Fortuna Silver (FVI.to) reports its quarter

How earnings have progressed at FVI, 2007 to date

Fortuna Silver (FVI.to) filed its 2q10 financials and its 2q10 MD&A (click on those links to download your copies) a few minutes ago. A solid quarter (as expected) including:

• 5c EPS

• 55% operating margin at Caylloma

• Cash cost at Caylloma of negative $5.23/oz silver

• A strong working cap position of U$71.7m, more than enough to pay for the San José capex (even if you forget the earnings to come in the next quarters at Caylloma)

This stock is dirt cheap. Toldya enough times and repeated the message in IKN65, two Sundays ago, using these words:

Fortuna Silver (FVI.to): The holding pattern continues. I’m just going to take a couple of lines here to say out loud that I still believe this current period is an outstanding window of opportunity to accumulate FVI shares and that this stock is as good as they come in the junior mining world. When push comes to shove, you can keep your hotpot juniors with their discovery holes and overhyped potential, because I’ll take exceptional underlying value as my point of departure every single time. Top pick, end of story. Rah-rah.

Those words were written with FVI at $2.08. It's now $2.40. Just sayin'. More analysis in IKN67 this Sunday. DYODD.

Today's silver riddle

Is rock that contains 2.2Kg of silver and 9.6g/t gold economically viable? Personally, I reckon it has a fair chance of turning a profit :-). Here's a NR from Fortuna Silver (FVI.to) out today:

VANCOUVER , May 12 /PRNewswire-FirstCall/ - Fortuna Silver Mines Inc. (TSX: FVI / Lima Stock Exchange: FVI) is pleased to announce the results of drilling completed in the upper portion of the Animas Vein at the Caylloma Mine in southern Peru . Exploration raises and cross-cuts completed in late 2009 and early 2010 along the Animas structure above level 6 of the mine cut high-grade silver-gold mineralization as previously reported (see Fortuna news release dated Feb. 2, 2010).

    Highlights of the drilling include:

     ANIS016010   2222 g/t Ag, 9.64 g/t Au, 1.17% Pb and 3.02% Zn over 9.2m
     ANIS016210    431 g/t Ag, 0.45 g/t Au, 0.53% Pb and 0.26% Zn over 11.8m
     ANIS015610    520 g/t Ag, 0.45 g/t Au, 0.47% Pb and 0.32% Zn over 7.6m
     ANIS015910    305 g/t Ag, 0.64 g/t Au, 0.91% Pb and 2.33% Zn over 8.2m
     ANIS015810    508 g/t Ag, 0.42 g/t Au, 1.51% Pb and 3.76% Zn over 4.1m

Widths given are estimated true widths based on the orientation of the drill holes relative to the Animas Vein. The drilling tested the Animas Vein mineralization over a strike length of 500m and vertically from level 6 to the surface, a distance of 150 to 200m along the inclination of the vein.

The full assay results from all twenty drill holes completed in the upper portion of the Animas Vein are summarized below with length-weighted assay averages calculated for the mineralized intervals. The new silver results compare extremely favorably to the 156g/t Ag average Proven and Probable Reserve (P&P) grade for Caylloma with sixty percent of the holes returning higher silver grades (see Fortuna news release dated July 16, 2009). CONTINUES HERE

Blowout quarter of production from Fortuna (FVI.to)

Record Ag numbers and nearly 300k lbs Cu to add to the mix, folks. FVI is the special one.

Press Release Source: Fortuna Silver Mines Inc. On Monday April 12, 2010, 11:28 am

VANCOUVER, April 12 /CNW/ - Fortuna Silver Mines Inc. (TSX: FVI / Lima Stock Exchange: FVI) - is pleased to announce its production figures for first quarter 2010.

  First Quarter Highlights
     <<
     -  Record silver production of 479,821 ounces; 30% increase over Q1 2009
     -  Zinc production of 6,868,811 pounds; 1% decrease over Q1 2009
     -  Lead production of 5,920,140 pounds; 1.5% increase over Q1 2009
     -  Copper production of 295,854 pounds; 213% increase over Q4 2009
     >>

Q1 2010 record silver production is due to to improved grades in production stopes with respect to the mine plan and contribution of development material from the new high grade discovery made in the upper levels of the Caylloma vein. Exploration drilling of this discovery is ongoing concurrent with stope preparation for production. The Company is prioritizing the definition of resources in this new area to incorporate them into the mine plan this year. This is the first full quarter of commercial operation for the copper circuit with a production of 295,854 pounds of Cu in concentrate.

 Operating Highlights
     <<
            --------------------------------------------------------
                                  Q1 - 2010   Q4 - 2009   Q1 - 2009
            --------------------------------------------------------
             Processed ore (t)     101,503      97,989      91,449
            --------------------------------------------------------

            --------------------------------------------------------
             Head grade
            --------------------------------------------------------
             Ag (g/t)               167.23      165.05      147.81
            --------------------------------------------------------
             Zn (%)                   3.44        3.42        3.83
            --------------------------------------------------------
             Pb (%)                   2.87        3.14        3.11
            --------------------------------------------------------
             Cu (%)                   0.25        0.24        0.23
            --------------------------------------------------------

            --------------------------------------------------------
             Recovery(%)
            --------------------------------------------------------
             Ag (1)                     88          86          85
            --------------------------------------------------------
             Zn                         89          89          90
            --------------------------------------------------------
             Pb                         92          93          93
            --------------------------------------------------------
             Cu                         53          --          --
            --------------------------------------------------------

            --------------------------------------------------------
                                  Q1 - 2010   Q4 - 2009   Q1 - 2009
            --------------------------------------------------------
             Metal produced
            --------------------------------------------------------
             Ag (oz) (2)           479,821     449,449     367,986
            --------------------------------------------------------
             Zn (lb)             6,868,811   6,597,229   6,948,967
            --------------------------------------------------------
             Pb (lb)             5,920,140   6,322,356   5,831,316
            --------------------------------------------------------
             Cu (lb)               295,854      94,227          --
            --------------------------------------------------------
            (1) Ag recovery in Pb and Cu concentrate
            (2) Ag production in Pb and Cu concentrate
     >>

A NI 43 - 101 Technical Report dated August 11, 2009 on Reserves and Resources for the Caylloma Mine is available on the Company's website at
www.fortunasilver.com.

Fortuna Silver (FVI.v) in the box seat

don't worry, this is not
CEO Ganoza on a bad hair day

A short but very sweet little news release from my fave Ag play Fortuna Silver (FVI.v) this morning. Here it is and below some comments:

VANCOUVER, Jan. 6 /CNW/ - Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: FVI) is pleased to announce that the Company has signed a commitment letter to enter into a US $20 million senior secured revolving credit facility with The Bank of Nova Scotia. The facility will have a 2.5 year maturity. The proceeds of the facility may be used for general corporate purposes, including the development of the San Jose Project in Mexico.

The facility is intended to complement Fortuna's strong cash position and provide additional financing flexibility during the construction stage at San Jose. On December 14, 2009 the Company announced it had obtained all the required construction and environmental permits for the operation of a 1500 tonne per day underground mine. The San Jose pre-feasibility study is scheduled to be completed in the first quarter of 2010, with construction activities to commence shortly thereafter.

What this basically means is that FVI has turned around, looked the vultures of Bay St. and Howe St. in the eye, flipped them a serious bird and said, "We don't need your stinkin' lowball placement terms, go screw yourselves, we got all the cash we need to build our future." Of course FVI might eventually decide to do a placement, but if they do it'll be on the terms set by the company, not the gouging bankers and bullshit merchants that sit on stocks and depress their prices until the company caves in and does the deal. Put simply, the $20m credit facility, plus the healthy company treasury, plus the impressive free cash flow thrown off by Caylloma is enough to build San José, a mine with all its permits in place.

I'm long this stock. You might have realized this already. DYODD, dudettes and dudes, but if you can't be bothered, The IKN Weekly will be running an updated NOBS report on Fortuna Silver with a revised target price in this Sunday's edition. Be there or be square.

Fortuna Silver (FVI.v): Holy moley....

......you could have got all the sub $1.50 you wanted on FVI Wednesday. One of those moments when the market sheep line up in front of you and offer to give you their money....and I wasn't around.

Tant pis. I hope some of you took advantage, anyway.

Fortuna Silver (FVI.v) 3q09 production numbers

Fortuna Silver (FVI.v), my idea of the best small silver out there, just released its 3q09 production figures (not the earnings report). The headline number is 438,186 ounces of silver produced in the period, which is a mile up from the same quarter last year but slightly down on 2q09. Check the whole thing out on the link here.

We'll be going into details on the numbers, doing crunchy stuff and making a stab at what we can expect for the quarterly earnings in IKN26 next weekend, but from the looks of the market so far this morning....

...reaction has been subdued but positive, with trade at $1.60 up 1.3% on Friday's close.

Fortuna Silver (FVI.v) scores for Peru

Fortuna Silver (FVI.v) +12.5% this morning on strong volume. And if you think this a great result for Peru versus Mexico's laggard silver plays, just wait til FVI.v gets to play its away game in San José, builds its mine there and shows locals close up and in face how to run a profitable silver mine. FVI got the mojo working now, folks. Feel free to jump on and send my shares even higher. DYODD.

DMM and MAI doing well today, too. Sheesh, I should turn off the interwebnetpipes in trading hours more often....

Fortuna Silver news

The quarterly results from Fortuna Silver (FVI.v) made for good reading. The conference call today was strong and positive (and I hear well-attended too, but if you missed it a recording will be available very soon at the company website). The stock is trading well, with nearly 500k volume done yesterday and closing in on the same figure today.

FVI is up 5% and threatening to break out at this point (the TA heads tell me a $1.04 finish would be good). Damn well should, too.

This weekend's IKN Weekly will feature a NOBS fundamental analysis report on Fortuna Silver as we take in the recent happenings and set a target for the end of the year. Be there or be square.

Fortuna Silver (FVI.v) results

Here linked is the press release from Fortuna Silver (FVI.v) that hit the wires a few minutes ago. And below, by way of a small self-promo and a large fundy pointer, is the part of The IKN Weekly published last Sunday that took a look at Fortuna Silver and its 1q09 results published last Friday.



You could have snapped up FVI.v at 89c or 90c this morning, folks, but don't worry because this thing is going higher. This is what subscribers read on Sunday afternoon on half of one of the 13 pages of The IKN Weekly;



DYODD, dude.

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Fortuna Silver (FVI.v): Fortuna reported its quarter on Friday 15th May. The numbers were much as expected, with operating profit at Caylloma of U$4.23m and a final net loss of $1.06m once normal-looking land asset writedowns, machinery upgrades and exploration costs were taken into consideration. Two notable changes:

Firstly FVI.v is now reporting in US dollars to directly reflect its means of sales. This makes sense, but it did make me do a nasty double-take when I saw its current assets position at $37.9m, as I was expecting to see a Canadian dollar total there. After about 20 seconds of “oh my gawd where’s the money gone?” I noted the change. Moral; read the small print J

Secondly, FVI.v is now reporting its cash costs per ounce of silver after by-product credits (Pb and Zn). 1q09 came in at a cash cost of U$0.10/oz silver (10 cents per ounce). This will likely be used as a marketing promotional angle. It’s certainly eyecatching even for experienced FVI.v watchers like myself. The market likes positive soundbites.

Now for the practical stuff, as we can now refine our price target for FVI.v. Using the following parameters:

• Friday’s closing share price of C$0.93 (U$0.79)

• Reported NAV of U$112.9m

• Current forex of U$1 = C$1.178 (reversed C$1 = 0.8489)

• S/O total of 92.147m (the Continuum merger is now complete)

Fortuna is running a market cap of U$72.8m. This gives us a NAV multiple of 0.645X, a very low multiple for what is in essence a self-sustaining mining company with significant growth potential baked in via its Mexico project. There is every reason to expect that NAV multiple to return to a very sustainable 0.8X which would imply a share price of C$1.15 (note, Canadian dollar share price target) and an upside to Friday’s close of 23.7%. This is now our target price for this cycle of the stock and where we will take profits. So let’s be clear here; FVI.v is now a strong buy for short-term trading purposes. Final note: FVI.v will publish its news release about the quarterly report on Tuesday morning.

Fortuna Silver (FVI.v), Doug Casey, Sheep and an Excellent Buying Opportunity for Serious Investors

Right now Fortuna Silver (FVI.v) is down 12.77% at $0.82 on triple average volumes because a large flock of unwitting sheep have been fed bullshit by the scamster Doug Casey.

Yesterday, "the Casey team" decided to publish a "sell" alert on Fortuna. You can read the whole thing below (and f*** your copyright Dougieboy...bite me) but basically the note's argument is that due to political and social problems at its San José project in southern Mexico they decided it's not a good time to hold.

This is bullshit. I've just got off the phone with FVI and they've told me that yes, the road is blocked there right now but it isn't affecting FVI's operations in the slightest. They also made it 100% clear that they have the support of the vast majority of locals. In their words, "if we didn't have local support they would have kicked us out ages ago. And how on earth could we have recently submitted our environmental impact study without respecting the local people and getting full cooperation from them?" Quite right. Casey speaks of "kidnappings", which sounds dramatic in the English language but it's not that much, really. In a protest situation the act of holding someone against their will may technically be called kidnapping, but it's a very common occurance South of the Rio Grande. Casey talks about "beatings"; oh yeah? Show us the bruises, blowhard! Casey talks about "our sources in Mexico" which is the biggest laugh of the lot, as all they're doing here is taking the conversation they had with FVI and spinning it their own way. They probably couldn't find Oaxaca on a map, let alone have a special source there. It seems that the agitators are using very suspect arguments to make their protest, too. For example they are trying to scare people by talking about cyanide and its effects when FVI is not going to use cyanide at San José.

So why has Casey sent out this sell alert? That's easy enough...he's a self-serving manipulator. He most probably sold out above a buck and now wants in lower and I'll bet you a tenspot that soon enough when this has all blown over (and it will), Casey will alert his sheep with a "Good news! Looks like it was a false alarm! We can take advantage of these low prices, folks!" message and up she goes again....after having bought in himself, of course.

The guy is a despicable, untrustworthy BSser. Here's the column from yesterday that's managed to part his flock from their bankroll once again. Fortunately he's also a great contrary indicator and I'll be picking up FVI once the sheep have panicked their way to the bottom. That may be today or may be tomorrow, but be crystal clear that just the Peru Caylloma operation on its own is worth at least $0.90, so right now you're getting the San José gig for free and Caylloma at a discount. DYODD

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Comments: This is very good news from Caylloma, much as expected; they've increased the silver grade and production substantially, which should help the bottom line.

Unfortunately, the news from Oaxaca, Mexico, where the company's high-grade gold-silver San Jose project is located, is not so good. There has been violence, including beatings and kidnapping of local officials (but not any company personnel, yet).

Our sources in Mexico indicate that with an election coming up, state and federal officials don't want to get involved -- they don't want photos on the front page of every newspaper showing police or army units dragging peasants away. Neither does the company, for that matter.

The good news is that the San Jose story does not have significant national presence in Mexico yet, with little mainstream press coverage. There's coverage on several left-wing, environmentalist web sites -- a clear smear campaign -- but it's not clear that there is any serious money behind them. Fortuna's proposed processing wouldn't even use cyanide, so the scaremongering is even more unfounded than usual.

From what we have gathered so far, San Jose does not seem to be a major focal point the international environmental movement has chosen to pick a fight over. So, the trouble could blow over.

Also on the plus side, Fortuna is done with its drilling and had no time-sensitive work going on at the time the trouble boiled over, so the road blockade has not materially affected operations.

Management argues that if the town really didn't want the mine developed, the company would have been blocked long ago and would never have been given permission to drill, etc. We have been on site and agree; the protesters are not the Voice of the People.

Simon Ridgway and Jorge Ganoza are smart guys, with many years of experience dealing with Latin American politics; if anyone can smooth this over, it's this management team.

However, there's bad news too:

We hear that the mayor tried to call a town meeting, and the agitators broke it up and kidnapped the mayor for some hours.

We understand that the ejido (land commission) also tried to have a meeting, and that the agitators broke that up with violence as well, kidnapped the ejido commissioner, and beat his wife severely.

There’s a local priest lending his support to the anti-mining crowd.

This means the problem will likely drag on. If greater violence breaks out between the pro-mining factions (which seem to be in the majority) and anti-mining factions (which are screaming about cyanide and cancer), it's unlikely that the result will be a peaceful, pro-mining community.

Where does all this leave Fortuna?

We like the Caylloma mine a great deal, but it's relatively small; San Jose is very important to the company’s future.

It's possible that the trouble-makers could be persuaded (or bribed) by their neighbors to drop their opposition or leave. The fact that Fortuna has been able to work in the community for years does support the view that most of the locals are on their side. The fact that Fortuna doesn't actually need to do any work on the ground right now (the drilling is done, and the core is all logged -- the next step is in the hands of the engineering firm doing the resource estimate -- argues for patience.

Sooner or later, Simon and Jorge will probably make this work.

However, the fact that there is no clear solution in sight argues for getting out. If we sell and things go south for a time, we might be able to buy back in cheaper. And if we sell and things clear up, we can always buy back in again, with our transaction costs being our main source of pain. But if we hold on and things get rough in Oaxaca, we'll probably have to hold for a very long time to get out without taking a much larger loss.

Consequently, we are, regretfully, closing our position in Fortuna. For now. Some of us here at Casey Research may hold on to our shares, because we have a high tolerance for risk and can be patient for years, if necessary. But the logical thing to recommend is stepping aside while there is elevated political risk, with an eye towards reentering the stock when things clear up and the shares seem poised for take-off again.

Fortuna Silver (FVI.v): An interesting snippet

Here's a short'n'sweet post with new news about Fortuna Silver (FVI.v).

The Ottoscope™ reports that Fortuna (FVI.v) has hedged around 65% of its zinc (Zn) and lead (Pb) production. The Zn is hedged at around U$1,200/MT (that's U$0.544/lb) and the Pb is around $1,100/MT (that's U$0.499/lb). This means that with the bias toward Zn over Pb at its Caylloma mine, the global average hedge price is a touch under U$0.53/lb. This hedge is for the first six months of 2009 (i.e. it started in January and finishes June '09).

All silver production remains unhedged.

Those who bought the NOBS report will be able to factor in the change to the presumed metals revenues mix. Those who haven't bought the $10 report yet and are interested can find out more here.

Fortuna Silver (FVI.v): Get the report

My marketing friend is telling me to "prosecute the sale" (whatever that means), so here we go with the post about the new Fortuna Silver (FVI.v) report out and available immediately. Be warned that (due to wife input after reading marketing friend's mail today) this post is getting repeated tomorrow, too.

Thanks in advance, etc.
Otto

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Mailbag and Fortuna Silver (FVI.v)

Click to enlarge

On Friday I had this short but very gratifying exchange with reader JB. Here it is in full (with names reserved):

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On Fri, Feb 13, 2009 at 2:19 PM, XXXXXXXXXXXXXXXXX wrote:

Just wanted to say thanks for you blog on this day that my Fortuna investment reached 100.46% gain. All the best, XXXXXXXXXX

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On Fri, Feb 13, 2009 at 3:47 PM, otto rock wrote: Wow XXXXXXXX, that's great! I'm very happy for you. With your permission I'll include this mail in tomorrow's mailbag post

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Anyone who gets me 100% can do anything they'd like with my mail. :)

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Thus permission was granted and you get to read the mails :-). I'd like to point out to JB and all readers that I didn't "get him 100%" as he got it for himself. DYODD, dude....I really mean it. It's always your money and your responsibility when you invest, so pat yourself on the back JB as the credit is yours. Still, it's great that somebody took into account my views on this humble corner of cyberspace and has managed to make good coin as a result.

So all that said, here comes the pitch for a new NOBS report on Fortuna Silver (FVI.v) available to the general public at a low, low price. I've written a latest update on the company with my views on how its earnings will develop in 2009. The report gives the necessary background, explains about its development plans, takes into account three metals prices scenarios and gives the reader a solid idea of Fortuna silver's price sensitivity to silver, zinc and lead. It rounds off with price forecasts and practical advice on how trade the stock.

This eight page report, packed with details and giving you the parameters you need to trade FVI.v in 2009, costs just U$10 (yep, just ten US dollars) and is payable by PayPal. Either send straight from your own PayPal account to.....

otto.rock1 (AT) gmail (DOT) com

........or use this paypal button (it's set for $10 by default):

As you'll see behind that button, all the usual credit cards are accepted.

So get wise to Fortuna Silver by investing just U$10 (the price of one trade's commission, basically) and getting your hands on a copy of this NOBS report, created from scratch by yours truly (someone that has visited FVI's Caylloma mine not once but twice in the last couple of years). I'd venture to say that once you see how 2009 prices and market sentiment is likely to play out on this stock price, the small investment in this report will pay for itself many times over for savvy investors.

Order your copy now and it will be delivered immediately on receipt. Thank you for your attention.

Fortuna Silver (FVI.v): Get wise

This below is a re-post from yesterday because...well...because I want you to buy a copy of the report. Those that have already ordered (seven of you) and those that order today will get their copy delivered tonight. If you order in the days to come you'll get yours immediately on receipt. Thanks in advance.

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Mailbag and Fortuna Silver (FVI.v)

Click to enlarge

Yesterday I had this short but very gratifying exchange with reader JB. Here it is in full (with names reserved):

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

On Fri, Feb 13, 2009 at 2:19 PM, XXXXXXXXXXXXXXXXX wrote:

Just wanted to say thanks for you blog on this day that my Fortuna investment reached 100.46% gain. All the best, XXXXXXXXXX

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

On Fri, Feb 13, 2009 at 3:47 PM, otto rock wrote: Wow XXXXXXXX, that's great! I'm very happy for you. With your permission I'll include this mail in tomorrow's mailbag post

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Anyone who gets me 100% can do anything they'd like with my mail. :)

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

Thus permission was granted and you get to read the mails :-). I'd like to point out to JB and all readers that I didn't "get him 100%" as he got it for himself. DYODD, dude....I really mean it. It's always your money and your responsibility when you invest, so pat yourself on the back JB as the credit is yours. Still, it's great that somebody took into account my views on this humble corner of cyberspace and has managed to make good coin as a result.

So all that said, here comes the pitch for a new NOBS report on Fortuna Silver (FVI.v) available to the general public at a low, low price. I've written a latest update on the company with my views on how its earnings will develop in 2009. The report gives the necessary background, explains about its development plans, takes into account three metals prices scenarios and gives the reader a solid idea of Fortuna silver's price sensitivity to silver, zinc and lead. It rounds off with price forecasts and practical advice on how trade the stock.

This eight page report, packed with details and giving you the parameters you need to trade FVI.v in 2009, costs just U$10 (yep, just ten US dollars) and is payable by PayPal. Either send straight from your own PayPal account to.....

otto.rock1 (AT) gmail (DOT) com

........or use this paypal button (it's set for $10 by default):

As you'll see behind that button, all the usual credit cards are accepted.

So get wise to Fortuna Silver by investing just U$10 (the price of one trade's commission, basically) and getting your hands on a copy of this NOBS report, created from scratch by yours truly (someone that has visited FVI's Caylloma mine not once but twice in the last couple of years). I'd venture to say that once you see how 2009 prices and market sentiment is likely to play out on this stock price, the small investment in this report will pay for itself many times over for savvy investors.

Order your copy now and it will be delivered well before the opening bell Monday. Thank you for your attention.

Continuum (CNU.v) vs Fortuna (FVI.v) arbitrage opportunity

A gift for value hunters

Here's an interesting way to get hold of shares of Fortuna Silver at a discount to present PPS, and may appeal to those people looking at FVI.v as a long-term value play.

As this PR dated August 14th announced, FVI.v is buying out Continuum Resources (CNU.v), its minority partner at the San José silver project in Mexico. FVI.v is emitting 7m new shares to absorb the 124m or so CNU.v shares out. When you get the calculator out that works out at 0.05642772 shares of FVI.v for every CNU.v.

In this update PR published this week, FVI.v stated that the deal is going ahead as planned and is due concluded by the end of the year. All this offers up the chance of a decent arbitrage trade, as this table makes clear.

The CNU / FVI arbitrage
CNU.v Share price	Equiv. FVI.v Price	New FVI at 92.33m S/O
0.02	0.35	0.38
0.025	0.44	0.48
0.03	0.53	0.58
0.035	0.62	0.67
0.04	0.71	0.77
0.045	0.80	0.86
0.05	0.89	0.96
0.055	0.97	1.05
0.06	1.06	1.15

The first column is a range of prices for CNU.v (for example, right now it's trading at $0.035 and yesterday it traded at $0.03). The second column is the equivalent price of FVI.v today using the 0.05642772 multiplier. The third column is the one that gives us the longer term arbitrage, as it assumes the deal is done and Fortuna's shares outstanding (S/O) moves from the present 85.33m to the 92.33m it will have once the new 7m shares are put into the mix.

All this shows that there's plenty of chance to buy FVI.v at a discount by entering through CNU.v. Consider that right now FVI.v is trading at $0.70 and CNU.v is trading at $0.035. This means you can get a 70c stock for a 67c equivalent (and if you can snag a few CNU.v at 3c you're getting FVI.v for a real bargain arbitrage of 58c).

This kind of trade is most useful for people thinking of a longer term position in FVI.v, of course. DYODD, dudes.

Fortuna Silver provides an update

At Caylloma, underground extraction caught on camera

Here's the link to the full PR. Go read it for yourself.

But I'm sure you'll like:

• improved production tonnage
  
• more silver from the mine
• even more coming in 2009 (1.4m ounces will be 70% more than this year)
• recovery rates for all metals are improving (now over 80% recovery for silver)
• new copper circuit that adds easy money by-product cashflow
• strong cash position Mr Taylor
• etc etc

This company is the real deal, people. Read that PR for yourself, but I'd like to point out just one small thing here. FVI announced it had started developing the Soledad vein (the bonanza-grade vein mentioned in the PR) on September 23rd and just six weeks later the ore is being processed and those big silver grades are being turned into saleable ounces. This is the difference between an explorer company and a junior actually in production and is something many junior investors don't appreciate. Far too often a PR announcing high grades hits the airwaves as part of an ongoing drill campaign but nothing ever comes of it, or if something does we have to wait months or even years for a solid result. Not true when you can throw the ore into the processor in a matter of days.

All junior miners are not the same. DYODD. Here's a link to the Fortuna website to help you.

Message to Jay Taylor: Enrol for 'Financials 101'

Yes girls, you KNOW he's cute

I found out yesterday that newsletter writer and sheep-herder Jay Taylor told his flock to sell Fortuna Silver (FVI.v) on October 16th. Well that's fair enough, I have no problem with that, we all make our own value decisions. But when I saw why he'd called sell on the stock I just burst out laughing. Here's the full alert sent to me yesterday by a kind reader:

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Taylor says sell Fortuna Silver

Fortuna Silver Mines Inc (C:FVI)
Shares Issued 85,331,659
Last Close 10/29/2008 $0.48
Thursday October 30 2008 - In the News

Jay Taylor in the Oct. 16, 2008, edition of Gold, Energy & Tech Stocks tells readers to sell their Fortuna Silver Mines Inc., recently 61 cents. Mr. Taylor said buy three times between August, 2005, and August, 2006, at prices ranging from 61 cents to $1.35. He said sell half on April 16, 2007, at $3.25. Assuming a $1,000 investment for each of the three buys, selling half of the $3,000 investment at $3.25 would have yielded a profit of $3,620. Mr. Taylor upgraded Fortuna to a buy on June 12, 2008, at $1.96. Assuming a $1,000 investment at $1.96, and taking into accounting the remaining $1,500 investment after the April, 2007, sale, selling the total $2,500 investment at 61 cents would yield a loss of $1,229. Mr. Taylor says he is selling this stock because of a rapidly deteriorating global economic environment, and not because of a loss of interest in the company. The newsletter writer has decided to sell those companies in his portfolio which do not have a considerable amount of cash on their balance sheets. By doing so, he hopes to turn these negative markets to his favour or at least avoid further losses. He plans to keep an eye on Fortuna for a possible repurchase when there are signs that the current global decline has abated.

© 2008 Canjex Publishing Ltd.

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So, Mr. Taylor is selling FVI.v because it doesn't have a considerable amount of cash on its balance sheet. IS HE TOTALLY MAD? Right now FVI.v has around C$50m in cash, which is more than the company is worth according to market cap (about C$41m). I'm not talking about working capital either (that's much higher), I'm talking about cold, hard cash that FVI.v has tucked away in deposit accounts collecting a useful slice of interest. Not only that, but FVI.v is the owner of a mine that actually makes money...y'know..positive free cash flow. It's not some explorer with no income stream that will continue to fracture cash while it waits for the market to turn again.

If, as is truly the case, FVI.v has more cash than market cap this can only mean one of two things about Jay Taylor:

1) He doesn't have a clue about Fortuna Silver
2) He doesn't have a clue about how to read a balance sheet or financial reports.

And as Taylor did an extensive interview with FVI.v this year (you can see the video at the company website), it seems clear that the guy must know about the company. So therefore the only possible conclusion is that he's a zero when it comes to reading financial reports.

A little knowledge is a dangerous thing, and those that pay Taylor healthy monthly subscriptions for newsletters that contain badly researched and patently false information should muse on that old saw. Call sell on FVI.v if you want, Taylor, but don't write factually incorrect and misleading statements to back up your erroneous analysis. Jeesh, what a dumbass.........

Fortuna Silver: If you needed proof that the market is crazy......

.....Fortuna Silver (FVI.v) is now fully priced only on its cash at bank.

With U$46.6m in cash at bank (yep...real cash. Folding bills. Don't confuse it with 'working capital' either, as that stands at U$55m) and shares out at 85m, this means each share has C$0.65 of cash to back it up. The share price is now C$0.55.

Let's put this as simply as possible: Buy FVI.v stock at C$0.55 and you get C$0.65 worth of cash. And that doesn't even include:

• A working mine that made over $4m last quarter

• $14m worth of plant and equipment

• A hedge book that sells a large slug of its zinc and lead production at $1.10 to $1.20/lb

• A very large and exciting silver mine project in Mexico that is already a long way down the development track

• Wonderful new rich vein finds at the Caylloma mine that promise to extend mine life way way into the future
  

• A damn good management team

• etc

So if you like, buy the company out at 55c, sell the machinery, keep the cash, give the two properties away to charity or something and keep the twenty five million dollar profit that you make. It wouldn't be a bad day's work, would it? And I bet the charities would be happy, too.

The bottom line is less flippant. All the above is an example of market inefficiency, and this is what the investor should always be on the lookout for. It might be very tough on junior miners with no cash at bank at the moment, but if the market thinks their properties aren't going to get developed any time soon and they have no cash to support themselves, then at least the market has a reason for pricing them way way down (be that reason proved correct or false over time). But pricing a working mine with positive cash flow at the amount of cash it has in bank? Gimme a break!

I suggest you do some DD on Fortuna Silver, folks. I'm quite sure that once you do you'll come to the same "it's a buy" conclusion as I do. Here's the link to the company website.

Fortuna Silver (FVI.v)...errr, that's one thousand, seven hundred and seventy-five ounces of silver per tonne

The Caylloma Processing Plant

Look, even though it'd be very easy I'm not going to lay on a whole heap of hyperbole here. Just read the press release below. What I will say is that grade returns like the one just announced by Fortuna Silver are rare birds indeed. And they found 3.3g/t of gold in the mix, too.

Just as a quick mental exercise (and I know it's only the vein intersection, but humour me a second, yeah?). How much is a metric tonne of rock that holds 1,775 oz of silver and 3.3 oz of gold worth right now?

1,775 X $13.14 = $23,323.50
3.3 X $890 = $2,937
Total = $26,260.50

Yep, that's probably a profitable place to do some mining ;-)

C'mon, tell me I toldya so...tell me...tell me.....c'mon, tell me.............

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Press Release

Source: Fortuna Silver Mines Inc.

Fortuna Develops Soledad Vein, Caylloma Mine, Peru; Cuts High Grades Including 52,224 g/t Ag + 105 g/t Au Over 0.55 Meters
Tuesday September 23, 12:43 pm ET

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Sept. 23, 2008) - Fortuna Silver Mines Inc. (TSX VENTURE:FVI - News; BVL:FVI) is pleased to report that underground exploration and development on the Soledad and Silvia veins at its Caylloma Mine located in southern Peru has confirmed high-grade silver mineralization.

- Systematic channel sampling at 2m intervals along the strike of the Soledad vein returned grades averaging 2,259 g/t Ag, 3.76 g/t Au, 0.94% Pb, 1.47% Zn and 0.20% Cu over the initial 62m of the drift, with an average mineralized vein width of 0.70m.

- Locally, Bonanza style grades have been encountered during systematic channel sampling with grades ranging up to 52,224 g/t Ag and 104.76 g/t Au over a vein width of 0.55m.

Vertical continuity of the mineralization is currently being evaluated through the development of a chimney extending upward along the vein structure. A plan showing the underground workings and the channel sample locations has been posted on Fortuna's website at www.fortunasilvermines.com.

The high-grade silver mineralization is hosted by semi-transparent to milky quartz veins containing silver sulfosalts, minor rhodonite bands, and traces of sphalerite, galena and pyrite.

The Silvia Vein, located subparallel to and approximately 50m to the south of the Soledad Vein, has now been intersected in an underground crosscut with rib channel samples averaging 292 g/t Ag, 0.26 g/t Au, 7.98% Pb, 5.05% Zn and 1.86% Cu over a vein width of 2.49m. Underground exploration and development of the Soledad and Silvia veins is continuing for delineation of potential resources and to prepare the veins for production. Mining in both veins will use selective narrow vein mining methods.

The Soledad and Silvia veins are located in the northeastern portion of the Caylloma District in close proximity to the San Cristobal and Santa Cata veins which were extensively mined for high-grade silver ores from the 16th to 20th centuries.

Fortuna announced drill results for the Soledad and Silvia veins in August 2008 (see Fortuna Silver news release dated August 19, 2008), including drill hole STCM000808 which returned 1,937 g/t Ag and 1.89 g/t Au over an estimated true thickness of 1.2m and drill hole STCM000507 which intersected 548 g/t Ag and 1.51 g/t Au over an estimated true thickness of 1.3m.

Background

The silver and base metal-rich Caylloma district is located in the Tertiary volcanic belt of southern Peru. Intermediate-sulfidation epithermal mineralization is present in vein systems hosted by andesitic volcanic and volcaniclastic rocks overlying a Jurassic-age sedimentary basement. The Caylloma Mine was purchased by Fortuna Silver in 2005 and returned to production in October of 2006. Fortuna currently operates the 100% owned Caylloma Pb-Zn-Ag Mine at a rate of over 1000 tpd with production sourced primarily from the Animas Vein.

Fortuna holds exploration and mining rights to concessions covering approximately 13,800 hectares in the Caylloma area. Exploration activities include testing of high grade silver and base metal targets within the Caylloma District and evaluation of surrounding properties to identify opportunities warranting more advanced exploration and development.

Quality Assurance & Quality Control

Sample results reported for the Soledad and Silvia veins are based on channel samples systematically collected perpendicular to the orientation of the vein. Samples are dried, prepared and analyzed at company-owned laboratory facilities at the Caylloma property. Silver and base metals are assayed by atomic absorption methods utilizing an aqua regia digestion. Gold is assayed by standard fire assay methods with an atomic absorption finish. Certified reference standards are blindly inserted into the sample stream at a frequency of 1 per 20 normal samples. Assay blanks are blindly inserted at a frequency of 1 per 40 samples and field duplicates at a frequency of 1 per 60 normal samples. Check assay samples and preparation duplicate samples are routinely submitted to ALS Chemex facilities in Lima to verify sample preparation and assay quality.

Qualified Person

Mr. Gregory Smith, P.Geo., is the Company's Qualified Person as defined by National Instrument 43-101 and is responsible for the accuracy of the technical information in this news release.

Fortuna Silver Mines Inc.

Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Principal assets include the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is aggressively pursuing additional acquisition opportunities. For more information, please visit our website at www.fortunasilver.com.

ON BEHALF OF THE BOARD

Jorge Alberto Ganoza Durant, President, CEO and Director

Fortuna Silver Mines Inc.

The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release.