Fortuna Silver Mines Inc.
(NYSE: FSM) (TSX: FVI) today
reported net income of $13.1 million, adjusted EBITDA of $42.2
million, and free cash flow from ongoing operations of $30.1
million for the third quarter of 2020.
Jorge A. Ganoza, President and CEO, commented,
“We have reported a record breaking quarter in sales and free cash
flow as we continue to capitalize on the current metals price
environment through solid production results and cost containment
measures.” Mr. Ganoza continued, “At Lindero, the
ramp-up phase is progressing with first gold pour achieved in
October.” Mr. Ganoza concluded, “We remain on track for commercial
production at Lindero in the first quarter of 2021.”
Third quarter 2020
highlights
- Sales of $83.4 million, compared to $61.3 million in Q3
2019
- Net income of $13.1 million, compared to net loss of $7.7
million in Q3 2019
- Adjusted net income1 of $16.1 million, compared to $1.9 million
in Q3 2019
- Adjusted EBITDA1 of $42.2 million, compared to $19.2 million in
Q3 2019
- Free cash flow from ongoing operations1 of $30.1 million,
compared to $10.6 million in Q3 2019
- Silver and gold production of 2,127,746 ounces and 12,791
ounces, respectively
Note: 1. Refer to non-GAAP
financial measures and Forward-Looking Statements at the end of
this news release
Third quarter COVID-19 related
impacts on operations
The COVID-19 pandemic continues to impact
economies around the world and our operations. In response to
the pandemic, the Governments of Mexico, Peru and Argentina
implemented measures to curb the spread of COVID-19, which included
among others, the closure of international borders, temporary
suspension of all non-essential activities, and the declaration of
mandatory quarantine periods. Certain of these measures have
either been eliminated or relaxed during the third quarter.
The Company is managing the necessary
country-by-country restrictions in order to assist in the
protection of those most vulnerable. At each of our mine
sites, health protocols are in place for control, isolation and
quarantine, as necessary, and these continue to be reviewed and
adjusted accordingly based on the circumstances at each location.
Operations at the Caylloma Mine were temporarily suspended for a
21-day period in July to among other things sanitize and disinfect
the mine and make infrastructure improvements to accommodate social
distance guidelines. As a result of the shutdown,
approximately $0.9 million has been recorded as care and
maintenance costs.
In April 2020, the Company withdrew its
production and cost guidance for the year until further notice due
to the uncertainties related to the impact caused by COVID-19
constraints on the Company's business and operations (refer
to Fortuna news release dated April 2, 2020).
Third Quarter 2020 Consolidated
Results
|
Three months
ended |
|
Nine months ended |
|
|
September
30, |
|
September 30, |
|
Consolidated Metrics |
2020 |
2019 |
|
|
2020 |
|
2019 |
|
(Expressed in $ millions except per share
information) |
Sales |
|
83.4 |
61.3 |
|
|
|
175.5 |
|
188.2 |
|
Mine
operating income |
|
42.1 |
16.7 |
|
|
|
63.3 |
|
61.1 |
|
Operating
income (loss) |
|
28.5 |
(1.5 |
) |
|
|
29.0 |
|
25.2 |
|
Net
income (loss) |
|
13.1 |
(7.7 |
) |
|
|
2.9 |
|
4.8 |
|
Earnings
(loss) per share - basic |
|
0.07 |
(0.05 |
) |
|
|
0.02 |
|
0.03 |
|
|
|
|
|
|
|
|
|
|
|
Adjusted
net income1 |
|
16.1 |
1.9 |
|
|
|
8.9 |
|
17.5 |
|
Adjusted
EBITDA1 |
|
42.2 |
19.2 |
|
|
|
67.8 |
|
70.2 |
|
Net cash
provided by operating activities |
|
45.5 |
18.2 |
|
|
|
62.1 |
|
45.3 |
|
Free cash
flow from ongoing operations1 |
|
30.1 |
10.6 |
|
|
|
44.5 |
|
28.2 |
|
Capex |
|
|
|
|
|
|
|
|
|
Sustaining |
|
4.9 |
4.0 |
|
|
|
10.6 |
|
13.7 |
|
Non-sustaining |
|
- |
0.8 |
|
|
|
0.2 |
|
1.7 |
|
Lindero |
|
9.9 |
68.5 |
|
|
|
36.2 |
|
161.5 |
|
Brownfields |
|
1.0 |
1.0 |
|
|
|
2.9 |
|
3.9 |
|
|
|
|
|
|
|
Sept 30, 2020 |
|
Dec 31, 2019 |
|
Cash and cash equivalents |
|
|
85.2 |
|
83.4 |
|
Note: |
|
|
|
|
|
|
|
|
|
1 Refer to
Non-GAAP financial measures and Forward Looking Statements at the
end of this news release |
|
|
|
|
|
|
|
|
|
|
Sales for the three months ended September 30,
2020 were $83.4 million, a 36% increase from the $61.3 million
reported in the same period in 2019 driven by higher silver and
gold prices of 44% and 29%, along with increased volume of silver
and gold ounces sold of 9% and 12%, respectively.
Operating income for the three months ended
September 30, 2020 was $28.5 million, an increase of $30.0 million
from a $1.5 million operating loss reported in the same period in
2019. The operating loss in 2019 was impacted by an $8.3
million foreign exchange loss related to the VAT construction
receivable in Argentina. Excluding the effect of foreign
exchange, our higher operating income in the third quarter was
driven by higher precious metal prices and higher volumes of silver
and gold ounces sold despite a 21-day shutdown that lowered sales
volume at the Caylloma Mine. Other factors increasing operating
income were lower cash production costs, and lower exploration and
evaluation costs of $1.4 million, which were partially offset by
higher share-based payment expense of $2.2 million. The
Company’s increased share price performance during this quarter
directly impacted the value of our cash-settled share awards.
Net income for the three months ended September
30, 2020 was $13.1 million, a $20.8 million increase over the $7.7
million net loss reported in the same period in 2019. The
effective tax rate for the quarter was 53% which reflects a
negative impact of approximately 7 percentage points derived from
the devaluation of the Mexican peso.
Free cash flow from ongoing operations for the
three months ended September 30, 2020 was $30.1 million compared to
$10.6 million in the same period in 2019. Net cash provided
by operating activities for the quarter increased $27.3 million to
$45.5 million.
Capital resources and liquidity
Total liquidity available to the Company as of
September 30, 2020 was $140.0 million, which includes $55.0 million
of available credit under our $150.0 million credit facility.
At the end of the quarter, the Company had cash and cash
equivalents of $85.2 million (December 31, 2019: $83.4
million).
Third Quarter 2020 Consolidated
Results
San Jose Mine,
Mexico
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Mine Production |
|
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled |
|
|
|
255,226 |
|
|
267,998 |
|
|
662,203 |
|
|
795,656 |
Average tonnes milled per day |
|
|
|
2,934 |
|
|
3,046 |
|
|
2,518 |
|
|
3,025 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
|
254 |
|
|
219 |
|
|
232 |
|
|
253 |
Recovery (%) |
|
|
|
92 |
|
|
91 |
|
|
92 |
|
|
91 |
Production (oz) |
|
|
|
1,917,540 |
|
|
1,709,125 |
|
|
4,516,790 |
|
|
5,865,843 |
Metal sold (oz) |
|
|
|
1,884,940 |
|
|
1,706,678 |
|
|
4,503,736 |
|
|
5,880,888 |
Realized price ($/oz) |
|
|
|
24.87 |
|
|
17.33 |
|
|
20.04 |
|
|
15.81 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
|
1.52 |
|
|
1.40 |
|
|
1.42 |
|
|
1.60 |
Recovery (%) |
|
|
|
92 |
|
|
91 |
|
|
91 |
|
|
90 |
Production (oz) |
|
|
|
11,425 |
|
|
10,942 |
|
|
27,709 |
|
|
36,886 |
Metal sold (oz) |
|
|
|
11,317 |
|
|
10,886 |
|
|
27,797 |
|
|
36,861 |
Realized price ($/oz) |
|
|
|
1,921 |
|
|
1,487 |
|
|
1,752 |
|
|
1,365 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/t) |
|
|
|
67.62 |
|
|
70.53 |
|
|
68.53 |
|
|
69.40 |
Production cash cost ($/oz Ag
Eq)1,2 |
|
|
|
6.97 |
|
|
7.67 |
|
|
7.17 |
|
|
6.71 |
Unit net smelter return
($/t) |
|
|
|
255.64 |
|
|
161.83 |
|
|
196.93 |
|
|
168.67 |
AISC ($/oz Ag Eq)1,2 |
|
|
|
12.00 |
|
|
10.77 |
|
|
11.32 |
|
|
9.60 |
Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
|
1 Production cash cost Ag Eq and AISC Ag Eq are calculated
using realized metal prices for each period, respectively |
2 Production cash cost, production cash cost Ag Eq, and AISC
Ag Eq 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 1,917,540 ounces of
silver and 11,425 ounces of gold during the third quarter of 2020,
which represents a 12% and 4% increase over the comparable quarter
in 2019. The increase was due primarily to higher silver and
gold head grades of 16% and 9%, respectively.
Cash cost per tonne for the three months ended
September 30, 2020 decreased 4% to $67.62 per tonne compared to
$70.53 per tonne in the same period in 2019. The decrease in
cash cost per tonne is mainly due to lower mine preparation costs
compared to the same period in the prior year. Mine
preparation in 2020 is in line with plan.
All-in sustaining cash cost per ounce of payable
silver equivalent was $12.0 for the quarter compared to $10.77 for
the comparable period in 2019, due mainly to higher royalties and
worker participation expenses related to higher sales and
profits.
Caylloma Mine, Peru
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30, |
|
|
Nine months ended
September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
Mine Production |
|
|
|
|
|
|
|
|
|
|
|
|
Tonnes milled |
|
|
107,002 |
|
|
134,338 |
|
|
373,915 |
|
|
398,037 |
Average tonnes milled per day |
|
|
1,189 |
|
|
1,493 |
|
|
1,530 |
|
|
1,496 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (g/t) |
|
|
74 |
|
|
64 |
|
|
70 |
|
|
65 |
Recovery (%) |
|
|
83 |
|
|
82 |
|
|
83 |
|
|
83 |
Production (oz) |
|
|
210,206 |
|
|
228,168 |
|
|
704,190 |
|
|
692,005 |
Metal sold (oz) |
|
|
217,281 |
|
|
224,504 |
|
|
704,843 |
|
|
695,836 |
Realized price ($/oz) |
|
|
24.96 |
|
|
17.12 |
|
|
19.27 |
|
|
15.84 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Lead |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
|
3.15 |
|
|
2.68 |
|
|
2.94 |
|
|
2.67 |
Recovery (%) |
|
|
90 |
|
|
90 |
|
|
87 |
|
|
91 |
Production (000's lbs) |
|
|
6,702 |
|
|
7,157 |
|
|
21,201 |
|
|
21,305 |
Metal sold (000's lbs) |
|
|
6,884 |
|
|
7,069 |
|
|
21,196 |
|
|
21,410 |
Realized price ($/lb) |
|
|
0.86 |
|
|
0.92 |
|
|
0.82 |
|
|
0.90 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Zinc |
|
|
|
|
|
|
|
|
|
|
|
|
Grade (%) |
|
|
4.93 |
|
|
4.35 |
|
|
4.58 |
|
|
4.31 |
Recovery (%) |
|
|
89 |
|
|
89 |
|
|
88 |
|
|
90 |
Production (000's lbs) |
|
|
10,313 |
|
|
11,518 |
|
|
33,110 |
|
|
33,986 |
Metal sold (000's lbs) |
|
|
10,628 |
|
|
11,615 |
|
|
32,999 |
|
|
33,807 |
Realized price ($/lb) |
|
|
1.07 |
|
|
1.06 |
|
|
0.98 |
|
|
1.18 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
|
|
|
|
|
|
Production cash cost ($/t) |
|
|
82.55 |
|
|
93.03 |
|
|
79.20 |
|
|
86.25 |
Production cash cost ($/oz Ag Eq)1,2 |
|
|
15.28 |
|
|
12.78 |
|
|
14.28 |
|
|
10.69 |
Unit net smelter return ($/t) |
|
|
162.82 |
|
|
132.06 |
|
|
119.79 |
|
|
137.71 |
AISC ($/oz Ag Eq)1,2 |
|
|
19.37 |
|
|
15.78 |
|
|
17.15 |
|
|
13.97 |
Notes: |
|
|
|
|
|
|
|
|
|
|
|
|
1 Production cash
cost Ag Eq and AISC Ag Eq are calculated using realized metal
prices for each period respectively |
2 Production cash
cost, production cash cost Ag Eq, and AISC Ag Eq 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 6.7 million pounds of
lead and 10.3 million pounds of zinc during the third quarter of
2020, which were 6% lower and 10% lower than the 7.2 million pounds
of lead and 11.5 million pounds of zinc produced in the same period
in 2019. The lower production was due to lost production from
a 21-day shutdown of the mine in early July to sanitize and
disinfect the mine following the sudden death of a contractor’s
employee. Lead and zinc head grades were 18% and 13% higher
than in the same period in 2019. Silver production for the
third quarter totaled 210,206 ounces with an average head grade of
74 g/t compared to the 228,168 ounces produced with an average head
grade of 64 g/t in the same period in 2019. The Company
incurred $0.9 million of costs during the 21-day shutdown of the
mine and have been reported as care and maintenance costs.
Cash cost per tonne of processed ore for the
three months ended September 30, 2020 was $82.55, which was 11%
lower than the $93.03 cash cost per tonne in the same period in
2019. The lower cash cost per tonne was due to lower mine
preparation as a result of cost-cutting efforts related to
Covid-19. Cash costs incurred during the shutdown were
reported as care and maintenance costs.
All-in sustaining cash cost per ounce of payable
silver equivalent was $19.37 for the quarter compared to $15.78 for
the comparable period in 2019, due to the impact of the 21-day
voluntary suspension at the mine site in July.
Lindero Mine Update
Construction at the Lindero open pit heap leach
gold mine located in Salta Province, Argentina is substantially
complete as at September 30, 2020. On October 20, 2020, the
Company announced the first gold pour of 728 ounces (refer to
Fortuna news release dated October 20, 2020) as the mine ramps up
towards commercial production in the first quarter of 2021.
The following table summarizes the spending on
construction and preproduction related costs at the Lindero Mine
for the nine months ended September 30, 2020:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative to |
Nine months ended |
|
|
(Expressed in $ millions) |
|
|
December 31, 2019 |
September 30, 2020 |
|
Total |
Construction capital expenditures |
|
|
268.2 |
36.2 |
|
304.4 |
Contractor advances and deposits on equipment, net of
transfers |
|
|
10.5 |
(7.2 |
) |
3.3 |
Total Construction Spending |
|
|
278.7 |
29.0 |
|
307.7 |
Preproduction costs |
|
|
8.0 |
23.3 |
|
31.3 |
Spare
parts, supplies and materials inventory |
|
|
6.2 |
11.7 |
|
17.9 |
Other costs 1 |
|
|
4.5 |
1.2 |
|
5.7 |
Total Lindero Mine Costs |
|
|
297.4 |
65.2 |
|
362.6 |
Note: 1. Consists of
Argentina financial transaction taxes, deposits and other costs
There were $15.2 million of construction trade
payables outstanding as at the end of the third quarter.
During the third quarter of 2020, a total of
675,000 tonnes of ore have been placed on the leach pad averaging
0.83 g/t gold, containing an estimated 17,980 ounces of gold (refer
to Fortuna news release dated October 14, 2020). Average gold head
grade of ore placed on the leach pad is below budget of 1.00 g/t to
1.10 g/t (refer to Fortuna news release dated May 8, 2020). The
lower average head grade is due to COVID-19 related restrictions
which delayed the start of mining activities and limited the access
to high-grade ore from the pit and resulted in the shortfall being
sourced from the medium grade stockpile.
From the commencement of mining operations in
September 2019 (refer to Fortuna news release dated September 13,
2019) to the end of the third quarter 2020, a total of 2.3 million
tonnes of mineralized material averaging 0.61 g/t Au, containing
45,700 ounces of gold has been extracted from the pit. Of this
amount, 1.6 million tonnes averaging 0.52 g/t Au, containing an
estimated 27,500 ounces of gold has been stockpiled, with the
remaining 682,000 tonnes averaging 0.83 g/t Au, containing 18,200
ounces sent to the crushers. (refer to Fortuna news release dated
October 14, 2020).
Management confirms the reconciliation of the
material movements from the pit for the third quarter of 2020 as
satisfactory and indicates a good correlation between the grade
control model versus the Mineral Reserve block model with
differences of less than five percent for tonnes, grade and ounces
(refer to Fortuna news release October 14, 2020).
Management has updated the production forecast
for Lindero in 2020 and estimates between 13,000 to 15,000 ounces
of gold doré will be produced (refer to Fortuna news release dated
May 8, 2020). The new forecast considers the following operational
issues which were encountered during commissioning and ramp-up
activities:
- Despite placing 93% of planned gold ounces on the leach-pad as
at the end of October, the adoption of an advance stacking
sequence limited the Company’s ability to implement an early
irrigation strategy as per the original plan. This issue will be
resolved in mid-November when the conveyor stacking system is
commissioned, and a retreat stacking sequence is implemented which
will accelerate the irrigation process.
- Additional time has been allocated to the commissioning and
ramp-up schedule of the HPGR-Agglomeration-Stacking system during
November and December due to the challenges and limitations of
completing these activities under COVID-19 related restrictions.
This will result in a reduction of contained gold ounces placed on
the leach-pad for the two months from 38,000 ounces to 24,000
ounces.
- The shortfall of gold ounces placed on the leach pad in
November and December along with the placement of a greater
quantity of coarser crushed material due to the extended
commissioning of the HPGR has a compound effect on reducing gold
doré production.
Qualified
Person
Eric Chapman, Vice President of Technical
Services, is a Professional Geoscientist of the Association of
Professional Engineers and Geoscientists of the Province of British
Columbia (Registration Number 36328), and is the Company’s
Qualified Person (as defined by National Instrument 43-101). Mr.
Chapman has reviewed and approved the scientific and technical
information contained in this news release and has verified the
underlying data.
Non-GAAP Financial
Measures
The following tables represent the calculation
of certain non-GAAP financial measures as referenced in this news
release.
Reconciliation to Adjusted Net
Income for the three and nine months ended September 30, 2020 and
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in
$ millions) |
|
Q3, 2020 |
|
|
Adjust. |
|
|
Q3 2020Adjusted |
|
|
Q3, 2019 |
|
|
Adjust. |
|
|
Q3, 2019Adjusted |
Sales |
|
83.4 |
|
|
|
- |
|
|
|
83.4 |
|
|
|
61.3 |
|
|
|
- |
|
|
|
61.3 |
|
Cost of
sales |
|
41.4 |
|
|
|
(0.0 |
) |
|
|
41.4 |
|
|
|
44.6 |
|
|
|
0.1 |
|
|
|
44.7 |
|
Mine operating income |
|
42.1 |
|
|
|
0.0 |
|
|
|
42.1 |
|
|
|
16.7 |
|
|
|
(0.1 |
) |
|
|
16.6 |
|
General and
administration |
|
9.0 |
|
|
|
0.0 |
|
|
|
9.0 |
|
|
|
6.9 |
|
|
|
0.0 |
|
|
|
7.0 |
|
Exploration and
evaluation |
|
0.1 |
|
|
|
- |
|
|
|
0.1 |
|
|
|
1.5 |
|
|
|
- |
|
|
|
1.5 |
|
Share of loss from
associates |
|
0.0 |
|
|
|
(0.0 |
) |
|
|
- |
|
|
|
0.0 |
|
|
|
(0.0 |
) |
|
|
- |
|
Foreign exchange loss |
|
3.6 |
|
|
|
(3.3 |
) |
|
|
0.3 |
|
|
|
8.4 |
|
|
|
(8.2 |
) |
|
|
0.2 |
|
Other
expenses, net |
|
0.9 |
|
|
|
0.0 |
|
|
|
0.9 |
|
|
|
1.2 |
|
|
|
(1.3 |
) |
|
|
(0.1 |
) |
Operating income (loss) |
|
28.5 |
|
|
|
3.3 |
|
|
|
31.8 |
|
|
|
(1.5 |
) |
|
|
9.5 |
|
|
|
8.0 |
|
Interest income and finance costs, net |
|
(0.4 |
) |
|
|
0.1 |
|
|
|
(0.4 |
) |
|
|
(0.1 |
) |
|
|
0.1 |
|
|
|
0.0 |
|
Income before taxes |
|
28.1 |
|
|
|
3.4 |
|
|
|
31.4 |
|
|
|
(1.5 |
) |
|
|
9.6 |
|
|
|
8.0 |
|
Income tax expense |
|
15.0 |
|
|
|
0.4 |
|
|
|
15.4 |
|
|
|
6.2 |
|
|
|
(0.0 |
) |
|
|
6.2 |
|
Net income (loss) and adjusted net
income |
|
13.1 |
|
|
|
3.0 |
|
|
|
16.1 |
|
|
|
(7.7 |
) |
|
|
9.6 |
|
|
|
1.9 |
|
Note: Certain figures may not add due to
rounding and certain comparative figures have been reclassified to
conform to the current year presentation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Expressed in
$ millions) |
|
Q3 2020YTD |
|
|
Adjust. |
|
|
Q3 2020 YTDAdjusted |
|
|
Q3 2019YTD |
|
|
Adjust. |
|
|
Q3 2019 YTDAdjusted |
Sales |
|
175.5 |
|
|
|
- |
|
|
|
175.5 |
|
|
|
188.2 |
|
|
|
- |
|
|
|
188.2 |
|
Cost of
sales |
|
112.2 |
|
|
|
0.1 |
|
|
|
112.3 |
|
|
|
127.1 |
|
|
|
0.2 |
|
|
|
127.3 |
|
Mine operating income |
|
63.3 |
|
|
|
(0.1 |
) |
|
|
63.2 |
|
|
|
61.1 |
|
|
|
(0.2 |
) |
|
|
61.0 |
|
General and
administration |
|
22.9 |
|
|
|
0.1 |
|
|
|
23.0 |
|
|
|
20.4 |
|
|
|
0.1 |
|
|
|
20.5 |
|
Exploration and
evaluation |
|
0.6 |
|
|
|
- |
|
|
|
0.6 |
|
|
|
2.0 |
|
|
|
- |
|
|
|
2.0 |
|
Share of loss from
associates |
|
0.1 |
|
|
|
(0.1 |
) |
|
|
- |
|
|
|
0.2 |
|
|
|
(0.2 |
) |
|
|
- |
|
Foreign exchange loss |
|
7.5 |
|
|
|
(9.2 |
) |
|
|
(1.8 |
) |
|
|
11.9 |
|
|
|
(10.5 |
) |
|
|
1.4 |
|
Other
expenses, net |
|
3.1 |
|
|
|
(0.2 |
) |
|
|
2.8 |
|
|
|
1.5 |
|
|
|
(1.3 |
) |
|
|
0.2 |
|
Operating Income |
|
29.0 |
|
|
|
9.4 |
|
|
|
38.5 |
|
|
|
25.2 |
|
|
|
11.7 |
|
|
|
36.9 |
|
Investment income |
|
3.3 |
|
|
|
(3.3 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
Interest income and finance
costs, net |
|
(1.1 |
) |
|
|
0.2 |
|
|
|
(0.9 |
) |
|
|
(0.0 |
) |
|
|
0.3 |
|
|
|
0.3 |
|
Gain
(loss) on derivatives |
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.2 |
) |
|
|
2.6 |
|
|
|
1.4 |
|
Income before taxes |
|
31.2 |
|
|
|
6.2 |
|
|
|
37.6 |
|
|
|
23.9 |
|
|
|
14.6 |
|
|
|
38.5 |
|
Income tax expense |
|
28.3 |
|
|
|
0.4 |
|
|
|
28.6 |
|
|
|
19.1 |
|
|
|
1.9 |
|
|
|
21.0 |
|
Net income and adjusted net
income |
|
2.9 |
|
|
|
5.9 |
|
|
|
8.9 |
|
|
|
4.8 |
|
|
|
12.7 |
|
|
|
17.5 |
|
Note: Certain figures may not add due to rounding and
certain comparative figures have been reclassified to conform to
the current year presentation
Reconciliation to Adjusted
EBITDA for the three and nine months ended September 30, 2020 and
2019
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
September 30, |
|
|
September 30, |
(Expressed in
$ millions) |
|
2020 |
2019 |
|
|
2020 |
2019 |
Net income (loss) for the
period |
|
13.1 |
|
(7.7 |
) |
|
|
2.9 |
|
4.8 |
|
Adjustments: |
|
|
|
|
|
|
|
Community support provision |
|
0.1 |
|
(0.1 |
) |
|
|
- |
|
(0.2 |
) |
Inventory adjustment |
|
- |
|
0.1 |
|
|
|
- |
|
0.1 |
|
Foreign exchange loss, Lindero Mine |
|
2.7 |
|
8.3 |
|
|
|
8.7 |
|
10.4 |
|
Net finance items |
|
0.4 |
|
- |
|
|
|
0.9 |
|
(0.3 |
) |
Depreciation, depletion, and amortization |
|
11.2 |
|
11.3 |
|
|
|
31.8 |
|
34.4 |
|
Income taxes |
|
15.0 |
|
6.2 |
|
|
|
28.3 |
|
19.1 |
|
Share of loss from associates |
|
- |
|
- |
|
|
|
0.1 |
|
0.2 |
|
Investment income |
|
- |
|
- |
|
|
|
(3.3 |
) |
- |
|
Other non-cash items |
|
(0.2 |
) |
1.1 |
|
|
|
(1.6 |
) |
1.7 |
|
Adjusted EBITDA |
|
42.2 |
|
19.2 |
|
|
|
67.8 |
|
70.2 |
|
|
|
|
|
|
|
|
|
Reconciliation to free cash flow
from ongoing operations for the three and nine months ended
September 30, 2020 and 2019
|
|
|
|
|
|
|
|
|
|
Three months ended |
|
|
Nine months ended |
|
|
September 30, |
|
|
September 30, |
(Expressed in
$ millions) |
|
2020 |
2019 |
|
|
2020 |
2019 |
Net cash provided by operating
activities |
|
45.5 |
|
18.2 |
|
|
|
62.1 |
|
45.3 |
|
Less: Change in
long-term receivables |
|
(0.3 |
) |
(1.5 |
) |
|
|
(0.9 |
) |
(1.5 |
) |
Less: Additions to
mineral properties, plant and equipment |
|
(5.6 |
) |
(7.2 |
) |
|
|
(13.8 |
) |
(18.2 |
) |
Less: Current income tax
expense |
|
(15.5 |
) |
(5.9 |
) |
|
|
(25.5 |
) |
(24.4 |
) |
Add: Income taxes paid |
|
6.0 |
|
7.0 |
|
|
|
22.6 |
|
27.0 |
|
Free cash flow from ongoing
operations1 |
|
30.1 |
|
10.6 |
|
|
|
44.5 |
|
28.2 |
|
Note: |
|
|
|
|
|
|
|
1 From ongoing
operations including San Jose and Caylloma and excludes Greenfields
exploration |
The financial statements and MD&A are available on SEDAR and
on the Company's
website:https://www.fortunasilver.com/investors/financials/2020/.
Conference call to review third
quarter 2020 financial and operational
results
A conference call to discuss the financial and
operational results will be held on Friday, November 13, 2020 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.webcaster4.com/Webcast/Page/1696/38330 or over the
phone by dialing in just prior to the starting time.
Conference call
details:
Date: Friday, November 13, 2020Time: 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: 38330
Playback of the conference call will be
available until November 27, 2020. Playback of the webcast will be
available until November 13, 2021. In addition, a transcript of the
call will be archived on the company’s website:
https://www.fortunasilver.com/investors/financials/2020/.
About Fortuna Silver Mines
Inc.
Fortuna Silver Mines Inc. is a Canadian precious
metals mining company with operations in Peru, Mexico and
Argentina. Sustainability is integral to all our operations and
relationships. We produce silver and gold and generate shared value
over the long-term for our shareholders and stakeholders through
efficient production, environmental protection, and social
responsibility. For more information, please visit our
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; the timing and amount of
estimated future production; recovery rates; mine plans and mine
life; the future price of gold, silver and other metals; costs of
production; and proposed expenditures; the construction of the
Lindero mine and the related costs of construction, achieving
steady operations and timing of commencement of commercial
production; and forecasted production at the Lindero Mine for 2020.
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, the duration and
effects of COVID-19, and any other pandemics on our operations and
workforce, and the effects on global economies and society; changes
in general economic conditions and financial markets; changes in
prices for gold, 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 commissioning at
Lindero; delays in achieving steady production and commencement of
commercial production at Lindero; 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 silver
equivalent; adjusted net (loss) income; operating cash flow per
share before changes in working capital, income taxes, and interest
income; free cashflow from ongoing operations; 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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