Fortuna Silver (FSM) provided additional insights into its last quarter and last year results at a recent conference call, notes Adrian Day, editor of Global Analyst — and a participant in MoneyShow's Metals & Mining Virtual Event on April 20-22. Register for free here.

For the year, silver production was down 19%, due to lower grades and temporary Covid-shutdowns at both silver mines, Caylloma and San Jose.

Higher prices offset lower production and that, together with the onset of the new gold mine in Argentina, saw revenue up around 9%, but because of lower capital spending, free cash flow doubled for the year to almost $79 million.

Following a weak 4th quarter overall, Fortuna has pointed to improvements, particularly at the new Argentina mine, Lindero; this year is “materially better”.

There are still some technical difficulties with specialized equipment. Because of Covid travel restrictions, they are unable to get the vendor technicians on site which is delaying fixing the problem. The company now expects to be at 85% capacity by the end of this month or early next.

The company also said it was going to spend more on exploration, which had been “short-changed” for three years as the company focused on the development and construction of Lindero.

This will include “aggressive” near-mine exploration at San Jose, as well as drilling the nearby El Blanco project in Mexico that it has optioned from Minaurum (MMRGF). Similarly, at Callyoma, Peru, it will be drilling extensions as well as new areas.

And at Lindero, it will be drilling a second gold porphyry, near the main ore, which is looking to be a small, higher-grade deposit, suitable as a satellite deposit. It will also be drilling new projects in both Mexico and Argentina.

As of the end of last quarter, the company has $34 million in cash. With good metals prices, the famously conservative company is looking to strengthen its balance sheet, aiming for “a fortress.”

With strong management, a solid balance sheet, and a full year ahead at the new mine, Fortuna, which remains fundamentally undervalued relative to other comparable silver miners, is a buy.

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