With the price of silver slipping to start the week, shares of Fortuna Silver Mines (FSM 7.14%) are headed in the opposite direction. The company announced today that it has received a permit from the Mexican government for its silver-gold asset, San Jose, and Wall Street is reacting to the news today.
As of 10:22 a.m. ET on Monday, shares of Fortuna Silver Mines were up 17.4%.
The uncertainty over whether Fortuna Silver Mines would receive an environmental impact authorization (EIA) has plagued investors since November, when management reported that the Mexican government had denied a reauthorization of the permit, which had expired in late October. According to Fortuna, the Mexican government has granted the company a 12-year extension of the EIA for San Jose.
San Jose, which began operations in 2011, accounted for 6.2 million ounces of silver production and 38,000 ounces of gold production in 2020. In 2021, the company forecasts San Jose will achieve silver and gold production of approximately 6.2 million ounces and 40,000 ounces, respectively.
Ryan Thompson, an analyst at BMO Capital, is particularly impressed with the company receiving the EIA, and he upgraded the stock to outperform from market perform according to Thefly.com. Besides upgrading the stock, Thompson raised his price target to 7.50 Canadian dollars ($5.82) from CA$5.75.
It's no surprise that investors are heralding the company's receipt of the EIA from the Mexican government, considering the prominent place the asset holds in Fortuna's portfolio. But investors shouldn't add some luster to their portfolios with Fortuna Silver Mines solely based on today's news. Instead, they should dig deeper into the company and its fundamentals and then decide whether it is the right silver stock for them.