Seeking Alpha: Solid Costs And Expansion Potential For Fortuna Silver

The closest thing to a safe hiding place that investors in precious metal miners can find today is a company with a clean balance sheet and a competitive cost structure. Fortuna Silver (FSM) seems to fit the bill, as the company's cash production costs are on the correct side of industry-wide averages and the company has a net cash position with no particularly demanding capital requirements in the near term.

Even though Fortuna Silver has a better cost position than Pan American Silver (PAAS) and Coeur Mining (CDE), the all-in sustaining cost of more than $20/oz is a little higher than the current spot price of silver. What that suggests to me is that cash flow is likely to get tight if silver prices don't recover, as I am not convinced that the company has the scope to significantly curtail costs from here. I do believe that the stock is trading at an attractive price relative to its NAV, but investors should note that Fortuna's current price would seem to be forecasting silver prices at least 10% lower than today's level.

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Solid Costs And Expansion Potential For Fortuna Silver