Canadian-based silver mining company, Fortuna Silver Mines (FVI.TSX), announced record silver production for 2009 - reporting 1,685,026 ounces of silver from its Caylloma Silver Mine in southern Peru. The silver mining production out of Fortuna represented a 98% increase over the company’s 2008 output. Fortuna Silver went on to state that production of each of its key metals - silver, zinc, lead, and copper - all rose substantially over 2008 as mine output, mill throughput, and grades all increased, and recoveries improved.
Fortuna stated that its unaudited financial results for 2009 demonstrate gross revenues in excess of $50 million, a 90% increase over 2008’s revenue of $26.3 milion. Looking ahead to 2010, Fortuna Silver released silver production guidance for 2010 of 1.7 million ounces - with base metal production remaining near current levels. Specifically this includes 28.4 million pounds of zinc, 25.2 million pounds of lead, and 1.0 million pounds of copper.
Jorge Ganoza - President, CEO, and a Director of Fortuna Silver - commented that “The Caylloma Mine is a success story for Fortuna. It has delivered three consecutive years of silver production expansion and unit cost reduction. We expect to maintain production of all commodities at close to current levels during 2010 with the exception of copper, which should ramp up to 1M pounds. Future growth will come from the development of our San Jose Project in Mexico. We have all the required permits in place for San Jose and a strong treasury, which will enable us to launch the construction of Fortuna’s second mine in the first quarter of 2010.”
This emerging silver mining company provided an update on its high-grade San Jose silver project, located in the southern State of Oaxaca, Mexico. Fortuna stated that as a result of the recent granting of the Change of Land Use permit - announced on December 14, 2009 - it now has all of the key permits necessary to begin construction at San Jose. It expects to publish a pre-feasibility and commence construction activities during the first quarter of 2010. Moreover, Fortuna said it “looks forward to commissioning San Jose in 2011, which will drive further growth in Fortuna’s silver production.”
Further supporting progress at San Jose was Fortuna’s announcement on January 6, 2010 that the silver mining company had signed a commitment letter to enter into a $20 million senior secured revolving credit facility with the Bank of Nova Scotia. Fortuna stated that the proceeds of the facility, which “complement Fortuna’s strong cash position”, are intended partially for the development at San Jose.
Fortuna Silver has transitioned itself from a small silver explorer to a growing mid-tier silver mining producer. CEO Jorge 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. With San Jose moving forward to production, Fortuna will now be a multi-project operator - a development that will diversify the company’s growing revenue stream. Share volumes in Fortuna have increased dramatically in recent months and investment bank coverage of the silver mining company has expanded as well. These facts suggest that Fortuna is receiving increasing support from institutional investors as the company continues to separate itself from its peers.
In afternoon trading shares of FVI.TSX were higher by C$0.07 to C$2.73, while the gold price was up $2.99 to $1,134.20 per ounce and the silver price was up $0.22 to $18.65 per ounce.
