The rise in the price of gold and silver has been excellent news for shares in Fresnillo (FRES) so far this year, but full-year results contained a number of disappointments. Chief among them was an announced cut to 2016 capital expenditure budgets, reflecting concerns around the sustainability of precious metal prices.
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Last year was instructional on this front. The average realised price for an ounce of gold fell 10.4 per cent in the period to $1,127 (£805), while silver dropped 16.1 per cent to $15.6 per ounce. Fresnillo compensated for these falls by increasing production, particularly for gold, which at 762,000 ounces beat top-end guidance by 4.3 per cent.