Silver production may be under the radar of some small cap investors, which is why it’s timely to point out that one Vancouver-based silver producer is making steady, if not spectacular progress in its search for the shiny metal.
Fortuna Silver Mines Inc. (TSX-Venture:FVI) came out in mid-April with production figures for the first quarter 2010. Included was a 30% increase over the same quarter as the year before, in terms of silver production, to more than 479,000 ounces. Lead production inched ahead 1.5% to 5.9 million ounces over the same period, and copper production jumped 213% to 295,000 ounces. To be fair, the company did not boost its zinc production, which tailed off about 1% over Q1 2009 to 6.8 million ounces.
FVI attributes its hefty silver production to improved grades in production stopes with respect to the mine plan and contribution of development material from the new high grade discovery made in the upper levels of the Caylloma vein in southern Peru. Exploration drilling of this discovery is ongoing concurrent with stope preparation for production.
The increased results in the field are making their way to the bottom line. FVI’s 2009 operating income came in at $14.38 million U.S., compared to a loss of $5.59 million U.S. in 2008, on sales of $51.4 million, compared to 2008’s figure of $24.9 million U.S. Net income for 2009 was $620,000 U.S., compared to a loss of $910,000 U.S. the year before.
CEO Jorge Ganoza proclaims "2010 is an even more exciting year for the Company as we are already working on pre-construction activities with the aim of commissioning our second underground mine at San Jose in Mexico in the third quarter of 2011."
Fortuna, a growth-oriented, silver and base metal producer focused on mining opportunities in Latin America, has as its primary assets Caylloma, as well as the San Jose Silver-Gold Project in Mexico. San Jose is a high-grade silver and gold-bearing epithermal vein system.
FVI is advancing with engineering studies for the development of the San Jose deposit including mine and processing plant design, tailings dam engineering as well as evaluating power and water supply alternatives. Fortuna is selectively pursuing additional acquisition opportunities.
Acquiring FVI stock is only slightly easier now than it was soon after the beginning of calendar 2010, for that’s when the stock peaked for the last 52 weeks at $3.01, almost exactly six months after troughing at 77 cents a share.
The news of increased production in Caylloma gave the stock a boost to $2.82 per share, still attractive to the budget-wise investors, but also high enough to get that would-be investor’s attention.
