Fortuna Silver receives EIA extension for San Jose mine in Mexico

Mexico has granted Fortuna Silver Mines (TSX: FVI; NYSE: FSM) a 12-year extension to its environmental impact authorization for the company’s San Jose mine in Oaxaca state, after first denying the extension in November. 

 “After continued dialogue and technical evaluation, Semarnat confirmed operations at the San Jose mine are conducted in accordance with all environmental obligations under the EIA,” Fortuna Silver stated in a press release, referring to the country’s Secretaría de Medio Ambiente y Recursos Naturales. 

  “Following confirmation of compliance, Semarnat reassessed Fortuna’s application and granted the extension on the existing EIA terms.”  

Located in the Taviche mining district and run by Fortuna’s Mexican subsidiary, Minera Cuzcatlan,  the San Jose mine has been producing silver and gold since 2011. Last year the mine produced 6.2 million oz. of silver and 37,805 oz. of gold.  

Mexico did not renew the company’s EIA on November 10 due to a pending evaluation of the mine’s infrastructure and the company’s failure to provide “required documents,” which Minera Cuzcatlan said it had already submitted, according to a Fortuna press statement published last month.  

BMO analyst Ryan Thompson, who follows Fortuna Silver, said in a research note that the latest development would have a positive impact on the company’s shares and upgraded his rating on the company to outperform from market perform. He also raised his target price on the company from $5.75 to $7.25.  

“The granting of this extension … provides investors with assurance that the San Jose mine will continue to operate and generate cash flow for the company,” Thompson said in a research note. “The EIA extension removes a material overhang on the stock. Fortuna shares have underperformed significantly since the EIA was denied, and we think this has now created a buying opportunity.”  

At presstime in Toronto, Fortuna Silver was trading at $4.95 per share, up 18.5% from its opening price of $4.71 per share. Over the last year, Fortuna’s shares have traded in a range of $3.77 and $12.61 per share.