Fortuna Silver Mines Inc.

  • Mid-tier silver producer with significant revenues from lead and zinc production.
  • Fortuna wanted to insure a portion of future cash flow funding for certain asset development plans and general corporate needs by hedging a portion of its by-product metal output.
  • Client targeted firm floor prices for its lead and zinc production, and sought advice on the percentage of production to be sold forward, over what duration and with what instruments.
  • Client hedged a portion of its lead and zinc output using a Min/Max or Collar structure.
  • This strategy allowed the client to hedge a large percentage of its lead and zinc at a profitable floor while still participating in market prices up to historically high levels.
CPM Group’s Involvement
  • Discussed production with management to formulate optimal hedge ratio and tenor.
  • Recommended a hedge ratio and tenor followed by indicative trades.
  • Introduced the client to suitable trading counterparties.
  • Guided the client through the credit approval process with the counterparties.
  • Discussed risk management of each position with management.
  • Created a live competitive quoting process where financial institutions compete for best prices.
  • Provide ongoing hedge management, market intelligence and advice.