Industrias Penoles 1Q26 CEO Brief to MSE

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# Industrias Penoles 1Q26 CEO Brief to MSE

Source: https://www.penoles.com.mx/assets/files/reportes/BMV/informe/en/Informe_Director_1T26_Eng.pdf
Published: 2026-04-30T00:00:00+00:00
Fetched: 2026-05-06T16:02:52.98+00:00
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# Industrias Penoles 1Q26 CEO Brief to MSE
Source: https://www.penoles.com.mx/assets/files/reportes/BMV/informe/en/Informe_Director_1T26_Eng.pdf
Published: 2026-04-30
Further information:
Investor_Relations@penoles.com.mx
Luis Carlos Navarro: (52) 55 52 79 32 19
Celia Ortega: (52) 55 52 79 32 94
INDUSTRIAS PEÑOLES, S.A.B. DE C.V.
REPORT OF EARNINGS FOR THE FIRST QUARTER OF 2026.
.
Mexico City, April 30, 2026 – Industrias Peñoles, S.A.B. de C.V. (“Peñoles” or the
“Company”) (BMV: PE&OLES), a mining group with integrated operations for the
smelting and refining of non-ferrous metals and the manufacture of chemical products,
reports its consolidated results for the first quarter of 2026 (1Q26) and the main changes
compared to the same period in 2025 (1Q25).
EXECUTIVE SUMMARY
In the initial quarter of 2026, average gold and silver prices touched historic highs in
January. Toward the close of the period, the strengthening of the dollar and high interest
rates triggered a correction; nonetheless, prices for these metals remained elevated.
Silver stood out with an average price increase of 157.5%, while gold rose by 70.4% on
average compared to the same quarter in 2025. Among industrial metals, copper was
notable with an average increase of 37.5%, followed by zinc at 14.2%. Copper reached
peaks driven by deficit expectations but moderated its closing price due to lower demand
in China. Zinc showed resilience despite an increase in global inventory, while lead
delivered a weak performance due to high inventory levels and its low relevance in the
energy transition.
In mining operations, the volume of ore milled and processed was 3.9% higher compared
to 1Q25, primarily due to production at Tizapa—whose operations were suspended
during that period due to a strike at the unit—offsetting lower milling at Capela,
Velardeña, Saucito, and Fresnillo. Conversely, the volume of ore deposited decreased by
18.6%, mainly at Herradura, due to greater selectivity, a slight delay in the
commissioning of Phase XV of the leaching pads, and heavy rains in January that affected
the mining and ore deposition. Ore extraction and deposition at Milpillas were also lower
due to scooptram equipment failures, ventilation deficiencies, and backfill deficits.
Gold mining production recorded a 6.3% decrease, resulting from lower volumes of ore
deposited, alongside lower grades and recovery rates at Herradura, which was partially
mitigated by production from Tizapa. Silver production increased by 3.1%, thanks to the
resumption of operations at Tizapa, higher volumes of ore processed, and improved
grades and recoveries at Sabinas. Additionally, better grades and recoveries at
Herradura, increased milling at San Julián Veins, and recovery at the Pryrite plants
contributed to the growth. These operations offset lower production at Fresnillo,
Velardeña, and Ciénega (due to lower processed volumes, grades, and recoveries), at
Juanicipio (due to lower ore grade and recovery), and at Capela (due to lower processed
volume and recovery).
1
Regarding industrial metals, lead, zinc, and copper production increased by 20.6%,
15.6%, and 22.0%, respectively, compared to 1Q25 volumes, primarily attributed to the
resumption of operations at Tizapa. Zinc also benefited from higher volumes of ore
processed with better grades and recoveries at Juanicipio and Sabinas, as well as
improved grade and recovery at Fresnillo—operations that compensated for lower
production at Capela, Saucito, Velardeña, and Ciénega. The increase in lead production
was also driven by better ore grades and recoveries at Juanicipio and Sabinas, while
copper was bolstered by improved ore grades and recoveries at Capela and Velardeña.
Conversely, copper cathodes decreased by 22.4% due to lower ore deposition, recovery,
and grade at Milpillas.
In metallurgical operations, refined gold production decreased by 18.6% due to lower
production from Herradura and reduced purchases of gold-rich materials from third-
party shippers for treatment at the silver refinery. Silver and lead production declined
by 17.7% and 24.0% compared to 1Q25 due to lower throughput at the smelter,
resulting from corrective shutdowns in the sinter and furnace areas, as well as lower
grades in the concentrate feed mixtures. In contrast, refined zinc production increased
by 14.7% due to a higher volume of concentrates treated at the zinc plant, which had
been undergoing its scheduled annual maintenance shutdown during 1Q25.The chemical
business recorded an increase in sodium sulfate production (+8.6%) thanks to
operational continuity at the plants, which during 1Q25 was affected by power outages
and lower demand from the detergent sector. Magnesium oxide volume also achieved
higher production (+22.9%) due to a recovery in demand for certain varieties, primarily
refractory and caustic grades. Magnesium oxide production increased slightly (+1.3%)
as brine production in ponds rose during the solar evaporation months. Regarding the
ammonium sulfate byproduct, higher production by +97.9% was due to increased
demand in the fertilizer market, although the strategy remains to reduce its production
to pivot plant capacity toward more profitable products.
The financial results for the period were bolstered by high gold, silver, and copper prices,
which—combined with higher sales volumes of copper matte, concentrates, and chemical
products—offset lower sales volumes of silver, gold, zinc, and lead. The appreciation of
the peso against the U.S. dollar impacted production costs and operating expenses (since
approximately 50% of costs and expenses are denominated or incurred in local
currency). The cost of sales grew due to the higher cost of metal sold, resulting from
high metal prices, as well as higher production costs driven by both the aforementioned
exchange rate effect and the resumption of operations at Tizapa and increased
maintenance and repair work. Operating expenses further increased due to higher fees
paid, extraordinary mining rights, and a faster pace in exploration activities. Additionally,
other income was recorded, contrasting with the other expenses from the same period
last year, and the financial and exchange rate results were favorable. Finally, the
provision for income taxes increased due to higher taxable income and the unfavorable
effect of the exchange rate appreciation against the dollar on the deferred tax provision.
Due to the factors described above, the financial results obtained by the Company in
1Q26 and their variation compared to 1Q25 were as follows (figures in millions): Net
Sales US$ 3,444.5 (+91.6%), Gross Profit US$ 1,696.1 (+176.7%), EBITDA US$
1,635.4 (+159.8%), Operating Income US$ 1,478.6 (+221.4%), and Net Income
attributable to the Controlling Interest US$ 665.0 (+257.7%).
2
I. FINANCIAL RESULTS
The Company's consolidated financial statements were prepared in accordance with
International Financial Reporting Standards ("IFRS") issued by the International
Accounting Standards Board ("IASB"). The analysis of the consolidated financial
statements is presented in millions of US dollars (US$), which is Peñoles' functional
currency, and the figures for 1Q26 are compared with those for 1Q25, except where
otherwise indicated.
FINANCIAL HIGHLIGHTS:
(Million US$) 1Q'26 1Q25 % Chg
Invoiced sales 3,440.0 1,798.0 91.3
Net sales (1) 3,444.5 1,798.0 91.6
Gross profit 1,696.1 612.9 176.7
% of Sales 49.2% 34.1%
EBITDA (2)(3) 1,635.4 629.6 159.8
% of sales 47.5% 35.0%
Operating profit (3)
1,478.6 460.1 221.4
% of sales 42.9% 25.6%
Other (Expenses) Income
(4) 4.1 -6.6 n.a
Financial income
-9.4 -31.7 70.4
(expenses), net
Net income (loss)
665.0 185.9 257.7
Controlling interest
% of sales 19.3% 10.3%
(1) Includes hedging results.
(2) Income before interest, taxes, depreciation, and amortization.
(3) Does not include other income (expenses).
(4) Includes impairment of fixed assets.
INCOME STATEMENT:
The following chart shows the variation in each income statement item and its influence
on the change in net income for 1Q26 compared to 1Q25:
3
(1) Includes the effect of metal prices on Sales and Cost of Metal, as well as the variation in hedging
results.
(2) Cost of Metal is presented net of Treatment Charges, Profit on inventories, and other items.
Represents the volume effect, excluding the effect of metal prices -included in item (1) above.
(3) Includes financial income and expenses and exchange rate results.
(4) Includes impairment of long-lived assets.
(5) Includes variation from the sale of other products and services.
The variations are explained below:
Net Sales for 1Q26 totaled US$ 3,444.5, representing a 91.6% increase (+US$ 1,646.5)
compared to those obtained in 1Q25, due to the following reasons:
• Higher realized prices (+US$ 1,798.1): primarily in the sale of silver, gold, and
concentrates followed by better prices for copper matte and, to a lesser extent,
sodium sulfate, copper, and lead; these offset a slight decrease in the price of
magnesium oxide.
• Lower sales volumes (US$ 165.0): of silver, gold, zinc, and lead, mitigated by
higher sales volumes of copper matte, concentrates, and chemical products.
• Higher revenues from the sale of other products and services (+US$ 8.9).
• The above was accompanied by a favorable variation in metal hedging results
(+US$ 4.5).
The Cost of Sales amounted to US$ 1,748.4, which is +47.5% above that recorded
during 1Q25. The increase of +US$ 563.3 was due to the following:
• Higher Cost of Metal sold (+US$ 506.9): mainly due to the higher cost and sales
volume of copper matte during 1Q26 and higher metal prices— especially for
silver and gold—in materials purchased from third parties for metallurgical
operations, which was partially offset by lower purchase volumes.
• Higher Production Cost (+US$ 112.4): due to the following reasons: (i) the
unfavorable effect of the peso's appreciation against the U.S. dollar on peso-
denominated costs (approximately 50% of production costs are denominated in
local currency); (ii) operating costs at the Tizapa mining unit, whose operations
were suspended due to a strike in 1Q25; (iii) higher maintenance and repair
4
costs; and (iv) higher electricity consumption in operations, primarily at the zinc
plant due to increased production.
The variations by cost items are detailed below:
o Maintenance and repairs (+US$ 39.2, +37.1%): due to repair work carried
out at mining units, primarily at Saucito, Tizapa, Herradura, and Fresnillo,
as well as at the metallurgical plants.
o Human Capital (+US$ 31.4, +31.8%): the increase was mainly due to the
effect of a lower average exchange rate of the peso against the dollar, as
well as the operations at Tizapa and higher benefits.
o Contractors (+US$ 21.8, +21.1%): due to development work at mining
units, particularly at Saucito, Fresnillo, and Tizapa.
o Operating materials (+US$ 18.2, +19.2%): resulting from higher
consumption at Tizapa due to the resumption of its operations, increased
use of "estabilical" at the metallurgical operations' zinc plant, as well as
safety equipment, reagents, and lead for alloys.
o Energy (+US$ 16.5, +17.7%): mainly due to higher costs for diesel and
natural gas, as well as higher electricity consumption at the zinc plant.
o Depreciation and amortization (-US$ 13.3, -8.0%): primarily due to lower
depreciation charges at Fresnillo plc mining units.
Low-value leases (-US$ 0.3, -3.3%): due to fewer IT equipment leases
at mining units, mainly Juanicipio, San Julián, and Herradura.
Other items (-US$ 1.2, -2.9%): due to a lower byproduct transfer
charge, which offset higher raw material consumption, increased freight
costs, survei

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