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Silver & Gold Producer Achieves Solid Q4/19
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An update on Fortuna Silver Mines is provided in a CIBC report.

In a March 15 research note, CIBC analyst Cosmos Chiu reported that Fortuna Silver Mines Inc.'s (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) Q4/19 financials were solid but the company increased capex for its Lindero operation in Argentina.

As for Q4/19, Fortuna Silver's adjusted earnings per share (EPS) and cash flow per share (CFPS) were a beat, Chiu relayed. EPS was $0.07 and CFPS was $0.17, higher than consensus' $0.06 and $0.11 projections, respectively, and CIBC's estimates.

Chiu highlighted that the Canadian company's Q4/19 production from its San Jose mine in Mexico and its Caylloma mine in Peru was steady and cash flow generating. It amounted to 2,250,000 ounces (2.25 Moz) at a cash cost of $8.27 per ounce and an all-in sustaining cost of $12.58 per ounce. Both costs were 10% and 5% better, respectively, than in Q3/19.

Fortuna's 2020 production guidance remains unchanged at 7.5–8.3 Moz of silver and 101,000–125,000 ounces of gold (101–125 Koz), with 60–80 Koz coming from Lindero.

Chiu noted that after the recent announcement that the first pour at Lindero would be delayed to sometime in Q2/20, Fortuna increased total capex for Lindero to about $320 million from $298 million and raised preproduction working capital needs to $40 million from $25 million. "Fortuna should be able to meet the remaining capital requirements at Lindero until commercial production is announced, expected in Q3/20," Chiu commented.

CIBC kept its Neutral rating but decreased its target price on Fortuna Silver to CA$4.75 per share from CA$5.75. The stock is currently trading at around CA$3.46 per share.


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Disclosures from CIBC, Fortuna Silver Mines Inc., Earnings Update, March 15, 2020

Analyst Certification:
Each CIBC World Markets Corp./Inc. research analyst named on the front page of this research report, or at the beginning of any subsection hereof, hereby certifies that (i) the recommendations and opinions expressed herein accurately reflect such research analyst's personal views about the company and securities that are the subject of this report and all other companies and securities mentioned in this report that are covered by such research analyst and (ii) no part of the research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by such research analyst in this report.

Potential Conflicts of Interest:
Equity research analysts employed by CIBC World Markets Corp./Inc. are compensated from revenues generated by various CIBC World Markets Corp./Inc. businesses, including the CIBC World Markets Investment Banking Department. Research analysts do not receive compensation based upon revenues from specific investment banking transactions. CIBC World Markets Corp./Inc. generally prohibits any research analyst and any member of his or her household from executing trades in the securities of a company that such research analyst covers. Additionally, CIBC World Markets Corp./Inc. generally prohibits any research analyst from serving as an officer, director or advisory board member of a company that such analyst covers.

In addition to 1% ownership positions in covered companies that are required to be specifically disclosed in this report, CIBC World Markets Corp./Inc. may have a long position of less than 1% or a short position or deal as principal in the securities discussed herein, related securities or in options, futures or other derivative instruments based thereon.

Recipients of this report are advised that any or all of the foregoing arrangements, as well as more specific disclosures set forth below, may at times give rise to potential conflicts of interest.

Important Disclosure Footnotes for Fortuna Silver Mines Inc. (FVI.TO)
• 2a These companies are clients for which a CIBC World Markets company has performed investment banking services in the past 12 months: Fortuna Silver Mines Inc.
• 2c CIBC World Markets Inc. has managed or co-managed a public offering of securities for these companies in the past 12 months: Fortuna Silver Mines Inc.
• 2e CIBC World Markets Inc. has received compensation for investment banking services from these companies in the past 12 months: Fortuna Silver Mines Inc.
• 2g CIBC World Markets Inc. expects to receive or intends to seek compensation for investment banking services from these companies in the next 3 months: Fortuna Silver Mines Inc.

For important disclosure footnotes for companies mentioned in this report that are covered by CIBC World Markets Inc., click here: Disclaimers & Disclosures.

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