FSM, Fortuna Mining Corp.

Will it survive?

• Can it pay its interest? 22.2×
  Comfortable
  Operating income $408M ÷ interest expense $18M
  What this means

  Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.

• How heavy is the debt, net of cash? +$627M
  Net cash, debt-free
  Cash $554M + ST investments $73M − debt $0
  What this means

  Cash and short-term investments exceed every dollar of debt by $627M, on net the company owes nothing, and can act from strength when others can't. Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.

• How long is cash tied up? 5d
  Tight
  DSO 29 + DIO 93 − DPO 117 days
  What this means

  Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.

Is it a good business?

• Return on invested capital —
  Not enough data
  Industry peers: median -4%
  What this means

  The filing data didn't include the inputs for this check.

• Owner-earnings margin 9%
  Solid through the cycle
  9-yr median margin, range 3%–20%; latest $138M = operating cash $366M − maintenance capex $228M
  Industry peers: median -3%
  What this means

  What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's 15% of revenue this year, a 9% median across 9 years.

• Are earnings backed by cash? 1.27×
  Cash-backed
  Cash from ops $366M ÷ net income $287M
  What this means

  How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.

How is the cash used?

• Where do the earnings go? 7%
  Reinvests most of it
  Dividends + buybacks $10M ÷ Owner Earnings $138M
  What this means

  Of $138M Owner Earnings, $10M (7%) went back to shareholders, $0 dividends, $10M buybacks. Returning most of it is the mark of a mature business with little left to reinvest at a high return; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.

• Investing or harvesting? 1.00×
  Maintaining
  Capex $228M ÷ depreciation $227M
  What this means

  Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.

Graham’s defensive tests · 2 of 5 met

Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.

• Adequate size Miss
  Revenue ≥ $2B · $947M
  What this means

  Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.

• Strong liquidity Pass
  Current ratio ≥ 2× · 2.98×
  What this means

  Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.

• Earnings stability Miss
  A profit every year (10-yr record) · 2 loss years
  What this means

  Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.

• Dividend record Miss
  Uninterrupted dividends · none paid
  What this means

  An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.

• Earnings growth Pass
  Earnings +33% over the record · +209%
  What this means

  At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.

• Moderate price —
  P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
  What this means

  Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $0.40/share (latest year $0.94), the averaged base the calculator's gate runs on, and book value is $5.48/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.

Durability & moat, 2016–2025

Whether the record’s returns held, and what the capital reinvested earned.

• Profitable years 8 of 10
  What this means

  Lost money in 2 year(s), look at what happened there before trusting the average.

• Operating margin 29% → 22% (3-yr avg ends)
  What this means

  The recent-years average (22%) sits below the early years (29%), but the latest year (43%) is back near the early level: a cyclical trough dragging the window down, not a one-way slide. The through-cycle median is 23% — read it across the cycle, not on the dip.

• Owner earnings growth +23%/yr
  What this means

  Owner earnings grew about 23% a year over the record.

• Worst year 2022 · −16.7% op. margin
  What this means

  Operations went underwater in 2022, understand why before trusting the good years.