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Fortuna Silver (FSM) Q2 Gold Output Up 100%, Silver Down 13% Y/Y

Zacks Equity Research
·4-min read

Fortuna Silver Mines Inc. FSM reported gold production of 62,171 ounces in second-quarter 2022, indicating a year-over-year surge of 100%. The upside was driven by 29,016 ounces contributions from the Lindero Mine and 24,553 ounces from the Yaramoko Mine.

Silver production was 1,652,895 ounces in the quarter, implying a drop of 13% from the prior-year quarter. This was due to a 9% decline in head grade at the San Jose mine, which was in line with the Mineral Reserve average grade for the second quarter.

Production of Gold-equivalent ounces (GEOs) was 96,712 in the quarter under review. By-product base metal production was 7.6 million pounds of lead and 10.9 million pounds of zinc.

The company reiterates production guidance for the current year. FSM expects silver production between 6.2 and 6.9 million ounces and gold production between 244 and 280 thousand ounces. GEOs for 2022 are anticipated to be 369,000-420,000 ounces.

Mine Details

At the Lindero mine in Argentina, second-quarter gold production was 29,016 ounces, up 49% year over year. The mine operation continues to deliver strong performance in line with annual guidance.

The San Jose mine in Mexico produced 1.38 million ounces of silver and 8,295 ounces of gold, down 15% and 19% year over year, respectively. Both are on track to meet 2022 production guidance.

The Caylloma mine in Peru produced 267,559 ounces of silver in the June-end quarter and is on track to deliver total production in the upper range of annual production guidance. Zinc and lead production for the quarter was 10.9 million pounds and 7.6 million pounds, respectively, on track to meet the upper range of guidance.

For both San Jose and Caylloma mines, Fortuna Silver expects silver production for the year to be at the upper end of the guidance.

The Yaramoko mine in Burkina Faso produced 24,553 ounces of gold in the second quarter of 2022.

Some other Mining - Silver industry players like Endeavour Silver Corporation EXK and Hecla Mining HL came out with their second-quarter production performance.

Endeavour Silver announced that it produced 2.1 million silver-equivalent ounces in the second quarter of 2022, up 7% from the prior-year quarter’s levels. Consolidated silver production was 1,359,207 ounces in the quarter, up 27% year over year. This was driven by increased silver production at the Guanacevi and Bolanitos mines.

Hecla reported silver production of 3.6 million ounces in the second quarter of 2022, up 10% quarter over quarter, due to record throughput at the Lucky Friday Mine. Gold production was up 10% to 45,718 ounces in the second quarter compared with the first quarter of 2022. All three of Hecla’s operating mines delivered solid performances during the quarter, driven by an expected increase in silver production at Lucky Friday and gold production at Casa Berardi.

Price Performance

Shares of Fortuna Silver have declined 30.1% in the past six months compared with the industry’s fall of 29.1%.

Zacks Investment Research
Zacks Investment Research


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Zacks Rank & Other Stock to Consider

Fortuna Silver currently carries a Zacks Rank #2 (Buy).

Another top-ranked stock in the basic materials space is Cabot Corporation CBT.

Cabot, currently carrying a Zacks Rank #1 (Strong Buy), has an expected earnings growth rate of 22.5% for the current fiscal year. The Zacks Consensus Estimate for CBT's earnings for the current fiscal has been revised 6% upward in the past 60 days. You can see the complete list of today's Zacks #1 Rank stocks here.

Cabot's earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 16.2%. CBT has gained around 12.9% in the past six months.


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