Fortuna reports consolidated financial results for full year
2018
Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI)
today reported full year 2018 net income of $34.0 million, adjusted
net income of $38.4 million, and adjusted EBITDA of $113.9
million.
Jorge A. Ganoza, President and CEO, commented,
“In 2018 we had strong financial results with free cash-flow
generation from ongoing operations of $55 million and adjusted net
income of $38.4 million. Our strong results in the year, in spite
of a weaker price environment in the second semester, speak for our
commitment to efficient operations and the strength of our
assets.” Mr. Ganoza added, “Our capital investment plans and
working capital requirements during the Lindero construction in
Argentina are adequately funded from available liquidity and free
cash flow from our mines.”
Full Year 2018 Highlights
- Sales of $263.3 million, compared
to $268.1 million in 2017
- Net income of $34.0 million,
compared to $66.3 million in 2017
- Adjusted net income1 of $38.4
million, compared to $48.7 million in 2017
- Adjusted EBITDA1 of $113.9 million,
compared to $122.0 million in 2017
- Free cash flow from ongoing
operations1 of $55.2 million
- Cash position, including short-term
investments as at December 31, 2018 was $163.3 million
- Credit facility expanded to $150.0
million with $80.0 million undrawn
- Silver and gold production of
8,890,943 ounces and 54,210 ounces, respectively
- AISC2 per silver equivalent ounce
of payable silver was $10.6
Fourth Quarter 2018
Highlights
- Sales of $59.6 million, compared to
$75.4 million in 2017
- Net income of $2.2 million,
compared to $34.1 million in 2017
- Adjusted net income1 of $4.4
million, compared to $12.3 million in 2017
- Adjusted EBITDA1 of $22.7 million,
compared to $34.9 million in 2017
- Free cash flow from ongoing
operations1 of $11.8 million
- Silver and gold production of
1,937,703 ounces and 12,070 ounces, respectively
- AISC2 per silver equivalent ounce
of payable silver was $12.2
Notes: 1. Refer to
Non-GAAP Financial Measures 2. AISC
oz Ag Eq calculated at realized metal prices of $1,273/oz Au,
$15.7/oz Ag, $1.0/lb Pb, and $1.3/lb Zn
2018 Year-End and Fourth Quarter 2018
Consolidated Results
Consolidated Metrics |
|
Q4 2018 |
|
Q4 2017 |
|
|
YTD 2018 |
|
YTD 2017 |
|
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|
|
|
|
Financial (Expressed in $ millions except per share
information) |
Sales |
$ |
59.6 |
|
$ |
75.4 |
|
$ |
263.3 |
|
$ |
268.1 |
|
Mine operating income |
|
17.3 |
|
|
35.2 |
|
|
96.6 |
|
|
109.6 |
|
Operating income |
|
6.3 |
|
|
57.7 |
|
|
61.6 |
|
|
110.3 |
|
Net income |
|
2.2 |
|
|
34.1 |
|
|
34.0 |
|
|
66.3 |
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share (basic) |
|
0.01 |
|
|
0.21 |
|
|
0.21 |
|
|
0.42 |
|
Earnings per share (diluted) |
|
0.01 |
|
|
0.21 |
|
|
0.21 |
|
|
0.42 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted net income1 |
|
4.4 |
|
|
12.3 |
|
|
38.4 |
|
|
48.7 |
|
Adjusted EBITDA1 |
|
22.7 |
|
|
34.9 |
|
|
113.9 |
|
|
122.0 |
|
Cash provided by operating activities |
|
19.3 |
|
|
29.0 |
|
|
83.5 |
|
|
70.2 |
|
Free cash flow1 |
|
(26.7 |
) |
|
14.5 |
|
|
(52.4 |
) |
|
24.5 |
|
Free cash flow from ongoing operations1 |
|
11.8 |
|
|
19.2 |
|
|
55.2 |
|
|
37.1 |
|
Capex |
|
|
|
|
|
|
|
|
|
|
Sustaining |
|
9.4 |
|
|
8.0 |
|
|
24.0 |
|
|
28.0 |
|
Non-sustaining |
|
1.2 |
|
|
- |
|
|
3.3 |
|
|
- |
|
Lindero |
|
39.4 |
|
|
3.1 |
|
|
80.0 |
|
|
11.4 |
|
Brownfields |
|
1.6 |
|
|
2.2 |
|
|
8.6 |
|
|
10.1 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec 31, 2018 |
|
Dec 31, 2017 |
|
Cash, cash equivalents, and short-term investments |
|
$ |
163.3 |
|
$ |
212.6 |
|
Notes: |
|
|
|
|
|
|
|
|
|
|
1. Refer to Non-GAAP
Financial Measures. |
|
|
|
|
|
|
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|
|
Certain
comparative figures have been reclassified to conform to the
current year's presentation |
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|
Fourth Quarter 2018 Results
Sales for the three months ended December 31,
2018 were $59.6 million, a $15.8 million decrease from the $75.4
million reported in 2017. The decrease in sales was due to
lower sales volume in silver and gold of 13% and 18% and a decline
in metal prices for silver, lead, and zinc of 13%, 21%, and 19%,
respectively.
Net income for the three months ended December
31, 2018 was $2.2 million or $0.01 per share compared to $34.1
million or $0.21 per share in the same period of 2017, which
included a $31.1 million (after-tax: $21.9 million) impairment
reversal. The main items affecting the comparability of
results in the quarter were the impairment reversal in 2017 and
$3.9 million of foreign exchange losses in 2018 related to the
Lindero project construction. Adjusted net income for
the three months ended December 31, 2018 was $4.4 million compared
to $12.3 million reported in the same period of 2017. The
decrease in adjusted net income was due mainly to lower sales at
both San Jose and Caylloma. Higher production costs in the
quarter were partially offset by lower share-based payment charges
and a realized gain in commodity derivative instruments of $0.9
million compared to a loss of $1.5 million in 2017.
Adjusted EBITDA for the three months ended
December 31, 2018 was $22.7 million compared to $34.9 million in
the comparable period in 2017. The decrease in adjusted
EBITDA was due primarily to lower sales. Higher production
costs were partially offset by the same items discussed above in
adjusted net income.
Net cash provided by operating activities for
the three months ended December 31, 2018 was $19.3 million compared
to $29.0 million reported in 2017. Free cash flow from ongoing
operations for the three months ended December 31, 2018 was $11.8
million compared to $19.2 million reported in 2017.
Annual Results
Sales for the year ended December 31, 2018 were
$263.3 million, a decrease of $4.8 million over the $268.1 million
reported in 2017. The decrease in sales was due mainly to an
8% decline in the realized silver price and was partially offset by
a 5% increase in silver sales volume and lower treatment
charges.
Net income for the year ended December 31, 2018
was $34.0 million compared to $66.3 million reported in 2017, which
included a $31.1 million (after-tax: $21.9 million) impairment
reversal. The main items affecting the comparability of
results were the impairment reversal in 2017 and $3.9 million of
foreign exchange losses in 2018 related to the Lindero project
construction.
Adjusted net income for the year ended December
31, 2018 decreased $10.3 million to $38.4 million from $48.7
million in 2017. The decrease in adjusted net income was due
to a combination of lower sales, higher production costs, and
higher depletion at Caylloma of $3.1 million related to the
reversal of the impairment in 2017. Other items of variance in the
year-over-year comparison were higher general and administrative
expenses of $1.3 million and a realized gain in commodity
derivative instruments of $0.4 million compared to a loss of $1.6
million in 2017.
Adjusted EBITDA for the year ended December 31,
2018 was $113.9 million compared to $122.0 million reported in
2017. The decrease in adjusted EBITDA was due to a
combination of lower sales and higher production costs.
Net cash provided by operating activities for
the year ended December 31, 2018 was $83.5 million compared to
$70.2 million reported in 2017. Free cash flow from ongoing
operations increased $18.1 million to $55.2 million due primarily
to negative changes in working capital items in 2017.
Capital Resources and Liquidity
At December 31, 2018, the Company had cash, cash
equivalents, and short-term investments of $163.3 million (December
31, 2017 – $212.6 million). In December 2018, the Company
expanded its existing credit facility from $120.0 million to $150.0
million of which $80.0 million remains undrawn. Total
liquidity available to the Company as of the 2018 year-end was
$243.3 million, which along with free cash flow from ongoing
operations will provide sufficient liquidity to meet our funding
needs during the construction of the Lindero project.
Lindero Project (“Project”)
Construction at the Lindero open pit heap leach
gold mine located in Salta Province Argentina is well underway, and
the overall Project is 40% complete. Approximately 91% of
direct capital costs have been committed. Construction
spending for the year totaled $122.9 million comprising of $80.0
million on construction expenditures, of which $18.9 million were
unpaid as at December 31, 2018, and $42.9 million in deposits on
equipment and advances to contractors.
Total construction capital costs are forecast to
increase up to $295.0 million or 20% over initial capital guidance
(see Fortuna news releases dated February 20, 2019 and September
21, 2017 and the technical report entitled “Fortuna Silver Mines
Inc.: Lindero Property, Salta Province, Argentina”, dated effective
October 31, 2017 which is available on SEDAR at www.sedar.com). The
revised construction capital cost forecast includes a $17 million
contingency and excludes a potential cost savings from the
devaluation of the Argentine Peso (“ARS”). An ARS/USD
exchange rate of 22.0:1 was built into the construction capital
forecast corresponding to the average referenced exchange rate on
the awarded contracts, compared to the December 31, 2018 ARS/USD
exchange rate of 37.7:1. Approximately 35% of the
construction capital costs are in Argentine Pesos. The actual US
dollars spent will depend on the ARS/USD exchange rate as well as
the Argentine inflation rate. The main drivers for the
increased capital costs were higher owner’s costs and construction
indirect costs related to the extension of the Project schedule,
road maintenance and contractor stand-by costs due to abnormal
rainfall impacting the Project and access roads.
San Jose Mine, Mexico
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
Mine Production |
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Tonnes milled |
|
256,181 |
|
|
271,370 |
|
|
1,040,478 |
|
|
1,070,790 |
|
Average tonnes milled per day |
2,846 |
|
|
3,015 |
|
|
2,956 |
|
|
3,044 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
230 |
|
|
259 |
|
|
260 |
|
|
238 |
|
Recovery (%) |
|
91 |
|
|
92 |
|
|
92 |
|
|
92 |
|
Production (oz) |
|
1,718,496 |
|
|
2,071,762 |
|
|
7,979,634 |
|
|
7,526,556 |
|
Metal sold (oz) |
|
1,818,026 |
|
|
2,089,121 |
|
|
7,921,345 |
|
|
7,481,616 |
|
Realized price ($/oz) |
14.61 |
|
|
16.69 |
|
|
15.74 |
|
|
17.03 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
1.58 |
|
|
1.89 |
|
|
1.75 |
|
|
1.77 |
|
Recovery (%) |
|
91 |
|
|
92 |
|
|
92 |
|
|
92 |
|
Production (oz) |
|
11,825 |
|
|
15,177 |
|
|
53,517 |
|
|
55,950 |
|
Metal sold (oz) |
|
12,312 |
|
|
15,333 |
|
|
53,255 |
|
|
55,412 |
|
Realized price ($/oz) |
1,236 |
|
|
1,273 |
|
|
1,273 |
|
|
1,257 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/oz Ag)1,2 |
2.2 |
|
|
0.0 |
|
|
0.7 |
|
|
1.0 |
|
Production cash cost ($/oz Ag Eq)1,3 |
6.8 |
|
|
5.5 |
|
|
5.9 |
|
|
6.1 |
|
Production cash cost ($/t)1 |
65.9 |
|
|
57.9 |
|
|
63.7 |
|
|
59.7 |
|
Unit net smelter return ($/t) |
145.5 |
|
|
181.7 |
|
|
138.5 |
|
|
169.8 |
|
AISC ($/oz Ag)1,2 |
|
7.1 |
|
|
6.5 |
|
|
5.5 |
|
|
7.1 |
|
AISC ($/oz Ag Eq)1,3 |
|
9.9 |
|
|
9.6 |
|
|
9.0 |
|
|
10.1 |
|
1 Non-GAAP
Financial Measure. Refer to the Non-GAAP Financial Measures at the
end of this news release and in the associated MD&A for a
description and calculation of these measures |
|
2 Net of
by-product credits from gold |
|
3 AISC/oz Ag Eq
calculated using the realized metal prices of gold and silver set
out in the table |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterly Results
The San Jose Mine produced 1,718,496 ounces of
silver and 11,825 ounces of gold in the fourth quarter of 2018,
which were 9% and 4% below plan and 17% and 22% below the
comparable quarter in 2017. The decrease in production was
due primarily to 6% lower mill throughput during the quarter as
well as lower average head grades for silver and gold, of 230 g/t
and 1.58 g/t, respectively, or 11% and 16% lower than the
comparable quarter in 2017.
Cash cost per tonne of processed ore was $65.9,
which was 14% higher than the $57.9 cash cost for the comparable
quarter in 2017. The increase in cash cost per tonne was due
primarily to higher mining costs related to higher energy costs,
timing of execution of backfill and support costs during the
quarter, and higher indirect costs relating to safety and
environment.
Annual Results
Total silver and gold production for 2018
increased 6% and decreased 4% to 7,979,634 and 53,517 ounces,
respectively, compared to 2017. The 9% higher silver head
grade more than made up for the 3% decline in mill throughput with
the processing plant treating 1,040,478 tonnes of ore for the year
ended December 31, 2018.
Cash cost per tonne of processed ore for 2018
was $63.7, or 7% higher than in 2017 and 4% above guidance.
The increase in cash cost per tonne was due to higher energy
tariffs, higher distribution costs related to the direct export of
concentrate, and higher milling costs related to dry-stack
re-handling in the first half of the year.
All-in sustaining cash cost per payable ounce of
silver equivalent (“AISC”) was $9.0 for 2018 compared to $10.1 in
2017 was due to higher silver equivalent production and lower
sustaining capital expenditures. Compared to the 2018 annual
guidance of $10.0, the AISC was $1.0 lower due to a 12% increase in
silver equivalent production.
Cash cost per tonne of processed ore and AISC
are non-GAAP financial measures.
Caylloma Mine, Peru
|
|
|
Three months ended December 31, |
|
|
Years ended December 31, |
|
Mine Production |
|
2018 |
|
|
|
2017 |
|
|
|
2018 |
|
|
|
2017 |
|
|
Tonnes milled |
|
135,034 |
|
|
|
134,635 |
|
|
|
534,773 |
|
|
|
529,704 |
|
|
Average tonnes milled per day |
1,500 |
|
|
|
1,513 |
|
|
|
1,502 |
|
|
|
1,488 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
61 |
|
|
|
65 |
|
|
|
63 |
|
|
|
66 |
|
|
Recovery (%) |
|
83 |
|
|
|
85 |
|
|
|
84 |
|
|
|
84 |
|
|
Production (oz) |
|
219,207 |
|
|
|
238,414 |
|
|
|
911,309 |
|
|
|
943,038 |
|
|
Metal sold (oz) |
|
214,883 |
|
|
|
243,051 |
|
|
|
911,648 |
|
|
|
934,710 |
|
|
Realized price ($/oz) |
14.55 |
|
|
|
16.70 |
|
|
|
15.71 |
|
|
|
17.06 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Lead |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
2.39 |
|
|
|
2.91 |
|
|
|
2.62 |
|
|
|
2.81 |
|
|
Recovery (%) |
|
91 |
|
|
|
91 |
|
|
|
91 |
|
|
|
91 |
|
|
Production (000's lbs) |
6,453 |
|
|
|
7,846 |
|
|
|
28,255 |
|
|
|
29,878 |
|
|
Metal sold (000's lbs) |
6,377 |
|
|
|
8,054 |
|
|
|
28,349 |
|
|
|
29,508 |
|
|
Realized price ($/lb) |
|
0.89 |
|
|
|
1.13 |
|
|
|
1.02 |
|
|
|
1.05 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
4.30 |
|
|
|
4.36 |
|
|
|
4.28 |
|
|
|
4.21 |
|
|
Recovery (%) |
|
90 |
|
|
|
90 |
|
|
|
90 |
|
|
|
90 |
|
|
Production (000's lbs) |
11,537 |
|
|
|
11,676 |
|
|
|
45,485 |
|
|
|
44,347 |
|
|
Metal sold (000's lbs) |
11,713 |
|
|
|
11,803 |
|
|
|
45,867 |
|
|
|
44,315 |
|
|
Realized price ($/lb) |
|
1.19 |
|
|
|
1.47 |
|
|
|
1.32 |
|
|
|
1.32 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/oz Ag)1,2 |
(20.4 |
) |
|
|
(44.4 |
) |
|
|
(35.4 |
) |
|
|
(34.6 |
) |
|
Production cash cost ($/oz Ag Eq)1,3 |
8.7 |
|
|
|
7.0 |
|
|
|
7.6 |
|
|
|
7.7 |
|
|
Production cash cost ($/t)1 |
89.5 |
|
|
|
82.0 |
|
|
|
83.5 |
|
|
|
79.1 |
|
|
Unit net smelter return ($/t) |
141.7 |
|
|
|
184.1 |
|
|
|
166.1 |
|
|
|
166.2 |
|
|
AISC ($/oz Ag)1,2 |
|
20.8 |
|
|
|
(18.4 |
) |
|
|
(7.8 |
) |
|
|
(13.0 |
) |
|
AISC ($/oz Ag Eq)1,3 |
|
14.8 |
|
|
|
10.7 |
|
|
|
11.7 |
|
|
|
11.2 |
|
|
1 Non-GAAP
Financial Measure. Refer to the Non-GAAP Financial Measures at the
end of this news release and in the associated MD&A for a
description and calculation of these measures |
|
2 Net of
by-product credits from gold, lead, and zinc. |
|
3 AISC/oz Ag Eq
calculated using the realized metal prices for silver, lead, and
zinc set out in the table |
|
Quarterly Results
The Caylloma Mine produced 219,207 ounces of
silver which was 8% lower than the comparable period in 2017.
Average silver head grade was 61 g/t, or 6% below the head grade
for the comparable period reported in 2017. The Caylloma Mine also
produced 6.5 million pounds of lead and 11.5 million pounds of
zinc, which were 18% and 1% lower than the comparable quarter in
2017. The decrease in production was due primarily to lower
average head grades for lead and zinc of 2.39% and 4.30%,
respectively, which were 18% and 2% below the average head grades
reported in the comparable quarter in 2017.
Cash cost per tonne of processed ore for the
fourth quarter of 2018 was $89.5, which was 9% higher than the
$82.0 cash cost for the comparable quarter in 2017. The increase
was due primarily to higher mine costs related to mine support and
higher indirect costs related to labor and community relations
costs.
Annual Results
Total lead production for 2018 decreased 5% to
28.3 million pounds while zinc production increased 3% to 45.5
million pounds, over 2017. Silver production decreased 3% to
911,309 ounces compared to 943,038 ounces in 2017. Head
grades for lead and silver were 7% and 5% lower than in 2017,
respectively. However, the decline in head grades was partially
offset by a 1% increase in ore processed. Total silver
production was 11% above 2018 guidance.
Cash cost per tonne of processed ore for 2018
was $83.5 or 6% higher than the $79.1 reported in 2017 and 3% above
guidance. The increase in cash costs was due mainly to higher
indirect costs related to on-site labor, general services and mine
support costs.
All-in-sustaining cash cost per payable ounce of
silver equivalent (“AISC”) was $11.7 for 2018 compared to $11.2
reported in 2017. Compared to the 2018 annual guidance of
$13.7, the AISC was $2.0 lower due to a 13% increase in silver
equivalent production and lower sustaining capital
expenditures.
Cash cost per tonne of processed ore and AISC
are non-GAAP financial measures.
Non-GAAP Financial Measures
The following tables represent the computation
of certain non-GAAP financial measures as referenced in this news
release.
Income Statement Reconciliation to
Adjusted Net Income for the Fourth Quarter and Year to
Date
|
(Expressed in $ millions, except per share
information) |
|
Q4 2018 |
|
|
Adjust. |
|
Q4 2018 Adjusted |
|
Q4 2017 |
|
Adjust. |
|
Q4 2017 Adjusted |
|
Sales |
$ |
59.6 |
|
$ |
- |
|
|
$ |
59.6 |
|
|
$ |
75.4 |
|
|
$ |
- |
|
|
$ |
75.4 |
|
|
Cost of sales |
|
42.2 |
|
|
0.1 |
|
|
|
42.3 |
|
|
|
40.1 |
|
|
|
- |
|
|
|
40.1 |
|
|
Mine operating income |
|
17.4 |
|
|
(0.1 |
) |
|
|
17.3 |
|
|
|
35.3 |
|
|
|
- |
|
|
|
35.3 |
|
|
Selling, general and
administration |
|
6.3 |
|
|
- |
|
|
|
6.3 |
|
|
|
8.4 |
|
|
|
- |
|
|
|
8.4 |
|
|
Exploration and
evaluation |
|
0.2 |
|
|
- |
|
|
|
0.2 |
|
|
|
1.3 |
|
|
|
- |
|
|
|
1.3 |
|
|
Share of loss of
equity-accounted investee |
|
0.1 |
|
|
(0.1 |
) |
|
|
- |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
- |
|
|
Foreign exchange loss
(gain) |
|
3.6 |
|
|
(3.9 |
) |
|
|
(0.3 |
) |
|
|
(1.3 |
) |
|
|
- |
|
|
|
(1.3 |
) |
|
Impairment reversal |
|
- |
|
|
|
|
- |
|
|
|
(31.1 |
) |
|
|
31.1 |
|
|
|
- |
|
|
Other (income) expenses,
net |
|
0.9 |
|
|
(0.9 |
) |
|
|
- |
|
|
|
0.1 |
|
|
|
(0.8 |
) |
|
|
(0.7 |
) |
|
Operating Income |
|
6.3 |
|
|
4.8 |
|
|
|
11.1 |
|
|
|
57.7 |
|
|
|
(30.1 |
) |
|
|
27.6 |
|
|
Interest and finance
costs |
|
0.4 |
|
|
- |
|
|
|
0.4 |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
Gain (loss) on financial
assets and liabilities carried at fair value |
|
0.4 |
|
|
0.4 |
|
|
|
0.8 |
|
|
|
(0.7 |
) |
|
|
(0.6 |
) |
|
|
(1.3 |
) |
|
Income before taxes |
|
7.1 |
|
|
5.2 |
|
|
|
12.3 |
|
|
|
57.0 |
|
|
|
(30.7 |
) |
|
|
26.3 |
|
|
Current income tax expense |
|
3.9 |
|
|
0.2 |
|
|
|
4.1 |
|
|
|
11.4 |
|
|
|
0.3 |
|
|
|
11.7 |
|
|
Deferred income tax recovery |
|
1.0 |
|
|
2.8 |
|
|
|
3.8 |
|
|
|
11.4 |
|
|
|
(9.1 |
) |
|
|
2.3 |
|
|
Net income and adjusted net income |
$ |
2.2 |
|
$ |
2.2 |
|
|
$ |
4.4 |
|
|
$ |
34.2 |
|
|
$ |
(21.9 |
) |
|
$ |
12.3 |
|
|
Earnings per share -
basic |
$ |
0.01 |
|
$ |
0.01 |
|
|
$ |
0.02 |
|
|
$ |
0.21 |
|
|
$ |
(0.14 |
) |
|
$ |
0.07 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in $ millions, except per share
information) |
|
YTD 2018 |
|
|
Adjust. |
|
YTD 2018 Adjusted |
|
YTD 2017 |
|
Adjust. |
|
YTD 2017 Adjusted |
|
Sales |
$ |
263.3 |
|
$ |
- |
|
|
$ |
263.3 |
|
|
$ |
268.1 |
|
|
$ |
- |
|
|
$ |
268.1 |
|
|
Cost of sales |
|
166.7 |
|
|
(1.3 |
) |
|
|
165.4 |
|
|
|
158.6 |
|
|
|
- |
|
|
|
158.6 |
|
|
Mine operating income |
|
96.6 |
|
|
1.3 |
|
|
|
97.9 |
|
|
|
109.6 |
|
|
|
- |
|
|
|
109.6 |
|
|
Selling, general and
administration |
|
26.2 |
|
|
- |
|
|
|
26.2 |
|
|
|
24.9 |
|
|
|
- |
|
|
|
24.9 |
|
|
Exploration and
evaluation |
|
0.7 |
|
|
- |
|
|
|
0.7 |
|
|
|
1.5 |
|
|
|
- |
|
|
|
1.5 |
|
|
Share of loss of
equity-accounted investee |
|
- |
|
|
- |
|
|
|
- |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
- |
|
|
Foreign exchange loss |
|
6.1 |
|
|
(3.9 |
) |
|
|
2.2 |
|
|
|
2.1 |
|
|
|
|
|
2.1 |
|
|
Impairment reversal |
|
- |
|
|
|
|
- |
|
|
|
(31.1 |
) |
|
|
31.1 |
|
|
|
- |
|
|
Other (income) expenses,
net |
|
2.0 |
|
|
(1.9 |
) |
|
|
0.1 |
|
|
|
1.7 |
|
|
|
(2.6 |
) |
|
|
(0.9 |
) |
|
Operating Income |
|
61.6 |
|
|
7.1 |
|
|
|
68.7 |
|
|
|
110.3 |
|
|
|
(28.3 |
) |
|
|
82.0 |
|
|
Interest and finance
costs |
|
0.4 |
|
|
0.5 |
|
|
|
0.9 |
|
|
|
(0.4 |
) |
|
|
- |
|
|
|
(0.4 |
) |
|
Gain (loss) on financial
assets and liabilities carried at fair value |
|
5.4 |
|
|
(5.0 |
) |
|
|
0.4 |
|
|
|
(5.0 |
) |
|
|
3.4 |
|
|
|
(1.6 |
) |
|
Income before taxes |
|
67.3 |
|
|
2.6 |
|
|
|
69.9 |
|
|
|
104.9 |
|
|
|
(24.9 |
) |
|
|
80.0 |
|
|
Current income tax expense |
|
30.6 |
|
|
(0.8 |
) |
|
|
29.8 |
|
|
|
34.9 |
|
|
|
1.8 |
|
|
|
36.7 |
|
|
Deferred income tax expense (recovery) |
|
2.8 |
|
|
(1.0 |
) |
|
|
1.8 |
|
|
|
3.8 |
|
|
|
(9.2 |
) |
|
|
(5.5 |
) |
|
Net income and adjusted net income |
$ |
34.0 |
|
$ |
4.4 |
|
|
$ |
38.4 |
|
|
$ |
66.3 |
|
|
$ |
(17.5 |
) |
|
$ |
48.7 |
|
|
Earnings per share -
basic |
$ |
0.21 |
|
$ |
0.03 |
|
|
$ |
0.24 |
|
|
$ |
0.42 |
|
|
$ |
(0.11 |
) |
|
$ |
0.31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
(Expressed in $ millions) |
|
Q4 2018 |
|
Q4 2017 |
|
YTD 2018 |
|
YTD 2018 |
|
Net Income for the
period |
$ |
2.2 |
|
$ |
34.1 |
|
$ |
34.0 |
|
$ |
66.3 |
|
|
Add back: |
|
|
|
|
|
|
|
|
|
Community support provision |
|
(0.3 |
) |
|
- |
|
|
1.1 |
|
|
- |
|
|
Inventory adjustment |
|
0.2 |
|
|
- |
|
|
0.2 |
|
|
- |
|
|
Foreign exchange, Lindero project |
|
3.9 |
|
|
- |
|
|
3.9 |
|
|
- |
|
|
Net finance items |
|
(0.4 |
) |
|
(0.1 |
) |
|
(0.4 |
) |
|
0.5 |
|
|
Depreciation, depletion, and amortization |
|
10.8 |
|
|
9.6 |
|
|
44.8 |
|
|
42.5 |
|
|
Income taxes |
|
4.9 |
|
|
22.8 |
|
|
33.4 |
|
|
38.5 |
|
|
Share of (income) loss of equity-accounted investee |
|
0.1 |
|
|
0.1 |
|
|
- |
|
|
0.2 |
|
|
Impairment reversal |
|
- |
|
|
(31.1 |
) |
|
- |
|
|
(31.1 |
) |
|
Unrealized gain (loss) on financial instruments |
|
0.4 |
|
|
(0.6 |
) |
|
(5.0 |
) |
|
3.4 |
|
|
Other operating expenses |
|
0.9 |
|
|
0.1 |
|
|
2.0 |
|
|
1.7 |
|
|
Adjusted EBITDA |
$ |
22.7 |
|
$ |
34.9 |
|
$ |
113.9 |
|
$ |
122.0 |
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow and Free Cash Flow from
Ongoing Operations
(Expressed in $ millions) |
|
Q4 2018 |
|
Q4 2017 |
|
YTD 2018 |
|
YTD 2017 |
Free Cash Flow |
Net cash provided by operating activities |
$ |
19.3 |
|
$ |
29.0 |
|
$ |
83.5 |
|
$ |
70.2 |
|
Less: Purchases of
mineral properties, plant and equipment |
|
(11.8 |
) |
|
(12.2 |
) |
|
(36.8 |
) |
|
(37.4 |
) |
Less: Expenditures on
Lindero Project |
|
(23.8 |
) |
|
(3.0 |
) |
|
(61.1 |
) |
|
(10.2 |
) |
Less: Deposits on long term assets, net |
|
(13.3 |
) |
|
3.7 |
|
|
(43.1 |
) |
|
0.6 |
|
Less: Current income tax expense |
|
(3.9 |
) |
|
(11.4 |
) |
|
(30.6 |
) |
|
(34.9 |
) |
Add: Income taxes paid |
|
6.8 |
|
|
8.4 |
|
|
35.7 |
|
|
36.2 |
|
Free cash flow |
$ |
(26.7 |
) |
$ |
14.5 |
|
$ |
(52.4 |
) |
$ |
24.5 |
|
Add: Lindero construction capital expenditures |
|
23.8 |
|
|
3.0 |
|
|
61.1 |
|
|
10.2 |
|
Add: Greenfield capital expenditures |
|
1.4 |
|
|
1.7 |
|
|
3.6 |
|
|
2.4 |
|
Add: Deposits on long term assets - Lindero construction |
|
13.3 |
|
|
- |
|
|
42.9 |
|
|
- |
|
Free cash flow from ongoing operations |
$ |
11.8 |
|
$ |
19.2 |
|
$ |
55.2 |
|
$ |
37.1 |
|
|
|
|
|
|
|
|
|
|
The financial statements and MD&A are
available on SEDAR and have also been posted on the company's
website at
https://www.fortunasilver.com/investors/financials/2018/.
Conference call to review 2018 year-end
financial and operational results
A conference call to discuss 2018 year-end
financial and operational results will be held on Thursday, March
14, 2019 at 8:00 a.m. Pacific | 11:00 a.m. Eastern. 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.webcaster4.com/Webcast/Page/1696/29679 or over the
phone by dialing just prior to the starting time.
Conference call details:
Date: Thursday, March 14, 2019Time: 8:00
a.m. Pacific | 11:00 a.m. Eastern
Dial in number (Toll Free): +1.844.602.0380Dial
in number (International): +1.862.298.0970
Replay number (Toll Free): +1.877.481.4010Replay
number (International): +1.919.882.2331Replay Passcode: 10466
Playback of the conference call will be
available until March 28, 2019 at 11:59 p.m. Eastern.
Playback of the webcast will be available until March 14,
2020. In addition, a transcript of the call will be archived
on the company’s website:
https://www.fortunasilver.com/investors/financials/2018/.
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
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; and proposed expenditures.
Often, but not always, these Forward looking Statements can be
identified by the use of words such as "estimated", "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; technological and operational hazards in
Fortuna's mining and mine development activities; 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; all-in cash
cost per ounce of silver equivalent production; adjusted net (loss)
income; operating cash flow per share before changes in working
capital; free cash flow; 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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