I bought 1000 shares of Fortuna Silver Mines yesterday at 2.32.
Stock Trade Commentary
Have you seen the trading in the final hour with Fortuna? It was a spectacle of dumping. House Cormark #73 dumped thousands of shares right after the news were released. For a moment I thought I was looking at the wrong stock. It took me a while to recover from this collapse and decide to buy more. I had to reread the feasibility study release carefully in order to find out why was this happening.
I covered Fortuna just last week and the fundamentals for this company remain strong. Based on yesterdays release heres what stands out until now:
- Positive results of the Pre-feasibility Study (PFS) for its 100% owned San Jose Project in Oaxaca, Mexico.
- Granted all of the necessary permits to commence construction at San Jose.
- 3.5 million tonnes of Probable Reserves with 23.2 million ounces of contained silver and 181,000 ounces of contained gold.
- Incremental throughput rate starting at 750 tonnes per day (tpd), scaling to 1,000 tpd in 2014 and to 1,500 tpd in 2016
- With 72 million dollars on hand and positive cash flow from Caylloma, the company wont need to do any financing in order to cover the costs of this new mine.
- 2.7 million tonnes of Inferred Resources with 17 million ounces of contained silver and 133,500 ounces of contained gold not included in the Reserves or the economic model
- After-tax Net Present Value (NPV) of US$ 36.4 million at an 8% discount rate
- After-tax Internal Rate of Return (IRR) of 18%
- Estimated Pre-production Capital Expenditures (CAPEX) of US$ 55.7 million
- Average Cash Cost per silver equivalent (Ag Eq) ounce over life of Reserves of US$ 6.90
- 9 year production plan based on existing Reserves
Looking back at these facts implies that a major investor was purposely driving the price down; maybe its a personal thing between the house and the company. Nothing negative can justify such a fire sale.
I picked up those extra shares at 2.32, way higher than the teens we saw for a brief period of time. I had to read the news release carefully before buying again. I will be watching the action closely on this one, maybe pick up some more if it falls further. Those 1000 shares are not a long term hold; I will sell if the price gets anywhere close to 2.50.
Are you invested in FVI, what do you think about all of this?