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small-cap

One NYSE Listed- Commodity Stock to Consider- Fortuna Silver Mines Inc

Jun 21, 2023 | Team Kalkine
One NYSE Listed- Commodity Stock to Consider- Fortuna Silver Mines Inc

Section 1: Company Fundamentals

1.1Company Overview and Performance summary

Company Overview:

Fortuna Silver Mines Inc. (NYSE: FSM) is a Canada-based precious metals mining company with operations in Argentina, Burkina Faso, Mexico and Peru. The Company is primarily engaged in producing silver and gold minerals. The Company’s operated mines and projects include San Jose Mine, Caylloma Mine, Lindero Mine and Yaramoko Mine.

This US Daily Report covers the Company Overview & Price performance, Summary table, Key positives & negatives, Key metrics, Underlying commodities analysis, Company details, Technical guidance & Stock recommendation, and Price chart.

Price Performance:

  • FSM's share price has corrected by 7.44% in the past three months. Moreover, in the long term, the stock has given a return of 32.33% over the past nine months.
  • The stock is currently trading near in between its 52-week range of USD 20 and 52-week low price of USD 2.05, with the expectations of an upside movement from the current levels.
  • The stock is currently below its short-term (50-day) SMA and long-term (200-day) SMA, with the current RSI of around 29.95.

1.2 Summary Table

1.3 The Key Positives & Negatives

1.4 Underlying Commodity Analysis:

Gold prices remained below the USD 1,940 per ounce, experiencing a decline of over 1% in the past two sessions. The market sentiment was cautious as investors awaited Federal Reserve Chair Jerome Powell's testimony before Congress to gain insights into the future trajectory of US interest rates. Recent data revealed a significant surge in US housing starts, indicating the resilience of the economy despite higher borrowing costs and providing room for further monetary tightening. While the Federal Reserve decided to keep interest rates unchanged last week, members of the Federal Open Market Committee (FOMC) projected an average of two additional rate hikes this year. The central bank's latest report to Congress emphasized that inflation in crucial sectors of the US services industry remains high and shows no signs of easing. The market currently expects a 25-basis point rate hike in July, signaling the end of the tightening cycle.

Silver prices declined to USD 23 per ounce in late June, reaching the lowest level in a month. This decline was in line with other precious metals as the hawkish stance of major central banks dampened demand for non-interest-bearing assets. The European Central Bank (ECB) and the Bank of England (BoE) have also indicated their intention to continue raising rates. However, concerns over supply limitations prevented further declines. Regulatory changes in Mexico have made it more challenging for mining companies to obtain mineral concessions, potentially leading to reduced investments in new projects and jeopardizing output from the world's largest silver producer. Moreover, silver production in Peru experienced a 7% year-on-year contraction in the first four months of 2023. Current production levels have raised concerns of a shortage as the demand for silver increases due to the transition to renewable energy sources, particularly in the solar panel and electric vehicle sectors.

Section 2: Fortuna Silver Mines Inc (“Buy” at current market price ofUSD 3.06, as of June 21, 2023, at 06:45 am PDT)

2.1 Company Details

2.2 Valuation and Technical Guidance

Markets are trading in a highly volatile zone currently due to certain macroeconomic issues and geopolitical tensions prevailing. Therefore, it is prudent to follow a cautious approach while investing.

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels is June 21, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: The report publishing date is as per the Pacific Time Zone.

Technical Indicators Defined: -

Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.

 Resistance: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Resistance 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Resistance 2 may act as the crucial resistance level for the stock.

 Stop-loss: It is a level to protect against further losses in case of unfavorable movement in the stock prices.