SILVER STOCKS NEWS - Silver stocks advanced Tuesday as the spot silver price rose $0.03 to $17.69 per ounce. The Philadelphia Gold & Silver Index (XAU), which is made up of the world’s largest gold and silver stocks, rose 2.2% to 168.93. The iShares Silver Trust ETF (SLV), which serves as a proxy for the price of silver, increased 0.4% to $17.33 per share.
With today’s gain the XAU extended its rise over the past 52 weeks to 13.1%. However, the silver price has climbed 28.8% over that time frame, as most large-cap silver stocks have not provided investors with leverage to the price of silver. Specific examples include Coeur d’Alene Mines (CDE) and Pan American Silver (PAAS) - which have posted gains of only 10.0% and 14.3% respectively - as well as Silver Standard Resources (SSRI), which has fallen 18.3% over the past year.
While most large-cap silver stocks have underperformed, several small- and mid-cap names have provided leverage to silver over the past year - including Fortuna Silver Mines (FVI.TSX), whose shares have surged 104.9% since July 20, 2009. This afternoon, the Canadian-based silver miner released an update on construction activities at its 100% -owned San Jose silver-gold project in Oaxaca, Mexico. Fortuna Silver announced that construction at San Jose is proceeding on schedule and within budget for completion and commissioning of the mine in the third quarter of 2011.
San Jose is expected to operate at a rate of 1,500 tonnes per day, and will produce five million silver equivalent ounces on an annual basis at a cash cost of $6.20 per ounce. San Jose will be Fortuna’s second operating mine, joining the company’s Caylloma mine in southern Peru. Fortuna has stated that it expects to achieve full production capacity within two years from the start of operations.
Commenting on the progress at San Jose, Jorge Ganoza - President, CEO and Director of Fortuna Silver Mines - stated that “Management is focused on the construction of our second mine and working to capitalize on the main areas of opportunity for the project which include migrating a significant portion of the inferred resource into the mine plan for the first five years of operations. With US$74 million in the treasury, the Company is fully funded to build the mine at San Jose and continue exploring to grow existing resources and reserves both in Peru and Mexico.”
In afternoon trading, Fortuna Silver Mines (FVI.TSXV) was one of the largest advancers among silver stocks, rising 2.5% to C$2.07 per share.
