On Monday, Dec. 20, Fortuna Silver Mines Inc (NYSE:FSM/FVI.TO) announced that the SEMARNAT, Mexico’s environmental authority, granted a 12-year extension of the Environmental Impact Authorization at the San Jose mine.
SEMARNAT confirmed that the mine operations are conducted in accordance with all environment obligations under the EIA, reassessed the application and thereby granted the extension.
Since the mine was put into operation by FSM, PROFEPA (Mexico’s environmental protection agency) has conducted 13 inspections. The Company has never been cited for pollution or environmental damage. In addition the Company spends its resources to go well above and beyond the environmental and community outreach requirements to remain in compliance with its operating permits and maintain a good relationship with the local stakeholders and authorities.
FSM is the biggest employer in the Central Valleys region of Oaxaca and the biggest direct and indirect source of economic wealth output in the area. The only surprise was that the extension was granted before year-end. I expected that FSM would have to incur the cost of elevating this matter to the courts.
During the period between the initial denial and subsequent granting of the extension, the mine operations were never paused and the Company did not incur loss of revenue.
Based on the reserves, the current assessed life of the mine is three years. However, the property hosts multiple areas of possible resource expansion. While its impossible to know if the Company can extend the mineral reserves for the full 12 years of the extension, I am confident that the mine will operate for several years beyond the rated LOM. This probability, in my opinion, is not yet factored into the stock price.