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Fresnillo PLC (LSE:FRES) is emerging as one of the clearest equity plays on a powerful rally in precious metals, with Citi raising its price target sharply as higher silver prices transform the group’s earnings and cash flow outlook. The bank lifted its target price to £46 and reiterated a Buy rating, pointing to what it sees as strong momentum in spot silver, which continues to trade in the high $80s an ounce. Citi’s house view is that silver will outperform gold, with prices potentially reaching $100 an ounce, a shift that materially changes the earnings profile for primary silver producers. Under Citi’s updated assumptions, silver is expected to average $78 an ounce in 2026. That would drive Fresnillo’s EBITDA to about $4.9 billion, roughly 24% higher than the bank’s previous forecasts and potentially double current levels. Consensus estimates, Citi argues, have yet to catch up with the scale of the move. The implications for cash generation are significant. Citi expects free cash flow yields of around 7–8%, supporting the case for further re-rating. On its numbers, Fresnillo could generate $2.6 billion of free cash flow in 2026 alone, enabling a cash dividend of about $1 billion and leaving the group with net cash of roughly $1.3 billion by the end of 2025. That would put Fresnillo’s balance sheet in its strongest position since listing, reinforcing its appeal as a high-quality, leveraged play on a structurally stronger silver market. The stock was up 1.6% at 3,844p in lock-step with the silver price.
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