In August, Fortuna Silver Mines reported financial results for the second quarter, initially providing a bump in share price as the stock flirted with making a new two-and-a-half-year high.
Subsequently, the shares have fallen about 30% with slumping silver and gold prices not doing the company any favors.
Incidentally, during the second quarter Fortuna Silver Mines (TSX:FVI) (NYSE:FSM) reported production of 1.63 million ounces of silver and 8,519 ounces of gold. The production comes from Fortuna’s two primary assets: the Caylloma silver mine in southern Peru and the San Jose silver-gold mine in Mexico. Silver production was particularly improved at the San Jose Mine, rising to 1.1 million ounces in Q2 from 580,570 ounces in the year prior quarter. Silver production at Caylloma increased from 493,422 ounces to 529,011 ounces year-over-year.
Late in September, Fortuna updated the Mineral Reserve and Mineral Resource estimates at the San Jose Mine. Proven and Probable reserves total 4.3 Mt containing an estimated 31.2 million ounces of silver and 243,000 ounces of gold. That was a 26% increase in contained silver ounces (and 13% for gold). Inferred Resources were 7.1 Mt, containing 58.9 million ounces of silver and 401,000 ounces of gold, representing a 67% jump in the silver category and 47% for gold compared to a resource estimate in July 2013.
Today, the company said that total production across its two mines increased again in the third quarter. Across the three months, silver production at Caylloma rose to 588,727 ounces, compared to 568,722 ounces in Q3 2013, for an increase of 3.5% year-over-year and
11.3% quarter-over-quarter. At the San Jose Mine, silver production was 1.215 million ounces, versus 536,191 ounces in the year prior quarter, marking an increase of 126.6% year-over-year and 10.5 percent compared to Q2.
Total silver production for the third quarter was 1.8 million ounces, compared to 1.1 million ounces in the third quarter last year, equaling a 63% increase.
Gold production was 399 ounces at Caylloma and 9,352 ounces at San Jose for a total of 9,751 ounces for the quarter. That compares to 4,515 ounces in Q3 2013. Lead production at Callyoma dropped to 4.2 million pounds from 4.73 million pounds, while zinc production rose to 7.1 million pounds from 6.4 million pounds in the year earlier quarter. No lead or zinc are produced at the San Jose Mine. According to the company, the increase in zinc production has mitigated the impact of declining silver prices, as silver is down by 22% in 2014 while zinc is up 22%.
So far in 2014, Fortuna has produced five million ounces of silver and 26,420 ounces of gold.
At the current pace, production will outpace annual guidance by 9% and 8%, respectively.
"It is with great satisfaction that we see how our teams continue to capture opportunities to improve on our cost performance and annual production guidance. This operating performance translates directly to our bottom line results,” Fortuna President and CEO Jorge Ganoza said in a statement today.
Ganoza further commented that the company is working towards a goal to increase capacity to 3,000 tones per day at the San Jose Mine by mid-2016 as part of a target of consolidated annual production of 9 million ounces of silver and 50,000 ounces of gold.
Toronto-listed shares of Fortuna dipped as low as $4.14 last Friday, hitting the lowest level for the stock since late in May. The stock had a sharp climb on Wednesday ahead of the news today, rising 11.6% to close the day at $4.80.
