Can you stand way back and take a wider view pic to post? Seeing the fireplace in a wider context will get you much better input and advice.

How about doing it over something like a verdegris pressed tin?

Gatsby Ceramic 8"x8" Tin Look Tiles, Green, 10 Square Foot Box · More Info

Or just plain tile in a modern color

Wallingford Craftsman · More Info

Honestly, we need to see more of the room to understand your style. It would also help to explain what you mean by "modernize" - to some it means farmhouse style, to some it means minimalist, etc.... And, we need to have some idea on budget.

You didn't say you might change the tile - but here it is anyway:

Frame it, and drywall with plaster/stucco finish. Integral color plaster has a smooth finish, in almost any color.

Montecito Mid-Century Living Room · More Info

While not exactly like your situation, it is similar, maybe what I did will help you. I painted my tile, grout, trim, mantel and hideous mirror (glued massively well by previous owner to the wall) all the same white and painted the brassy color on the fireplace with high heat black paint and it helped a lot. It was pretty easy with the right primer.

Before:

After:

yours possibly:

There are all kinds of options and if you search Pintetest for painted fireplace tiles you may see something that suits your style and room. (Be sure the hearth is all one color.) If interested, suggest beefing up the entire fireplace and a used mantle/surround shouldn't be too hard to find.

For fun, went onto Marketplace.