Fortuna Silver posts record Q1 production; shares advance

Mon 10:54 am by Deborah Bacal

First quarter silver and gold production were 12% and 13% above budget, respectively, as average head grades for both metals were 13% above plan, according to the company's statement. Fortuna Silver Mines (NYSE:FSM)(TSE:FVI) shares climbed on Monday after the company announced record first quarter production from its two operating mines in Latin America.

The company, which owns the San Jose mine in Mexico and the Caylloma mine in Peru, produced 1.5 million ounces of silver, up 55% over a year ago, and 8,150 ounces of gold, an increase of 81% from the first quarter of 2013. The silver miner also produced base metal by-products, including lead and zinc.

Fortuna said it is on track to produce 6 million ounces of silver this year, as well as 32,300 ounces of gold, or 7.9 million silver equivalent ounces.

"I am very pleased with the strong production figures for the first quarter of the year. Gold and silver outputs were both above plan and costs remained well in line with our guidance for the year," said president and CEO Jorge A. Ganoza.

Indeed, cash costs for San Jose were US$66.61 per tonne, better than the full year forecast of US$67.1 per tonne, while Caylloma cash costs were US$87.85 per tonne, compared to the annual guidance of US$88.3 per tonne.

The company's mill expansion at its San Jose mine, to a capacity of 2,000 tonnes per day, was completed earlier this month, with Fortuna expecting to achieve this new run rate by the end of April. The miner is also considering expanding the mill even further, to a rate of 3,000 tonnes per day, due to continued exploration success at Trinidad North, Fortuna said.

Fortuna shares rose more than 5% in early deals Monday, to C$4.38 in Toronto, extending year-to-date gains to more than 43%.