Fortuna Silver slumps 9% despite impressive drilling in Mexico

Fortuna Silver Mines Inc (TSE:FVI NYSE:FSM) sank more than 8% on Wednesday, hit by a downgrade on the same day of the release of impressive intercepts at the Trinidad North discovery at its San Jose silver-gold mine in Mexico.

In early afternoon dealings the Vancouver-based company was changing hands for $4.67, down 8.9% on the New York Stock Exchange and down 5.7% to C5.83 in Toronto. Around 522,000 shares in the $652 million counter were traded in New York by 2:00EST, compared to a daily average of some 300,000 shares. Year to date the volatile counter is still up nearly 3.5%.

The stock downgrade by analysts at CIBC to a "sector perform" from an "outperform" weighed more heavily on the share price than results of step-put out drilling in 23 holes at Trinidad North, first discovered in February 2013, which extended silver-gold mineralization by 150m.

Highlights include a 4.6 metre interval grading 1,845 g/t silver-equivalent (1,282 g/t Ag & 8.11 g/t Au) contained within a broader 18.0 metre interval grading 608 g/t silver-equivalent (426 g/t Ag & 2.62 g/t Au).

Fortuna is spending $3.5m on an exploration program at Trinidad North this year which will include 12,000m of drilling work.

Fortuna is expected to produce 12 million ounces of silver equivalent at a cash cost of $5.01 per silver-equivalent ounce from its San Jose silver-gold mine in Mexico and the Caylloma polymetallic mine in Peru.

San Jose is being expanded to full capacity of 3,000 tonnes per day by the middle of next year and Fortuna's total production could jump past 16m silver equivalent ounces by 2017.