Fortuna Silver Mines (FSM) reported a solid fourth quarter, with gold and silver production both in line with full-year guidance, while lead and zinc exceeded guidance somewhat. Gold production was above many analyst expectations, although costs were up, details Adrian Day, editor of Global Analyst.

This quarter represents another consecutive one where Fortuna’s operations have met or exceeded expectations after a frustrating series of issues in 2021 and early 2022. Construction at Séguéla remains on track, with first gold expected in the second quarter, after mining begins this quarter.

The company is initiating action in Mexico, on both the judicial and political front, over the last reversal of its permit for San Jose. The company is also looking for an increase in gold-equivalent ounces this year of between 3% and 15% over last year, driven by a 25% increase in gold as Séguéla comes on stream.

Gold production is expected at between 282K and 320K, as much as a 23% increase, while silver output is expected to decline by up to 9% to 6.3 million to 6.9 million ounces.

Given the firm’s strong management, solid balance sheet, diversified asset base, and growth ahead, Fortuna can be accumulated here and bought aggressively on any dips.

As for the big picture, gold and silver have moved ahead on expectations that the Federal Reserve will continue to slow, and then pause, its tightening program. We remain very positive for the balance of the year, but some trimming of gold stocks, and certainly caution in new buys, would not be out of place.

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