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Highlights:

  • Fresnillo divests majority of its over 9% stake in MAG Silver due to strategic misalignment with resulting shareholding in Pan American.
  • No changes to Juanicipio partnership terms; Fresnillo remains operator and majority owner.
  • Sale proceeds to be allocated per capital priorities, including project development and debt management.

Fresnillo plc (LSE: FRES) has announced the sale of the majority of its shares in MAG Silver Corp (TSX/NYSE: MAG), following the proposed acquisition of MAG Silver by Pan American Silver Corp (TSX: PAAS; NASDAQ: PAAS). The move reflects a reassessment of Fresnillo’s investment strategy in light of the anticipated conversion of its equity interest into a significantly smaller stake in a broader, multi-asset mining entity.

The decision comes after Pan American’s announcement of a definitive agreement to acquire MAG Silver, which jointly owns the Juanicipio silver mine in Mexico alongside Fresnillo. Upon completion of the transaction, Fresnillo’s existing stake in MAG Silver—initially acquired to support its involvement in Juanicipio would be converted into a shareholding of less than 1% in Pan American. Fresnillo stated that this change would not align with its original investment rationale nor with its shareholders' interests.

Juanicipio, located in the Zacatecas region, has been a key operational asset for Fresnillo. The company has reiterated that its role as majority owner and operator of the project remains unchanged. The terms of the Juanicipio joint venture, including governance and legal structures, are not impacted by the MAG-Pan American transaction.

Fresnillo noted that while the partnership landscape will shift if the acquisition is completed, it acknowledges the potential for future collaboration with Pan American, given its presence in the precious metals sector. Any future engagement will continue within the existing framework of the Juanicipio agreement.

The proceeds from the share divestiture will be used in line with Fresnillo’s established capital allocation framework. This includes prioritising investments across its development pipeline and maintaining financial discipline, particularly with respect to liquidity and debt reduction.

This development is part of a broader trend within the mining sector, where consolidation and realignment of asset ownership continue as companies respond to commodity cycles and seek operational efficiencies. Fresnillo’s decision underscores a selective approach to equity holdings, especially when investment outcomes shift outside of original intent.

While the company has exited its direct equity position in MAG Silver, it remains committed to advancing Juanicipio as part of its production portfolio. Operational activities at the site are ongoing and Fresnillo confirmed that it continues to meet performance and output expectations.