Fortuna Silver Mines Inc.
(NYSE: FSM) (TSX: FVI) today
reported a net loss of $7.7 million, adjusted net income of $1.9
million, and adjusted EBITDA of $19.2 million for the third quarter
of 2019.
Jorge A. Ganoza, President and CEO, commented,
“On the strength of our two operating mines and improved metal
prices, we generated adjusted EBITDA of $19.2 million with strong
free cash flow from ongoing operations of $10.6 million in the
third quarter of 2019. These financial metrics are in spite
of a challenging quarter from an operating perspective as our mine
sequencing at San Jose yielded lower grades and we experienced a
peak in our quarterly cash cost for the year. Both our
production and costs are expected to be aligned with our plan in Q4
and we confirm our full-year production and cost guidance.”
Mr. Ganoza continued, “In Argentina, the lower Peso created an
unrealized foreign exchange loss of $8.3 million relating to our
VAT construction receivable. This was a key factor in our net
loss of $7.7 million for the quarter.” Mr. Ganoza further
indicated, “As of the end of October, Lindero overall construction
is 81 percent complete, with 99 percent of direct capital
expenditures committed, and over 85 percent of the total projected
construction capital spent.” Mr. Ganoza concluded, “Pre-production
mining at Lindero commenced in early September and placing of ore
on the leach pad is scheduled to commence in December 2019.”
Third quarter 2019
highlights
- Sales of $61.3 million, compared to
$59.6 million in Q3 2018
- Net loss of $7.7 million, compared
to net income of $6.9 million in Q3 2018
- Adjusted net income1 of $1.9
million, compared to $9.6 million in Q3 2018
- Adjusted EBITDA1 of $19.2 million,
compared to $24.2 million in Q3 2018
- Free cash flow from ongoing
operations1 of $10.6 million, compared to $13.6 million in Q3
2018
- Silver and gold production of
1,937,293 ounces and 11,436 ounces, respectively
- AISC2 per silver equivalent ounce
of payable silver was $13.2
Notes:1. Refer to Non-GAAP Financial Measures
and Forward-Looking Statements at the end of this news release2.
AISC oz Ag Eq calculated at realized metal prices of $1,487/oz Au,
$17.3/oz Ag, $0.9/lb Pb, and $1.1/lb Zn
Overview of financial and
operating results
The Company’s financial results for the quarter
were impacted by an $8.3 million foreign exchange loss related to
the VAT construction receivable in Argentina resulting in a net
loss of $7.7 million. After adjusting for non-cash and
non-recurring items, the adjusted net income for the quarter was
$1.9 million compared to $9.6 million in Q3 2018 and $7.2 million
in Q2 2019. The lower adjusted net income in the context of
higher precious metal prices was mostly as a result of lower silver
and gold metal production of 13% and 9%, respectively, compared to
Q3 2018 that prevented us from realizing the full benefit of rising
metal prices in the quarter. The lower metal output was
related to mine production sequencing at the San Jose Mine in the
quarter. Management expects production in the fourth quarter
to be aligned with the mine plan and management continues to
confirm production guidance for the year.
Compounding the effect of lower production, cash
costs at San Jose were slightly above the high end of our annual
cash cost guidance range and 5% above for Caylloma. Compared
to Q3 2018 cash cost per tonne at San Jose and Caylloma were 11%
and 5% higher, respectively. Although some components of the
higher costs are of a non-recurring nature, management anticipates
costs in Q4 to remain at the high end of our annual cash cost
guidance.
Capital resources and
liquidity
Total liquidity available to the Company as of
September 30, 2019 was $112.2 million, which includes $40.0 million
of available credit under our $150.0 million credit facility.
At the end of the quarter, the Company had cash, cash equivalents,
and short-term investments of $72.2 million (December 31, 2018 –
$163.3 million), a decrease of $91.1 million since the beginning of
the year. The decrease reflects the increased spending on
construction of the Lindero project.
Subsequent to the end of the quarter, the
Company closed a bought deal public offering of senior
subordinated, unsecured convertible debentures which raised
aggregate gross proceeds of $46 million.
Lindero gold
Project
Construction at the Lindero open pit heap leach
gold mine located in Salta Province; Argentina is 81% complete as
of the end of October 2019. Net construction spending for the
third quarter of 2019 was $37.6 million (YTD spending - $131.0
million) of which $27.0 million was unpaid as of the end of
September. Cumulative construction spending to date was
$253.8 million, including advances to contractors, representing 85%
of the total expected construction costs. The total cost of
construction is expected to be $298.0 million. In addition,
the Company expects to incur approximately $25.0 million of
pre-production costs and working capital at Lindero and
approximately $12.0 million of recoverable value added taxes
through to the end of construction.
Refer to the following links to access
Lindero’s construction video updates and construction photo
gallery:
https://fortunasilver.com/mines-and-projects/development/lindero-project-argentina/construction-videos/https://fortunasilver.com/mines-and-projects/development/lindero-project-argentina/construction-gallery/lindero-deposit/
Third Quarter 2019 Consolidated
Results
Consolidated Financial Metrics |
|
Three months ended September
30, |
|
Nine months ended September
30, |
|
|
2019 |
|
|
2018 |
|
% Change |
|
2019 |
|
2018 |
|
% Change |
(Expressed in $ millions except per share
information) |
|
|
|
|
|
Sales |
|
$ |
61.3 |
|
|
$ |
59.6 |
|
3% |
|
$ |
188.2 |
|
$ |
203.7 |
|
(8%) |
Mine
operating income |
|
|
16.7 |
|
|
|
16.5 |
|
1% |
|
|
61.1 |
|
|
79.2 |
|
(23%) |
Operating
(loss) income |
|
|
(1.5 |
) |
|
|
10.5 |
|
(114%) |
|
|
25.2 |
|
|
55.3 |
|
(54%) |
Net
(loss) income |
|
|
(7.7 |
) |
|
|
6.9 |
|
(212%) |
|
|
4.8 |
|
|
31.8 |
|
(85%) |
(Loss)
earnings per share (basic) |
|
|
(0.05 |
) |
|
|
0.04 |
|
(225%) |
|
|
0.03 |
|
|
0.20 |
|
(85%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income1, 2 |
|
|
1.9 |
|
|
|
9.6 |
|
(80%) |
|
|
17.5 |
|
|
33.9 |
|
(48%) |
Adjusted
EBITDA1 |
|
|
19.2 |
|
|
|
24.2 |
|
(21%) |
|
|
70.2 |
|
|
91.2 |
|
(23%) |
Net cash
provided by operating activities |
|
|
18.2 |
|
|
|
21.9 |
|
(17%) |
|
|
45.3 |
|
|
64.2 |
|
(29%) |
Free cash
flow from ongoing operations1 |
|
|
10.6 |
|
|
|
13.6 |
|
(22%) |
|
|
28.2 |
|
|
42.2 |
|
(33%) |
Capex |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sustaining |
|
|
4.0 |
|
|
|
5.4 |
|
(27%) |
|
|
13.7 |
|
|
14.2 |
|
(3%) |
Non-sustaining |
|
|
0.8 |
|
|
|
0.6 |
|
39% |
|
|
1.7 |
|
|
2.1 |
|
(21%) |
Lindero |
|
|
68.5 |
|
|
|
24.5 |
|
180% |
|
|
161.5 |
|
|
41.8 |
|
286% |
Brownfields |
|
|
1.0 |
|
|
|
2.4 |
|
(61%) |
|
|
3.9 |
|
|
7.1 |
|
(45%) |
|
|
|
|
|
|
|
|
|
|
|
Sep 30, 2019 |
|
|
Dec 31, 2018 |
|
% Change |
Cash,
cash equivalents, and short-term investments |
|
|
|
$ |
72.2 |
|
|
163.3 |
|
(56%) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets |
|
|
|
|
|
|
|
|
|
$ |
871.5 |
|
$ |
786.5 |
|
11% |
Non-current credit facility |
|
|
|
|
|
|
|
|
|
$ |
109.4 |
|
$ |
69.3 |
|
58% |
Shareholders' equity |
|
|
|
|
|
|
|
|
|
$ |
610.3 |
|
$ |
602.8 |
|
1% |
Notes: |
1. Refer to
Non-GAAP financial measures. |
2. The
three and nine months ended September 30, 2018 comparatives have
been restated to reflect the addback of Lindero's deferred income
taxes to conform to the current year presentation |
|
Financial
Results
Sales for the quarter were $61.3 million, a 3%
increase from the $59.6 million reported in the same quarter in
2018. The increase in sales was due primarily to higher metal
prices for silver and gold of 17% and 23%, respectively, but was
partially offset by a decrease in the volume of silver
and gold ounces sold of 10% and 6% respectively, as
well as a 10% decrease in the volume of lead sold and lower zinc
prices of 8%.
The operating loss for the quarter was $1.5
million, compared to operating income of $10.5 million in the same
quarter in 2018. The loss was due to an $8.3 million foreign
exchange loss on the value added tax receivable at our Lindero
project in Argentina. Other items impacting the quarter
were $1.3 million in non-cash impairment charges related to our
exploration initiatives.
Excluding the foreign exchange loss in Argentina
and the non-cash impairment charges, on an adjusted basis,
operating income was $8.1 million, compared to $12.0 million in Q3
2018. The decrease was mainly due to higher share-based
payments expense of $1.9 million ($1.5 million in Q3 2019 compared
to $0.4 million credit in Q3 2018), higher production costs of $1.8
million, and higher spending in exploration and evaluation
activities of $1.3 million.
Net loss for the quarter was $7.7 million or
($0.05) per share compared to $6.9 million net income or $0.04 per
share reported in the same quarter in 2018. Adjusted net
income for the quarter was $1.9 million compared to $9.6 million in
Q3 2018. On an adjusted basis, the effective tax rate for the
quarter was 76% due to the volatility of foreign exchange rates,
lower pre-tax income, and withholding taxes. The effective
tax rate on an adjusted basis for the nine-month period was 54%,
which was slightly above our expected range of 48% to 50%.
Adjusted EBITDA for the period was $19.2 million
compared to $24.2 million in the comparable period in 2018.
The decrease in adjusted EBITDA was due primarily to higher
share-based payments, higher operating costs and higher spending in
exploration and evaluation activities.
Net cash provided by operating activities for
the quarter was $18.2 million compared to $21.9 million reported in
2018. Free cash flow from ongoing operations was $10.6
million, compared to $13.6 million in 2018. For the nine
months free cash flow from ongoing operations was $28.2 million
compared to $42.2 million in 2018.
San Jose Mine,
Mexico
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
Mine Production |
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled |
|
|
267,998 |
|
|
262,710 |
|
|
795,656 |
|
|
784,297 |
Average tonnes milled per day |
|
|
3,046 |
|
|
2,985 |
|
|
3,025 |
|
|
2,994 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
219 |
|
|
258 |
|
|
253 |
|
|
270 |
Recovery (%) |
|
|
91 |
|
|
91 |
|
|
91 |
|
|
92 |
Production (oz) |
|
|
1,709,125 |
|
|
1,991,211 |
|
|
5,865,843 |
|
|
6,261,137 |
Metal sold (oz) |
|
|
1,706,678 |
|
|
1,904,179 |
|
|
5,880,888 |
|
|
6,103,319 |
Realized price ($/oz) |
|
|
17.33 |
|
|
14.82 |
|
|
15.81 |
|
|
16.08 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
1.40 |
|
|
1.61 |
|
|
1.60 |
|
|
1.80 |
Recovery (%) |
|
|
91 |
|
|
91 |
|
|
90 |
|
|
92 |
Production (oz) |
|
|
10,942 |
|
|
12,387 |
|
|
36,886 |
|
|
41,692 |
Metal sold (oz) |
|
|
10,886 |
|
|
12,098 |
|
|
36,861 |
|
|
40,943 |
Realized price ($/oz) |
|
|
1,487 |
|
|
1,211 |
|
|
1,365 |
|
|
1,285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/t) |
|
|
70.5 |
|
|
63.3 |
|
|
69.4 |
|
|
63.0 |
Production cash cost ($/oz Ag Eq)1,2 |
|
|
7.7 |
|
|
6.1 |
|
|
6.7 |
|
|
5.7 |
Unit net smelter return ($/t) |
|
|
161.8 |
|
|
157.3 |
|
|
168.7 |
|
|
183.8 |
AISC ($/oz Ag Eq)1,2 |
|
|
10.8 |
|
|
9.1 |
|
|
9.6 |
|
|
8.8 |
Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
- Production cash cost silver equivalent and all-in sustaining
cash cost silver equivalent (AISC) are calculated using realized
metal prices for each period respectively.
- Production cash cost, production cash cost silver equivalent,
and all-in sustaining cash cost silver equivalent are Non-GAAP
Financial Measures. Refer to Non-GAAP Financial Measures in
the associated MD&A for a description and calculation of these
measures.
|
|
Quarterly
Results
The San Jose Mine produced 1,709,125 ounces of
silver and 10,942 ounces of gold in the third quarter of 2019,
which were 14% and 12% below the comparable quarter in 2018.
The lower metal output was related to mine production sequencing in
the quarter. The Company expects silver and gold production
to be in accordance with the mine plan in the fourth quarter and
annual production will be within the 2019 annual production
guidance.
Cash cost per tonne of processed ore for the
third quarter ended September 30, 2019 increased 11% to $70.5 per
tonne compared to $63.3 per tonne for the comparable quarter in
2018. The increased cash cost was due to higher contractor
costs and mine support costs and was partially offset by lower
dry-stack tailings operating and energy costs. The cash cost
for the quarter was slightly above the annual cost guidance.
The fourth quarter and annual cash cost are expected to be within
the annual cash cost guidance.
Caylloma Mine, Peru
|
|
|
Three months ended September 30, |
|
|
Nine months ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
Mine Production |
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled |
|
|
134,338 |
|
|
135,996 |
|
|
398,037 |
|
|
399,739 |
Average tonnes milled per day |
|
|
1,493 |
|
|
1,511 |
|
|
1,496 |
|
|
1,503 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
64 |
|
|
65 |
|
|
65 |
|
|
64 |
Recovery (%) |
|
|
82 |
|
|
85 |
|
|
83 |
|
|
85 |
Production (oz) |
|
|
228,168 |
|
|
239,253 |
|
|
692,005 |
|
|
692,101 |
Metal sold (oz) |
|
|
224,504 |
|
|
250,255 |
|
|
695,836 |
|
|
696,765 |
Realized price ($/oz) |
|
|
17.12 |
|
|
15.01 |
|
|
15.84 |
|
|
16.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lead |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
|
2.68 |
|
|
2.74 |
|
|
2.67 |
|
|
2.70 |
Recovery (%) |
|
|
90 |
|
|
92 |
|
|
91 |
|
|
91 |
Production (000's lbs) |
|
|
7,157 |
|
|
7,576 |
|
|
21,305 |
|
|
21,802 |
Metal sold (000's lbs) |
|
|
7,069 |
|
|
7,822 |
|
|
21,410 |
|
|
21,972 |
Realized price ($/lb) |
|
|
0.92 |
|
|
0.96 |
|
|
0.90 |
|
|
1.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
|
4.35 |
|
|
4.24 |
|
|
4.31 |
|
|
4.27 |
Recovery (%) |
|
|
89 |
|
|
90 |
|
|
90 |
|
|
90 |
Production (000's lbs) |
|
|
11,518 |
|
|
11,483 |
|
|
33,986 |
|
|
33,947 |
Metal sold (000's lbs) |
|
|
11,615 |
|
|
11,647 |
|
|
33,807 |
|
|
34,154 |
Realized price ($/lb) |
|
|
1.06 |
|
|
1.15 |
|
|
1.18 |
|
|
1.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/t) |
|
|
93.0 |
|
|
88.5 |
|
|
86.3 |
|
|
81.4 |
Production cash cost ($/oz Ag Eq)1,2 |
|
|
12.8 |
|
|
8.5 |
|
|
10.7 |
|
|
7.4 |
Unit net smelter return ($/t) |
|
|
132.1 |
|
|
151.7 |
|
|
137.7 |
|
|
173.7 |
AISC ($/oz Ag Eq)1,2 |
|
|
15.8 |
|
|
12.3 |
|
|
14.0 |
|
|
10.8 |
Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
- Production cash cost silver equivalent and all-in sustaining
cash cost silver equivalent (AISC) are calculated using realized
metal prices for each period respectively.
- Production cash cost, production cash cost silver equivalent,
and all-in sustaining cash cost silver equivalent are Non-GAAP
Financial Measures. Refer to Non-GAAP Financial Measures in
the associated MD&A for a description and calculation of these
measures.
|
|
Quarterly
Results
The Caylloma Mine produced 7.2 million pounds of
lead and 11.5 million pounds of zinc in the third quarter of 2019,
which were 6% lower and in line with the production for the
comparable quarter in 2018. The lower lead production was due
primarily to a combination of marginally lower ore production and a
2% lower head grade and recovery. Zinc production was in line
with production from the same quarter in 2018. Silver
production totaled 228,168 ounces or 5% lower than the production
for the comparable quarter in 2018.
Cash cost per tonne of processed ore was $93.0
which was 5% higher than the $88.5 cash cost per tonne for the
comparable quarter in 2018 and 5% higher than the high end of our
annual guidance range. The higher cash cost was due primarily
to higher indirect costs related mainly to on-site camp maintenance
and personnel transportation, higher mine support costs, timing of
maintenance of the processing plant, and higher zinc concentrate
transportation costs as a result of road blockades unrelated to
Caylloma’s operations that took place during the quarter.
Cash cost for the fourth quarter is expected to be at the high end
of the annual guidance range while annual cash cost is expected to
be within guidance.
Non-GAAP Financial
Measures
The following tables represent the calculation
of certain Non-GAAP Financial Measures as referenced in this news
release.
Income Statement reconciliation
to Adjusted Net Income for the three months ended September 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in $ millions, except per share
information) |
|
Q3 2019 |
|
|
Adjust. |
|
|
Q3 2019 Adjusted |
|
|
Q3 2018 |
|
|
Adjust. |
|
|
Q3 2018 Adjusted |
Sales |
$ |
61.3 |
|
|
$ |
- |
|
|
$ |
61.3 |
|
|
$ |
59.6 |
|
|
$ |
- |
|
|
$ |
59.6 |
|
Cost of
sales |
|
44.6 |
|
|
|
0.1 |
|
|
|
44.7 |
|
|
|
43.1 |
|
|
|
(1.4 |
) |
|
|
41.7 |
|
Mine operating income |
|
16.7 |
|
|
|
(0.1 |
) |
|
|
16.6 |
|
|
|
16.5 |
|
|
|
1.4 |
|
|
|
17.9 |
|
Selling, general and
administration |
|
6.9 |
|
|
|
- |
|
|
|
6.9 |
|
|
|
5.0 |
|
|
|
- |
|
|
|
5.0 |
|
Exploration and
evaluation |
|
1.5 |
|
|
|
- |
|
|
|
1.5 |
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Share of loss (income) from
associates |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
(0.1 |
) |
|
|
- |
|
Foreign exchange loss
(gain) |
|
8.4 |
|
|
|
(8.2 |
) |
|
|
0.2 |
|
|
|
0.8 |
|
|
|
- |
|
|
|
0.8 |
|
Other
(income) expenses, net |
|
1.4 |
|
|
|
(1.5 |
) |
|
|
(0.1 |
) |
|
|
(0.1 |
) |
|
|
- |
|
|
|
(0.1 |
) |
Operating Income |
|
(1.5 |
) |
|
|
9.6 |
|
|
|
8.1 |
|
|
|
10.5 |
|
|
|
1.5 |
|
|
|
12.0 |
|
Interest and finance
costs |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
- |
|
|
|
0.2 |
|
Gain
(loss) on derivatives |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
2.1 |
|
|
|
(1.2 |
) |
|
|
0.9 |
|
Income before taxes |
|
(1.5 |
) |
|
|
9.6 |
|
|
|
8.1 |
|
|
|
12.8 |
|
|
|
0.3 |
|
|
|
13.1 |
|
Income
tax expense (recovery) |
|
6.2 |
|
|
|
- |
|
|
|
6.2 |
|
|
|
5.9 |
|
|
|
(2.5 |
) |
|
|
3.5 |
|
Net (loss) income and adjusted net
income |
$ |
(7.7 |
) |
|
$ |
9.6 |
|
|
$ |
1.9 |
|
|
$ |
6.9 |
|
|
$ |
2.8 |
|
|
$ |
9.6 |
|
Earnings per share - basic |
$ |
(0.05 |
) |
|
$ |
0.07 |
|
|
$ |
0.02 |
|
|
$ |
0.04 |
|
|
$ |
0.02 |
|
|
$ |
0.06 |
|
Note:
Certain figures may not add due to rounding and certain comparative
figures have been reclassified to conform to the current year
presentation |
|
Income Statement reconciliation
to Adjusted Net Income for the nine months ended September 30,
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in $ millions, except per share
information) |
|
YTD 2019 |
|
|
Adjust. |
|
|
YTD 2019 Adjusted |
|
|
YTD 2018 |
|
|
Adjust. |
|
|
YTD 2018 Adjusted |
Sales |
$ |
188.2 |
|
|
$ |
- |
|
|
$ |
188.2 |
|
$ |
203.7 |
|
|
$ |
- |
|
|
$ |
203.7 |
|
Cost of
sales |
|
127.1 |
|
|
|
0.2 |
|
|
|
127.3 |
|
|
124.5 |
|
|
|
(1.4 |
) |
|
|
123.1 |
|
Mine operating income |
|
61.1 |
|
|
|
(0.2 |
) |
|
|
61.0 |
|
|
79.2 |
|
|
|
1.4 |
|
|
|
80.6 |
|
Selling, general and
administration |
|
20.4 |
|
|
|
0.1 |
|
|
|
20.5 |
|
|
19.9 |
|
|
|
- |
|
|
|
19.9 |
|
Exploration and
evaluation |
|
2.0 |
|
|
|
- |
|
|
|
2.0 |
|
|
0.5 |
|
|
|
- |
|
|
|
0.5 |
|
Share of loss (income) from
associates |
|
0.2 |
|
|
|
(0.2 |
) |
|
|
- |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
- |
|
Foreign exchange loss |
|
11.9 |
|
|
|
(10.5 |
) |
|
|
1.4 |
|
|
2.5 |
|
|
|
- |
|
|
|
2.5 |
|
Other
(income) expenses, net |
|
1.5 |
|
|
|
(1.3 |
) |
|
|
0.2 |
|
|
1.0 |
|
|
|
(1.0 |
) |
|
|
0.0 |
|
Operating Income |
|
25.2 |
|
|
|
11.7 |
|
|
|
36.9 |
|
|
55.3 |
|
|
|
2.3 |
|
|
|
57.7 |
|
Interest and finance
costs |
|
(0.0 |
) |
|
|
0.3 |
|
|
|
0.3 |
|
|
(0.1 |
) |
|
|
0.5 |
|
|
|
0.4 |
|
Gain
(loss) on derivatives |
|
(1.2 |
) |
|
|
2.6 |
|
|
|
1.4 |
|
|
4.9 |
|
|
|
(5.4 |
) |
|
|
(0.5 |
) |
Income before taxes |
|
23.9 |
|
|
|
14.6 |
|
|
|
38.5 |
|
|
60.2 |
|
|
|
(2.6 |
) |
|
|
57.6 |
|
Income
tax expense (recovery) |
|
19.1 |
|
|
|
1.9 |
|
|
|
21.0 |
|
|
28.4 |
|
|
|
(4.8 |
) |
|
|
23.7 |
|
Net income and adjusted net
income |
$ |
4.8 |
|
|
$ |
12.7 |
|
|
$ |
17.5 |
|
$ |
31.8 |
|
|
$ |
2.2 |
|
|
$ |
33.9 |
|
Earnings per share - basic |
$ |
0.03 |
|
|
$ |
0.08 |
|
|
$ |
0.11 |
|
$ |
0.20 |
|
|
$ |
0.01 |
|
|
$ |
0.21 |
|
Note:
Certain figures may not add due to rounding and certain comparative
figures have been reclassified to conform to the current year
presentation |
|
Adjusted
EBITDA
(Expressed in $ millions) |
|
Q3 2019 |
|
|
Q3 2018 |
|
|
YTD Q3 2019 |
|
|
YTD Q3 2018 |
Net (loss) income for the
period |
$ |
(7.7 |
) |
|
$ |
6.9 |
|
|
$ |
4.8 |
|
|
$ |
31.8 |
|
Add back: |
|
|
|
|
|
|
|
|
|
|
|
Community support provision |
|
(0.1 |
) |
|
|
1.4 |
|
|
|
(0.2 |
) |
|
|
1.4 |
|
Inventory adjustment |
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
Foreign exchange loss, Lindero Project |
|
8.3 |
|
|
|
- |
|
|
|
10.4 |
|
|
|
- |
|
Net finance items |
|
- |
|
|
|
(0.2 |
) |
|
|
(0.3 |
) |
|
|
0.1 |
|
Depreciation, depletion, and amortization |
|
11.3 |
|
|
|
11.4 |
|
|
|
31.8 |
|
|
|
34.0 |
|
Income taxes |
|
6.2 |
|
|
|
5.9 |
|
|
|
19.1 |
|
|
|
28.4 |
|
Share of loss (income) from associates |
|
- |
|
|
|
0.1 |
|
|
|
0.2 |
|
|
|
(0.1 |
) |
Other non-cash items |
|
1.1 |
|
|
|
(1.3 |
) |
|
|
4.3 |
|
|
|
(4.4 |
) |
Adjusted EBITDA |
$ |
19.2 |
|
|
$ |
24.2 |
|
|
$ |
70.2 |
|
|
$ |
91.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Free cash flow and free cash
flow from ongoing operations
(Expressed in $ millions) |
|
Q3 2019 |
|
|
Q3 2018 |
|
|
YTD Q3 2019 |
|
|
|
YTD Q3 2018 |
|
Free Cash Flow |
Net cash provided by operating activities |
$ |
18.2 |
|
|
$ |
21.9 |
|
|
$ |
45.3 |
|
|
$ |
64.2 |
|
Less: Exploration
expenses previously capitalized |
|
(0.8 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
Less: Working capital
item reclassed to long-term receivables |
|
(1.5 |
) |
|
|
- |
|
|
|
(1.5 |
) |
|
|
- |
|
Less: Purchases of mineral properties, plant and
equipment |
|
(7.0 |
) |
|
|
(9.2 |
) |
|
|
(19.9 |
) |
|
|
(25.0 |
) |
Less: Expenditures on Lindero construction |
|
(45.1 |
) |
|
|
(24.8 |
) |
|
|
(120.2 |
) |
|
|
(36.7 |
) |
Less: Capitalized interest on Lindero construction |
|
(0.8 |
) |
|
|
(0.3 |
) |
|
|
(3.0 |
) |
|
|
(0.6 |
) |
Less: Deposits on
long-term assets, net |
|
- |
|
|
|
(7.1 |
) |
|
|
- |
|
|
|
(29.8 |
) |
Less: Current income tax
expense |
|
(5.9 |
) |
|
|
(6.0 |
) |
|
|
(24.4 |
) |
|
|
(27.9 |
) |
Add: Income taxes paid |
|
7.0 |
|
|
|
6.2 |
|
|
|
27.0 |
|
|
|
28.9 |
|
Free cash
flow |
|
(35.9 |
) |
|
|
(19.3 |
) |
|
|
(96.7 |
) |
|
|
(26.9 |
) |
Add: Expenditures on Lindero construction |
|
45.1 |
|
|
|
25.1 |
|
|
|
120.2 |
|
|
|
37.3 |
|
Add: Expenditures on non-Lindero construction |
|
0.9 |
|
|
|
- |
|
|
|
3.3 |
|
|
|
- |
|
Add: Greenfield capital
expenditures |
|
0.5 |
|
|
|
0.7 |
|
|
|
1.4 |
|
|
|
2.2 |
|
Add: Deposits on long-term assets - Lindero construction |
|
- |
|
|
|
7.1 |
|
|
|
- |
|
|
|
29.6 |
|
Free cash flow from ongoing
operations |
$ |
10.6 |
|
|
$ |
13.6 |
|
|
$ |
28.2 |
|
|
$ |
42.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
The financial statements and MD&A are
available on SEDAR and on the Company's website at
https://www.fortunasilver.com/investors/financials/2019/.
Conference call to review third
quarter 2019 financial and operational
results
A conference call to discuss the financial and
operational results will be held on Monday, November 18, 2019 at
9:00 a.m. Pacific time | 12:00 p.m. Eastern time. Hosting the
call will be Jorge A. Ganoza, President and CEO, and Luis D.
Ganoza, Chief Financial Officer.
Shareholders, analysts, media and interested
investors are invited to listen to the live conference call by
logging onto the webcast at:
https://www.investornetwork.com/event/presentation/56572 or over
the phone by dialing just prior to the starting time.
Conference call
details:
Date: Monday, November 18, 2019Time: 9:00
a.m. Pacific time | 12:00 p.m. Eastern time
Dial in number (Toll Free): +1.844.369.8770Dial
in number (International): +1.862.298.0840
Replay number (Toll Free): +1.877.481.4010Replay
number (International): +1.919.882.2331Replay Passcode: 56572
Playback of the conference call will be
available until December 2, 2019 at 12:00 a.m. Eastern time.
Playback of the webcast will be available until November 18,
2020. In addition, a transcript of the call will be archived
on the company’s website:
https://www.fortunasilver.com/investors/financials/2019/.
About Fortuna Silver Mines
Inc.
Fortuna is a growth oriented, precious metal
producer with its primary assets being the Caylloma silver mine in
southern Peru, the San Jose silver-gold mine in Mexico and the
Lindero gold Project, currently under construction, in
Argentina. The Company is selectively pursuing acquisition
opportunities throughout the Americas and in select other
areas. For more information, please visit its website at
www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. GanozaPresident, CEO, and
DirectorFortuna Silver Mines Inc.
Trading symbols: NYSE: FSM | TSX: FVI
Investor Relations: Carlos BacaT (Peru):
+51.1.616.6060, ext. 0E: info@fortunasilver.com
Forward looking Statements
This news release contains forward looking
statements which constitute "forward looking information" within
the meaning of applicable Canadian securities legislation and
"forward looking statements" within the meaning of the "safe
harbor" provisions of the Private Securities Litigation Reform Act
of 1995 (collectively, "Forward looking Statements"). All
statements included herein, other than statements of historical
fact, are Forward looking Statements and are subject to a variety
of known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those reflected
in the Forward looking Statements. The Forward looking Statements
in this news release include, without limitation, statements about
the Company's plans for its mines and mineral properties; the
construction of the mine at the Lindero Project and the related
costs of construction, timing of commissioning, and timing of
commencement of commercial production; the Company's business
strategy, plans and outlook; the merit of the Company's mines and
mineral properties; the future financial or operating performance
of the Company; 2019 production and cost guidance; and proposed
expenditures. Often, but not always, these Forward looking
Statements can be identified by the use of words such as
"estimated", “expected”, “anticipated”, "potential", "open",
"future", "assumed", "projected", "used", "detailed", "has been",
"gain", "planned", "reflecting", "will", "containing", "remaining",
"to be", or statements that events, "could" or "should" occur or be
achieved and similar expressions, including negative
variations.
Forward looking Statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any results, performance or achievements
expressed or implied by the Forward looking Statements. Such
uncertainties and factors include, among others, changes in general
economic conditions and financial markets; changes in prices for
silver and other metals; fluctuation in foreign exchange rates; any
extension of the currency controls in Argentina; technological and
operational hazards in Fortuna's mining and mine development
activities; delays in the construction at the Lindero Project,
delays in the commissioning or commencement of commercial
production at the Lindero Project; risks inherent in mineral
exploration; uncertainties inherent in the estimation of mineral
reserves, mineral resources, and metal recoveries; governmental and
other approvals; political unrest or instability in countries where
Fortuna is active; labor relations issues; as well as those factors
discussed under "Risk Factors" in the Company's Annual Information
Form. Although the Company has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in Forward looking
Statements, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or
intended.
Forward looking Statements contained herein are
based on the assumptions, beliefs, expectations and opinions of
management, including but not limited to expectations regarding the
Company's plans for its mines and mineral properties; mine
production costs; expected trends in mineral prices and currency
exchange rates; the accuracy of the Company's current mineral
resource and reserve estimates; that the Company's activities will
be in accordance with the Company's public statements and stated
goals; that there will be no material adverse change affecting the
Company or its properties; that all required approvals will be
obtained; that there will be no significant disruptions affecting
operations and such other assumptions as set out herein. Forward
looking Statements are made as of the date hereof and the Company
disclaims any obligation to update any Forward looking Statements,
whether as a result of new information, future events or results or
otherwise, except as required by law. There can be no assurance
that Forward looking Statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, investors should not
place undue reliance on Forward looking Statements.
This news release also refers to non-GAAP
financial measures, such as cash cost per tonne of processed ore;
cash cost per payable ounce of silver; total production cost per
tonne; all-in sustaining cash cost; all-in cash cost; adjusted net
(loss) income; operating cash flow per share before changes in
working capital, income taxes, and interest income; and adjusted
EBITDA. These measures do not have a standardized meaning or method
of calculation, even though the descriptions of such measures may
be similar. These performance measures have no meaning under
International Financial Reporting Standards (IFRS) and therefore,
amounts presented may not be comparable to similar data presented
by other mining companies.
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