Fresnillo trading on demanding multiples, says Sanlam Securities

4th Mar 2014 11:33

Gold and silver miner Fresnillo was under heavy selling pressure on Tuesday after the company failed to meet analysts' forecasts with its annual results for last year.Equity Analyst Charlie Long from Sanlam Securities said that after 2012, "2013 was a very difficult year with almost all metrics down significantly".Earnings before interest, tax, depreciation and amortisation totalled just $729.8m last year, down 44.5% year-on-year and well below the consensus estimate of $799m.Long said: "Despite the huge share price correction over the last 12 months or so, Fresnillo still trades on demanding [earnings] multiples. It also is clearly struggling to replace reserves; a function of being a very large producer with its best assets now deep and mature. "We expect Fresnillo shares to perform should the silver price recover, but operationally we don't expect things to get any easier going forward; in terms of both replacing reserves and growing lowest cost production."The stock was down 8.6% at 887p by 11:36.BC