Saturday, November 12, 2011

Fortuna Silver Mines (FSM)

Fortuna Silver Mines is a junior Silver and Gold producer that is moving up towards Mid tier status. Their flagship mine is in Peru and have just went into commercial production on their San Jose mine in Mexico. See their website for details.

Here is a weekly chart of FSM with consolidation periods marked with the blue boxes.

If the spot price of Silver continues to appreciate from here, most solid junior and mid tier Silver miners should follow the uptrend. This may send miners like FSM to new yearly highs. The RSI on the daily and weekly charts are on the rise and may attain the 70+ overbought zone in a few weeks (?)  The stock has been in a trading range for the 2011 year and may be poised to breakout with the San Jose mine in production.

Excerpt from their 3rd quarter earnings report: 
VANCOUVER, Nov. 10, 2011 Fortuna Silver Mines Inc. is pleased to announce that it has filed its financial statements and MD&A for the three months ended September 30, 2011. The documents are available on SEDAR and have also been posted on the Company's website at 

Third quarter 2011 financial highlights:
Record net income of US$10.31 million, compared to a loss of US$0.77 million in Q3 2010
Revenue of US$32.08 million, compared to US$17.88 million in Q3 2010
Cash flow from operations before changes in non-cash working capital of US$18.21 million, compared to US$7.73 million in Q3 2010
Operating income of US$14.89 million, compared to US$1.03 million in Q3 2010
Cash position (including short term investments) and working capital as at September 30, 2011 were US$62.73 million and US$70.22 million respectively
Silver production of 660,749 ounces up from 474,489 ounces in 2010; silver accounted for 70% of revenue
Cash cost per silver ounce, net of by product credits, of US$1.45

See that last sentence in red above, they are getting Silver for US $1.45 and ounce!  (I'd like to trade some of my US fiat in at that price!)

This stock can be invested in for all three time frames, short, mid and long term depending upon one's investment philosophy. If you believe that the price of Silver will continue to appreciate going forward, this is one company to look into.  We cannot give buy or sell recommendations because we are not certified financial planners (CFP).  See full disclosure at the bottom of this page.
Position disclosure: At the time of this post (Nov 12th, 2011), long shares of FSM.

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