Fortuna Generates Strong Cash Flow as Operations Solid
Contributed Opinion

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Fortuna Mining Corp., Fox Riv Res Corp., Lara Exploration Ltd., Metalla Royalty & Streaming, Midland Exploration Inc., Altius Minerals Corp., Orogen Royalties Inc., and Osisko Gold Royalties Ltd.
2. Adrian Day: I, or members of my immediate household or family, own securities of: Fortuna Mining Corp., Fox Riv Res Corp., Lara Exploration Ltd., Metalla Royalty & Streaming, Midland Exploration Inc., Altius Minerals Corp., Orogen Royalties Inc., and Osisko Gold Royalties Ltd. My company has a financial relationship with: Fortuna Mining Corp., Fox Riv Res Corp., Lara Exploration Ltd., Metalla Royalty & Streaming, Midland Exploration Inc., Altius Minerals Corp., Orogen Royalties Inc., and Osisko Gold Royalties Ltd. I determined which companies would be included in this article based on my research and understanding of the sector.
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Fortuna Mining Corp. (FSM:NYSE; FVI:TSX; FVI:BVL; F4S:FSE) reported fourth-quarter earnings a little light of expectations (though up 50% on the year-ago quarter), with costs right at the top of its full-year guidance as cash flows continued to be strong, after pre-releasing production numbers.

Costs were relatively high because of the wind-down of mining at San Jose and the leach pad expansion at Lindero; both are behind the company now. Cash costs for the year were $987, and we expect costs to continue low.

Free cash flow was a new record in the quarter. The company repurchased $30 million of shares in the quarter after paying down debt; it ended the year with net cash of $59 million. Cash of $231 million is up $50 million from the previous quarter.

This Year Promises To Be Another Good One

A $42 million leach pad expansion at Lindero promises increased production and lower costs from that mine, while successful brownfields exploration at Séguéla promises mine expansion in the future. Solid balance sheet, stable costs, strong cash flow, and top conservative management, Fortuna has four mines after selling San Jose, two each in Latin America and West Africa.

It is our favorite mid-tier producer, exceeding $1 billion in sales in 2024. I have long indicated that as its one-off operational issues were put behind it, Fortuna would generate strong cash flows, and it is now doing that, firing on all cylinders.

After gaining 63 cents in three days following their results, however, we will hold for now but buy on any pullback.

Midland and Rio Resume Search for Lithium

Midland Exploration Inc. (MD:TSX.V) announced a new $5.2 million drilling program on its Galinée project, in which Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTNTF:OTCMKTS) is earning into.

The partnership is primarily focused on looking for lithium deposits.

This year's program will follow up on targets identified in last year's successful exploration work.

With a strong management, a solid balance sheet, and multiple projects under active exploration, Midland remains a Strong Buy.

Why Did Lara's Shares Drop This Week?

Lara Exploration Ltd. (LRA:TSX.V) shares fell sharply this week, hitting a low of 95 cents Thursday, on liquidations following the closing of a money management program.

The shares were consistently above $1.50 for most of this year.

Take advantage of this ongoing liquidation to add to positions.

Some U.S. brokerage firms were showing prices as low as 9 cents for a daily loss
of 84%. Firms using after-market OTC quotes for foreign stocks is an ongoing
problem; the quotes are meaningless. We have discussed this problem before; see,
for example, Bulletin #921. To add to woes, more firms are refusing to allow
clients to buy what they deem "penny stocks." A major Swiss bank rejected an
order ot buy Lara, saying that it no longer allows orders for shares prices under
$3. There is no legitimate reason for this. 

Altius Shares Also Experienced a Sharp Drop

Altius Minerals Corp. (ALS:TSX.V) shares also dropped sharply, over 6% on huge spike in volume in the last 10 minutes of the last day of February. The stock had already been sliding from over $29 at the end of January on higher-than-usual volume.

The longer-term selling could be related to the money manager liquidation referred to above in discussing Lara.

But the cause of the sharp drop last week is not knows, but it smacks of someone who wanted it off their books at month end or perhaps a margin call. In any event, this is also an opportunity for investors who do not own the best diversified resource company out there to buy.

Orogen Royalties Inc. (OGN:TSX.V) has also seen some selling from the
same source, although it is better bid than Lara, so has not fallen so much.
Nonetheless, if you do not own, this is a good time to buy. 

TOP BUYS this week include, in addition to the above, Osisko Gold Royalties Ltd. (OR:TSX; OR:NYSE), Metalla Royalty & Streaming Ltd. (MTA:TSX.V; MTA:NYSE American), and Fox River Resources Corp. (FOX:CSE)