versus the silver in recent years, silver has undershot and gold has outperformed. Is it fair to say the same risks sit around that future guidance going forward?

To your first question, the production from Valles is included in that forecast. The production that is not included, it's Noche Buena. Noche Buena was confirmed after we provided those figures, and we haven't modified that. So you can think about that additional production. It's not going to be significant on '27. In '27, we expect from Noche Buena something in the range between 15,000 and 20,000 ounces. But for '28, we expect a full year of production. So if these numbers help.

Okay. And then in terms of the kind of cadence and the risk to the up and the downside to those numbers, gold versus silver?

Octavio mentioned during the presentation, what we are seeing right now is stable in terms of silver equivalent ounces. We see -- not a risk. We see a possibility of increasing the production of gold that we will need -- that we're working out as we speak. And as a risk, Octavio also mentioned that we see a risk of slightly lower production, particularly from Saucito moving forward. However, the details and how much is something that we're working out right now, and we expect to provide more color before the end of the year.

That is something very well identified, Daniel, which is we've had some issues with ventilation and the development to the west in Saucito, a bit on ground control that made us change at least for the mining sequence for '27 is slightly for '28. So that's something that we are assessing. And therefore, that's why we will update you in Q4 production report.

There are no further questions online. I'd like to hand back to management for closing comments.

It's Amos Fletcher from Barclays. A couple of just other follow-ups. I just wanted to ask, Daniel, regarding your comments around you're not spending money on equipment because it's unavailable. What equipment is that? What areas are you seeing that in?

That's on -- mostly on long-term items. We are renewing our fleet in Herradura. We purchased in December 4 new trucks. We are shooting for 6 new this year, but we also will have to start renewing the loading fleet. And those -- we expected to have some of that available during this year, but it's not coming online this year. So we are postponing that for next one. That's one example.

Okay. And then I just wanted to follow up. Could you just update on your sort of preliminary thoughts on the CapEx for Tajitos and Rodeo projects, please?

In Rodeo, we'll have the numbers work out as part of the study. In Rodeo, we expect a capital -- this is still a PEA. We need to refine the PFS that we are starting in the next few months, but we expect a CapEx around $500 million, roughly speaking.

In Tajitos, it is more uncertain. However, the configuration of Tajitos as a project is very similar to Rodeo, simpler in terms of topography and layouts in general. Rodeo is a bit more complex. So in Tajitos, I would think, and to give you just an idea of something in the $400 million to $450 million potentially, but very early stage, and we have to work out those details.

And then last question was just around your investment in Sinda, the recent U.S. IPO. Could you just talk about the potential benefits of that and what might come from it?

That goes along the lines of consolidating on districts as well. The mining claims of this company finishes where ours start, and that's further south to Guanajuato Sur. If we were to see the Guanajuato Sur mining district, we will have, as I mentioned, 3 -- 4 additional targets, exploration targets, Guanajuato Sur, one more to South Naranjos and then Sinda. So that goes along the line as an investment of just to see possibilities in the near future in the same area.

Well, we thank you very much for being here. Let's go and as Mario mentioned, enjoy the sunny London. Thank you very much. Bye now.

Good morning, everyone. Thank you for joining us today. My name is Octavio Alvidrez, and I'm the CEO of Fresnillo plc. Here with me this morning, we have Mario Arreguin, our CFO. I'm joined also by our Chief Operating Officer, Tomas Iturriaga of the Central Region; and Daniel Diez of the Northern Region; and our Vice President of Exploration, Guillermo Gastelum.

I would like to welcome to our full year results presentation. Before we begin, and as always, I would like to point out to our disclaimer, but I will quickly move to set out what we will cover in our presentation.

I will take you through the investment proposition and some of the 2025 highlights and also our key recent HSECR initiatives. Guillermo then will go -- well, before then -- before Guillermo, Tomas and Daniel will provide an operational update from their respective regions. Mario will provide our financial update. Guillermo will talk us about resources and reserves. And then I will come back to close the presentation with some final comments and the outlook.

I'm pleased with the performance of our business. As we have already reported, gold exceeding guidance and silver was in line with guidance. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on future growth opportunities. We remain, and this is going to be a continuous effort, very focused on control of the cost and mitigate the first initial signs of inflation that we see in our operations.

Let's remind that in 2025, we achieved cost savings for $46 million through a number of initiatives, most of them and the majority of them in the Herradura district. But this will continue to be our focus in 2026. Of course, having the ounces and controlling the cost, even decreasing for 2 years, I would say, '24 to '25, and having in the ounces, we are enjoying the record prices and turning that into a record financial performance.

In 2025, we delivered also on our mergers and acquisition strategy with the acquisition of Probe Gold in Canada. This is an outstanding asset, which added 10 million ounces of gold to our resource base, and we look forward to taking the right steps to develop this exciting project in due course. This goes along our strategy of acquiring quality assets. And in terms of exploration, we will see the Probe Gold acquisition to turn into a district for exploration for many years.

Finally, we returned $950 million to shareholders in dividends, a record amount.

So turning to our investment proposition. We are still the largest producer of silver in the world and Mexico's leading gold miner. We benefit from a large portfolio of high-quality assets with over 2 billion ounces of silver resources and 44 million ounces of gold resources. Let's comment that this does not include the most recent acquisition of our project in Canada, as we closed that transaction in January of this year.

We have strong EBITDA margins and low costs and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $2 billion alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends. As you can see, we have distributed 69% of earnings in 2025, well above our stated dividend policy. Though I should be clear, our policy remains in place.

Some highlights on the financial performance. This is a record performance as we are announcing it today. Revenue was up strongly. But as you can see, our overall profitability was up sharply with significant margin improvements as we continue to focus on costs across the business so we can fully capitalize on the high precious metals price environment. And we have delivered considerable value to our shareholders, while retaining an extremely strong balance sheet.

I should state here, we believe the strong balance sheet is a competitive advantage. We have generated significantly cash flow, returning value to shareholders ahead of our stated dividend policy, but we also continue to look for opportunities, which we believe will be value enhancing in the long term.

And our balance sheet give us the flexibility to be able to act quickly if we feel our shareholders will be better served by other uses of capital, then, of course, we will act on that accordingly.

Some few comments on gold and silver markets. We continue to see strong fundamentals driving demand for both silver and gold. As we have seen sadly this weekend, global economic instability, geopolitical tensions and trade disputes have increased demand for safe haven assets like gold and silver. We are seeing growing interest in precious metals as an investment class, which has boosted demand.

Gold has hit record highs in the period, reflecting geopolitical tensions, while we are also seeing a strong underlying support from central banks. We expect these themes or aspects to continue for the foreseeable future. We have also seen increased demand not just from traditional drivers such as jewelry for silver, but in particular, in use in various industries, including electronic solar panels and automobiles, increasing industrialization has contributed to rising silver prices.

And as we can see on the silver graph, I mean, it is one trend from 2018 to 2020, but increasingly use and demand from 2020 till now. So that is quite a healthy market, I would say, increased because the scarcity of silver projects also increased the foundations for this market.

Finally, and most significantly, we are seeing supply constraints, as I mentioned, not only in gold, but also in silver. In short, we remain very confident in the outlook for silver and gold prices.

Moving quickly to HSECR highlights. Safety is at the heart of everything we do. And as we can see in the graph, I mean, the trend is quite positive, decreasing the long-term injury frequency rates as well as total recordable injury frequency rates. But still, the two fatalities we had this last year is a strong reminder that we can -- we should continue putting across all of our operations, our policy and protocols and our philosophy, "I Care, We Care." So we continue and finally achieve a year with no fatalities.

On the environment front, our work on improving our carbon emission performance is also ongoing as we work towards decarbonizing our operations, improving water recycling rates and upgrading our mining fleets. We achieved 78% renewable energy consumption in the period, ahead of our target. As I said before, we are not still increasing that target as we have some other mining projects that will increase our footprint. And therefore, that target remains at the same level that we have stated at 75%.

On community relations, in particular, I would like to highlight local health campaigns where we have provided nearly 7,000 medical consultations and our new water initiatives on San Julian in partnerships with Metals for Humanity.

As I highlighted before, our relationship with our communities is central to our license to operate, and we continue to make a huge contribution to our communities, both in terms of investment, employment and taxes we pay.

I now would like to turn the presentation to Tomas Iturriaga and then after to Daniel.

Do you want to present over there or...

Okay. Thank you, Octavio, and good morning, everyone. So let's move to the following page here to start giving you some color on the operations performance. I would say that accounting for the different realities of the -- and challenges of the three mines, as a whole, the Fresnillo district had a solid year, meeting production expectation and achieving relevant progress in the different projects across mines.

Getting to the mine-by-mine details at Fresnillo, we managed to stop the production decline that we have seen during the past 2 years with the silver grade increasing 10% year-on-year. That offset by a throughput decrease of the same magnitude due to lower bandwidth and/or shorter stope lengths at the San Alberto, Santa Elena and Candelaria areas.

I think we've made significant progress adjusting our mine operations to the new reality of the mine at depth, improved our dilution control discipline as seen in the silver grade increase year-on-year. During 2023, it's key that we advanced development of and mine infrastructure at San Mateo and San Alberto areas required to support grade and throughput increases expected in 2027 and 2028.

We saw good results at Fresnillo in the reserves front with 20 million ore tonnes at almost 200 grams per tonne of silver in reserve and most of it in the proven category, replenishing mine tonnes during the year and adding some to the reserve inventory.

Moving into Saucito, another solid year at Saucito in terms of production with a very slight decrease in silver production due to lower volume processed, mainly driven by lower equipment availability and some delays on ventilation robbins due to permitting. Development meters were also impacted during the year by these same factors. But as we already have obtained the permits for these ventilation robbins, and we have established a very rigorous availability program improvement with our mine equipment OEMs. We are expecting an improved 2026 performance.

Lead and zinc production were both strong at Saucito, helping a good financial result at the mine. Key for this year will be the interconnection of the deepened section of the Jarillas shaft is scheduled to be completed by Q3 this year, for what we need to shut down the shaft in a couple of weeks with some impact to this year's production and cost. But very positive impact expected starting in 2027 and on. So once we have this project conclude, we should see improvements in our cost per tonne due to decreased haulage.

I think the team did a very good job keeping the operations stable and under control at Saucito, which is becoming a complex mine to manage. We saw also good results in the reserve front at Saucito with almost 17.5 million tonnes of ore at above 200 grams per tonne of silver and also most of it in the proven category.

Finally, on to Juanicipio, where we had another very good year of operations with production of silver and the rest of the byproduct metals right or above expected levels and considering that silver grade decrease was expected and accounted for. So it was not a surprise, good year at operations.

For this year, the conclusion of and commissioning of our underground conveyor project scheduled for midyear. It's very key. We will need to shut down the San Jose del Bajio, main haulage ramp for the installation of this conveyor, which is going to impact our cost this year, but we'll see relevant cost benefits starting in 2027 and on.

Good result also in the reserve for -- in the reserve front at Juanicipio. 10.3 million tonnes of ore in reserve at about 200 grams per tonne of silver, pretty much all of it in the proven category. So efficiency and improvements and cost control initiatives will continue to be a focus in the district for this year. And just to counterbalance the inflationary pressures as well as exchange rate pressures. So we will keep a very disciplined approach to cost and efficiency.

And just to reiterate that I think we have a strong performance at the Fresnillo district all-in-all for the year.

Thank you. On to my colleague, Daniel Diez.

Thank you. Good morning, everybody. Happy to present the results of the operations in the Northern District, starting with Herradura. This was a very solid year in terms of results, consolidating the efforts on optimizing our operation and stabilizing first and now starting the process of growth and to optimize the installed capacity that we have for the coming years.

First of all, our annual gold production was significantly above expectations, both on target and the overall guidance. As you see, this was a strong support for surpassing the company guidance for 2025. A slight decrease compared to previous year, 1.2%, but as mentioned, was above our internal expectations. So all-in-all, a very solid year in Herradura.

The foundations of the results are the operational excellence and cost control initiatives that we started in 2023 and were consolidated in 2024. In particular, I'm highlighting this year, together with the efforts of the last year, mostly around the mine side of the operation. This year, in particular, we put a strong focus on optimizing the drilling patterns for increased recovery that was becoming one of the issues in our heap leach and also some enhancements on the DLP plants for throughput increase, supporting the results that we have right now.

In parallel, we are executing several structural projects to optimize our operation. The first one that we started, it's the construction of the new Carbon in Column plant that we are finalizing that during this month. And in parallel, we are working on the engineering for the Sulphides Crushing Circuit and for the ADR plant that we expect to have built and operating during somewhere next year.

Some capital deployment, it's included, and you see some increase in our overall capital profile. The structural projects that we are executing in Herradura, together with the sustaining, we are totalizing around $170 million for this 2026.

These projects that I'm mentioning here, all of them have been strictly evaluated. All of them have between 8 months and 1.5 years of payback period, so are very accretive in terms of returns for the company is what we're trying to do, continue a very strict capital allocation policy, trying to invest in smart investments to optimize our operations.

And in particular, in 2026, we have a strong focus on the district optimization. We have been explaining and communicated the view that we have in Herradura as a new gold-producing district. In this year, we are going to finalize the integrated planning, including all the assets that we are putting into production that we'll mention later on and maximization of the returns on the installed capacity that we have there.

Moving to Cienega. Cienega, we had a more difficult year this year. 2024 was very successful. In 2025, we experienced some specific issues around metallurgy that hit us mostly on silver production. As you can see, we decreased from 4.8 million ounces on '24 to 2.8 million during 2025. However, the good news is that, that was specific to one zone of the mine that we expect to deplete during the first half of this year. So after that, that specific problem will be solved.

In exploration, we're very happy with the results that we're having. I think we mentioned this on the previous announcement during midyear, the new discovery on a new high-grade gold zone called Victoria Complex, has been starting to deliver results starting in Q4 2025, and it's going to be the base of production for '26 and '27 in Cienega.

And we also have some optionality through a few satellite deposits, in particular, one that we are finalizing to engineer and going through the permitting process to hopefully being able to complement production from Cienega.

In terms of cost profile in Cienega, it's higher than expected due to lower production. However, during this year and next, we expect to be below $2,000 all-in sustaining cost with, which is still very healthy in terms of margin and still accretive as part of our portfolio.

And finally, in San Julian, also a very positive year. If you recall, one of the main challenges in San Julian for us was to being able to transition successfully from the operation with two deposits and plants to only one. That has been done with very positive results.

In terms of production, we have surpassed gold production and sustained silver production, which is very good. In terms of unit cost, as expected, it is slightly higher because operations in Vein is slightly more costly than operating the DOB. However, it's within the range that we set as a target that was having an all-in sustaining cost below $20, and we delivered $19.8 during 2025. So we're very happy with the results.

And also on the exploration side, some very good results on exploration and new discoveries. We expect to extend the mine life in San Julian. The current life of mine goes all the way up to 2030. We expect to extend that lease for 2 additional years, and we continue to have new discoveries. So we have an operation that is well controlled in terms of cost performance and also with possibilities to extend. So it's also a good part of our portfolio.

Handing over to Guillermo.

Good morning, everyone. Well, a few comments about our resources and reserves. Most of it is all good news. And I would like to remind you that the number that you're looking at are current as of April 2025. So those numbers have not benefited yet from the current higher precious metal prices.

We took a hit though of minus 8.5% in our silver resources due to the application of the RPEEE principle, which is being required, we formalized later on this year as a requirement for the disclosure of resources, that's a reasonable prospectus of eventual economic extraction.

So we lost -- we lost some silver resources. However, on the other hand, the remaining silver resources have a much higher probability to be converted into reserves in the future. The rest of the numbers are very positive.

The resources in gold grew 14%, mostly due to good exploration results at the Herradura district and at Lucerito and other projects in Mexico.

On the reserve side, the silver reserves grew 9.4%, as you can see. So most of the reserves were replenished at the Fresnillo district. And also our gold reserves grew 7.4% mostly coming out from the Herradura district. So those are good numbers. And as Octavio mentioned before, this number do not include any of the new resources that we came to Fresnillo with the acquisition of Probe Gold.

Highlight for 2025 was, of course, the acquisition of the Canadian junior company, Probe Gold, which has a very significant asset at one of the premium locations of the Val d'Or mining camp in Quebec, along one of these major structural breaks that cost millions of ounces of several other mines around.

So the Novador project, that's a flagship asset now of Fresnillo in Canada is located about 25 minutes drive east from the Val d'Or town site. So it's an excellent location. So overall, this acquisition is adding around 10 million ounces of gold resources, and most of them are located in the Novador project, which has a good potential to be -- well, and we are going to turn it into a producing asset, expecting to deliver in 2030 -- 2032, if I'm correct.

So very importantly, we have continued the work that was being carried out by Probe Gold. We are drilling right now, and we have good plans for additional geological and geophysical studies in the rest of the properties.

I would like to highlight a couple of issues here that this acquisition didn't come only with Novador, but with a significant land position in two major mineralized gold belts in Quebec. It's very important to say as well that the -- after the transaction, the key personnel of Probe Gold was retained. So -- and most -- and basically all of the professionals and technicians working at Val d'Or are now working for Fresnillo. So we haven't had any issue in continuing the operations and the exploration plans at Val d'Or.

Now a few comments about some highlights of what we did in 2025. We spent $175 million drilling slightly over 800,000 meters overall in all of our projects in Mexico, Peru and in Chile. As usual, we have a very strong focus on brownfields exploration.

We allocated about 80% of the budget to brownfields, which is coming out of the normal, say, exploration programs by the mine exploration teams following their targets of converting resources, adding new resources to the mine operations and also infill drilling in the reserves to increase the certainty of the reserve for medium- to long-term planning. And the remaining 20% was allocated mostly in the advanced exploration projects such as Guanajuato, Orisyvo, Rodeo, Tajitos, and the emerging Lucerito project, which is delivering good results in the latest exploration.

So, all of this work is supported by a significant land that we owned -- in the land concessions that we own in all the countries where we operate, we can see the numbers to the left of the triangle there. And our focus for 2026 will be an increase of the exploration budget up to $308 million. Now we're seeing a shift of more investment being put in the advanced exploration project and 35% of this total budget will be devoted to the advanced exploration projects that you see in the upper levels of the triangle, like places like Valles, Noche Buena at the Herradura district and also the Herradura underground also in Herradura and the other advanced projects I just mentioned.

But also some investment will continue to be made on the early-stage projects to keep our portfolio alive and dynamic with the -- still the brownfields around San Julian and Fresnillo and some of the projects that we have in Peru and Chile and now in Canada.

We'll finalize this slide just by mentioning that we continue to have the deployment of regional prospecting teams in the four countries where we operate, trying to advance new projects to make -- to show some progress or to make decisions as to optimizing the land that we control.

Okay. Having said that, now we will turn into a more detailed description of our project pipeline, and we will start talking about the brownfield projects. And of course, you all know that the advanced exploration projects are now being sponsored and championed by our COOs. So, we will start out of Valles.

So I will hand this over to Daniel.

Thank you, Guillermo. As mentioned before, part of the efforts of optimizing our portfolio, in particular, on the Herradura district is about capturing short-term opportunities and increase value where possible.

What you see here, and I think this is the first time in some time that we present what we're doing in the different projects, it's exactly that. What opportunities we can capture in the short term while we keep -- we remain optimizing our portfolio and our production profile in the district moving forward.

To begin with, we have Valles. Valles is an underground operation that will run in parallel with Herradura. We are pretty much starting production next year. We completed the detailed engineering during the last year and the beginning of this one. The operational model is completed, the section that will be operated by contractors. So we have selected our main contractor in there as well. And the rehabilitation works in the underground mine will start on Q3 this year.

We expect production to commence by mid-2027. And the expected average production will be in the range of 60,000 to 80,000 ounces per year. That will be processed through the same processing facilities in Herradura. So it's going to be an increase in gold ounces through higher grades by using the same capacity. So the capital is very limited, a very accretive project that we expect to have running for 7 years with a possibility to extend the mine life through exploration that depth is still open. So we're very excited about Valles coming online.

On the right-hand side, Noche Buena. Noche Buena, as you probably know, it's an open pit that operated up to 2022, where the reserves were depleted at that point in time. Some potential remained. So we kept analyzing opportunities. And together with some good exploration results and the new price scenarios, we rerun an evaluation, and we are actually restarting operations. We expect early next year. We have completed the studies for that. We expect an average production of between 40,000 and 50,000 ounces additional for the next 8 years in Noche Buena. So another very good news for the district and for the production profile of the company. This is not included in our forecast so far. That is in the short term.

And by the end of the presentation, Octavio will show a general time line of our project pipeline. But in the longer run, as we mentioned before as well, we have Herradura Underground that is the main portion of the deposit at depth. We completed conceptual studies. This is on earlier stages. So we expect production between 120,000 and 160,000 ounces per year. This is a longer implementation project. It requires some development in the open pit in order to be able to start. So we expect to start by 2031.

We have scheduled the definitive PEA during 2026 as part of the exercise that I mentioned before around the optimization of the district. And with this new long-term view of prices, what is the right transition between open pit and underground and how they coexist in the long run. We expect to comment on that by midyear this year.

And finally, it's a greenfield, but also part of the Herradura district is Tajitos. I will leave to Guillermo to comment a little bit on that one.

Thank you, Daniel. Well, Tajitos is a disseminated gold deposit, very similar to Noche Buena. It's located in the Herradura district, as already mentioned, and it has a resource around 1.1 million ounces, most of it in the indicated category.

So that's the -- for us the Tajitos as we know it now, but in 2025, we discovered additional mineralization west of it. So the district is much larger. We have -- we are exploring a vein system, which is outcropping that has very good gold grades and is amenable to underground mining. And also, we have defined additional exploration targets for disseminated mineralization west of the non-resource. So that's a good news. And we will be advancing studies at the PEA level in the first half of this year at Tajitos.

Now moving forward. And in this slide, you are seeing the advanced greenfield projects. Starting off with Rodeo, you'll just mention a few words before letting Daniel go into the details.

Rodeo is also a disseminated deposit. It's not much a vein-type. It's a different style of mineralization hosted in volcanic rocks, which are thoroughly oxidized through depths in excess of 300 meters, which is -- allows for very good metallurgical recovery and also has good exploration potential, and we have four rigs spinning right now at Rodeo looking for additional mineralization at this project.

So Daniel, would you like to continue on the plans?

Yes, quickly around. As you can see, we have been making significant efforts in order to optimize and put more focus on the development of our project's portfolio. Rodeo is one example. It's an open pit, as Guillermo commented.

During 2025, the focus of what we call an advanced PEA was on two fronts. The first one was extension and metallurgical drilling, and we successfully completed a campaign with 25,000 meters with good results.

And the second objective was the metallurgical test work. That is the key for a Heap Leach operation. We completed that, very detailed test work for a PEA, and the results are quite promising. So we're very confident on what's coming for Rodeo.

That just was completed in December this year -- last year. So we are starting by the end of this month, the PEA study for the optimization, and we expect to have that completed before the end of Q2 this year and hopefully start the PFS stage moving forward.

What we expect out of Rodeo, it's a production for what we know now, we think we have a possibility to slightly increase. But what we know now is between 75,000 and 90,000 ounces of gold per year, potentially starting in 2029 with a life of mine of between 8 and 9 years.

Then moving on to the next project, which is Guanajuato, Guanajuato Sur. Remember that Guanajuato is a historical mining district located in Central Mexico. But now we are exploring in new parts, new portions of this district where significant silver and gold veins have been discovered, brand-new structures, which were discovered by the use of epithermal methodology for going about exploring this type of deposits. And we had a very successful 2025 exploration results.

So Tomas, would you like to comment on the progress work?

Thank you, Guillermo. So during 2025, we concluded conceptual level studies with excellent results. This is a high-grade silver-gold project, very strong on the financial side at the conceptual level, very well located, rather accessible land, flat land at a very mine-friendly state as Guanajuato. So we're very excited with the results of the conceptual studies. We have selected already the ramp development and shaft sinking technology. Those are the critical path items in the project. So, we have already selected the technology and we are proceeding with detailed engineering of those pieces of infrastructure.

We will immediately continue to pre-feasibility level studies this year. And like I said, very, very interesting project. Potential is still open. The geological potential is still open at length and depth. So that's why Guillermo and his team are focusing very heavily on exploring the site. And the expected start of the production is by 2033 at this point.

Do you want to comment Orisyvo, let me tackle that?

Yes. Just let me mention about Orisyvo that is also significant that you've seen this name around for some time, is a significant disseminated gold deposit, the largest of its type ever discovered in Mexico. But fortunately, this system, which costs around 10 million ounces of gold has a core of higher rate, and that's been -- that we are targeting now. And that's -- about these studies, Tomas will continue on explaining.

Yes, Orisyvo. So this is a gold project up in the mountains in Chihuahua, as you know. During the year, we concluded the pre-feasibility A studies. And given the capital intensity of the project and some OpEx requirements, we decided to do a third-party review of that pre-feasibility A with very good results.

We were able to -- during this review to improve the project economics. So we will continue to pre-feasibility B during the year and advanced permitting engineering, which at this point is a critical part of the project, the permits. So we are already on it. Expected average production of Orisyvo is between 180,000 and 220,000 ounces of gold a year, also with the start projected for 2033 at this point.

Okay. I will finalize this section just by adding a few words on Novador. One of the targets when we get up to Val d'Or, and after the acquisition, it was not to disrupt the activities that were in progress. So we were able to continue the exploration drilling.

As I said, we have six rigs now in operation and also a very strong focus, of course, on the development of Novador. And for that reason, we have a number of consultants, which are supported by Fresnillo's technical services team to continue to advance the pre-feasibility level studies. So we are expecting results of the pre-feasibility by midyear, around July. And a little mistake there, production is scheduled to commence in 2032.

So I think with this, I will hand the microphone over to Mario Arreguin.

Thank you, Guillermo, and good morning to all of you. So, it's always a pleasure to be back here in London and to have the opportunity to share with you our financial numbers, especially when those numbers are record high numbers. So it's easier.

As you can see in the lines which are highlighted in yellow, gross profit was above last year by 114%. Operating profit was 142% above last year. Profit for the period was almost 600% above last year and EBITDA was above 81% last year. So very, very good numbers.

But let me start with gross profit. Again, as you can see, we were up by $1.4 billion. And here, what I would like to touch on are basically two line items. One has to do with adjusted revenues, which grew up by $1 billion. And that combined with the fact that we have a lower adjusted production cost compared to last year of almost 11%. Well, that resulted in great margins for us.

So let me start again with adjusted revenues. Okay. As you can see from this slide, in terms of sales volumes, as expected, and this was included in our guidance. Volumes sold were lower compared to last year. In the case of silver, we sold 11% less, which had a negative effect of $293 million. We sold less gold by 4.5% compared to last year, which had a negative effect of $94 million. So in general terms, in terms of sales volume, the total effect was a negative $429 million.

Fortunately, that was more than compensated by the higher average prices that we saw both in gold and silver. In the case of silver, (sic) [ gold, ] silver (sic) [ gold ] went up by 44%, the average price, which had a very positive effect, of almost $651 million. And silver went up by 51.5%. As a matter of fact, the average price of silver (sic) [ gold ] last year was $43.6. And currently, the spot price is almost twice that for this year. So things are looking good. And like I said, that had a positive effect of $781 million.

Let me share with you the main reasons behind the decrease in the adjusted production cost. And let me start first with the factors that are outside of our control. For example, in column #5, you will see the favorable impact that the devaluation of the Mexican peso had. We're talking here about the average exchange rate for both years. So the average exchange rate in 2024 was MXN 18.3 per dollar. And in 2024, (sic) [ 2025, ] it was MXN 19.22. So that translated into a 5.1% devaluation, again in terms of average exchange rate. Because I'm sure you've all seen that the peso has been coming down quite substantially throughout the year. However, what we take into consideration is the average exchange rate. So that had a positive effect of reducing our cost by almost $52 million.

Now when you combine that with the other factor, which is outside of our control, which is basically shown in graph #1, cost inflation, excluding the effect of the exchange rate was 3.2%, that had a negative effect of $45.8 million, which pretty much offset the benefit of the devaluation. But still, net, we had a positive effect.

And let me just go back to the previous slide. This is what we call our consolidated cost inflation, which basically takes into consideration our own consolidated basket of goods and services. And when you combine the two effects, the exchange rate effect together with inflation, this is what we obtained for 2025, a 0.24% deflation, if you will. So fortunately, for us, in 2025, inflation was not an issue when you look at it in dollar terms.

So to sum it up, when you look at the increase in gross profit of approximately $1.4 billion, there are two bars that stand out here. Clearly, prices, the higher prices shown on the #1 column, had the most important impact, which was estimated at $1.4 billion. And again, if you look at bar #9, that was a bit offset by the lower sales volume that I just mentioned.

Other favorable aspects were the lower depreciation that had a benefit of $129 million. The lower treatment and refining charges, which are worth mentioning because it's been a very favorable market for us, and that had a positive effect of $60 million. The devaluation, which I already mentioned, $52 million. And the rest are smaller numbers, but you can see them in the graph there.

Let me just go back to the income statement to comment on a couple of line items. I'm not going to go through each one of them, but worth mentioning here perhaps is the exploration expenses line, which was $174 million. I would say, invested in exploration, which was 6% higher compared to that last year, and that was again expected. Actually, we were below what we had budgeted of close to $187 million.

And one additional line item that I would like to comment on is the income tax expense. And I guess maybe some of you may be wondering why income tax expense decreased by 19% when profit before income tax increased by almost 180%. That's a bit strange for some.

And the answer to that is, and I'm sure you're familiar with this now because this has been happening for some years now, is the effect of the exchange rate on the deferred taxes. For example, in 2024, if you look at the $390 million tax expense that we recognized in that year, this is equivalent to an effective tax rate of 52.5%, which is way above the 30% statutory tax rate.

What happened there? Well, we had an initial exchange rate back then in 2024, at the beginning of the year of MXN 16.9 per dollar and a year-end exchange rate of MXN 20.8 per dollar. So we had an important devaluation, which resulted in this effect in recognizing a 52.5% effective tax rate.

Whereas in 2025, we had exactly the opposite effect. The beginning exchange rate was MXN 20.8 and the year-end exchange rate was close to MXN 18. So that's the reason why you see this effect. The exchange rate is generating a lot of volatility in this line item. And I guess, it's bit difficult for my friends, analysts to be able to predict this. You would need to have a lot of information in order to model this. But I just wanted you to be aware of this.

Moving now to the cash flow statement. Okay. So what I would like to point out here is basically in the first column at the bottom, a record high cash balance at the end of the year of almost $2.8 billion, which compared to our initial cash balance of almost $1.3 billion that resulted in a net increase of almost $1.46 billion.

Main source of cash, of course, is the top line, the operations, which generated $2.8 billion, almost 80% higher compared to last year. I think it's worthwhile commenting on some of the main uses of cash. And of course, one that I believe you would be interested in getting a little bit more detail would be the third line, which is income tax special mining rights.

And as you can see, we had a very important increase from $97 million in 2024 to $369.5 million this year. Let me just remind you that in this particular line, we have three items that make most of this. One has to do with the provisional tax payments that are done on a monthly basis from January to December and which is basically an advanced payment of taxes related to 2025. That alone was $250 million compared to the previous year, which was only $98 million.

The other item, which is important is the year-end tax return that we do in March and which is related to the previous year. So what you do is you calculate your taxes and net the previous year provisional tax payments and you only pay the net amount. So in March 2025, we paid $72 million corresponding to the 2024 fiscal year. compared to only $5.4 million in 2024.

And last but not least, is the special mining right corresponding to 2024 again, but it's paid in March 2025. And here, we're talking about $63 million. So those are the three main items which confirm this number here.

I do want to make you aware that in 2026, provisional tax payments will be higher. Remember, provisional tax payments is a factor that you apply to your revenues. So with higher prices, higher revenues and a higher factor, because it will be based on the 2025 tax payments, you can expect to see higher provisional tax payments.

And in March, when we conclude our tax return for 2025, the provision tax payments that we made in '25 will not be sufficient to cover the year-end final calculations. So you can expect that in March, we will have a very important cash out to pay for taxes, just to make you aware of that.

Of course, another important use of cash was CapEx, $400 million. Dividends paid to our friends at Pan American in December, $105 million, minority shareholders of our Juanicipio project. And of course, dividends paid to our majority shareholders of $654 million.

Lastly, and to close, I never make many or any comments on our balance sheet. But I thought it would be worthwhile pointing out the line that you see in yellow there, which is basically short-term liabilities, which grew quite substantially from $339 million to $903 million, almost $500-and-so million, and that's precisely related to tax payments that we will make next year. So again, just to make you aware of that, so you can include that in your cash flow projections. Other than that, very sound balance sheet, of course.

And now moving on to something that I think is more of your interest, which is capital allocation. Let me start by saying that our dividend policy remains unchanged. And you know our dividend policy has been historically since we did the IPO to pay out between 33% to 50% of our profit after tax, after making certain adjustments, of course. But even though we have that range, we should point out that we have always paid a dividend of at least 50% or more. So that range is really just conceptual because we have paid at least 50%.

In 2025, we have just announced a total dividend of $950 million, which is above our traditional dividend policy. In other words, it's above our 50% policy. And this is made up of $797 million final dividend that we just announced, together with the $153 million interim dividend that was paid back in September last year.

So as I just mentioned, we closed the year with $2.76 billion. But just bear in mind that some of the important uses of funds that we see -- of course, payment of the final dividend, which will be made in May of approximately $800 million. Our CapEx budget for this year is $765 million. The acquisition of Probe Gold, which was paid in January this year, required $550 million. And our exploration budget for this year is $308 million. So that adds up to an important amount of money.

Just to continue with capital allocation. Over the next 5 years, we are prepared to invest around $3 billion in growth projects to align with our project time line. These are basically all the projects that you are familiar with in our pipeline. And just in the next 5 years, if everything goes as planned, we would be requiring around $3 billion.

Of course, we will continue to analyze opportunistic acquisition targets with a long-term view and in accordance with our very strict returns criteria. We will follow a criteria similar to the one that we applied when we purchased Probe Gold, right?

And in line with market expectations, we remain bullish on precious metal prices, although our balance sheet strength and cash generation ensure we are prepared for the cyclical nature of prices. You never know when those prices may come down, and we need to be prepared just in case.

And lastly, we maintain our disciplined approach to capital allocation. And if the strong price environment persists by year-end, we are committed to shareholder returns.

So with that, I will pass it on to, I believe, Octavio.

Thank you, Mario. Just a few words on our outlook before turning to your questions. And as we see here, I mean, 2026, we see it as a transition year, very specific aspects that have affected our guidance for silver in 2026, as Tomas mentioned, in the Fresnillo district. Fresnillo, we are preparing zone of the area in the mine. And this year, we are not bringing those higher grades from that area.

And also the connection of the Saucito shaft in addition to what Daniel mentioned also in Cienega, Cienega is turning into more of a gold mine than silver, a lower production there. But then after having that or be better prepared in Fresnillo and with the connection of the Saucito shaft, we are expecting to increase the silver production '27 and '28.

Gold as well, another transition year, I would say, in the Herradura district. But the good thing is that in 2027 and 2028, we are expecting to bring brownfield project production that has the best returns, lower investment and those ounces will be there through Valles and Noche Buena as well. As well as higher production in Herradura.

As you can see on the base metal side, I mean, higher zinc production coming out of the Fresnillo district as we go to deeper areas as well.

On the CapEx side, and Mario mentioned part of that. I mean, we are preparing or making additional investments across our mines, as well timely so that we continue to have a strong position and a strong production outlooks at each one of the mines. As we mentioned, we are also increasing in 2027 and 2028. In the following years, '27 and '28, lower CapEx expected.

And as you can see here, I mean, we have adjusted our timetable for the different projects described by Tomas, Daniel and Guillermo. This is a more sensible table or time table according to longer permitting process in Mexico. But as we stated that 2 years ago, our focus was going to bring initially brownfield production. And you see reflected production from Valles, Noche Buena, and whenever we are at a deeper area in Herradura pit as well and bringing stronger projects in Rodeo, Tajitos by '29-'30. And Novador is reflected there, as Guillermo mentioned, the outlook to bring that into production, Orisyvo and Guanajuato.

I would like to finalize this chart by saying that one more of our very important strategies is to operate in districts, in which we can be operating for many years. We have, as you know, the Fresnillo district, Fresnillo Saucito and Juanicipio for many years. The Herradura cluster of the Herradura district as well is proven to be the case, a strong gold production.

In the future, we have Guanajuato in which we have identified, as Guillermo mentioned, not only the project, Guanajuato Sur, but also several targets from the historic areas of Guanajuato into the south to our project.

And one more is Novador. Novador is coming not only with those 10 million ounces in resources, 8 of those in the Novador project, but also a large exploration package that has identified already some exploration targets for many years to be explored as well.

Just to conclude, I mean, we have record financial performance for Fresnillo this year. We have been able to capitalize on a higher precious metals price environment with a stable production performance, combined with a strong cost control for 2 years despite inflationary pressures.

As a result, we have delivered considerable shareholder returns, including a record dividend payout in 2026 of $950 million. We are also making good progress on our brownfield development pipeline with the ounces that provide a better return. And we are also advancing the greenfields, as we mentioned.

And with that, I would like to turn to your questions. Yes, Jason?

Jason Fairclough, Bank of America. A couple of questions, one for Mario and then one for Tomas.

Mario, I mean, strong numbers. And then on top of that, it was a big beat versus consensus. And it just seems to be in the revenue line. And I think maybe part of that is TC/RCs. Maybe we didn't realize how much better they were getting for you. But is there something else going on in the revenue line there? Did you sell more metal than you produced?

No, we did not sell. If you look at the variation in inventories, actually, it increased. So we didn't sell more than...

Was it provisional pricing then or...

It's purely pricing. Purely pricing. As you saw, actually, we produced less, sold less volume. So the real reason behind our revenue increase is prices.

And in terms of the TC/RCs, is this the new normal? Or could they go down further?

Well, it's hard to predict how treatment charges are going to behave. But during the last 3 years, we've seen a downward trend, pushed a lot by the Chinese. It's putting a lot of pressure. And one of the things that we are concerned about, that you mentioned it, is the possibility of this continuing and the Chinese getting more market participation. And if some of the smelting and refining companies go out of business and with the Chinese have all the -- gather all the basically all the volume that might have a very unfavorable and sudden change. So we have to watch this very carefully.

Just a quick one...

That is correct, Jason. And I would say, I mean, that trend, as Mario mentioned, continues. We operate on a long-term agreement with Met-Mex. And when you compare -- I mean, those long-term agreement treatment charges and refining charges for silver continue to trend lower, but it's still a difference to the spot treatment charges that are quite very different.

Just to add, Tomas, a quick one. So quite a different trend in cost per tonne between Saucito and Fresnillo. I think Fresnillo was up 17% year-on-year and then Saucito down 10% year-on-year. Again, is this the new normal? Or is there some one-off effects in here?

I would say Saucito is a one-off, and we're going to see probably a bit of an increase this year because of the cost related to hauling while we interconnect the shaft. And Fresnillo tends to be normalizing at those levels.

So we should think about it being normalized at these new higher levels, cost per tonne, even by volume?

Yes. The volume is impacting and that's a normal level.

Daniel?

Dan Major from UBS. First question, just looking at the project pipeline and your outlook for CapEx. It seems like, again, we appreciate the more details on the projects. But if I look at Page 38 and 39, those of us that have been following the company for some time, these charts look fairly familiar. And then most years, the one on Page 39 moves a little bit further to the right, and really the Canadian projects, any new one in there.

I guess the first part of the question, what is included in your CapEx guidance, production guidance in terms of the pipeline of projects? Is it just the two brownfields that are entering production? Or what else have you factored in? And then I guess to add to that, you've identified $3 billion of potential spend. What is -- how much of that is included in your CapEx projections for '26 to '28 already? And how much is incremental upside, assuming the projects move forward?

Yes, you're right. I mean, as I mentioned it, I mean, this is a more sensible thing in terms of timing, how to develop the next projects. But as we have stressed and we are achieving that, initially, as we were realizing the greenfield projects were going to be -- take a bit longer to be developed, we prioritized the brownfield production, Valles and Noche Buena, which is a good surprise.

And then a more sensible approach to the rest of the greenfields. So on the CapEx side, in 2026, we have the shaft connection in Saucito. We have leaching pads in Herradura and the carbon project, the carbon recovery gold project in Herradura and also the conveyor belt in Juanicipio.

Also, we continue to put some studies and in Orisyvo and also in Guanajuato Sur as well, as Daniel mentioned, that is included there. But the only one CapEx investment reflected in 2026 that will provide additional production is what we are investing in Valles in 2026.

Sorry, just to follow up on that. So if Valles is the only one out of the $3 billion bucket, is it fair to say that if the projects progress as you suggest, you've got sort of $600 million, $800 million per annum upside to what you're guiding in CapEx out to 2030? Is that the right way we should be thinking about it?

The right way to see it is with the time line of projects, for example, Rodeo, which is pointing to the start of production in 2029, 2 years or 1.5 years, you will start to see the deployment of the CapEx that we will provide at some other time, at Tajitos as well. But I mean the large majority of that CapEx that Mario mentioned would go with the higher CapEx projects such as Orisyvo, Guanajuato, Novador at that time, yes, in some 4 years, 5 years to come.

All right. And then just next question, one for Mario. On the tax side, quite complicated. Could you just provide us some more basic guidance? What would you expect cash tax and P&L effective tax rate to be in 2026 if current prices stay the same?

I would expect in terms of income tax recognized in our income statement. Again, it depends on the exchange rate. And I've been very much surprised by the strength of the Mexican peso. As you can see, currently, it's around MXN 17.4 -- MXN 17.3 per dollar. So if that continues to be the case and it remains strong, then you will see, again, another revaluation of the Mexican peso this year. So that might have, as a consequence, again, a lower effective tax rate compared to the 30% statutory tax rate.

But having said that, you never know. We've seen some volatility if the peso at the end of the year because what you take into consideration is basically the end of the year spot exchange rate. It depends on that. But assuming no exchange rate effect, zero, which is a very important assumption, then we would expect to see something close to 30% effective tax rate.

And the cash tax, I noticed that the increase in provisional tax payments increased by $565 million.

Cash tax. Okay. As I mentioned, we will be finalizing our tax return in March this year for the 2025 fiscal year. And there, just for that, we are expecting something close to $500 million just to add to the provisional taxes that were paid in 2025. That's related to that year.

Now during 2026 from January to December, we will be paying the provisional tax payments as an advanced tax for the 2026 fiscal year. And those are going to go up quite substantially.

Why? Because of the higher prices? I said this is a factor or a percentage that you apply on revenue. If we foresee the current spot prices being maintained throughout the year, that will translate into higher revenue with a higher factor, so higher provisional tax payments. That will have an effect on the cash flow, not in the income statement though.

Okay. So somewhere in the region of $500 million cash tax more than the P&L tax. Is that the simple way of thinking about it?

$500 million more?

Yes. Additional cash tax to the P&L tax?

Yes.

Marina Calero from RBC. A couple of questions on my side. Can you give us a bit more color on the trends that you're seeing in your sustaining CapEx? Is it fair to assume that $600 million is the new normal you need for to sustain production at your operations?

For 2026?

Yes, and going forward as well.

And going forward. Yes, for 2026, let me -- I mean, as you know, I mean, the majority is mining works. And that has not varied because the development rates at our mines, underground mines keep at a similar level, approximately $180 million, sustaining, $250 million to $280 million more or less. Tailings dams, I mean, that's a large part of our investments every year.

In 2026, we continue to do tailings at Saucito, at Fresnillo, Herradura as well. So that's a large investment, approximately $150 million or so. Then the projects that I mentioned at Saucito, Herradura and Juanicipio, very much, I mean, you -- and then the investment for brownfields and greenfields, as I mentioned, is Valles, some in Orisyvo and some in Guanajuato.

Yes. And then after, I mean, as we have already in 2026, invested in tailings dams, that will -- CapEx will decrease in 2027 and 2028. The connection of the shafts and the other conveyor belts and everything, I mean, we will not have that, and that's why the CapEx goes a bit lower and also a sustaining part as well.

Just one follow-up on that. If I recall correctly, your old guidance was roughly $500 million for this year. How do you explain the difference to the $760 million that you're guiding today?

Yes. What we used to mention before was for the set of operating mines, sustaining and mining works and everything should be around $500 million, $550 million per year.

Marina, on the addition of Valles to the portfolio that is already included in these numbers. It requires around $40 million per year in mine development just in Valles. So that tops off on the $500 million guidance that we provided before.

Okay. That's very helpful. And just one final question. On M&A, you commented that you keep looking for opportunities. In which jurisdictions are you finding more compelling opportunities? Is it Mexico more attractive relative to the rest of the world? How are you thinking about that?

Yes. We continue to see the projects in Mexico. There are some good discoveries in silver. We continue to see mostly in countries with geological potential, of course, and the mining culture. You know that we've been exploring in Peru and Chile for quite some time. This year, we are starting drilling in Peru in some of our very interesting projects there.

But for M&A, we continue and we've looked in Canada. And as we mentioned, I mean, we had a very good acquisition there. Canada is one of those countries with good exploration potential, mining culture. In the U.S., we've seen some in the past. I mean, but given -- Novador is a very good example of what we try to do.

It has to be value accretive, of course, has to have some exploration potential. We have looked in those -- in the recent 2 to 3 years, some operating mines. However, given the expectation on the current record metal prices, I mean, the prices paid for those assets have been out of our expectation for value creation. So we continue to look. We will continue to look, but under a very disciplined approach as well.

This is Fernando of Morgan Stanley. A question on the portfolio mix. So we see a very high gold focus in your pipeline and also we have the Probe Gold acquisition. So are these things reflective of a broader strategy to increase the exposure to gold in your portfolio going forward?

Well, that has happened through times. If we look back at what we did from 2008 to 2018, initially, we grew faster on the gold side, bringing into production Noche Buena and then Soledad-Dipolos at that time. Then after we had Saucito that took longer to be developed, vein system there, the expansion of Saucito. So it depends on the portfolio we have.

From what we have reflected in the chart, yes, you're right. The brownfields will come first, Valles and Noche Buena, then after Rodeo and Tajitos, because those are not complex -- so complex projects to be developed and the larger investments in terms of silver will come with Guanajuato. And that's because we -- the veins and the values start what, 600, 700 meters below.

Around 500 meters below the surface.

It takes time.

It's Amos Fletcher from Barclays. I just wanted to ask a couple of questions. First one was just on cost inflation guidance. Mario, what would you be guiding us to in terms of dollar per tonne milled for 2026 inflation, excluding the impact of the peso?

Typically, when you have such huge increases in the price of gold and silver, following that, you see some sort of inflationary pressure. For budgeting purpose, what we have considered for 2026 is approximately a 6% increase in cost inflation. But again, we are in a very volatile environment. But if you're asking me what we're expecting, it would be somewhere close to 6%.

Okay. And then I just wanted to ask also, you've obviously given the list of potential projects on Page 39. Could you give us sort of indicative CapEx numbers for each of those projects to the extent they're available?

Yes. Yes, I can give you a bit more flavor on that. Bear with me for a second.

You have to realize, before Mario, that these projects are at different stages, of course. And according to that stage, we have the plus/minus percentage in terms of CapEx and everything. Go ahead, Mario, please.

Yes. Thank you. So here, I'm going to talk only about Orisyvo, Rodeo, Guanajuato Sur, Novador and the possibility of bringing back Soledad-Dipolos to operation. So considering those projects, for example, in 2027, in total, we're expecting there something around $250 million just on those projects alone. And in 2028, around $560 million. In 2029, somewhere around $800 million, just for those projects, excluding sustaining CapEx.

Okay. And then one final follow-up, I guess, was just to ask from the sort of the CapEx guidance you've given on Page 38. Just to clarify, I guess, what projects are included in that guidance?

This is only CapEx for the current operations. There is no CapEx for projects there with the exception of 2027 for Valles, that I mentioned and a bit for Orisyvo and Guanajuato.

Jason?

Slightly bigger picture question. So we're starting to see people increase the metal prices that they're using to calculate reserves and resources and also increase the metal prices they're using for mine planning. Can you just remind us what you're using to calculate your reserves for gold and silver? And how do you think about potential changes to your operating philosophy at some of the mines? Is it time to allow for more dilution?

Do you want to mention the prices? The answer is no. What is the question, Jason? But let me -- for the resources and reserves that have been reflected in this statement, we use for reserves $2,102.650 and for resources $2,300.030. Those are the ones in the statement.

We are -- we are starting that process again, and we are increasing those up to $2,800 gold for resources and $33 for silver for reserves and $30.35 for resources. And to your question, I mean, dilution is always a killer. I mean, when you dilute, of course, that tonne does not come with any value. So despite the fact that the higher prices will give us the possibility to mine profitably what used to be marginal blocks now are economic, but reducing dilution as much as possible.

Are you able to give us any color on the sensitivity of the reserves and resources to change in the prices? So for example, if you raise your long-term gold price from $3,000 to $4,000, how much do reserves increase by?

If you want to comment, also memo, in the Fresnillo district, the value per tonne of ore is above -- well above the cost that we have right now. So it will not bring a huge increase whenever we use higher prices. When we will see sensible ore will be probably in Cienega, a bit more help there. San Julian probably.

Marginal, I would say the main impact it's around the Herradura when you increase the price, size of the pit. And as mentioned during the presentation, the exercise of finding the right transition moment between underground and open pit is exactly that. Now the pit grows significantly. However, those are ounces that would come online in 2050 or beyond that. So we are in that trade-off of when is the better timing to bring production forward from the underground with higher rates.

I will just reinforce what Daniel said is the resources and reserves will be more sensitive in the -- for the open pit, the disseminated deposit that we just described for you. However, we're reaching -- it doesn't matter how much higher you go, there is a limit to the geology. I mean, and to grade. So there's nothing further to add once we get to extremely high prices.

And also in the underground operations, some of the narrow veins or lower vein material may be back into resources. But I don't know if in reserves because a more deeper analysis is required as to what sort of infrastructure and services are required to reach some sections of the mine that were left for some reason. So it all comes to the detailed engineering work for the reserves, no matter how the prices may go high, because it will give you less margin if we force things to be mined out just because at any given scenario, it turn economic, but the margin will decrease significantly.

Dan from UBS again. Just to kind of follow-up on Jason's question. What is the projected cost of production and the restart at Noche Buena?

We expect between $2,100 and $2,200 all in.

Yes. Okay. And sorry, I could probably take it offline, but I didn't actually catch. The first set of numbers of $2,100 and $2,300 for gold reserves and resources. Is that what you use for your 2025 calculation? And then the second set of numbers are what you're considering for your '26?

That's correct. Yes.

Okay. And then just a final one on the balance sheet and capital returns. You obviously, healthy payout this year. You've outlined the Probe Gold acquisition, more capital, more projects. Is there a threshold of net debt or cash on the balance sheet above which you'd pay out 100% of free cash flow?

Mario?

That's a decision for the Board to make, but we want to make sure that we have sufficient funds to be able to fund all of the $3 billion pipeline that we have defined. And what we -- what I can tell you is that definitely by year-end, if prices do remain where they are, we will definitely have a much bigger cash balance, and we will reevaluate again the possibility of paying an extraordinary special dividend. That I can tell you. How much? That's for the Board to decide.

All right. Thank you very much for joining us today. Thank you, guys.

Hello, and welcome, everyone, to today's call. My name is Becky, and I'll be your operator today. [Operator Instructions] I will now hand over to your host, Octavio Alvidrez, CEO, to begin. Please go ahead.

Thank you, Becky. Good morning, everyone, and thank you for joining us today. I'm very excited to share the details of Fresnillo's proposed acquisition of Probe Gold Inc., a transaction that marks a milestone in our growth strategy. Probe is a gold developer that is listed in the Toronto Stock Exchange and owns the Novador Gold project and a large exploration land package in Quebec and Ontario in Canada. Before we begin, I want to remind everyone that today's presentation contains forward-looking statements as we are seeing the slide right now. I encourage you to read the cautionary statements in this slide.

Today, I'm joined by Mario Arreguin, our CFO; Marcelo Ramos, Senior Vice President of Business Development; and Guillermo Gastelum, Senior Vice President of Exploration. Let me start with the highlights of this transaction. Fresnillo will acquire all outstanding shares of Probe Gold in an all-cash deal through a plan of arrangement under Canadian laws, which is analogous to a scheme of arrangement in the U.K. We are excited to add a high-quality project to our existing world-class operations and development pipeline in Mexico.

We are also excited that our first major acquisition outside Mexico is in Canada, a country with a strong partnership with Mexico and a global reputation for mining excellence. And there may be no better region to make this strategic entry than the prolific Val-d'Or mining camp in Quebec. Val-d'Or is renowned for its rich gold mining history, skilled workforce and excellent infrastructure. Probe Gold brings a large resource base of 10 million ounces, including 8 million ounces at its flagship Novador project. We are also excited about the large and unexplored land package of approximately 1,800 square kilometers in Baldor adjacent to major gold operations. This significant exploration potential provides for Fresnillo with a unique opportunity to leverage our technical expertise and exploration capabilities in a highly prospective region.

On Slide 5 and moving on to the summary of the transaction, Fresnillo will acquire all outstanding shares of Probe Gold for cash with a total equity value of CAD 780 million, which is approximately USD 560 million. Each Probe shareholder will receive CAD 3.65 of cash per share of Probe held. This represents a 24% premium on a 30-day VWAP to Probe's closing price. The transaction has unanimously support from Probe's Board of Directors and is subject to certain conditions, including obtaining Probe shareholder and court approvals. Current Probe management and directors and El Dorado, which owns approximately 12% of the shares outstanding have entered into voting support agreements payments to vote their shares in favor of the transaction.

The deal includes customary protections, and we are targeting completion of this transaction in Q1 of 2026. On Slide 6 and 7, we will review at the mining concessions. The Novador project is located just 25 kilometers east of Val-d'Or city, benefiting from proximity to highways, power and rail, very good infrastructure. The deposits are [ mesothermal ] and amenable to both open pit and underground mining. Probe has released an updated PEA in 2024, which demonstrates robust economics and potential. We are going to optimize the project and undertake work to add resources and further derisk the project. On Slide 9, the exploration upside and optimization highlights Fresnillo long-standing core competency, as you know, is exploration and Probe's assets offer considerable exploration upside due to the substantial unexplored land package in a Tier 1 mining jurisdiction.

We have undertaken significant due diligence, and we see opportunities to extend mineralization at depth and laterally and to add open pit resources at higher gold price. In terms of timing, we anticipate mailing in the management information circular to shareholders in December with the shareholder vote expected in January 2026 and closing targeted for Q1 2026. We have always taken a disciplined and long-term view to capital allocation, and I want to confirm that we will continue to do so in the future.

To reiterate, this transaction provides Fresnillo with a foothold in Canada, a large and growing resource base through the addition of high-quality development projects and underpinned by substantial exploration upside. While today's announcement is about growth and our entry into a new Tier 1 mining jurisdiction, I want to emphasize that Mexico remains our home base. Our commitment to our existing operations, projects, communities and stakeholders in Mexico is unwavering. This acquisition completes our portfolio and enhances our ability to deliver sustainable value, both at home in Mexico and in Canada. We are confident this will generate attractive returns and create long-term value for our shareholders.

I will now pass it back to Becky, our operator, who is going to open the floor for Q&A.

[Operator Instructions] Our first question comes from Marina Calero from RBC.

I just have 2 questions from my side. The first one, the assets you've acquired are located near the properties of other mining companies. To what extent have you engaged with those parties? And do you see any potential opportunities for cooperation or synergies with them? And then the second question I have is related to your growth projects in Mexico. What does this mean for the other projects you have in the pipeline? And how do you see the sequencing of the different growth options you have.

Thank you, Marina. Yes, that area, we have several mining companies as we do always in Mexico and in some other jurisdictions, for example, in Chile and Peru, we are open to a collaboration as it will be the case also in Quebec. We believe we have the technical capabilities to develop this project in Quebec, starting with more exploration. And then as we all know, we have a very good track record in developing, constructing and operating assets as we've seen in Mexico in which we doubled the number of operations we had in 10 years.

And we expect to have or apply these technical capabilities in this new endeavor. In regards to the pipeline that we have of growth projects in Mexico, we will continue to develop as planned these projects. We do have the resources and also the technical capabilities. Let me remind the growth projects that we have in Mexico, which are [ Juanicipio ], the Chihuahua state, Rodeo, future mining operation in Durango, Tajitos in the Herradura cluster and the recent discovery of Guanajuato South in the Guanajuato state. We're also adding some other projects in some other jurisdictions like Lucerito, as we mentioned. And our target, as we mentioned in our last calls, will be to first develop brownfield project that we have on hand, specifically in the Herradura area with the [ badges ] underground operation. But thank you for the question.

Our next question comes from Alain Gabriel from Morgan Stanley.

I have a couple of questions. One is how comfortable are you with the pre-feas studies that were published by Probe Gold? And are you adopting their key metrics such as CapEx, annual production, et cetera? Or do you envisage a proper overhaul of these metrics. I guess this question is more about the due diligence you've done on this project and the key metrics. And the second question is, clearly, you have a very rapidly increasing cash balance on your balance sheet. What does this acquisition mean for your year-end capital returns to shareholders in terms of special dividends? How should we think about the cash that you expect to return to shareholders at year-end.

Thank you, Alain. Yes, we review truly and in-depth all the information -- public information that we have from Probe. And we'll review it quite with the technical or, I would say, in the interdisciplinary technical team. It was over several months that we did. Of course, with our technical capabilities, we were able and a disciplined approach that we have to reviewing projects. We had a chance to really take into account all those key metrics that you mentioned and adjust according to our knowledge or experience or database in some others.

But in general, we took what is -- what they had in the PEA that they have. In terms of cash balance, yes, at the end of June, we had approximately USD 1.8 billion. With the good operating performance in our current operations, we -- and the current metal prices for gold and silver and also just recently also zinc, we expect to have a very good cash balance at the end of this year so that we will be able to probably and according to projections, have a similar dividend amount for next year as we did in this 2025.

Next question comes from Amos Fletcher from Barclays.

I guess a couple of questions. The first one, slightly to follow up on what Alain was saying. Should we assume that this transaction reduces your final dividend for this year by $560 million. And then the second question was just to ask, is this the start of a strategy to diversify the group internationally on a bigger scale? Should we expect more activity outside Mexico going forward? Or is this sort of -- do you envision this as a sort of a one-off deal?

Thank you for your question, and I will ask Mario Arreguin, our CFO, to take on the first one. Please, Mario.

Thank you, Octavio. And in terms of our cash balance, assuming this remain currently where they are, we are expecting to close the year with a cash balance of approximately $2.8 billion. So this acquisition, the payment is due in January or the first quarter of the year. So -- and we expect this to be around $560 million. So after we make the payment, we still have a very robust cash balance of around $2.2 billion.

In that regard, our dividend policy would not have any effect at all. We will maintain the same dividend policy that we put in place on the day of the IPO 18 years ago, which is balancing growth with returns to our shareholders. In other words, we invest in 50% of our profit and returning back to our shareholders 50%. That is our policy. And as always, based on our needs at that point in time, after considering the different commitments that we have in terms of our budgeted exploration and our budgeted CapEx for 2026. At that point in time, we will analyze the cash balance and propose something to our Board of Directors. But we don't expect this to have any impact at all on our dividend policy.

Thank you, Mario. And in terms of the strategy and our entrance in a new jurisdiction with today's announcement, if we review some of the annual reports, I mean, it's been several years in which we have been evaluating opportunities to go into some other different jurisdictions. Of course, this announcement today, I mean, ticks all the boxes that we look forward to having in our portfolio.

As I mentioned, the merits of the project, the merits of the land package, the merits of the jurisdiction, Canada, Quebec and specifically Val-d'Or area, ticks all the boxes. In the past, and as you know, I mean, we have been exploring in Peru for some years, also in Chile, in which we have some -- even a JV for exploration. So we are looking all the time for these kind of opportunities. Of course, this represents a major acquisition compared to the previous one that we've done in some of these other countries that I mentioned. But as I said, we will also will remain Mexico as our home base and our main playground, but we have the ability with the technical team that we have to go in Tier 1 jurisdiction as kind of. So we will continue looking. I mean, this is a very good opportunistic acquisition that we have done.

Our next question comes from Richard Hatch from Berenberg. We have lost connection to Richard. [Operator Instructions] We currently have no further questions. So I'll hand back to Octavio for closing remarks.

Well, we thank you all the participants in this call. We continue to be open to question and answers in our London office. Thank you very much all.