RE: RE: PriceEveryone has their own way of valuing mining stocks. If you apply whatever your criteria is and it is profitable for you, then it's a good system.
I like to look at reserves but like cashflow metrics better. I also try to put a grade on mgmt because that determines how things will be handled in the future that are not in the numbers.
Fortuna appears to be a superior value to me because of several things:
1. there are very few profitable silver miners. Most miners lose money and are constantly issuing shares to keep going. Fortuna has positive cashflow and it's valuation on a price to cashflow basis is on the low end of producers.
2. mgmt that delivers shareholder value. Many companies continually issue shares. Fortuna has bootstrapped one successful mine and accumulated enough cash to build their second, bigger mine. Amazing compared to the normal performance of junior miners who issue hundreds of millions of shares. Obviously there is a lot of work to get San Jose built and running at commercial producton rates within forecast. But mgmt has an enviable track record so far.
3. Reserves. You note 57million in reserves but Fortuna just got done increasing reserves by 112% in their most recent update. San Jose is still being explored and there is 30 million in inferred resources that could easily be moved up to M&I thru more drilling. I have no doubts that the reserve numbers will continue to climb.
4. Production. There is a long and rocky road from resource/reserves to production and cashflow. I prefer to see the cashflow. If Fortuna can produce good cashflow from one smallish mine, I can't wait to see what they do with San Jose after they get to commercial production and total company production tops 5 million oz/yr.
The combination of excellent mgmt, good financials with solid cash position, big increases in production and cashflow coming in 2011 and good prospects for silver going forward make Fortuna Silver a good value going forward. I have been pleasantly surprised by the recent pop in share price. I was thinking it would come later in 2010 as construction progress was reported. I think Fortuna has been recommended by various analysts and that has brought more attention to the stock. I didn't load up because I thought I would have more time. But I am very happy that I found Fortuna and have a decent holding.