Gold and silver miner Fresnillo (LSE: FRES) has reported a significant rise in production in its third quarter. This has the potential to boost profitability, but is Fresnillo a buy after its 65% rise in the last six months?

Fresnillo’s gold production increased by 21% versus the same period of last year. This was as a result of higher volumes processed and higher ore grades at its Herradura and Noche Buena mines. It’s a good time for Fresnillo to boost gold production since the price of gold has risen significantly in 2016. In fact, it has been up over 20% versus its end of 2015 price at times this year. This should increase Fresnillo’s profitability alongside higher production levels.

Fresnillo’s silver production increased by a more modest 6.7% when compared to the same quarter of the prior year. However, it was down by 9.4% versus the second quarter of the current year due to expected lower ore grades and a lower recovery rate at its Saucito mine. As with gold, the price of silver has risen sharply in 2016. It’s currently up 26% in 2016 and this should contribute to an improved financial performance for Fresnillo.

In fact, Fresnillo’s bottom line is forecast to rise by 517% in the current year, followed by a further increase of 66% next year. This shows that the company’s ramp-up in production is set to have a major impact on its bottom line. And with Fresnillo trading on a price-to-earnings growth (PEG) ratio of 0.4, it continues to offer excellent value for money.

Clearly, the outlook for gold and silver prices is relatively uncertain. US interest rate rises are likely to rise over the coming months and this could cause investor demand for precious metals to come under pressure as they favour income producing assets. However, the US election and fears surrounding global economic growth could support demand over the medium-to-long term. As such, Fresnillo’s growth prospects beyond next year are still very bright.

Is Glencore a better bet?

However, Fresnillo isn’t the only mining company with growth potential. Sector peer Glencore (LSE: GLEN) is forecast to increase its bottom line by 50% next year. Its PEG ratio of 0.5 is slightly higher than Fresnillo’s, but still offers growth at a very reasonable price.

Glencore is making progress with its turnaround strategy. Alongside increasing commodity prices, it has made asset disposals, reduced costs and become a more financially stable business. This means that its risk profile is lower than it was previously and its long-term sustainability is much higher. And with it being a relatively well-diversified mining company, it offers less risk than many of its single-commodity sector peers.

In terms of which is the better buy, Fresnillo offers greater defensive characteristics than Glencore. That’s due to its close link to the price of gold, which has historically been viewed as a safe asset in times of financial crises. With the outlook for the global economy being uncertain, Fresnillo could prove to be an excellent defensive growth stock and is therefore a better buy than Glencore.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.