Fortuna Silver Mines (FVI.TSXV) announced financial and operating results for the third quarter of 2009. The silver mining company delivered a 77% increase in sales, versus the third quarter of 2008, to a record $13.23 million in the most recent quarter. Mine operating income rose 409%, from $7.07 million compared to $1.73 million in the same period of 2008. Excluding the impact of the mark-to-market movements, Fortuna Silver earned $1.22 million in adjusted net income, relative to $0.23 million for the third quarter of 2008. As of September 30, 2009, the company had $33.68 million in cash and working capital of $34.86 million.
Fortuna Silver reported a head grade of 146.5 grams per ton of silver, a 149.9% increase from the third of 2008, and an 8.7% decrease from the second quarter of 2009. The silver mining company reported silver production of 438,186 ounces during the quarter, an 80% increase from the third quarter of 2008. Fortuna also stated that it remains on track to reach its silver production forecast of 1.6 million ounces for 2009. Cash costs of payable silver, net of by-product credits, at Fortuna Silver’s Caylloma mine in southern Peru were a negative $5.34 per ounce for the quarter, compared to negative $2.98 for the second quarter of 2009. The decline in cash costs was the result of higher credits from by-products. Cash costs per tonne of treated ore were $45.09 for the quarter, relative to $44.43 for the corresponding quarter of 2008.
With regard to the silver miner’s San Jose project, Fortuna Silver stated that it intends to have all the engineering and permits required to begin construction at San Jose by the end of 2009. The company is conducting project staffing for the construction phase and has begun selective searches for long lead equipment.
Jorge Ganoza, Fortuna Silver’s President, CEO, and a Director, stated that “the Company reported record breaking sales of $13.23 million. The average realized price of silver in the third quarter was US$14.70. Fortuna is well positioned to continue capitalizing on this bull trend in silver and base metals.”
Fortuna is one of a select group of small-cap mining companies that has been able to transform itself into a growing, profitable business. CEO Ganoza and his team continue to deliver their goal of providing silver price leverage to investors - in a way that focuses on generating positive cash flow. Fortuna’s management team has built a company that has grown from silver explorer to cash-flow positive silver producer, a relatively uncommon accomplishment in a challenging industry. Fortuna has begun to garner increasing support from institutional investors as the company continues to separate itself from its peers.
Fortuna Silver is a silver and base metal producer focused on mining opportunities in Latin America. The company’s primary assets are the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. Shares of FVI.TSXV were up C$0.06 to C$1.76, while the gold price was up $4.39 to $1,108.00 per ounce and the silver price was down $0.06 to $17.16 per ounce.
