Fortuna is a little known silver company with two operating underground mines in Peru and Mexico and a killer growth rate. Silver production popped 31% in 2011 while gold production grew 174%. The miner is on track to produce 3.7 million ounces of silver and 17,000 ounces of gold this year, with production growing to 5 million ounces and 26,000 ounces, respectively by 2014 -- that is a double digit growth rate at a time when other miners like Newmont Mining (NEM - Get Report) are struggling to just replenish their reserve base.
The company has no debt, working capital of $70 million and no plans to issue equity or raise cash -- unless it buys another exploration property and brings it into production, something it is actively pursuing.Before Fortuna catapults into a big time silver miner, it must overcome some big problems. First, no one knows about it. Average volume traded is well under 200,000. Fortuna's market cap is $844 million compared to other small silver producers like Silvercorp (SVM - Get Report), which has run into legal trouble over its operations in China and still has a market cap of more than $1 billion. CEO Jorge Ganoza hopes that the company's big growth profile and recent listing on the New York Stock Exchange (NYSE) will help draw investors.
"We have a very concrete growth plan in terms of reserves," he says, "so the company is well poised to capitalize on all those opportunities, and it was the right time to list in New York and to increase our exposure to New York based institutions." The volatile silver price is also a mixed bag for the company's popularity. In 2011, shares of Fortuna were up up 15%, while silver was down 10%. This year the two have moved in tandem, with silver up 17% and Fortuna up 15%. The stock is able to decouple from the silver price if the company delivers killer growth, but it can also move with silver, leaving it susceptible to a correction if the precious metal sells off. Canaccord Genuity, which rates Fortuna as a speculative buy, recently lowered its 2012 silver price forecast to $33.50 from $40 an ounce with their peak silver price dropping from $40 to $35 an ounce.
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