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3/22/12

We haz teh anointed

Louis Lobito James today hath spoken on Fortuna Silver (FVI.to), the world is perfecterated. Amen.

(and before we leave you with Lobito's words of wisdom, a disclosure: Long FVI.to and way, way longer than the Casey dumbass).


Fortuna Silver Mines (T.FVI, C$6.01, 124.9M SO, 128.8M FD, C$750.6M MCap, US$63M Cash, www.fortunasilvermines.com)
BUY SECOND TRANCHE UNDER C$5.50—Fortuna has had a fatality at its Caylloma mine in Peru. This is the first such accident since the company bought the mine seven years ago, notwithstanding the daily handling of explosives and operation of a lot of dangerous equipment in the dark. I have been to the mine in operation and would say that the safety and security practices on site are among the best I've seen. The company has always taken it very seriously and done a good job – but accidents do happen.
At least one industry observer – a self-anointed industry vigilante – has written highly critical remarks about Fortuna's plan for disclosing this information. We do not regard the source as credible and do not agree with the criticisms.
Meanwhile, in Mexico, a political activist in the area of Fortuna's San Jose mine was fatally shot recently. He was not shot during any directly anti-mine activity, nor by Fortuna security personnel. He was apparently critical of the mine and of the local government, which some activists say is in cahoots with Fortuna. The real bone of contention is local water use planning, which has turned violent before. Fortuna is often painted by opposition as the Bad Guy, even though the company rebuilt a water treatment plant for a local community, vastly improving their water quality, and pipes more water in. Locally, the focus of conflict is actually the government, not Fortuna, and there may well be political fallout from the conflict for years to come.

For now, however, the company has a lot of local support, is in full compliance with the law, and does not appear to be in any immediate danger.
I've been to this site as well, and I've seen the clean, safe work environment the company has created there. I've seen female employees treated with a respect and dignity that I had not seen in Mexico before. I saw local villagers who'd once had few choices other than scrabbling in the dirt or leaving, now trained and operating advanced computer-controlled machinery. I saw much more at the mine, a quality job from top to bottom, but I also saw that new restaurants and other businesses had sprung up in the town around the mine (I'd seen it before Fortuna built San Jose, as well).
In my mind, Fortuna's operation at San Jose is a text-book example of the positive impact responsible industry can have on a poor community that desperately needs capital influx.
In short, Fortuna is a good company, run by good people, providing good returns for investors, and having a good impact in the world.
As for what to do, I note that the shares dropped under our C$6.00 guidance for first tranches this week, so I'd look for second-tranche opportunities, especially if the issues discussed cause the market to discount FVI unrealistically.

So tell us Louis, while you're around giving out emergency market updates and all that. This Guyana Gold (GUY.to) thing you said you were buying more of at $5.87 just three weeks ago. It's now $3.24. Is that good or bad?

And can you help us out with thoughts on Sandspring (SSP.v), the stock you reco'd as a buy in June 2011 at $2.19. That one is now at $1.03, a 53% loss. Any extra thoughts on that?

What about East Asia Minerals (EAS.v), that was $5.15 in May 2011 when you told people to buy it? That's 40c or so now, a 90%+ loser. We need your guidance, oh great Lobito!

Then there's Avion (AVR.to), down 40% since you called it a buy at $2.00 in August 2011. That's another we'd really like to know more about, Lobito.

Next up Great Panther Silver (GPR.to), your buy call from September 2011 at $2.87 is now down at $2.10, which is another 26.8% haircut on your subscriber's cash. Advice please!

What price was PC Gold (PKL.to) when you said it was a buy? 72c I think. Well today it's 33c

Gold Bullion (GBB.v) was what, 40c or so when you told the top level Casey subbers to buy, then 50c or so when you got it on the Intl Speculator? Well today it's 16c...how you feel about that one these days?

But the good news is that Louis Lobito Little Wolfie Wolf James of Casey Research doesn't take this humble corner of cyberspace seriously.