Fortuna Silver Mines (FVI.TO)

Pullback is just a nice opportunity to buy.

Has owned this for 1.5 years. Fundamentals and return on capital are improving to 16% (high for a commodity). Is his silver play.

More upside on this one if someone is willing to take on the West African political risk as well as volatility in precious metals (and he is). Partial pivot from Latin America to West Africa. Three years ago he was afraid of this pivot, but they pulled it off.

Cheap on any fundamental basis. Jurisdictions it operates in keeps a lid on it. Pretty good at the acquire-and-develop business model. His one criticism is that instead of having one Tier 1 asset, it has a collection of Tier 2s. Very strong development pipeline; FCF looks good 3 years out, even with gold prices steady (but he expects higher).

Oversold. Expanding an operation, and it's having teething problems. Appears that West African operations are firing on all cylinders, but concern with global investors about political instability. 

Quality of US balance sheet is very poor, and not getting any better. 10-year forecast for the US deficit is $5T a year. Global debt to GDP isn't a lot better. And if balance sheets doesn't get any better, what's going to? You need an alternate to currencies.

He's very bullish on this area. Acquisition in the Ivory Coast, and one analyst has come down hard on the company as a result. Shares have been pushed down almost down to book value. Don't wring your hands and moan; instead, use this as an opportunity to buy a cheap stock. This name has one of the highest intrinsic value targets of all the gold stocks, over 120% higher. No dividend.

They went to raise money, but too much, which in turn pressured the stock price. But don't worry about the low price. He's bullish gold and silver. Be patient and let this wash through. The underwriters were stupid.

Would recommend selling at current prices. Does expect higher prices. Better options for investors in current markets. 

Likes both, but slightly prefers FVI, since it's so deeply out of favour. He's less conscious of political risk than most investors. Both are well run. Both have successfully brought Tier 2 deposits into production on time and on budget with efficient operations. 

Cheap stock price given large assets.
Believes company with be able to work through political problems.
Historically a good operator. 
Sees increased cash flow going forward. 
Very large silver assets. 

The stock is hitting resistance. Gold and silver have done very well. To know where the price of a commodity is going, look at companies that use the commodity. Look at FVI's share price, and that's been rallying. Don't add positions in gold and silver now, because mid-May enters seasonal strength in the USD--bad for Canadian minerals. But look at these names in late-June. Be patient.

He likes both. Has had its run of problems. Relationship between gold and silver favours silver. Plus, it's an industrial metal. EV industry will put upwards pressure on demand for silver. Drawdown of silver inventories have been unbelievable.