Fresnillo PLC (Fres) is a precious metals mining company with its assets based in Mexico. Revenue is dominated by silver (2010 Rev: 51%) and gold (44%). Fres’s growth plans are to produce 65m ounces of silver and 0.4m ounces of gold p.a. by 2018. To achieve this, it plans on delivering one new mine or mine expansion each year until 2014. Earnings are exposed to commodity price volatility as Fres does not implement commodity price hedging and a circa 15% decrease in the silver and gold price can result in a 2% decrease in profit. Further volatility is driven by its Silverstream contracts with a 25% increase/decrease in the price of silver resulting in a gain/loss of 12% in profit. Key growth drivers are a forecast increase in industrial demand for silver and continued investments in precious metals driven by inflation, ongoing economic instability and sovereign risk. Key risks include mining cost inflation (strengthening peso, higher electricity and diesel prices) and geopolitical & regulatory risks given its exposure to Mexico.