FRES.L WACC - Weighted Average Cost of Capital
The WACC of Fresnillo PLC (FRES.L) is 9.1%.
| Range | Selected | |
| Cost of equity | 8.0% - 11.0% | 9.5% |
| Tax rate | 30.4% - 46.9% | 38.65% |
| Cost of debt | 4.5% - 4.6% | 4.55% |
| WACC | 7.7% - 10.5% | 9.1% |
| Category | Low | High |
| Long-term bond rate | 4.0% | 4.5% |
| Equity market risk premium | 6.0% | 7.0% |
| Adjusted beta | 0.67 | 0.86 |
| Additional risk adjustments | 0.0% | 0.5% |
| Cost of equity | 8.0% | 11.0% |
| Tax rate | 30.4% | 46.9% |
| Debt/Equity ratio | 0.06 | 0.06 |
| Cost of debt | 4.5% | 4.6% |
| After-tax WACC | 7.7% | 10.5% |
| Selected WACC | 9.1% | |
| Debt/Equity | Unlevered | |||
| Peers | Company Name | ratio | Beta | beta |
| FRES.L | Fresnillo PLC | 0.06 | 0.81 | 0.78 |
| BRD.L | Bluerock Diamonds PLC | 2.75 | 0.26 | 0.09 |
| EUA.L | Eurasia Mining PLC | 0 | 1.58 | 1.58 |
| GEMD.L | Gem Diamonds Ltd | 2.07 | 1.21 | 0.5 |
| KDR.L | Karelian Diamond Resources PLC | 0.09 | 1.54 | 1.45 |
| PDL.L | Petra Diamonds Ltd | 8.63 | -0.02 | 0 |
| POLY.L | Polymetal International PLC | 1.03 | 1.27 | 0.75 |
| SLP.L | Sylvania Platinum Ltd | 0 | 1.19 | 1.19 |
| SRES.L | Sunrise Resources Plc | 0.26 | 0.55 | 0.47 |
| VAST.L | Vast Resources PLC | 0.55 | -0.74 | -0.53 |
| Low | High | |
| Unlevered beta | 0.49 | 0.76 |
| Relevered beta | 0.51 | 0.79 |
| Adjusted relevered beta | 0.67 | 0.86 |
FRES.L's CAPM model and how its cost of Equity is calculated
The Cost of Equity reflects the return a company needs to deliver to shareholders to justify the risk of investing in its shares. It’s computed using the Capital Asset Pricing Model (CAPM), which blends the risk-free rate, the stock’s beta, and the market risk premium.
This method evaluates the stock’s risk compared to a safe investment and the market’s overall volatility.
Here’s how we figure out the cost of equity for FRES.L:
cost_of_equity (9.50%) = risk_free_rate (4.25%) + equity_risk_premium (6.50%) * adjusted_beta (0.67) + risk_adjustments (0.25%)
We include the risk adjustments, which range from 0% to 1%, to keep our WACC conservatives, especially for companies traded in developing markets.