Fresnillo Aktie

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.

Good morning, everyone. Thank you for joining us today. My name is Octavio Alvídrez, CEO of Fresnillo. And here with me in London, we have Mario Arreguin, our CFO; Tomas Iturriaga, our COO from the Central Operations; and Daniel Diezas, Chief Operating Officer of the Northern Region.

Welcome to our half year results presentation.

As always, I would like to point out to our disclaimer before I move quickly to see the agenda we have for the day. I will take you through the key highlights and address on what our key recent HSECR initiatives. Tomas and Daniel will then provide some of the operational updates on their respective regions. And also, they will let us know some of it, about the development projects they coordinate. Mario will provide a financial update and some more detail into the decision to agree a buyback of the Silverstream contract with Peñoles. And finally, I will then conclude and provide some comments on the outlook. We then look forward to a Q&A session.

Investment proposition. You will be familiar with our investment case and I believe it remains compelling and consistent. But first, let me make a few introductory remarks about our results. I'm pleased with the performance of our operations. We have now delivered consistently for over 2 years after a period of challenge and dealt with a number of factors that have impacted our business before. I believe this shows how we have stabilized our operations and are now in a strong position to capitalize on further growth opportunities with the legacy operations all in a much better place.

Further, we're also making progress on our development pipeline. Of course, these major projects take time and in spite of we derisk them and ensure we have a very detailed plan in place as well as strong relations with all local communities. I would make the point that we are very focused on costs, and you will see this is reflected in our numbers.

This, in turn, has driven a truly outstanding financial performance with lower costs and solid production, well timed to benefit from higher prices of silver and gold mainly. Both gross profit and EBITDA have exceeded $1 billion in the period.

I would also like to highlight the constructive dialogue we have been having the new administration in Mexico with the sector, in general, making positive steps forward. We achieved and we were able to obtain some of the permits that were very pressing in some of the current operations, specifically in Fresnillo with the permits of Fátima Norte being released some months ago.

On the investment proposition. We are still the largest producer of silver in the world and Mexico's leading gold producer. We benefit from a large portfolio of high-quality assets with over 2.2 billion ounces of silver resources and 38.5 million ounces of gold resources.

We have strong EBITDA margins, significantly improved versus the prior year, and low costs and remain very focused on running our operations efficiently. This approach has seen us generate significant free cash flow of over $1 billion, alongside very strong earnings per share, which has enabled us to reward our shareholders with strong returns in the form of dividends.

A couple of words on the silver and gold market. We have all seen increased demand not just from the traditional markets. Drivers such as jewelry, but silver in particular is used in various industries including electronics, and very importantly, solar panels, which have very much made this demand grown in the last years.

The other part also in gold metals is the supply constraint. I mean, we have not seen a large supply nor in silver nor in gold in the last 8 to 10 years. And in silver specifically, the market running a deficit for the last 5 years. In short, we are confident of the outlook for silver and gold metal prices being supported by these factors.

HSECR. First, safety. Safety is the heart of everything we do. Overall, our safety performance has improved largely in part due to I Care, We Care campaign and philosophy, which is rolled out across our portfolio, and focused on installing a safety culture throughout the organization. The overall safety performance is trending in the right direction, as you can see.

We are sad to report we have experienced 2 fatalities over the last few months, one an employee and a contractor worker. And this is a reminder that we need to do more and redo our efforts across all of our operations.

On the environment, our work on improving our carbon emission performance is also ongoing as we work towards the decarbonization of our operations, improving water recycling rates and upgrading our mining fleets. We achieved 80% (sic) [ 86.6% ] renewable energy consumption in the period, a new record for the business.

Let's remind that 75% remains our objective. And with this 87%, whenever we bring our projects -- or development projects on operations, we will go back to those 75% as an objective to renewable energy consumption.

I was also pleased to open the Proaño water potabilization plant in the Zacatecas region in February to improve water supply in Fresnillo and complement what we've done as we have 3 sewage water treatment plants. But this will benefit approximately nearly 32,000 residents in the Fresnillo area with potable drinkable water. This project was a collaboration with the Zacatecas State Government and Minera Saucito, highlighting a public-private partnership to address water scarcity in the area.

Our community relations efforts have really progressed. These initiatives are particularly important. We move forward on our new development projects where considerable, very positive work is being done with the local communities. In particular, I would highlight local health campaigns we have developed in conjunction with the UNAM, which is the National University in Mexico Foundation, and the continued success of our scholarship program. 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 investments, employment and the tax we pay.

Finally, I should also add here, we are developing a constructive and positive relationship with the new administration on this well for the future and the development of our projects.

Some of the operating highlights for the period. We have already disclosed silver and gold production were in line with guidance with very strong gold performance driven by Herradura and silver impacted mainly by the cessation of mining activities in San Julián Disseminated Ore Body and also the buyback of the Silverstream agreement from Peñoles.

We remain very focused on costs and this is reflected in our operating margins. As you will see, those have increased from past periods.

In today's announcement, we have also confirmed the decision to agree a buyback of the Silverstream contract with Peñoles. And Mario Arreguin, our CFO, will provide a detailed review of the strategic and financial rationale for this. But overall, we are confident it is the right outcome for our shareholders.

Given the Silverstream buyback and the continued performance of Herradura, we are today making some adjustment to our full year guidance. Attributable silver production guidance for 2025 has been adjusted lower for the Silverstream buyback with no further Silverstream contribution from second half '25 onwards. However, on a silver equivalent ounces basis, there has been no change to the guidance because of the stronger production of gold in the case of Herradura.

Some of the financial highlights. As I've said in my introduction, this is a very strong set of numbers where we have capitalized on higher metal prices, but also kept a strict control over costs, as you can see from our margin performance. As a result, both EBITDA and gross profit have exceeded $1 billion. We are generating significant cash, which also translates to another strong dividend in line with our policy of over $150 million.

I will now turn to -- and hand over the microphone to Tomas and Daniel to provide some operating, and as I mentioned, some update on the development projects as well.

Thank you, Octavio, and good morning, everyone. Good to see you again here. Let's start with some comments on Fresnillo. So good results overall. We continue working in our operational discipline and geological controls, trying to improve the silver grade. And we have made some good progress there. Our grade is up 170 grams per tonne compared to 150 grams per tonne in the same period of last year. So that's a 12% increase on the grade. And we'll continue working towards that improvement, but we have been showing good progress.

The challenge now at Fresnillo moved to the tonnes of the volume process, where we saw a substantial decrease compared to the same period -- or the Q1 this year. And mainly -- the main factor there is unstable access to one of the areas that we had in the sequence for this year, the San Rafael area. So we needed to take out completely out of the mine plan those tonnes, some 60,000 tonnes in that area alone with -- so that's the main impact, along with lower volumes from the current fill stopes and having to do with the geometry of the veins, narrower veins or shorter stopes or a combination of both.

So we are starting already a new access to the San Rafael area and we will -- and we are doing different things to improve our cycle times where we can increase the volumes coming out of our current fill stopes. None of these measures will have an immediate impact, so we expect a similar second half of the year in terms of volumes. Maybe a bit better but not substantially better. However, for next year we should be okay with the -- back on sequence and we should have recovered that area in Fresnillo mine.

The development is at good levels, and as you can see, we are putting the meters of development that we need in the mine. And the gold and silver grades in the guidance will be -- are confirmed, will be there as guided.

Moving to Saucito. Good performance in terms of the tonnes processed, silver, lead and zinc grades. Gold is a bit lower, but it was expected based on the sequence and the zones of the mine that we have in the sequence for this year. So it's not a surprise. That's expected. And development is a bit below what we had in plans.

Basically 2 conditions there impacting the development. One, the ground conditions in Saucito. We know the ground in Saucito, the ground quality is bad, is challenging. And that is combined with a low availability of bolting and scaling equipment. That's what has impacted our development.

We have added more equipment, bulkers and scalers of our own and with the contractors. So we expect to get back on track with the development for the second half of the year.

The Jarillas shaft sinking continues, progressing well. The sink in itself is complete, so we are now working on the installation of the infrastructure required for that to become operational, that being crusher, screening, pumping system and all that. And we are also preparing for the interconnection of the 2 sections of the shaft first quarter next year. Silver and gold grade guidance is confirmed for Saucito as well.

At Juanicipio, all good in the performance of the operation. Tonnes, grades, everything is as expected. We see the silver grade down, but that was expected. We know as we mine down the silver grade is going to be lower, but still is within the plan and the expectations. So all good in Juanicipio.

The conveyor well project is progressing relatively well with some delays in the manufacturing of the components. So the commissioning of the system is slipping a little bit to Q1, Q2 next year. We are still analyzing the final date for commissioning and how to improve that delay that we are facing.

Tailings dam #2 construction is complete and the dam is fully operational. So we have now almost 9 years' worth of capacity of the tailings dam. And the gold and silver grade also for full year are within the guided range at Juanicipio.

So then moving to the projects. The Orisyvo project, so good progress. During the first half of the year, we completed the prefeasibility A level study. So that's now fully completed. Also all the engineering required for permitting is complete. So we are working on the integration of the environmental impact assessment to be submitted for approval late this year. So that's a very good progress for Orisyvo.

In the meantime -- and permitting being the critical part of the project. In the meantime, we will do a third-party review of the project, looking to derisk and optimize the economics and the design and the engineering of the project. So that's the progress there.

And then in Guanajuato, the Guanajuato Sur project, which is our main focus in that area by now, very good progress also in terms of drilling campaign, 46,000 meters of drilling in the first half of the year. And we are expecting good results again in terms of the resource increase at the end of the year. So not only we're putting the meters on the drilling, but we are getting good results out of it. And the scoping level study is well advanced and expected to be completed by early Q4 this year.

So all in all, good, stable quarter of operations in the district, the Central region, and good progress in the Orisyvo and Guanajuato projects.

With that, I will pass it on to Daniel. Thank you.

Good morning, everybody. On the results of the Northern Region, I'm happy to present what was a very solid first semester for this year.

Starting with Herradura. In Herradura, as you can see, we had very strong performance in gold production. It's with a 39% increase in production year-on-year compared to the previous one.

And in terms of cost, also a very positive development in terms of consolidating everything we've been working for, for some months already. The operational excellence program are delivering results above what we initially expected in terms of productivity and cost control. We finalized the first stage of optimization during this year and we have programmed a second stage on 2026. We made a decision to make a pause, consolidate what we're doing right now and start a new phase on the upcoming year.

The long-term strategic assessment of what we have been describing as the Herradura District vision is progressing as expected. Very good developments on that end in terms of the potential for growth coming forward. We are evaluating all the different optimization alternatives that we have in the district, but we still aim to complete the first phase of this district view by the end of 2025.

One of the components of this district view, that is the shorter-term Valles underground mine, it's progressing as expected. We are finalizing the detailed engineering as we speak. And the production plan, we still have in our schedule the plan to start operations by the first half of 2027. And we are confident that we are on a good track for that and that will add something between 60,000 and 100,000 additional ounces of gold production for Herradura District, which is very positive.

Another one of the levers that we have for optimizing the Herradura operation, that is the test work for the sulphide treatment. Started with a slight delay this year. We expected to have results by the second quarter. However, right now, we already started with the test work program and we expect results before the end of the year.

In terms of cost performance, as you can see, all-in sustaining cost below $1,400 and cash costs at $1,150-plus. It's very, very competitive. Results are above what we expected and we're confident that this is here to stay and consolidate Herradura as one of our cornerstone assets generating more than $400 million of free cash flow during the first semester, which is very, very positive for the company.

In the case of Ciénega, we started with some issues this year. In particular, the message is these issues are specific to one sector of the mine in terms of processing and the metallurgy of that sector. That is going to remain during the rest of the year. A bit softer production, but that is not going to be a long-term issue.

So the view of having Ciénega as a sustainable operation is still there with very good results in terms of exploration as well. Cost control measures and total expenditure and productivities are in line with our expectations. So what we see right now in terms of higher all-in and cash costs and lower production is something we are reversing during the second half of the year.

And the vision remains. The vision remains. We're starting the production from the stopes in Victoria Complex. That is a new high-grade gold area that we discovered during this year. And that, we expect, is going to become a very positive 2026 for Ciénega in terms of production.

So all in all, some issues particular to this year, but it doesn't change the view that we have on the operation and its sustainability in the medium to long term.

And San Julián, another success story. The performance in both gold and silver production during the first half of the year exceeded both our internal targets, our budget and also the first half of the previous year even operating with just one plant, as we discussed before, which is very positive.

The drivers for this were the plant optimization that we performed during 2024. Dilution management has been a focus during this year, and strict cost control allowed us to now confirm what was the challenge last year, that is having a sustainable operation in the long run operating with just one of the plants.

You can see the results in terms of cost. It's pretty much in line with the cost of the previous year even when we don't have the DOB operating, below $17 per ounce of equivalent silver, which is very competitive.

And that confirms the view that we have for San Julián in the long run. Good exploration results, good investment in terms of exploration to extend the mine life and significant cash flow and operating results. So all in all, good news.

And to finalize in the area of our greenfield projects in the Northern Region. We have a summary of Rodeo and Tajitos, both very similar in terms of the challenges, relatively simple projects but low grade. So when we made a review of the status of the projects, we made a decision in both of them in terms of, one, derisking the projects before moving ahead; and second, focusing in extending the resource base and derisking mostly around metallurgy. Metallurgy is going to be the key in both of these projects.

In the case of Rodeo, we started a drilling program this year. It's going very well, a slight delay at the beginning of the year to start. But right now, very good progress in the exploration results and getting the samples that we need for the metallurgical test work. We expect the campaign to finalize on Q4 this year then update the resource model, optimize the project, may have a revised PEA by Q2 2026. That is our time line right now. And after that, that's going to be the milestone for making the decisions moving forward.

And in the case of Tajitos, similar. We are exploring not the main ore body. We have very good potential in a vein system for high-grade gold in the Tajitos area, which would be a complement for the project. And in parallel, we're working on metallurgy for derisking the main ore body. The test work is ongoing and we expect a revised PEA by Q1 2026.

Handing over to Mario.

So thank you very much. Good morning, everyone. Can you hear me? Excellent.

Well, after nearly 8 months of discussions and very deep analysis and evaluation of several alternatives, we came to the conclusion that the best alternative for Fresnillo was to sell back to Peñoles the Silverstream agreement.

And for that, let me just give you a bit of background, and I'll just go very quickly through this slide. Peñoles notified Fresnillo of operational and financial difficulties impacting silver production and the long-term viability of the mine, and Fresnillo subsequently reported a revaluation loss relating to the agreement of $182.3 million in its 2024 accounts, valuing the agreement back then at $258 million before taxes.

More recently, though, Fresnillo received an updated reserve report from Peñoles for the Sabinas mine, certified independently by SRK Consulting, which showed a significant reduction in reserves, more than 50%. And I would say definitely this was the main, main reason behind the lower value of the mine, and hence, of the Silverstream.

A revised mine plan and sequencing program were drawn up with the validation from SRK Consulting, which materially impacted future production and free cash flow projections. Fresnillo together with Peñoles determined the new value of the Sabinas mine to be between $47 million and $50 million.

Fresnillo has agreed terms for Peñoles to buy back the Silverstream for $40 million. This creates a noncash $133 million loss after tax and net of the period's profit amortization in the first half of '25 income statement. The cash effect will be an inflow of $40 million in the second half of 2025.

The independent directors of Fresnillo have received financial advice from Bank of America Securities in relation to the consideration payable by Peñoles to Fresnillo to buy back the Silverstream agreement. The independent directors believe the valuation offered by the buyback of the Silverstream agreement is fair and in the best interest of Fresnillo shareholders given the considerable challenges identified.

And over the lifetime of the agreement, nearly 18 years since the IPO, Peñoles has paid Fresnillo approximately $882 million and Fresnillo has received approximately 52 million ounces of silver.

So we'll be happy to answer any questions or doubts that you might have regarding this buyback during the Q&A.

For the time being, if you don't mind, I would like to move on to the financial statements. Okay. This slide here shows basically the income statement for the first half, and we compare that to the first half of 2024. And as you can see from all the lines outlined in yellow, which showed the different profit levels, it was a very, very good financial result.

In terms of gross profit, we are 160% above last year. In terms of operating profit, we're 266% above last year. And in terms of profit for the period, almost 300% above considering the hit from the Silverstream agreement. And in terms of EBITDA, we basically doubled last year's number.

So going back to gross profit. As you can see, compared to last year, we were $630 million above. And if you move up that same column, you will see that there were basically 2 main reasons. One was the fact that we had a very important increase in revenues, $420 million. And that combined with a lower cost of production, nearly $170 million or 20% lower, the combination of those 2 were basically the 2 main reasons behind the increase in gross profit.

But one of the questions will be, how much of that adjusted -- increase in adjusted revenue was due to prices and how much of that was due to volume? So for that, we have to share with you on the following page, on Page 25. And as you can see clearly, basically, the main reason or the only reason for the increase in the adjusted revenue line was the increase in price of both gold and silver.

In the case of gold, we saw a 42% increase in the price of gold, coming from $2,235 per ounce to $3,169. And in the case of silver, we saw a 25% increase, increasing from $27 to $33.80 per ounce. And as you can see, there was a very favorable effect, in the case of gold, $262 million; in the case of silver, $175 million.

With regards to volume, you can clearly see that the negative effect which was expected in terms of silver production, which was 11% lower than last year. As a matter of fact, we were pretty much in line with budget. So that decrease was expected. That had a negative impact of $121 million. Whereas in the case of gold, where we had an increase of 15.6% compared to last year and we were quite above what we had originally budgeted, almost 22% of our budget, that had a positive effect of $117 million, which pretty much offset the negative impact of the lower silver.

If we can go back to the income statement, please. So the other important factor was the reduction in adjusted production cost. So for that, I would like to use the, what we call, a rainbow, which is on Page 26. Again, on the right-hand side, you can see the green bar, which represents the reduction of $170 million. And by far, the most important reason was, of course, the devaluation of the Mexican peso during the first half of the year. And here, we're talking about the average exchange rate which, for the first half of 2025, was nearly MXN 20 per dollar, MXN 19.98 to be exact, which compared to MXN 17.10 per dollar, which was the average exchange rate for the first half in '24. Actually MXN 17,10 was the lowest we've seen in the last 5 years. So that resulted in a devaluation of almost 17%, which had a positive impact, as you can see here, of almost $86 million or 50% of the total reduction in adjusted production cost.

If you look at column #1, there we talk about cost inflation, cost inflation being the increase -- or the average increase in the unit price of our main [ intake ]. I'm happy to report that we see inflation pretty much under control now. It was only 2.3% excluding the effect of the exchange rate and that had a negative impact of $15 million.

On the operating side, of course, if you look at column #4, as you know, we had the closing of San the Julián Disseminated Ore Body mine. So we're no longer incurring those costs and that implied a $24 million reduction.

And also on column #5, we had increases and decreases of production in several of our mines, but the net result was a decrease in terms of volume process at some of our mines. And that had an impact of $31 million in reduction of our costs. Of course, column #4 and 5 will translate into lower income when we look at the gross profit graphs, which I will show you in just a minute.

And I guess the main message here from this graph, at least from the operational point of view, is outlined in bar #3, where you see the result of the cost reduction efforts and efficiency programs that we have put in place, which resulted in a benefit of $23.3 million.

So to summarize the main reasons behind the increase in the gross profit, and if we can move please to the gross profit rainbow. Again, on the right-hand side, you can see the $630 million increase represented by that green bar. And clearly, the most important factor again were the prices. You can see that effect on column #1. Higher silver and gold prices represented almost 70% of the total increase in gross profit.

On the operating side and on the positive side, we saw the higher ore grades and higher recoveries, which had a positive impact of $107 million.

And if you look at the adverse side, you will see on the operating side on column #10 the fact that we closed down San Julián DOB represented $41 million lesser profit. And if you look at the variation in the change of inventories, which is pretty much an accounting phenomena that occurred between one semester and the other, that had a negative impact of $49 million.

And we already spoke about the effect of the exchange rate, which was positive, that's column #3. We also saw lower depreciation, $62 million. That's basically related to the closing of the San Julián DOB mine. And we already spoke about the efficiencies, which had a positive effect of $23 million. Fortunately, we've seen lower treatment and refining charges in the last 2 or 3 years and that had also a positive effect of $25 million.

So overall, I think that gives you a clear idea of what was behind the variation in gross profit.

If we move back to the income statement very briefly. If you look at the operating profit, again, it was $625.6 million above last year. Mainly all of that came from the increase in gross profit that I just explained to you. But if you look at the finance income or expense, in this case, line, in 2025, we are recognizing a loss of almost $180 million. That's basically due to the Silverstream effect.

If you look at the income tax expense, you will see that the we only had an effective tax rate of 18.5% compared to the statutory tax rate of 30%, much lower, and that was due precisely to the exchange rate and the impact that, that has on the valuation of assets, which are valued and accounted for on tax terms in pesos. So the spot exchange rate at the end of December was MXN 20.3 per dollar, and at the end of June, MXN 18.9 per dollar. So that was the main reason behind the lower effective tax rate.

And I think we can move on to the cash flow. Okay. If you look at the first column, bottom line, you will see that we closed the year with a cash and cash equivalents of almost $1.8 billion.

And if you look at our financial statements, you will see that there's a little difference between what we've shown you here and the $1.55 billion that actually are shown in the financial statements. And the difference of $270 million is basically that we had those $277 million in bank and deposits, which matured 3 months after the closing of June. For me at least, that's pretty much cash. And I thought that a better number to show you was the $1.8 billion, although I have to admit that if you are very strict and consider time deposits in AAA banks with maturities of around 3 to 4 months as not being cash, then it would be $1.5 billion.

In terms of dollars.

In dollars. Everything that we have is basically -- we do have a small balance in pesos to cover certain expenses, but we rather keep our cash in dollars.

The main generator of cash, of course, was the cash generated by operations, which is the very first line, the top $1.1 billion, which nearly doubled what we generated last year. Also working capital, there was a reduction in working capital. So that generated at $191 million of cash.

Another source of cash was, of course, the shares that we used to own from MAG. As you know, MAG was acquired by Pan American. We had approximately 9.2% of the total outstanding MAG shares and we thought it would be a very good opportunity to sell a large volume when that was announced. By the end of June, we had sold approximately 80% of the total holdings that we have. As we speak, we have sold 100%. We don't own any more MAG shares. That was an interesting source of cash, $150 million for the first half of the year.

And in terms of uses, of course, one of the main uses, as you can see there, was this dividend paid in May, $500 million.

Income tax, if you look at that, that was $255 million. That was mainly provisional tax payments. Remember, in Mexico, we pay provisional tax on a monthly basis based on the revenue and we simply apply a factor on that. And in March of the following year, you settle those provisional payments versus your income tax return. And if you have a favorable difference, then you get money back. If not, you have to pay. So, so far, we've paid $124 million in provisional taxes. We paid $63 million in mining rights and we paid $12 million in profit sharing, which are the 3 most important elements of that line.

In terms of CapEx, we have invested around $158 million during the first semester. And I think those are the most important items in the cash flow. I think I'm done.

So happy to answer any questions that you might have.

In the Q&A session.

In the Q&A session, obviously.

Very quickly, I mean -- thank you, Mario, by the way. So looking ahead for the rest of the year and we mentioned that we have adjusted very slightly the guidance for the year in terms of silver according to the -- what we were expecting to receive in the second half of the Silverstream, which is not longer on the Fresnillo side and also in '26 and '27. In '25, we -- as we mentioned, I mean, we have higher our guidance for gold in such a way that silver low or go up, I mean, on equivalent silver ounces remains very much the same. The rest of the expected production of '26, '27 for gold and also lead and zinc, those remain the same.

For CapEx, we are also rationalizing the CapEx for 2025. We do this exercise every year, see if we can lower the expected CapEx number for the year. Also in 2025, we are reflecting some delays in terms of lower development at Saucito mainly and also some of the Robbins ventilation raise boring in Saucito as well. Also some -- we are experiencing some delays, small delays, in the installation of the conveyor belt at Juanicipio. So part of that is reflected in a lower CapEx number in 2025, '26 and '27, as we had mentioned before.

Just a quick look on the development projects, how they -- we believe we can bring those onstream. That is a challenge on the first 4 development projects. Of course, we continue to advance those, as described by Tomas and Daniel.

But very focused on the brownfield projects, which are less of a challenge. We continue to advance on Valles underground, which is in the vicinity of -- or the underground portion of the Herradura District. That would give us ounces with no larger investments. So we are focusing on those. And further ahead, of course, in Herradura, we have potential at underground that we will continue to see and develop in the coming years. But very focused on this brownfield production at the Herradura area.

So all in all, and just to conclude. I mean, safety, I've mentioned. We need to redouble our efforts across all of our operations. The trends are becoming positive, but I mean we still work and see our operation free of fatality is something that the whole organization is very focused to achieve.

Outstanding first half performance, demonstrating the operational success. And this, coupled with higher metal prices, of course, we've seen the kind of free cash flow that our operations are -- our sizable production brings.

Focus on cost and productivity. So those quality ounces, we will continue to make every effort not only to control but also to decrease costs across all of our operations.

A strong return for our shareholders through increased dividends, and advancing our exploration and continued investment to progress our pipeline.

And with that, I mean, we can turn into Q&A.

Jason?

Congrats on the great results.

Thank you, Jason.

A couple of quick ones. The projects, you seem to have a lot of projects that are coming to a head in 2026 and 2027. How are you thinking about the ability to fund those? But then beyond that, do you feel like the organization has enough bandwidth technically to execute this many projects?

Do you want to mention something on the projects that you have and then I'll complement the answer.

Yes. I think we have -- technically, if we complement what we have in-house with qualified to do our projects, so for instance, in Guanajuato Sur, we have retained SRK to do the project complementing with our own technical team. Orisyvo, we have involved 2 firms there. So -- and then what we do mainly is use our technical team to do the reviews -- internal reviews to that. But I feel we're well equipped in that setting for those 2 projects. You want to add to that?

No, no. I share the same. I think our pipeline, it's moving forward, and at some point, we will require to strengthen our organization. But that's coming in a few years. What we need right now, I think we have solid resources. And with a good backup of consulting companies, we'll be able to deliver.

Yes. And we mentioned before that we are strengthening our organization. We put in place a Vice President of Technical -- Technical Vice President with a team on its own. We are better exchanging the process of planning with this Technical Vice President and its team, working along in a better level with the operational teams in place for the brownfield project that is the one that is coming first in Herradura.

I mean, also we named an additional person in charge of the operations and also developing the brownfield project at Valles and further definitions in terms of plans to ready much, of course, what we need in the projects in order to develop efficiently.

Just a follow-up, if I could. So the dividend, I mean, obviously very, very strong cash flow. I had a couple of investors sort of commenting that it seemed like the dividend was a little bit light, like it could have been maybe a little higher. And some people wondered if you were building a war chest to do some inorganic growth. How do you think about that?

Of course, we saw this cash generation because of what we mentioned, I mean, widening our margins, focusing on cost, enjoying high metal prices. You see the effect of really a sizable production there. The dividend that we declared in this period goes along the lines of our normal dividend policy, which in a yearly basis would be expected 50% of the net profit for the year. This is just the usual dividend policy.

In terms of building it and the cash balance, I mean, this is what we have. As you mentioned, we have enough development projects ahead of us that will require substantial cash as well. I mean, Orisyvo with all of the challenges in the coming years, we are trying to optimize the CapEx number. As Tomas mentioned, I mean, we concluded the pre-feasibility A. That shows a CapEx number that probably is a bit on the higher side. Right now, we are trying to optimize that. But I mean, that will require substantial amount of cash.

Rodeo and Tajitos, at a lower side of cash needs.

Guanajuato, probably something -- a project that we are trying to bring at a better pace. And also because of the depth of the vein systems, I mean, will require quite a fair amount of mining works, development ramps, a shaft and everything, bringing the cash needs up for Guanajuato Sur.

So I think we will continue to do the same, I mean, explore, finding new projects, develop and construct those projects. And those are a good use of cash.

Patrick Jones, JPMorgan. Just a question on -- a couple of questions on the Herradura side. Could you just comment a little bit more as to how you see sort of the long-term production profile there with incorporating the Valles underground? Should we be thinking about that as sort of a 500,000 tonne -- sorry, 500,000 ounce mine out to middle of the next decade?

And just on the CapEx side of that, can you give a bit of color as to how much that is specifically and what -- if that's within the '26-'27 guidance as well.

We're trying to be cautious about providing a forecast given that we are in the middle of the optimization process. Our first goal, I would say, it's to at least sustain the levels of production that we have right now because the natural trend of the open pit is decreasing in time.

With all the projects that we have in there, our initial goal is to sustain levels similar to what we have right now in the long run, 10, 15 years from now. However, we know we have the potential to go to levels like you mentioned. But again, we want to be cautious about forecasting until we finish all the engineering that we're doing.

Dan Major from UBS. First question, just on the financials, you had a good cash flow performance this period. Just like quite a lot of your peers in the sector, you're booking a build in tax payables. Can you provide us any guidance if prices stayed at this level kind of how much you would continue to accrue in the second half and then what the catch-up payment would be in the first half of 2025 as a result of the lift in profitability?

Yes. We've done our 6x6, that's what we call it, forecast for the year-end, and we're expecting to close somewhere around $2.3 billion in our cash balance after considering taxes, everything. So that will put us in a very, very strong position, I believe.

Sorry. Maybe to ask it slightly different. How much tax would you owe in 2027 with respect to 2026 in terms of accrual of tax payables? I think you built $100 million this half in payables. And that will continue to build, I would guess, if prices stay high and then you -- is that the right way of thinking about it or not?

Well, as I was explaining, we are paying what we call provisional tax payments on a monthly basis. And I believe that by year-end, we will be very close to the actual number that we get in March of the next year when we do our tax return calculations. So we might even end up having paid more provisional tax payments on a monthly basis than what we actually will accrue when we do our detailed calculations in March.

Okay. That's clear. And then just a question on the -- follow-up question on the projects. I mean, your Slide 35 has been in the deck for a long time and the projects have looked quite similar and they keep moving further to the right. It feels you're putting a little bit more detail on the time lines to PEAs in 2026 and the underground expected in Herradura. Have you got more confidence in the pipeline now than you have in the last couple of years?

And then just to follow up on Patrick's question, just to be clear, your guidance in gold for 2027, does that include the contribution from the underground at Herradura?

Yes. I mean, we continue to be positive on the development for development projects. However, challenges remain. As I mentioned, I mean, we see this administration being more positive on mining and trying to help and support if we need something in order to develop these projects. However, some challenges remain.

Rodeo still, as Daniel mentioned, we need to finalize our exploration, consolidate the resources there and then do the feasibility -- prefeasibility and feasibility.

Orisyvo, as I mentioned, is a project that goes from prefeasibility A to prefeasibility B. However, the size of the infrastructure we need to put in place to access this project, the indigenous consultation and everything is a big challenge there. Right now, we are optimizing or rationalizing that CapEx number that was out of the prefeasibility A process.

That keeps Tajitos also some challenges. We need to change in case we grow those resources positively with exploration. We need to change some of the infrastructure that we have there, talking about roads, a state road that is going through the project.

And Guanajuato is the one that we are trying to speed up. But also, as I mentioned, the challenge there is to access the veins at the level in which we have the economic realization for Guanajuato.

So yes, you're right. It seems like the development pipeline is still not moving to the pace that we would like. And that's why also the focus is on the brownfield projects. And Valles is the one that we have at site and some portion of Valles production is reflected in 2027. Yes.

To clarify, it's not a full year of production. It's our current schedule, it's going to be around 50% of a full year production what we have on Valles for that year.

And I'm assuming the CapEx is also reflected in 2026, 2027 even if you haven't defined it exactly.

Yes. That's it.

It's Amos Fletcher from Barclays. So I had a couple of questions on the financial side. Big working capital release in H1. Can you give us any guidance for what that might be in H2?

And then can I ask on the CapEx side, how much of your CapEx is denominated in Mexican peso versus U.S. dollar?

Okay. In terms of working capital, for the second half, most of the increase in working capital that I just showed you was due to a reduction in accounts receivables from Peñoles. So I don't think that will repeat itself in the second half. So I believe it would be pretty even during the second half. We won't see a reduction, I don't think, or any increase either.

In terms of CapEx, that was your second question?

How much is in the U.S...

CapEx. In terms of CapEx, I would say all the part that is related to development, which is basically contractors in Mexico, I would say approximately 40% of that is in pesos. And the other 60% is dollars, talking about contractors which actually do most of the development.

And in terms of actual equipment, pretty much everything is imported. So pretty much dollars, some euros.

And then I just wanted to ask on your guidance on unit cost inflation ex FX for the second half year-over-year or half-on-half, whichever is easier for you.

In the second half, we don't see any major pressures in terms of increases in the unit price of our [ intakes ]. So I would say it would be along the lines of what we just saw in the first half for the whole year, something between 2% and 3%.

And the last?

Okay. Sorry, I'm going to keep going. A couple of other ones, just on the buyout of the Silverstream contract. $40 million seems a little bit low when you consider you received $34 million in H1. Was the mine life just -- were they just going to shut the mine essentially? Is that why that payment was so low?

That was basically the alternative.

Yes. And then is it subject to a Class 1 vote? Or is it not material enough?

It's not material enough.

Richard Hatch from Berenberg. A couple of clarification points. So just on the costs. So you did $674 million of adjusted production costs in the first half. So should we, therefore -- I guess, peso strengthened a little bit, I think. So should we -- how should we be thinking about that gain in the second half? Like a little bit higher but still pretty well controlled? That's the first one.

I would say that, that is the case. And like I said, we had a very favorable exchange, average exchange rate effect in the first half.

Again, in the second half, we had almost MXN 20 per dollar versus MXN 17.10 in the first half of '24 -- second half. The second half of '24, the exchange rate was MXN 19.50 in the second half of '24. Currently, the exchange rate is around MXN 18.8, MXN 18.9. So if it remains where it is, it would actually be a small revaluation, very small revaluation in the second half, which would take away 1/3 of the benefit that we had in the first semester. So in other words, we're not expecting to have that benefit in the second half.

Clear. It sounds, Octavio, that you're not going to push for some top-of-the-cycle M&A, which sounds good to me. I think the market probably likes that, too. Takes my heart rate down. But the H2 '24 dividend was something that surprised the market very positively. You paid a lot of cash back to your shareholders.

So should we expect, if prices stay about the same, I appreciate you've got an attractive profile of CapEx projects, but should shareholder returns be expected to still be quite elevated going into the end of 2025?

You're absolutely right. I mean, we've seen the kind of deals in terms of M&A that have gone out in the market. And we are very disciplined about looking at that part. And as we mentioned before, our main objective and one that we invest across the cycles, I would say, is exploration where we have the development pipeline with the challenges that we mentioned. We would like to see those projects coming onstream earlier. But also, we're disciplined in the way we bring them into operations. We like to have operations with the quality of the current assets. So that's a part on the terms of an M&A.

In the meantime, yes, we will continue to see that cash build up going on that north direction. After -- and the exercise we do at year-end and that we as a management team propose to the Board after looking at all what we had in front of all of us is our mines, of course, demand a fair amount of investment, most of them on the vein systems. We need to do a lot of development, a lot of raise boring, ventilation and everything. Approximately 120 kilometers per year of development, that's a large investment. Renew the fleet that we have across all of our mines, all the needs in terms of exploration, brownfield and greenfield and also to maintain the resources and reserves at our mines. And then the usual dividend policy returns for shareholders.

And after we consider all of those needs, yes, it's something that we can consider as well. Some special dividends, as we mentioned before.

Okay. Helpful. Last one is just on Herradura costs. Just generally operational performance was good, so congrats to both the CMOs. But just on Herradura costs, $1,371 all-in sustaining cost, Daniel, you're comfortable where you can keep that level, please?

That level has been extraordinary in the first semester. We think it's going to go slightly up. But we are confident in trying to keep it below $1,500 levels. That is what we are trying to achieve as a long-term position in terms of cost.

Just a couple of follow-up questions. One on cost, how are you thinking about your cost for 2026? Do you see potential for more improvements?

Improvements as in cost reduction and efficiencies? Well, I would leave that to my colleagues.

We still see some room. Let's go back to when we talked about the labor reform and the need at that time to internalize a lot of the contractors head count that we having each one of the operations. We are still working towards reaching a more efficient level. And I think that's going across all of our operations. So I think there's still room to improve in that front.

Also, what we've seen in the market is that in previous periods, as we saw metal prices going up very rapidly, we're seeing also inflation going up from the mining sector. This is not the case in this year, at least, half of last year. And therefore, we believe that will continue to be the case.

We have not seen also the impact of tariffs as well. And I think the market has very much absorbed that first effect.

So we are hopeful that we will see inflation in general terms being contained. And then the work across all of our operations will continue to bear some fruits in terms of containing the cost and hopefully lowering the cost with the previous year.

Dan from UBS. A couple of follow-ups. So just -- to clarify on the cash return, you previously spoke to wanting to and targeting $1 billion of cash balance before you potentially distribute special dividends. You're talking $2.6 billion at the end of the year. Should we therefore assume $1.6 billion of distributions in the base case in the second half?

Well, I'm not sure about that. And I said $2.3 billion by year-end.

Sorry, $2.3 billion.

But you're right. When -- in previous years, that's pretty much the criteria that we follow. At the end of the day, it will be a Board decision. But definitely it's on the table, being considered.

And in previous periods, we used to have only Juanicipio as a development project to be developed. We -- the kind of investment that we were seeing at those times were in the region of $400 million, $400-plus million. The projects that we see now in the pipeline are larger in CapEx, at least Orisyvo, in the coming years. So that will be one aspect to have in the radar. And then Guanajuato Sur as well. So we have 2 in the following 3 to 4 years. And Rodeo and Tajitos, although lower CapEx numbers.

I just had one follow-up, I guess, on -- related to that. Could you just run through where the indicative CapEx numbers sit for each of the growth projects on Slide 35?

We need to look at this graph. I mean, as we mentioned, Rodeo exploration, a rough number that we have for exploration this year is approximately $10 million in Rodeo.

In Rodeo? In Rodeo, we're spending $8.3 million.

$8.3 million. And then we will have enough resources hopefully to run prefeasibility and feasibility. Previous estimation for that project was in the region of $300 million or so.

Previous estimation, however, we think it's more likely to be on the $450 million.

Updated that. Orisyvo was in the region of $1 billion from '24, yes, $1 billion and we are optimizing that one. So Tajitos, lower number than Rodeo. And Guanajuato, north of $500 million or so.

That's raw numbers. And of course, we will be -- we would continue defining those CapEx in coming years.

And then coupling that information with the graph, I mean, right now, exploration, all of them, except for Orisyvo. And as we advance through prefeasibility, feasibility A, B, et cetera, I mean, you will see the CapEx numbers being defined for the upcoming years accordingly.

Can you give us the same numbers for the brownfield projects, for Valles and the Herradura underground?

Yes. Valles?

In Valles, what we are finalizing right now in terms of details, it's to understand how much is the recovery CapEx for pumping stations, energy, et cetera. We don't think it's going to be more than $60 million to $70 million in total to restart the operation at Valles.

In the case of what we call the Herradura underground, that is the longer term. We don't have a view right now because it's deeper, it's more complex. We think it can be in the $200 million range, but that's to be seen.

Peter, do we have something in the line? Okay. So with that, we conclude the presentation, and we thank you for attending.