Fresnillo is Searching for Tomorrow’s Silver Reserves
The Fresnillo Group is the world’s largest silver producer and has a portfolio of nine mines in Mexico. The 2025 fiscal year brought financial growth to the company but also revealed operational headwinds. Revenue rose by 30.5% to USD 4.6 billion, and EBITDA climbed to USD 2.8 billion. However, actual silver production fell by 13.5% to 48.7 million ounces during the same period. This decline highlights a core issue: the depletion of aging mines and the need to advance into deeper zones. A critical aspect of the balance sheet was the 8.5% decline in proven silver resources to 2.06 billion ounces. To counter this trend, Fresnillo has increased exploration spending to USD 173.5 million. The strategy in Mexico increasingly involves partnering with exploration companies to secure access to districts adjacent to existing facilities. This is evident in the stake in Silver Viper Minerals and the sale of the Coneto project to the exploration company. For shareholders, Fresnillo offers a solid foundation despite operational pressures.
Pan American Silver Capitalizes on the High-Price Phase
Pan American Silver has positioned itself as the second-largest silver player through the acquisition of Yamana Gold. In 2025, the company generated record revenue of USD 3.8 billion and free cash flow of USD 1.2 billion. The driver was its 44% stake in the Juanicipio mine in Mexico, which is operated by Fresnillo. In 2025, this mine alone delivered over 2.5 million ounces of silver to Pan American and impressed in the fourth quarter with operating maintenance costs of just USD 9.51 per ounce. The most important future project is the La Colorada skarn deposit, one of the world’s largest undeveloped silver-polymetallic deposits. Here, the Candelaria zone recently delivered peak values of 10,305 g/t Ag. Management is using the record cash flows to significantly increase the dividend, which most recently raised the quarterly dividend by 29% to USD 0.18 per share. This operational leverage on the silver price also makes Pan American Silver a solid core investment.
Silver Viper and the Logic Behind the Acquisition
While producers grapple with the complexity of large-scale mining operations, junior explorers like Silver Viper Minerals act as discoverers – their primary task is to identify mineral deposits in the ground. The company focuses on developing precious metal projects in Mexico. A milestone for Silver Viper was the acquisition of the Coneto project in Durango. Silver Viper acquired the project from a joint venture led by Fresnillo for a purchase price of USD 15 million, which was paid entirely in shares. Through this transaction, Fresnillo became a significant shareholder whose stake cannot be diluted due to contractual provisions. With its existing resource of approximately 538,000 ounces of gold equivalent, the Coneto project provides the foundation for rapid expansion within direct reach of Fresnillo’s infrastructure. Meanwhile, at the original core project, La Virginia in Sonora, a 60,000-meter drilling program is underway to further expand the resource of approximately 700,000 ounces of gold equivalent. Here, the El Rubi zone has previously returned values such as 228 g/t Ag over 13.3 m. An updated resource estimate in the second quarter could serve as a major catalyst for the stock price and attract new investors.
Consolidation Pressure Offers Leverage for Investors
The momentum in the silver sector offers investors excellent opportunities. On one hand, there are producers like Fresnillo and Pan American Silver, which, as cash flow machines, benefit from high precious metal prices. They offer security through dividends but are limited in growth by dwindling reserves. On the other hand, specialized explorers like Silver Viper are positioning themselves. The fact that Fresnillo transferred the Coneto project to Silver Viper while simultaneously becoming a major shareholder suggests that the group’s management believes the explorer can generate value more quickly than its own operations. With a market capitalization of around USD 57 million, Silver Viper’s valuation barely reflects its strategic potential. Since companies like Fresnillo urgently need resources that can be quickly integrated into their existing infrastructure, Silver Viper is considered an obvious takeover candidate in the current market environment. Investors find Silver Viper an attractive vehicle for profiting disproportionately from the chronic supply deficit in the precious metals sector.
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