Fortuna Silver Mines Inc.
Summary
Simon Ridgway, founder of Fortuna Silver Mines Inc. believes future profit of silver will increase up to $29 million from $11 million in 2007. He realized that they did a good job from 2007 revenues from Caylloma mine in Arequipa, Peru and that the price of silver went over $20 an ounce. The Caylloma mine produced 500 ton to 1100 tons daily and hopes to produced 1.5 million ounces for next year. He says the company prospers quickly because the supply decreased as demand grew. With the next project in
Connections
There were factors that caused consumer demand for silver to change. It might have been because other substitutes like lead and zinc prices to have decreased and the company increased production to increase the prices for competition. The increase in demand will result the demand curve to shift right, more silver will be demanded, regardless of the price, than previously. There is a change in supply. An increase in productions costs will results the supply curve to the left. Then same amount of silver will be supplied to the market at a higher price to earn a profit.
Reflections
I agree with the article that prices for silver will continue to rise in the future and would become more profitable. Another factor would be because of expectation of future prices that silver will continue to rise. The reason is because I believe the demand for silver would increase, since silver makes up 1/3 of the world’s jewelry and silverware. Silver is necessary to make up an electrical circuit. . The fact that silver has properties of being a good conductor and that it can resist high temperatures. It makes it valuable to be used in technology.
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