Valorización Fortuna

Daily Letter | 1
16 April 2012

Fortuna Silver Mines Inc.
SPECULATIVE BUY

FVI : TSX : C$3.81

Target: C$7.00

COMPANY STATISTICS:
52-week Range (C$):
Shares Out Basic (M):
Shares Out fd (M):
Market Cap (C$):
Cash & Equivalents (C$):
NAVPS (C$):
NAVPS – Peak (C$)
FYE:
Avg. Daily Vol.:
President & CEO:
Chairman:
Website:

$3.81 - $7.22
125.0
129.0
$476.2
$55.7
$4.88$7.04
Dec 31
536,000
Jorge Ganoza
Simon Ridgeway
www.fortunasilver.com

EPS:
EPS:

Total

2011E
2011E
2,665
$35.29

M etals and Mining -- Precious Metals and Minerals

PRODUCTION IN LINE; SAN JOSE
EXCEEDS EXPECTATIONS
Investment recommendation
We maintain our SPECULATIVE BUY recommendation on the shares of
Fortuna Silver with a target price of C$7.00, unchanged.
Investmenthighlights
•

EARNINGS SUMMARY:
FYE
FYE Dec
AgEq Sales (000oz):
Ag Price (US$/oz):
Total Cash Costs
(US$/oz AuEq)*
P/E
CFPS (US$):
P/CF

Nicholas
1.604.643.7027
Nicholas Campbell
ncampbell@canaccordgenuity.com
1.604.643.1655
Chris Lerch
clerch@canaccordgenuity.com

Fortuna reported Q1 production of 953,091 ounces of silver, 5,137
ounces of gold, 4.4 million pounds of lead,and 5.3 million pounds of
zinc. These results exceeded our estimates for production of
931,936 ounces of silver 4,129 ounces of gold, 4.8 million pounds of
lead, and 5.4 million pounds of zinc.

•

The San Jose operation exceeded our expectations, while the
Caylloma mine slightly underperformed. At San Jose, average head
grades of 198 g/t silver and 1.92 g/t gold were significantly higherthan the expected grade of 170 g/t silver and 1.40 g/t gold, which
more than offset slightly lower than expected throughput.

•

Production at Caylloma was constrained by lower than expected
throughput and recoveries. Fortuna processed 113,444 tonnes of
ore at Caylloma with silver recoveries of 78%, compared to our
estimates for throughput of 118,300 tonnes and silver recoveries of
81%.Silver recoveries were impacted by the higher grade oxidized
ore from the reserves from level six of the Animas vein. These lower
than expected recoveries are expected for the remainder of the year.

2012E 2013E 2014E
2013 2014
2012E 2013E 2014E
4,386 5,495 6,329
$34.00 $34.00 $31.50

$2.25
25.0x
$0.32
12.1x

$8.41
7.6x
$0.72
5.3x

$8.24
5.8x
$0.97
3.9x

$7.84
7.1x
$0.894.3x

Q1 $0.04
Q2 $0.05
Q3 $0.08
Q4 ($0.01)
$0.15

$0.13
$0.11
$0.13
$0.13
$0.50

$0.16
$0.16
$0.16
$0.16
$0.66

$0.13
$0.13
$0.13
$0.13
$0.54

SHARE PRICE PERFORMANCE:

Valuation
Source: Interactive Data Corporation

COMPANY DESCRIPTION:
Fortuna Silver is a junior silver producer with interests in the
Caylloma silver-lead-zinc mine in Peru and the San Josesilvergold project in Mexico. With the San Jose project, the company is
on track to ramp up silver-equivalent production to 5.0 million
ounces by 2012E and 6.0 million ounces by 2014E.
All amounts in C$ unless otherwise noted.

After adjusting our model to incorporate the Q1 operating results and
lower silver recoveries at Caylloma, our estimate for peak silver price
NAVPS (5%, US$35/oz Ag) hasincreased slightly to C$7.04, from $7.03.
We continue to value Fortuna Silver based on a 1.0x multiple to our
peak silver price estimate of NAVPS (5%).

Canaccord
Canaccord Genuity is the global capital markets group of Canaccord Financial Inc. (CF : TSX | CF. : AIM)
The recommendations and opinions expressed in this Investment Research accurately reflect the Investment Analyst’s personal,reflect
independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For important
information, please see the Important Disclosures section in the appendix of this document or visit Canaccord Genuity’s Online Disclosure
Database.

Daily Letter | 2
16 April 2012

Investment risks
The commercialization risks associated with mineral...