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Fortuna Silver (FSM) (FVI.to): Tracking the Lindero bullshit

When you are awoken to the smell of CEO bullshit it’s often worth investigating further, if only to see how many more bullshit lies and truth-stretches have been in operation. Our subject, Fortuna CEO Jorge Ganoza, has already been shown as untrustworthy over the progress and cost of his white elephant in Argentina (of all places, WTF were they thinking?) due to the corporate need to raise cash for the project when he said very clearly earlier in the year they wouldn’t need any more, even after the weather-affected delay was taken into consideration. So when today FVI said…
“The Lindero Project construction remains on track with placement of Mineral Reserves on the leach pad scheduled for the fourth quarter of 2019 and first doré pour planned in the first quarter of 2020”
…the radar buzzed and it was time for some fact-checking. Starting here, what FVI said on February 20th in its NR when re-setting the timeline:
“The crushing and agglomeration plant is on the critical path of the
project.  Commissioning of this plant is planned for late in the third
quarter of 2019.”
Compare that today’s NR:
“Commissioning of the crushing circuit and the agglomeration plant is planned for the fourth quarter of 2019.”
So what part of this fits with the company’s claim that “The Lindero Project construction remains on track?“. Answer; None, it’s revisionist BS. Also,note that on February 22nd the company was keen to explain that critical path was the crushing and agglomeration plant. Today it was all sequins and sleight of hand over the start of pre-production mining”, as not only was that the NR title, but CEO Ganoza threw in his comment about it being “...one of the important milestones of the project...”. Not a peep about the real delays at the project, but we’re beginning to see a pattern and that suddenly comes as no surprise.
So what about if we take a decent guess at when this thing is really going to be finished, rather than when they’d like us to think it’ll be ready. For that we need to track their deeds rather than their words and this table does just that:
Along the way and from time to time, FVI has reported the total completion percentage of Lindero to the market in its publications, e.g. MD&As, news releases and conference calls. This shows six of the pertinent dates and the percentage of Lindero reported complete by the company on each date.
  • Back on November 7th (in the 3q19 MD&A), Lindero was 26% complete.
  • Then in both the Feb 20th NR and the year-end MD&A, Lindero was reported 40% complete. We know the project had hit weather delays at that point, so a pass is given.
  • Then on May 13th we were told Lindero was 47% complete. Slow progress since the last update and as the columns on the right show, they’d only added an extra 7% completion in 62 days, a rate of 0.11% per day.
  • However, since then things have picked up a bit as the last two updates show an improved rate of build-out at Lindero, averaging 0.21% completion per day since May 13th. That’s a three and a half month sample and a reasonable one on which to base estimates.
Therefore, a little mathematics: If today Lindero is 70% complete and being built out at the average rate of 0.21% per day, that means we are 143 days from completion. And that, ladies and gentlemen, means FVI can say whatever it wants about pre-production-this-and-that, this thing won’t be ready until late January. This compares to the original plan (3q18 MD&A): “...the Company maintains its guidance of the commencement of commissioning in the second quarter of 2019 and achieving commercial production by the end of the third quarter of 2019.” It’s not even going to be commissioned by end 2019 and the company has the brass neck to tell us it remains on track today.

Over-budget, overdue and even when it’s finished, in Argentina. 

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