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Analyst Report: Fortuna Silver Mines, Inc. (TSX:FVI / NYSE:FSM / BVL:FVI / FSE:F4S)

|Includes:AG, Fortuna Silver Mines (FSM)

Established in 2005, Fortuna Silver Mines is a growing, low-cost silver producer with two operating mines in Peru and Mexico. The company is focused on organic growth in production and resources, as well as on exploration and acquisition of economic silver mineral assets in Latin America.

Fortuna expects to increase production from an estimated 3.7M oz of silver and 17,400 oz of gold in 2012 (4.6M silver equivalent oz) to an estimated 5M oz of silver and 26,000 oz of gold, not including significant lead and zinc by-products, by 2014. In 2014, the company projects total production of 6.4M silver equivalent oz, a 39% increase. In 2011, the company's net realized price per ounce of silver sold was over $30 USD.

The company is profitable and growing in terms of mineral assets, production and revenues. The company's low cash costs suggest that profits will grow in step with increasing production. Production is expected to increase 39% in the next 24 months. The company's share price is near its 52-week low. The company's execution has been very consistent. All other things being equal, the company's share price seems likely to rise from recent lows.

For comparison, First Majestic Silver Corp. (TSX:FR / NYSE:AG) has consistently increased its mineral assets, production and revenues while developing new mines and maintaining relatively low production costs. Fortuna Silver Mines is well positioned to become the next First Majestic.

Fortuna Silver Mines, Inc. (TSX:FVI / NYSE:FSM / BVL:FVI / FSE:F4S)

Disclosure: I am long FSM, AG.

Stocks: FSM, AG