Fortuna Silver Acquires a New Silver mine and an Option for further 20% Interest

 Fortuna Silver( FVI) announced on January 4 that it has acquired a 60 % interest in a silver mine in Oaxaca,Mexico.And if conditions are met it has the right to acquire a further 20% interest.The conditions are to pay $450,000 in cash and put $4 million in work expenditures on the mine.The size of the ore body is not given in the announcement.But Fortuna believes that  this new mine will fit in with  and expand it's present stable of silver properties. Fortuna produced 2.1 million ounces of silver plus another 13,000 ounces of gold in Q3.

Other Silver Properties  

Fortuna Silver has properties in Mexico,Peru and Argentina. And their new acquisition is in Oaxaca,Mexico where it is already familiar with the regulatory environment.An earlier blog dated November20,2020 on Workathon-Blogger stated that Q3 was a record quarter for FVI.Free cash flow in Q3 of 2020 was equal to the entire 9 months of 2019.This earlier blog also discussed the opening of Fortuna's new mine in Argentina called Lindero.Lindero has a lot of ppotential andFortuna has spent $325 million developing this mine.It is expected to be in full production in 2021.This blog expects that with Lindero and Taviche included that silver production could hit 2.3-2.4 million ounces of silver and 14,000-15,000 ounces of gold.This could make free cash flow of $40-$50 million for Q1 in 2021.And as my blog (November20,2020) predicted; this may allow FVI to pay out a small dividend in 2021.        

Production and Price

Fortuna Silver's price is difficult to forecast as it swings up and down with the price of silver and gold.A chart of silver prices is shown above. In 2020 the price of silver went from a low  of $16 an ounce to $25 and the gold price went from a low of $1365 to $1950 an ounce. In addition, Fortuna will be affected by the increase in production expected in 2021.Their new Lindero mine in Argentina will have  the largest impact with an expected increase in annual production of 15-20%.And now there will be  increased production from the newly acquired Taviche mine in Mexico. With a small increase in the price of silver and gold and the expected increase in production this blog forsees that FVI will gradually move back to $10.50 and then towards $12.This will be especially true if Q4 results are similar but slightly better than their Q3 results.                   https://www.zacks.com/