| | Published : January 15th, 2009 | in the News: Proactive Investors |
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Re: Fortuna in the News: Proactive Investors - Wednesday, January 14, 2009 Title: Fortuna Silver's strong balance sheet bodes well for continued growth
by Ian Mclelland
Since formation in 2004, Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: FVI) has undergone the transformation from would-be producer to producer, and now looks set to substantially build its production profile with a second asset in Mexico.
Fortuna Silver has made the move from explorer to producer when it acquired the Caylloma Silver- Lead-Zinc Mine in Peru from Hochschild Mining (LSE: HOC) in 2005, while it was on care and maintenance. The rest is history, so to speak, as Fortuna moved the mine back into production in October 2006, buoyed by high commodity prices until early 2008.
However, the company was not immune from the substantial correction in metals in the second half of 2008, and along with its peers, was pulled down on negative sentiment towards the sector.
This massive correction in the share price doesn't reflect the underlying potential of the company, however. Fortuna is still ramping up production at Caylloma, which is forecast to produce approximately 1.5 million ounces of silver in 2009 plus lead and zinc. Assuming US$10/ounce silver, US$1100/tonne zinc and US$950/tonne lead, around 40-45% of total revenues will come from silver, and a tonne of rock will be worth around US$72. Fortuna is also adding a copper circuit, which will add additional by product credits.
In November Fortuna released third quarter results which highlighted the progress being made at Caylloma. Fortuna reported revenues of C$7.79 million for the quarter and C$22.47 million for the first nine months. Production throughput increased by 37% over the same quarter in 2007, at 89,827 tonnes of treated ore producing 243,280 ounces of silver, 2,139 tonnes of lead and 2,877 tonnes of zinc. The company also recorded its best recoveries yet, with metallurgical recoveries of 80.07%, 92.19% and 88.11% for silver, lead and zinc respectively. Cash cost per production tonne was US$44.33. Net loss for the quarter was only C$0.31 million versus C$3.39 million a year earlier.
Fortuna reported revenues of C$7.79 million for the quarter and C$22.47 million for the first nine months, which were down on last year - not surprising on the lower prices realised for zinc and lead in particular. The good news is that the mine is washing its face despite the savage correction in metal prices. Using the assumed metal price scenario, Caylloma is expected to have approximately US$27 million in revenues for 2009 with a free cash flow of approximately US$2.5 million. In other words, the mine generates sufficient operating margins as to fund its investment activities for 2009 without requiring corporate funding. The better news is that Fortuna Silver, as of end of September 2008, is sitting on a C$41.2 million cash pile and has no need to come back to the markets in 2009.
Fortuna's solid track record at Caylloma also bodes well for the company's ability to move an operation into production, as it has proved it has the skills and experience to deliver results.
This is largely down to Jorge Ganoza's, Fortuna Silver's CEO, ability to assemble a competitive and committed group of executives that make up Fortuna's Management team. Jorge is a geological engineer, who comes from a Peruvian family with a long history of operating mines in Central and South America.
What Mr. Ganoza understands is that if you want to focus on silver production, there are two countries you need to be looking at - Peru and Mexico - which are the top two silver producers in the world, and conveniently, both countries have a long history of supporting mining.
So it shouldn't come as any surprise that Fortuna's second asset, the San Jose Silver-Gold Project lies in Mexico. While Mexico is well known for its precious metal mining potential, Fortuna's project lies in a less well known region, the Taviche Mining District in the state of Oaxaca, in southern M�xico.
Fortuna initially optioned San Jose from Continuum Resources, a fellow TSX company, but recently announced that it was acquiring its smaller partner, taking its equity stake to 100%. San Jose certainly is shaping up nicely for Fortuna Silver. Drilling results have continued to confirm continuity of the high grade epithermal veins. Mining operations, according to Fortuna, are likely to commence in late 2010 or early 2011, assuming there are no major hiccups along the way. The project is on early stages of engineering and the preliminary capital expenditure is expected to be in the region of US$30 million, based on a 1000 tonnes per day operation producing around 5.5 million ounces of silver equivalent ounces per annum. Widths of the veins, information gathered from over 70,000 meters of drilling and a decline recently put in, suggest the mine will be able to use mechanized mining methods, and Fortuna is looking at bringing in a contractor to operate.
The three obvious hurdles at San Jose will be securing financing for the mine, sourcing a reliable supply of fresh water and ensuring good support from the local community who aren't as familiar with mine developments as their cousins further north.
A revised 43-101 resource estimate at San Jose is expected in the second quarter of 2009, which should reflect an upgrade from the inferred to the indicated category. The San Jose deposit contains approximately 67 million silver equivalent ounces out of which 17.7 million ounces are in the Indicated / Measured category and 49.1 million ounces are in Inferred the category.
Fortuna Silver does have a fair old whack of warrants outstanding, but they are way out of the money ($2.30) as are a fair few options granted to directors. Fortunately for shareholders, the company doesn't need the money from the warrants to accomplish its near term objectives.
Major shareholders include Sprott Asset Management in Toronto and Tocqueville Asset Management in New York City, but overall Fortuna Silver benefits from a substantial private investor following, with around 60% of the company's stock held by retail investors. That equates to decent liquidity, which is good news for investors who like to see clear entry and exit points.
>From an outsider looking in, it's hard not to like Fortuna Silver. The company has delivered on its goals, and the balance sheet is in fine order. Nowadays, cash is king, and this company has plenty, which puts it in an enviable position to many of its peers who are struggling to stay afloat.
Copyright � 2009 FORTUNA SILVER MINES INC. (FVI) All rights reserved. For more information visit our website at http://www.fortunasilver.com/ or send email to news@goldgroup.com ..
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Fortuna Silver Mines Inc.
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PRODUCER |
CODE : FVI.TO |
ISIN : CA3499151080 |
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ProfileMarket IndicatorsVALUE : Projects & res.Press releasesAnnual reportRISK : Asset profileContact Cpy |
Fortuna Silver is a gold and silver producing company based in Canada. Fortuna Silver produces gold, silver, copper, lead and zinc in Mexico and in Peru. Its main assets in production are CAYLLOMA in Peru and SAN JOSE PROJECT in Mexico and its main exploration properties are MARIO PERU in Peru and TLACOLULA in Mexico. Fortuna Silver is listed in Canada, in Germany and in United States of America. Its market capitalisation is CA$ 1.0 billions as of today (US$ 773.2 millions, € 695.5 millions). Its stock quote reached its lowest recent point on September 15, 2000 at CA$ 0.14, and its highest recent level on November 04, 2016 at CA$ 9.99. Fortuna Silver has 158 850 000 shares outstanding. |
In the News and Medias of Fortuna Silver Mines Inc. |
Annual reports of Fortuna Silver Mines Inc. |
Financings of Fortuna Silver Mines Inc. |
Option Grants of Fortuna Silver Mines Inc. |
Nominations of Fortuna Silver Mines Inc. |
Financials of Fortuna Silver Mines Inc. |
Project news of Fortuna Silver Mines Inc. |
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Corporate news of Fortuna Silver Mines Inc. |
8/19/2016 | Research Reports Initiated on Silver Stocks Excellon Resourc... |
7/28/2016 | Fortuna Completes Acquisition of Goldrock Mines Corp. |
7/27/2016 | Fortuna announces retirement of director |
7/25/2016 | Goldrock Shareholders Approve Acquisition by Fortuna Silver ... |
7/12/2016 | Fortuna reports production of 1.6 million ounces of silver a... |
7/11/2016 | Fortuna announces changes in management |
7/6/2016 | Fortuna commissions 3,000 tpd mill expansion on-time and und... |
6/20/2016 | Early Warning Report |
6/17/2016 | Fortuna Reports Results of Annual General Meeting |
6/7/2016 | Fortuna to acquire Goldrock Mines Corp. Sourcing continued l... |
5/10/2016 | Fortuna reports consolidated financial results for the first... |
5/9/2016 | Fortuna meets 1Q profit forecasts |
5/2/2016 | Fortuna to release first quarter financial results on May 9,... |
4/13/2016 | Fortuna reports production of 1.6 million ounces of silver a... |
3/29/2016 | Fortuna files Form 40-F, Annual Report |
3/24/2016 | Fortuna Updates Reserves and Resources |
12/16/2015 | Fortuna provides year-end update for the San Jose Mine, Mexi... |
11/2/2015 | Fortuna to release third quarter financial results on Novemb... |
9/2/2015 | Falling Earnings Estimates Signal Weakness Ahead for Fortuna... |
8/18/2015 | DuSolo Announces Bridge Loan Facility and Board Restructurin... |
8/7/2015 | Fortuna Reports Consolidated Financial Results for the Secon... |
8/7/2015 | Fortuna to Host Second Quarter 2015 Earnings Conference Call... |
7/30/2015 | Fortuna to release second quarter financial results on Augus... |
7/28/2015 | Why Fortuna Silver Mines (FSM) Could Be Positioned for a Slu... |
7/15/2015 | Fortuna reports production of 1.7 million ounces of silver a... |
6/19/2015 | Fortuna Reports Results of Annual General Meeting |
4/13/2015 | Fortuna reports production of 1.6 million ounces of silver a... |
4/10/2015 | NYSE stocks posting largest percentage increases |
3/30/2015 | Fortuna amends and expands $40 million credit facility |
3/30/2015 | Amends and Expands $40 Million Credit Facility |
3/28/2015 | Fortuna files Form 40-F, Annual Report |
3/27/2015 | Fortuna Files Form 40-F, Annual Report |
3/13/2015 | Fortuna reports consolidated financial results for 2014 |
3/12/2015 | Fortuna to Host Fourth Quarter and Fiscal Year 2014 Earnings... |
3/10/2015 | Fortuna Updates Reserves and Resources: Silver Contained in ... |
3/10/2015 | s Reserves and Resources: Silver Contained in Reserves Incre... |
3/10/2015 | Fortuna Updates Reserves and Resources: Silver Contained in ... |
3/3/2015 | Fortuna to release 2014 yearend financial results on March 1... |
3/3/2015 | Fortuna to Release 2014 Yearend Financial Results on March 1... |
1/21/2015 | Fortuna Intercepts 1,282 g/t Ag and 8.1 g/t Au Over 4.6 Mete... |
1/15/2015 | Fortuna reports 2014 record production of 8.7 million silver... |
1/15/2015 | Reports 2014 Record Production of 8.7 Million Silver Equival... |
1/15/2015 | Fortuna Reports 2014 Record Production of 8.7 Million Silver... |
12/17/2014 | Fortuna announces expansion of its San Jose Mine from 2,000 ... |
12/17/2014 | Fortuna Announces Expansion of Its San Jose Mine From 2,000 ... |
11/11/2014 | Fortuna reports consolidated financial results for the third... |
11/11/2014 | Fortuna meets 3Q profit forecasts |
11/10/2014 | Fortuna to Host Third Quarter 2014 Earnings Conference Call ... |
11/4/2014 | Fortuna to release third quarter financial results on Novemb... |
11/4/2014 | Fortuna to Release Third Quarter Financial Results on Novemb... |
10/9/2014 | Fortuna Reports Production of 1.8 Million Ounces of Silver a... |
8/27/2014 | Fortuna Silver Reports Updated Mineral Resource Estimate for... |
8/12/2014 | Fortuna Reports Consolidated Financial Results for the Secon... |
8/12/2014 | Fortuna to Host Second Quarter 2014 Earnings Conference Call... |
8/5/2014 | Fortuna to Release Second Quarter Financial Results on Augus... |
7/14/2014 | Fortuna Intercepts 854 g/t Ag and 5.0 g/t Au Over 3.3 m in T... |
7/14/2014 | Fortuna Intercepts 854 g/t Ag and 5.0 g/t Au Over 3.3 m in T... |
7/10/2014 | Fortuna Reports Production of 1.6 Million Ounces of Silver a... |
3/18/2014 | Fortuna reports consolidated financial results for 2013 |
3/11/2014 | Fortuna to release 2013 year-end financial results on March ... |
2/18/2014 | s Reserves and Resources; Silver =?ISO-8859-1?Q?=20in=20Infe... |
1/21/2014 | Drills Step-out Hole of 3=2E5 kg/t Ag and 15 g/t Au Over a T... |
12/17/2013 | Season's Greetings from Fortuna Silver Mines Inc. |
11/25/2013 | Step-out drilling extends high-grade mineralization at Fortu... |
11/25/2013 | Step-out drilling extends high-grade mineralization at Fortu... |
11/25/2013 | Step-out drilling extends high-grade mineralization at Fortu... |
10/30/2013 | Fortuna Silver to release third quarter financial results on... |
10/30/2013 | to release third quarter financial results on November 5, 20... |
10/17/2013 | Fortuna Silver increases San Jose silver reserves by 22% and... |
10/15/2013 | reports production of 1,104,914 ounces of Ag and 4,515 ounce... |
9/23/2013 | completes 1,800 tpd mill expansion on-time and on-budget at ... |
8/7/2013 | Fortuna Silver to release second quarter |
8/7/2013 | to release second quarter financial results on August 12, 20... |
6/18/2013 | upgrades mill expansion at San Jose from 1,500 to 1,800 tpd |
5/13/2013 | (Caylloma)discovers new high grade vein at Caylloma mine; Drilling int... |
5/8/2013 | reports cash flow of US$16.3 million and net income of US$6.... |
5/2/2013 | Fortuna Silver to release first quarter financial results on... |
5/2/2013 | to release first quarter financial results on May 7, 2013; C... |
4/22/2013 | drills 7.3 m of 1789 g/t Ag and 10 g/t Au on northern extens... |
3/18/2013 | to release 2012 year-end financial results on March 20th, 20... |
2/12/2013 | Fortuna Silver Mines- Sustainability Case Study: Collaborati... |
2/7/2013 | launches new sustainability section on website |
1/14/2013 | beats guidance, reports record production of 5.2 million sil... |
11/8/2012 | Reports Cash Flow of US$19.95 Million and Net Income of US$8... |
10/23/2012 | to present at The Silver Summit 10th Anniversary Conference ... |
10/12/2012 | reports record production of 1,027,741 ounces of silver and ... |
7/3/2012 | (Tlacolula)Reports High-Grade Gold and Silver Values at Radius's Tlacol... |
5/17/2012 | Fortuna Silver Mines Launches New Website |
9/15/2011 | to Begin Trading on the New York Stock Exchange on September... |
8/29/2011 | Applies for NYSE Listing |
7/20/2011 | Reports Production Figures for Second Quarter 2011 |
5/14/2011 | Reports Net Income of US$4.78 Million on Revenue of US$21.67... |
1/13/2011 | Increases Silver Production by 13% in 2010 and Issues Produc... |
1/13/2011 | Increases Silver Production by 13% in 2010 and Issues Produc... |
3/22/2010 | Operating Income of US$ 14.38 Million and Net Income of US$ ... |
3/19/2010 | 4rth Quarter 2009 Results Conference Call |
1/18/2010 | Increases silver production by 96% in 2009, issues productio... |
1/6/2010 | Signs commitment letter for US $20 Million credit facility |
11/13/2009 | Reports Record Revenue of US$ 13.23 Million and Mine Operati... |
9/23/2009 | Options Tlacolula Silver Project In Mexico From Radius Gold ... |
8/12/2009 | Reports Net Income of US$ 1.2 Million and Cash from Operatio... |
7/16/2009 | Upgrades Reserves to 20.3 Million Ounces of Silver at the Ca... |
5/19/2009 | Reports Record Revenue of US$ 8.98 Million and a Production ... |
2/25/2009 | Continuum Shareholders Approve Arrangement |
1/30/2009 | Announces Resignation of Director |
1/27/2009 | Acquisition Circular Mailed |
1/15/2009 | in the News: Proactive Investors |
1/15/2009 | Reports Commercial Concentrate Grades of 135g/t Gold and 17,... |
11/17/2008 | Reports for Q3 2008: Net loss of $0.31 million, positive ope... |
9/25/2008 | San Jose In-Fill Drilling Returns 29.1m @ 6.8 g/t Au + 933 g... |
9/12/2008 | Attends the Silver Summit |
8/18/2008 | Reports Net Income Of $2.39 Million, Revenue Of $7.85 Millio... |
8/15/2008 | To Acquire Continuum Resources And 100% Of San Jose Project,... |
7/2/2008 | Peruvian Operations Not Affected By National Strike |
6/25/2008 | Provides Corporate Update |
6/16/2008 | consolidates concession ownership at San Jose Project, Mexic... |
5/22/2008 | Reports 1Q 2008 Revenue of $6.83 million, Net Loss of $0.64 ... |
5/21/2008 | discovers extention to Animas Vein at Caylloma Mine, Peru |
4/18/2008 | Reports Operating Cash Flow of $13.24 million on Revenue of... |
11/16/2007 | Reports Revenue Of $9.2 Million, Operating Cash Flow Of $3.... |
10/25/2007 | Hires VP Project Development for San Jose |
10/11/2007 | Retains Investor Relations Consultants |
10/11/2007 | Warrant Exercises Increase Cash Position to Cdn $44 million |
8/30/2007 | 's Chairman, Simon Ridgway, Interviewed by WallSt.net |
8/21/2007 | 'S Liquidity And Solvency Unharmed By Market Turmoil |
8/17/2007 | Caylloma Mine Unaffected By Earthquake |
8/16/2007 | Reports Revenue Of $8.8 Million, Operating Cash Flow Of $3.0... |
3/12/2007 | increases San Jose Ag-Au Resource: Silver equivalent 17.7 mi... |
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