"After a difficult 12 months, FRES needs to deliver on operational targets and show results from its investments in the mines. We believe this would allow the company to re-rate and earn back its historical premium," said analysts with the New York investment bank.

At the Fresnillo mine, the company is implementing a cavity monitoring system, increasing infill drilling and bringing in a US$23 million tunnel boring machine (TBM) to improve development work as it seeks to counter the impact of declining grades and increasing dilution as the mine deepens caused by narrower veins and greater ore variability. The TBM will generate 300m of development a month and enable other development faces to be opened.

The company also expects to complete the extension of the $35 million San Carlos shaft at the end of 2020 which it believes will unlock more than 50% of the mine's reserves by providing a more economical method of transporting ore from deeper levels to the surface processing plant. This development will include a vertical conveyor to reduce the haulage fleet, and improve ventilation and safety.

In the second half of 2020, Fresnillo also aims to complete the second phase of the Pyrites flotation plant for historical and ongoing tailings. Together with the completed phase 1 Saucito tailings project, it should produce 3.5 million ounces of silver per year.

The existing Fresnillo plant is also being expanded to 9,000 tonnes per day with a delivery target of the third quarter of 2020.

Saucito faces similar challenges of declining silver grades and increasing base metal grades and is implementing similar solutions. Infill drilling is being stepped up and the Jarillas shaft is being deepened from 630m to 1,000m in 2024, with 8,200tpd capacity. As at Fresnillo mine, benefits are expected gradually rather than a step change.

With the challenges at its existing operations, the development of the Juanicipio joint venture project with MAG Silver has increased significance. With production due to commence in late 2020, Juanicipio is due to annually produce 12Moz of silver and 44,000oz of gold over an initial 12-year mine life.

Shares in Fresnillo are trading at £7.42, valuing the company at £5.4 billion.