Fortuna Silver is a mid-tier producer in Mexico and Peru. Fortuna is very similar to First Majestic Silver and Endeavour silver. All of them performed very well in 2010 and 2011. They all have low cash costs, very little debt, and substantial cash. And all of them are growing. This is why none of them are very cheap. Fortuna is selling at a FD market cap of $772 million. They will produce 8 million oz of silver in 2017, plus 50,000 oz of gold. Their all-in costs should be around $14 per oz, making them profitable.
They have $175 million in cash, and are growing organically. Their only red flag, besides not being cheap, is future growth. With only 45 million oz of silver reserves (150 gpt), they need more resources to keep up their growth pace. They have 90 million oz of silver resources, which is low for their market cap.
The key for this company is going to be exploration, or perhaps acquisitions. They have 9 exploration projects on their two large properties: Caylloma in Peru and San Jose in Mexico. They have a new high grade discovery (Trinidad North) that looks exciting. They bought Goldrock Mines in 2016 and their 3 million oz Lindero gold project. This will give them an additional 100,000 oz of gold production at low cash costs under $700 per oz (starting in 2018).
They are giving guidance to produce about 20 million oz of silver equivalent in 2018 at about $16 per oz all-in costs (free cash flow). A portion of this is from base metals. 8 million oz is silver, plus 150,000 oz for gold (9 million oz silver equivalent at 60 to 1). If they hit their cost targets, I would expect Fortuna to do very well.
Production scheduled for Q1 2015 at 110,000 oz per year. Cash cost should be below $800. Forecasted to be $650. All-In Costs should be below $1200 and perhaps below $1000. 3 million oz deposit (.5 gpt).
Production scheduled for Q1 2015 at 110,000 oz per year. Cash cost should be below $800. Forecasted to be $650. All-In Costs should be below $1200 and perhaps below $1000. 3 million oz deposit (.5 gpt).
Part of the Lindero property. Only 15% of the property has been explored. They will likely find more gold to extend the mine life.
Total Land Package Size (ha):
3,500
Profitability (by resource)
Proven & Probable
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
Percentage Gold:
75.57%
77.09%
n/a
1.52%
Percentage Silver:
24.43%
22.91%
n/a
-1.52%
Total (Gold Eq. Oz.):
2.65M
2.59M
n/a
-0.05M
Total (Silver Eq. Oz.):
184.19M
196.40M
n/a
12.21M
P
L
A
U
S
I
B
L
E
Gold Eq. Oz.:
2.28M
2.24M
n/a
-0.05M
Silver Eq. Oz.:
158.81M
169.19M
n/a
10.38M
Maximum Profit (Gold):
$327.01M
$420.19M
n/a
$93.18M
Maximum Profit (Silver):
$158.19M
$126.72M
n/a
$-31.47M
Total Maximum Profit:
$485.21M
$546.91M
n/a
$61.71M
Max Profit / Current MCap:
0.581
0.760
n/a
0.179
Max Profit Per Share (Gold):
$2.04
$2.63
n/a
$0.58
Max Profit Per Share (Silver):
$0.99
$0.79
n/a
$-0.20
Total Max Profit Per Share:
$3.03
$3.42
n/a
$0.39
Total Free Profit Per Share:
$0.00
$0.00
n/a
$0.00
FD Mkt. Cap / Gold Eq.:
$366.00
$322.15
n/a
$-43.86
FD Mkt. Cap / Silver Eq.:
$5.26
$4.26
n/a
$-1.00
FD Mkt. Cap / Per Metal as % Spot Price:
29.68%
25.06%
n/a
-4.62%
Measured & Indicated
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
Percentage Gold:
76.65%
78.12%
n/a
1.47%
Percentage Silver:
23.35%
21.88%
n/a
-1.47%
Total (Gold Eq. Oz.):
3.26M
3.20M
n/a
-0.06M
Total (Silver Eq. Oz.):
226.98M
242.25M
n/a
15.27M
P
L
A
U
S
I
B
L
E
Gold Eq. Oz.:
2.70M
2.65M
n/a
-0.05M
Silver Eq. Oz.:
188.23M
200.69M
n/a
12.46M
Maximum Profit (Gold):
$392.41M
$504.23M
n/a
$111.81M
Maximum Profit (Silver):
$180.69M
$144.75M
n/a
$-35.94M
Total Maximum Profit:
$573.11M
$648.97M
n/a
$75.87M
Max Profit / Current MCap:
0.686
0.901
n/a
0.215
Max Profit Per Share (Gold):
$2.45
$3.15
n/a
$0.70
Max Profit Per Share (Silver):
$1.13
$0.90
n/a
$-0.22
Total Max Profit Per Share:
$3.58
$4.06
n/a
$0.47
Total Free Profit Per Share:
$0.00
$0.00
n/a
$0.00
FD Mkt. Cap / Gold Eq.:
$308.79
$271.59
n/a
$-37.21
FD Mkt. Cap / Silver Eq.:
$4.44
$3.59
n/a
$-0.85
FD Mkt. Cap / Per Metal as % Spot Price:
25.04%
21.13%
n/a
-3.91%
Reserves & Resources
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
Percentage Gold:
72.15%
73.81%
n/a
1.66%
Percentage Silver:
27.85%
26.19%
n/a
-1.66%
Total (Gold Eq. Oz.):
4.64M
4.54M
n/a
-0.10M
Total (Silver Eq. Oz.):
323.14M
343.60M
n/a
20.46M
P
L
A
U
S
I
B
L
E
Gold Eq. Oz.:
3.31M
3.23M
n/a
-0.07M
Silver Eq. Oz.:
230.02M
244.69M
n/a
14.66M
Maximum Profit (Gold):
$461.90M
$593.52M
n/a
$131.61M
Maximum Profit (Silver):
$245.73M
$196.85M
n/a
$-48.88M
Total Maximum Profit:
$707.63M
$790.36M
n/a
$82.73M
Max Profit / Current MCap:
0.847
1.098
n/a
0.250
Max Profit Per Share (Gold):
$2.89
$3.71
n/a
$0.82
Max Profit Per Share (Silver):
$1.54
$1.23
n/a
$-0.31
Total Max Profit Per Share:
$4.42
$4.94
n/a
$0.52
Total Free Profit Per Share:
$0.00
$0.44
n/a
$0.44
FD Mkt. Cap / Gold Eq.:
$252.69
$222.75
n/a
$-29.94
FD Mkt. Cap / Silver Eq.:
$3.63
$2.94
n/a
$-0.69
FD Mkt. Cap / Per Metal as % Spot Price:
20.49%
17.33%
n/a
-3.16%
Future Valuation (Cash Flow & Totals)
Totals
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
C U R R E N T
R & R Valuation:
$611.40M
$623.22M
n/a
$11.82M
Mkt. Cap:
$835.20M
$720.00M
n/a
$-115.20M
Annual Gold Production:
(guess) 50,000oz.
(CG) 50,000oz.
03/02/2017
0oz.
Annual Silver Production:
(guess) 8,000,000oz.
(guess) 8,000,000oz.
03/02/2017
0oz.
F
U
T
U
R
E
FD Mkt. Cap:
$2,925.00M
$2,925M
n/a
$0M
FD Mkt. Cap Growth:
250%
306%
n/a
56%
Annual Production
Gold:
150,000 oz.
150,000 oz.
n/a
0 oz.
Silver:
8,000,000 oz.
8,000,000 oz.
n/a
0 oz.
Current FD Mkt. Cap /
Gold Eq. Reserves:
160.62
138.46
n/a
-22.15
Silver Eq. Reserves:
6.42
5.54
n/a
-0.89
Gold Eq. Production:
1,777.02
1,531.91
n/a
-245.11
Silver Eq. Production:
71.08
61.28
n/a
-9.80
P&P Reserves (oz.)
Gold:
2.00M
2.00M
03/02/2017
n/a
Silver:
80.00M
80.00M
03/02/2017
n/a
Gold Eq.:
5.20M
5.20M
03/02/2017
n/a
Silver Eq.:
130.00M
130.00M
03/02/2017
n/a
P&P Reserves per FD Share (oz.)
Gold:
0.013
0.013
n/a
n/a
Silver:
0.500
0.500
n/a
n/a
Gold Eq.:
0.033
0.033
n/a
n/a
Silver Eq.:
0.813
0.813
n/a
n/a
Cash Flow
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
Current:
$27.24M
$24.93M
n/a
$-2.32M
Current Multiple:
30.66
28.88
n/a
-1.77
F U T U R E
@ current prices:
$16.87M
$18.59M
n/a
$1.72M
Multiple @ current prices:
49.52
38.74
n/a
-10.78
Growth @ current prices:
-38.09%
-25.44%
n/a
0.13
@ future prices:
$780.30M
$780.30M
n/a
$0.00M
Multiple @ future prices:
1.07
0.92
n/a
-0.15
Growth @ future prices:
3,030.34%
3,030.34%
n/a
2.66
Defaults
Defaults
03/02/2017 Last Analysis Data
Current Data
Change
Item
Value
Value
Updated
Value
Spot Gold:
$1,233.20
$1,285.40
08/22/2017
$52.20
Spot Silver:
$17.72
$16.98
08/22/2017
$-0.74
Gold:Silver Ratio:
69.59
75.70
08/22/2017
6.11
Spot Gold (Future):
$2,500.00
$2,500.00
$0.00
Spot Silver (Future):
$100.00
$100.00
$0.00
Gold:Silver Ratio (Future):
25.00
25.00
0.00
Gold Cash Cost:
$750.00
$750.00
$0.00
Gold Extra Operating Cost:
$350.00
$350.00
$0.00
Gold Avg. Recovery Rate:
75.00%
75.00%
0.00%
Silver Cash Cost:
$10.00
$10.00
$0.00
Silver Extra Operating Cost:
$6.00
$6.00
$0.00
Silver Avg. Recovery Rate:
75.00%
75.00%
0.00%
Plausibility of P & P:
100.00%
100.00%
0.00%
Plausibility of M & I:
80.00%
80.00%
0.00%
Plausibility of Inferred:
50.00%
50.00%
0.00%
Tax Rate:
30.00%
30.00%
0.00%
Tax Rate (Future):
40.00%
40.00%
0.00%
Future Valuation Multiplier:
15.00%
15.00%
0.00%
text size
Notes
Low cash cost because of offsets.
The claim to be able reach 25 million oz of silver equivalent production with all-in costs (free cash flow) around $15 by 2019.
Low silver resources for their market cap.
Gold Price (last analysis) ($)
1230.00
Silver Price (last analysis) ($)
18.00
Stock Price (last analysis) ($)
5.22
1 Yr Stock Price High ($)
9.07
Stock Price Change From 1 Yr High (%)
-40%
Stock Price USA 5-Year High ($) (including date)
9.07 - 8/12/2012
Stock Price USA 5-Year Low ($) (including date)
39 Cents - 10/31/2008
People (wag)
Excellent management team.
Mine Locations
Mexico, Peru
Local Issues (wag)
Ownership
100%
Country of Incorporation
Canada
Gold Properties
Lindero project in Argentina
3 million oz resource at .6 gpt
100,000 oz per year
Cash costs under $700 per oz
Caylloma and San Jose produce about 50,000 oz per year
Silver Properties
Two large silver properties.
Caylloma in Peru. 1 million oz in 2017.
San Jose in Mexico. 7 million oz in 2017.
Combined they have 220,000 acres and 9 exploration projects.
All-in costs around $14 per oz.
Strong balance sheet: $175 million in cash and investments and only $40 million debt.
New high grade discovery at Trinidad North at San Jose.
Hedging
Shareholder Friendly (wag)
Yes, planning organic growth from here forward.
Flagship Property
Two
Ore Grade (wag)
High Grade (5 opt)
Drill Results
Rating History
3/2/2017: Increased rating from 2 to 2.5 after the share price dropped to $5.21.
7/8/2016: Decreased rating from 2.5 to 2 because their market cap increased in value.
10/12/2015: Increased rating from 2 to 2.5 because their market cap dropped to $338 million.
10/13/2014: Decreased rating from 2.5 to 2 because their market cap increased to $585 million.
10/13/2013: Increased rating from 2 to 2.5 because the stock price dropped 38%.
10/12/2012: rating decreased from 2.5 to 2 because forecasted future market cap growth is under 200%. I do still think it will be a 3 bagger, but I am going to use the numbers to be consistent.
Wiki from New Acquisition (Goldrock Mines Corp)
Notes
Name change in 2012 from Mansfield Minerals to Goldrock Mines.
Should begin construction in 2017 for Lindero project in they get financing (18 months of construction).
Resources reduced on Profile Page for 68% recovery rate.
Gold Price (last analysis) ($)
1100.00
Silver Price (last analysis) ($)
14.00
Stock Price (last analysis) ($)
.15 Cents
1 Yr Stock Price High ($)
.28 Cents
Stock Price Change From 1 Yr High (%)
-55%
Stock Price USA 5-Year High ($) (including date)
$3.09 - 2/18/2011
Stock Price USA 5-Year Low ($) (including date)
.11 Cents - 8/12/2015
People (wag)
Appear to be doing a good job. They are currently on schedule and are giving good guidance.
Mine Locations
Argentina
Local Issues (wag)
Potential infrastructure issues: Water is 7 miles away. Power is 14 miles away.
Ownership
100%
Country of Incorporation
Canada
Gold Properties
Lindero property. 8,000 acres.
3 million oz resource (.5 gpt). 68% recovery rate.
Feasibility study in 2013 (produce 110,000 oz for 10 years) at $650 cash costs.
IRR of 27% after-tax. NPV of $130 million at $1300 gold.
Capex of $155 million (need $100 million loan, plus $40 million equity financing, which will cause huge share dilution).
Fully permitted.
Significant exploration potential.
Arizaro property is 1 mile away and has 500,000 oz. Only 15% of the property has been explored.
Silver Properties
Hedging
Shareholder Friendly (wag)
Low dilution
Flagship Property
Lindero
Ore Grade (wag)
.5 gpt
Drill Results
Rating History
10/5/2012: Increased rating from 3 to 3.5 after they committed to building the mine.
Summary from New Acquisition (Goldrock Mines Corp)
Goldrock Mines has an advanced project in Argentina called Lindero. It is a 3 million oz open pit (.5 gpt), with a 68% recovery rate. They released a feasibility study in early 2013 and could begin production in 2017 with financing. The capex is $155 million, and they need a $100 million loan, plus $40 million in equity financing (which will cause huge dilution). It has an after-tax IRR of about 27% and an NPV of $130 million at $1300 gold. But the NPV jumps to $300 million at $1400 gold. Financing won't be easy at $1200 or $1300 gold, so the project could get delayed. Production will begin at 100,000 oz and could increase with exploration success. Cash costs are projected to be around $650 per oz.
This stock could be a 20 bagger if they get financing and extend the mine life beyond 10 years. Currently future reserves are valued at $10 per oz, which is very cheap. The FD market cap is only $18 million. It is a permitted economic project with a feasibility study, and will likely get built. Buying a 100,000 oz producer at this valuation is not a bad bet. If they can get into production and meet their cash cost projections, and then find another mine to develop (Arizaro has 500,000 oz but very low grade), they could be a growth story. Lindero is a large property of 8,000 acres and only 15% has been explored.
I see two red flags for this stock. First, they still have not obtained financing to build the mine. Second, financing will significantly dilute shares. You might want to wait until they finance the capex. Hopefully it won't include significant hedging.
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