Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (“Fortuna”
or the “Company”) today reported its financial and
operating results for the first quarter of 2022.
First Quarter 2022
Highlights
Operational
- Gold and silver
production of 66,800 ounces and 1,670,128 ounces, respectively. An
increase of 93% and a decrease of 13% respectively compared to the
first quarter of 2021 (“Q1 2021”). Gold equivalent production of
103,0983 ounces.
- AISC 1 per ounce
of gold sold of $1,038 for the Lindero Mine and $1,147 for the
Yaramoko Mine. AISC 1,2 per silver equivalent ounce of payable
silver sold of $15.32 and $17.83 for the San Jose Mine and Caylloma
Mine, respectively.
- All mine
operations performed in line with annual guidance projections.
- Total recordable
injury rate of 3.13 with 2 lost time injuries. One fatal incident
at the Lindero mine in January.
Financial
- Net income of
$27.0 million or $0.09 per share, compared to $26.4 million or
$0.14 net income per share reported in Q1 2021. Adjusted net
income1 of $33.4 million compared to $27.5 million reported in Q1
2021
- Sales of $182.3
million, an increase of 55% from the $117.8 million reported in the
same period in Q1 2021
- Consolidated
realized prices of $1,884 per ounce and $24.18 per ounce for gold
and silver respectively
- Adjusted EBITDA1
of $80.3 million compared to $60.8 million reported in Q1 2021
- Free cash flow
from ongoing operations1 of $9.6 million compared to $11.8 million
reported in Q1 2021.
- As at March 31,
2022, the Company had cash and cash equivalents of $110.4 million,
and available liquidity of $150.4 million
Growth and Development
- Seguela Project;
maiden Inferred Mineral Resource for the Sunbird discovery
comprising 3.45 million tonnes averaging 3.16 g/t containing
350,000 gold ounces (see news release dated March 15, 2022)
- Seguela construction 48% complete
as of the end of March. On-time and on-budget for first gold in mid
2023
Jorge A. Ganoza, President and CEO, commented,
“Our net income in the quarter of $27.0 million and adjusted
EBITDA1 of $80.3 million with margins of 44% attest to the strong
operational performance of our four mines.” Mr. Ganoza continued,
“We are running a thriving business in an $1,800 per ounce gold
price environment and are confident of the resiliency of our assets
throughout the precious metal cycle.” Mr. Ganoza concluded, “We
maintain a strong balance sheet with low debt leverage and a
healthy liquidity position of $150.4 million.”
1 Refer to Non-IFRS financial measures 2 AISC/oz Ag Eq
calculated at realized metal prices, refer to mine site results for
realized prices and Non-IFRS Financial Measures for silver
equivalent ratio3 Gold equivalent production includes gold, silver,
lead and zinc and is calculated using the following metal prices:
$1,884/oz Au, $24.2/oz Ag, $2,331/t Pb and $3,736/t Zn or Au:Ag =
1:77.9, Au:Pb = 1:0.8, Au:Zn = 1:0.54 For full details see news
release dated March 15, 2022
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Three months ended March 31, |
|
|
|
|
2022 |
|
2021 |
|
% Change |
Sales |
|
182.3 |
|
117.8 |
|
55 |
% |
Mine operating income |
|
63.5 |
|
51.3 |
|
24 |
% |
Operating income |
|
40.7 |
|
40.4 |
|
1 |
% |
Net income |
|
27.0 |
|
26.4 |
|
2 |
% |
Earnings per share -
basic |
|
0.09 |
|
0.14 |
|
(36 |
%) |
Adjusted net income1 |
|
33.4 |
|
27.5 |
|
21 |
% |
Adjusted EBITDA1 |
|
80.3 |
|
60.8 |
|
32 |
% |
Net cash provided by operating
activities |
|
33.2 |
|
21.1 |
|
57 |
% |
Free cash flow from ongoing
operations1 |
|
9.6 |
|
11.8 |
|
(19 |
%) |
Capital expenditures2 |
|
|
|
|
|
|
Sustaining |
|
18.0 |
|
7.9 |
|
128 |
% |
Non-sustaining3 |
|
1.9 |
|
0.3 |
|
533 |
% |
Lindero construction |
|
- |
|
2.6 |
|
(100 |
%) |
Séguéla construction |
|
42.9 |
|
- |
|
100 |
% |
Brownfields |
|
2.5 |
|
2.5 |
|
0 |
% |
As at |
|
March 31, 2022 |
|
December 31, 2021 |
|
% Change |
Cash
and cash equivalents |
|
110.4 |
|
107.1 |
|
3 |
% |
1 Refer to
Non-IFRS Financial Measures section at the end of this news release
and to the MD&A accompanying the Company’s financial statements
on SEDAR at www.sedar.com for a description of the calculation of
these measures. |
2 Capital
expenditures are presented on a cash basis |
|
3 Non-sustaining
expenditures include greenfields exploration |
|
Figures may not
add due to rounding |
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First Quarter 2022 Results
Sales for the three months ended March 31, 2022
were $182.3 million, an increase of 55% from the $117.8 million
over the same period in 2021. Sales by reportable segment in the
three months ended March 31, 2022 were as follows:
- Lindero
recognized adjusted sales of $54.1 million from 28,619 ounces of
gold ounces sold, a 45% increase from the same period in 2021.
Higher gold sales were the result of increased performance at the
three stage crushing and stacking facility.
- Yaramoko
recognized adjusted sales of $55.4 million from 29,530 ounces of
gold sold.
- San Jose
recognized adjusted sales of $45.9 million, a 17% decrease from the
$55.3 million reported in the same period in 2021. Lower sales were
driven by a 20% and 23% decrease in the volume of silver and gold
ounces sold, respectively, which was driven by lower mined grades
which was in line with Mineral Reserve estimates.
- Caylloma
recognized adjusted sales of $26.8 million, a 7% increase from the
$25.1 million reported in the same period in 2021. The increased
sales were mainly driven by higher zinc and lead prices.
Operating income for the three months ended
March 30, 2022 was $40.7 million, a slight increase of $0.3 million
compared to Q1 2021 as higher operating income at Lindero and the
contribution from Yaramoko were offset by lower operating income at
San Jose, higher Corporate expenses, and a $2.1 million write-down
related to the termination of an exploration agreement on the Sante
Fe property in Mexico.
Net income for the three months ended March 31,
2022 was $27.0 million, an increase of $0.6 million over the same
period in 2021. Net income was impacted by a loss on financial
derivatives of $4.2 million for the first quarter of 2022 compared
to a $1.7 million gain in the same period of 2021. This was driven
by a $5.2 million loss ($1.1 million realized, $4.1 million
unrealized) on financial derivatives at the Caylloma Mine due to
higher zinc prices that was partially offset by gains on fuel
hedges at Lindero.
Outlook on Cost Inflation
The Company continues to monitor the impact of
inflationary pressures on its cost structure and any deviation this
could create from the guidance the Company issued at the beginning
of the year. During the quarter ended March 31, 2022, the Company
observed cost pressure on certain consumables including cyanide,
diesel, explosives and grinding media while certain others remained
relatively constant. Through the first quarter of 2022 the impact
of inflation was below 5% of total cost. At the Lindero Mine, where
diesel is the largest cost component, the effect of a rising price
was partially mitigated by fuel hedges the Company has in place for
approximately 55% of consumption in 2022. The future impact of
inflation on costs remains uncertain at this time. The Company will
continue to closely monitor the levels of cost inflation over the
remainder of 2022.
Liquidity
Free cash flow from ongoing operations for the
three months ended March 31, 2022 was $9.6 million compared to
$11.8 million in Q1 2021. The decrease was driven by negative
changes in working capital in Q1 2022 of $27.9 million and taxes
paid of $20.1 million compared to a current income tax charge in
the quarter of $11.9 million.
Total liquidity available to the Company as at
March 31, 2022 was $150.4 million. The Company’s $200.0 million
revolving credit facility was fully available as at the end of
March 2022 and $40.0 million remained undrawn. Subsequent to March
31, 2022 the company drew down $20.0 million from the credit
facility bringing the total amount drawn to $180.0 million of the
available $200.0 million.
Lindero Mine, Argentina
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Three months ended March 31, |
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|
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2022 |
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|
2021 |
Mine Production |
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|
|
|
|
|
Tonnes placed on the leach pad |
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1,295,755 |
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|
2,130,000 |
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Gold |
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|
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|
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Grade (g/t) |
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|
0.88 |
|
|
0.82 |
Production (oz) |
|
|
30,068 |
|
|
22,332 |
Metal sold (oz) |
|
|
28,619 |
|
|
21,297 |
Realized price ($/oz) |
|
|
1,890 |
|
|
1,754 |
|
|
|
|
|
|
|
Cash cost ($/oz Au)1 |
|
|
692 |
|
|
615 |
All-in sustaining cash cost ($/oz Au)1 |
|
|
1,038 |
|
|
1,055 |
|
|
|
|
|
|
|
Capital expenditures
($000's) |
|
|
|
|
|
|
Sustaining |
|
|
3,125 |
|
|
4,040 |
Non-sustaining |
|
|
169 |
|
|
- |
Brownfields |
|
|
144 |
|
|
91 |
1 Cash cost and
AISC are non-IFRS financial measures. Refer to Non-IFRS Financial
Measures. |
During the first quarter of 2022, the operation
lost man-hours in January as a result of the sudden surge in
COVID-19 cases causing a 14% shortfall in ore placed on the pad,
compared to plan for the quarter. The Company is executing a
recovery plan during the second and third quarters of the year and
does not anticipate any impact on achieving annual production
guidance.
In the first quarter of 2022, a total of
1,295,755 tonnes of ore were placed on the heap leach pad averaging
0.88 g/t gold containing an estimated 36,568 ounces of gold. Gold
production for the quarter was 30,068 ounces, representing a 35%
increase quarter-over-quarter. Higher gold production is explained
by an increase in the performance of the three-stage crushing and
stacking circuits to design parameters, which delivered 100% of the
1.3 million tonnes of ore placed on the pad in the quarter compared
to 19% or 0.4 million tonnes of the 2.1 million tonnes placed in
the comparable quarter a year ago. Mine production was 2.4 million
tonnes of mineralized material with a strip ratio of 0.5:1.
Cash cost per gold ounce sold was $692, compared
to $615 in the first quarter of 2021. Cash costs per ounce of gold
was higher due to higher consumable prices mainly related to
diesel, cyanide and explosives and higher headcount as the mine had
not reached its full complement of staff in the first quarter of
2022. This was partially offset by the higher volume of gold
sold.
All-in sustaining cash costs per gold ounce sold
was $1,038 during Q1 2022 compared with $1,055 in the first quarter
of 2021. All-in sustaining costs for the first quarter of 2022 was
impacted by the production issues described above and lower
sustaining capital related to timing effects.
Yaramoko Mine Complex, Burkina Faso
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Three months ended March 31, |
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|
|
2022 |
|
|
2021 |
Mine Production |
|
|
|
|
|
|
Tonnes milled |
|
|
127,968 |
|
|
- |
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
Grade (g/t) |
|
|
7.50 |
|
|
- |
Recovery (%) |
|
|
98 |
|
|
- |
Production (oz) |
|
|
28,235 |
|
|
- |
Metal sold (oz) |
|
|
29,530 |
|
|
- |
Realized price ($/oz) |
|
|
1,878 |
|
|
- |
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
Cash cost ($/oz Au)1 |
|
|
705 |
|
|
- |
All-in sustaining cash cost ($/oz Au)1 |
|
|
1,147 |
|
|
- |
|
|
|
|
|
|
|
Capital expenditures
($000's) |
|
|
|
|
|
|
Sustaining |
|
|
7,361 |
|
|
- |
Brownfields |
|
|
488 |
|
|
- |
1 Cash cost and
AISC are non-IFRS financial measures. Refer to Non-IFRS Financial
Measures. |
2 The Yaramoko
Mine was acquired as part of the acquisition of Roxgold which
completed on July 2, 2021. As such comparative figures for the
comparative quarter in 2021 is not presented. |
The Yaramoko Mine produced 28,235 ounces of gold
in the first quarter of 2022 with an average gold head grade of
7.50 g/t; above the plan for the quarter. Gold production is on
target to meet the upper end of the annual guidance range primarily
due to mill feed grade being 9% higher than budgeted for the
period. Positive grade reconciliation compared to the reserve model
at the 55 Zone and additional tonnes from ore development explain
the increase in grade.
Cash cost per gold ounce sold was $705, which
was below plan, primarily due to higher production during Q1
2022.
All-in sustaining cash cost per gold ounce sold
was $1,147 for Q1 2022, which was below plan due to higher
production and lower sustaining capital related to timing
effects.
San Jose Mine, Mexico
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|
Three months ended March 31, |
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|
|
2022 |
|
|
2021 |
Mine Production |
|
|
|
|
|
|
Tonnes milled |
|
|
250,947 |
|
|
259,803 |
Average tonnes milled per day |
|
|
2,918 |
|
|
3,048 |
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|
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Silver |
|
|
|
|
|
|
Grade (g/t) |
|
|
185 |
|
|
217 |
Recovery (%) |
|
|
91 |
|
|
91 |
Production (oz) |
|
|
1,358,189 |
|
|
1,646,444 |
Metal sold (oz) |
|
|
1,316,193 |
|
|
1,642,300 |
Realized price ($/oz) |
|
|
24.27 |
|
|
26.17 |
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
Grade (g/t) |
|
|
1.13 |
|
|
1.36 |
Recovery (%) |
|
|
90 |
|
|
91 |
Production (oz) |
|
|
8,239 |
|
|
10,301 |
Metal sold (oz) |
|
|
7,952 |
|
|
10,287 |
Realized price ($/oz) |
|
|
1,890 |
|
|
1,783 |
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
Production cash cost ($/t)2 |
|
|
76.05 |
|
|
69.96 |
Production cash cost ($/oz Ag Eq)1,2 |
|
|
10.42 |
|
|
8.38 |
Net smelter return ($/t) |
|
|
182.65 |
|
|
223.69 |
All-in sustaining cash cost ($/oz Ag Eq)1,2 |
|
|
15.32 |
|
|
13.40 |
|
|
|
|
|
|
|
Capital expenditures
($000's) |
|
|
|
|
|
|
Sustaining |
|
|
3,575 |
|
|
1,987 |
Non-sustaining |
|
|
415 |
|
|
274 |
Brownfields |
|
|
1,529 |
|
|
1,736 |
1 Production cash
cost silver equivalent and All-in sustaining cash cost silver
equivalent are calculated using realized metal prices for each
period respectively |
2 Production cash
cost, Production cash cost silver equivalent, and All-in sustaining
cash cost silver equivalent are Non-IFRS Financial Measures, refer
to Non-IFRS Financial Measures |
The San Jose Mine produced 1,358,189 ounces of
silver and 8,239 ounces of gold during the three months ended March
31, 2022, which represents an 18% and 20% decrease compared to Q1
2021. The driver for the decrease in production was primarily lower
average head grades of 15% and 17% for silver and gold,
respectively; which is in line with Mineral Reserve estimates.
The cash cost per tonne for the three months
ended March 31, 2022 was $76.05 per tonne compared to $69.96 per
tonne in Q1 2021. Cash cost per tonne in the quarter was in line
with annual guidance.
The all-in sustaining cash cost of payable
silver equivalent for the three months ended March 31, 2022
increased 14% to $15.32 per ounce, compared to $13.40 per ounce in
Q1 2021. The increase in all-in sustaining costs was primarily the
result of lower silver equivalent ounces sold and an increase in
sustaining capital due to additional spend on mine equipment,
partially compensated by lower royalties and mining taxes and lower
worker’s participation.
Caylloma Mine, Peru
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|
|
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|
Three months ended March 31, |
|
|
|
2022 |
|
|
2021 |
Mine Production |
|
|
|
|
|
|
Tonnes milled |
|
|
132,574 |
|
|
131,887 |
Average tonnes milled per day |
|
|
1,524 |
|
|
1,499 |
|
|
|
|
|
|
|
Silver |
|
|
|
|
|
|
Grade (g/t) |
|
|
89 |
|
|
77 |
Recovery (%) |
|
|
82 |
|
|
81 |
Production (oz) |
|
|
311,939 |
|
|
267,311 |
Metal sold (oz) |
|
|
294,301 |
|
|
259,311 |
Realized price ($/oz) |
|
|
23.78 |
|
|
26.29 |
|
|
|
|
|
|
|
Gold |
|
|
|
|
|
|
Grade (g/t) |
|
|
0.16 |
|
|
0.62 |
Recovery (%) |
|
|
37 |
|
|
73 |
Production (oz) |
|
|
258 |
|
|
1,922 |
Metal sold (oz) |
|
|
325 |
|
|
1,673 |
Realized price ($/oz) |
|
|
1,828 |
|
|
1,775 |
|
|
|
|
|
|
|
Lead |
|
|
|
|
|
|
Grade (%) |
|
|
3.55 |
|
|
3.21 |
Recovery (%) |
|
|
88 |
|
|
88 |
Production (000's lbs) |
|
|
9,134 |
|
|
8,181 |
Metal sold (000's lbs) |
|
|
8,575 |
|
|
7,998 |
Realized price ($/lb) |
|
|
1.06 |
|
|
0.92 |
|
|
|
|
|
|
|
Zinc |
|
|
|
|
|
|
Grade (%) |
|
|
4.18 |
|
|
4.70 |
Recovery (%) |
|
|
89 |
|
|
88 |
Production (000's lbs) |
|
|
10,827 |
|
|
11,969 |
Metal sold (000's lbs) |
|
|
10,546 |
|
|
12,267 |
Realized price ($/lb) |
|
|
1.69 |
|
|
1.25 |
|
|
|
|
|
|
|
Unit Costs |
|
|
|
|
|
|
Production cash cost ($/t)2 |
|
|
89.60 |
|
|
83.09 |
Production cash cost ($/oz Ag Eq)1,2 |
|
|
12.39 |
|
|
13.10 |
Net smelter return ($/t) |
|
|
211.80 |
|
|
194.39 |
All-in sustaining cash cost ($/oz Ag Eq)1,2 |
|
|
17.83 |
|
|
18.50 |
|
|
|
|
|
|
|
Capital expenditures
($000's) |
|
|
|
|
|
|
Sustaining |
|
|
3,949 |
|
|
1,972 |
Brownfields |
|
|
324 |
|
|
630 |
1 Production cash
cost silver equivalent and All-in sustaining cash cost silver
equivalent are calculated using realized metal prices for each
period respectively |
2 Production cash
cost, Production cash cost silver equivalent, and All-in sustaining
cash cost silver equivalent are Non-IFRS Financial Measures, refer
to Non-IFRS Financial Measures |
The Caylloma Mine produced 311,939 ounces of
silver, 9.1 million pounds of lead and 10.8 million pounds of zinc
during the three months ended March 31, 2022. Silver production was
17% higher than the comparable period, driven by a 16% increase in
average head grade from the contribution of newly scheduled
higher-grade production stopes located in level 16 of the Animas
vein. Lead production was 12% higher than the comparable period due
to higher grades while zinc production was 10% lower than the
comparable period due to lower grades. Gold production totalled 258
ounces with an average head grade of 0.16 g/t which was in line
with expectations.
The production cash cost per tonne for the three
months ended March 31, 2022 increased 8% to $89.60, compared to
$83.09 in Q1 2021. The increase was the result of higher mining
costs related to higher increased ground support and backfill
requirements and increased plant costs related to steel and
reagents. Cash cost per tonne in the quarter was in line with
annual guidance.
The all-in sustaining cash cost for the three
months ended March 31, 2022 decreased 4% to $17.83 per ounce
compared to $18.50 per ounce in Q1 2021. The decrease was driven by
higher silver equivalent 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-IFRS Financial Measures
The Company has disclosed certain financial
measures and ratios in this news release which are not defined
under the International Financial Reporting Standards (“IFRS”), as
issued by the International Accounting Standards Board, and are not
disclosed in the Company's financial statements, including but not
limited to: cash cost per ounce of gold sold; all-in sustaining
cash cost per ounce of gold sold; all-in cash cost per ounce of
gold sold; total production cash cost per tonne; cash cost per
payable ounce of silver equivalent sold; all-in sustaining cash
cost per payable ounce of silver equivalent sold; all-in cash cost
per payable ounce of silver equivalent sold; free cash flow from
ongoing operations; adjusted net income; adjusted EBITDA and
working capital.
These non-IFRS financial measures and non-IFRS
ratios are widely reported in the mining industry as benchmarks for
performance and are used by management to monitor and evaluate the
Company's operating performance and ability to generate cash. The
Company believes that, in addition to financial measures and ratios
prepared in accordance with IFRS, certain investors use these
non-IFRS financial measures and ratios to evaluate the Company’s
performance. However, the measures do not have a standardized
meaning under IFRS and may not be comparable to similar financial
measures disclosed by other companies. Accordingly, non-IFRS
financial measures and non-IFRS ratios should not be considered in
isolation or as a substitute for measures and ratios of the
Company’s performance prepared in accordance with IFRS. The Company
has calculated these measures consistently for all periods
presented.
To facilitate a better understanding of these
measures and ratios as calculated by the Company, descriptions are
provided below. In addition, see “Non-IFRS Financial Measures” in
the Company’s management’s discussion and analysis for the three
months ended March 31, 2022 (“Q1 2022 MD&A”), which section is
incorporated by reference in this news release, for additional
information regarding each non-IFRS financial measure and non-IFRS
ratio disclosed in this news release, including an explanation of
their composition; an explanation of how such measures and ratios
provide useful information to an investor and the additional
purposes, if any, for which management of Fortuna uses such
measures and ratio. The Q1 2022 MD&A may be accessed on SEDAR
at www.sedar.com under the Company’s profile, Fortuna Silver Mines
Inc.
Except as otherwise described in the Q1 2022
MD&A, the Company has calculated these measures consistently
for all periods presented.
Reconciliation to Adjusted Net Income for the Three
Months Ended March 31, 2022 and 2021
|
|
|
|
|
|
|
|
Three months ended March 31, |
Consolidated |
|
2022 |
|
|
2021 |
|
Net income |
|
27.0 |
|
|
26.4 |
|
Adjustments, net of tax: |
|
|
|
|
|
Foreign exchange loss, Lindero Mine2 |
|
- |
|
|
2.2 |
|
Write off of mineral properties |
|
1.5 |
|
|
- |
|
Unrealized loss (gain) on derivatives |
|
2.3 |
|
|
- |
|
Accretion on right of use assets |
|
0.6 |
|
|
- |
|
Other non-cash/non-recurring items |
|
2.0 |
|
|
(1.1 |
) |
Adjusted Net Income |
|
33.4 |
|
|
27.5 |
|
1 Amounts are recorded in Cost
of sales |
|
|
|
|
|
2 Amounts are recorded in
General and Administration |
|
|
|
|
|
Reconciliation to Adjusted EBITDA for
the Three Months Ended March 31, 2022 and 2021
|
|
|
|
|
|
|
|
Three months ended March 31, |
|
|
2022 |
|
|
2021 |
|
Net income |
|
27.0 |
|
|
26.4 |
|
Adjustments: |
|
|
|
|
|
Community support provision and accruals |
|
- |
|
|
- |
|
Inventory adjustment |
|
- |
|
|
(0.1 |
) |
Foreign exchange loss, Lindero Mine |
|
- |
|
|
2.2 |
|
Foreign exchange loss, Séguéla Project |
|
0.6 |
|
|
- |
|
Net finance items |
|
2.8 |
|
|
2.4 |
|
Depreciation, depletion, and amortization |
|
38.1 |
|
|
19.2 |
|
Income taxes |
|
6.8 |
|
|
13.3 |
|
Other non-cash/non-recurring items |
|
5.0 |
|
|
(2.6 |
) |
Adjusted EBITDA |
|
80.3 |
|
|
60.8 |
|
Reconciliation of Free Cash Flow from
ongoing operations for Three Months Ended March 31, 2022 and
2020
|
|
|
|
|
|
|
Three months ended March 31, |
Consolidated |
|
2022 |
|
|
2021 |
|
|
|
|
|
(Restated) |
|
Net cash provided by operating
activities |
|
33.2 |
|
|
21.1 |
|
Adjustments |
|
|
|
|
Additions to mineral properties, plant and equipment |
|
(20.5 |
) |
|
(9.3 |
) |
Other adjustments |
|
(3.1 |
) |
|
- |
|
Free
cash flow from ongoing operations |
|
9.6 |
|
|
11.8 |
|
Reconciliation of Cash Cost per Ounce of Gold Sold for
the Three Months Ended March 31, 2022 and 2021
|
|
|
|
|
|
Lindero
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cost of sales |
|
|
35,867 |
|
|
22,186 |
|
Changes in doré inventory |
|
|
1,017 |
|
|
- |
|
Inventory adjustment |
|
|
739 |
|
|
- |
|
Export duties |
|
|
(4,008 |
) |
|
(2,800 |
) |
Depletion and
depreciation |
|
|
(12,009 |
) |
|
(6,245 |
) |
By
product credits |
|
|
- |
|
|
(58 |
) |
Production cash cost1 |
|
|
21,607 |
|
|
13,083 |
|
Changes in doré inventory |
|
|
(1,017 |
) |
|
- |
|
Realized gain in diesel hedge |
|
|
(782 |
) |
|
- |
|
Cash cost applicable per gold
ounce sold |
A |
|
19,808 |
|
|
13,083 |
|
Ounces
of gold sold |
B |
|
28,607 |
|
|
21,289 |
|
Cash
cost per ounce of gold sold1 ($/oz) |
=A/B |
|
692 |
|
|
615 |
|
1 March 31, 2021
restated, Sustaining leases moved to All-In Sustaining |
|
|
|
|
|
|
|
Yaramoko
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cost of sales |
|
|
38,041 |
|
|
- |
|
Changes in doré inventory |
|
|
(1,320 |
) |
|
- |
|
Export duties |
|
|
(3,333 |
) |
|
- |
|
Depletion and
depreciation |
|
|
(14,028 |
) |
|
- |
|
By
product credits |
|
|
(5 |
) |
|
- |
|
Production cash cost |
|
|
19,355 |
|
|
- |
|
Changes in doré inventory |
|
|
1,320 |
|
|
- |
|
Refining charges |
|
|
155 |
|
|
- |
|
Cash cost applicable per gold
ounce sold |
A |
|
20,830 |
|
|
- |
|
Ounces
of gold sold |
B |
|
29,530 |
|
|
- |
|
Cash
cost per ounce of gold sold ($/oz) |
=A/B |
|
705 |
|
|
- |
|
Reconciliation of All-in Sustaining Cash Cost per Ounce
of Gold Sold for the Three Months Ended March 31, 2022 and
2021
|
|
|
|
|
|
|
|
Lindero
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cash cost applicable |
|
|
19,808 |
|
|
13,093 |
|
Export duties and mining
taxes |
|
|
4,008 |
|
|
3,581 |
|
General
and administrative expenses (operations) |
|
|
1,905 |
|
|
1,138 |
|
Adjusted operating cash
cost |
|
|
25,721 |
|
|
17,812 |
|
Sustaining leases |
|
|
705 |
|
|
518 |
|
Sustaining capital
expenditures1 |
|
|
3,125 |
|
|
4,040 |
|
Brownfields exploration expenditures1 |
|
|
144 |
|
|
91 |
|
All-in sustaining cash
cost |
|
|
29,695 |
|
|
22,461 |
|
Non-sustaining capital expenditures1 |
|
|
169 |
|
|
- |
|
All-in cash cost |
|
|
29,864 |
|
|
22,461 |
|
Ounces
of gold sold |
|
|
28,607 |
|
|
21,289 |
|
All-in
sustaining cash cost per ounce of gold sold |
|
|
1,038 |
|
|
1,055 |
|
All-in
cash cost per ounce of gold sold |
|
|
1,044 |
|
|
1,055 |
|
1 Presented on a
cash basis |
|
|
|
|
|
|
|
|
Yaramoko
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cash cost applicable |
|
|
20,830 |
|
|
- |
|
Export duties and mining
taxes |
|
|
3,333 |
|
|
- |
|
General
and administrative expenses (operations) |
|
|
410 |
|
|
- |
|
Adjusted operating cash
cost |
|
|
24,573 |
|
|
- |
|
Sustaining leases |
|
|
1,435 |
|
|
- |
|
Sustaining capital
expenditures1 |
|
|
7,361 |
|
|
- |
|
Brownfields exploration expenditures1 |
|
|
488 |
|
|
- |
|
All-in
sustaining cash cost |
|
|
33,857 |
|
|
- |
|
All-in cash cost |
|
|
33,857 |
|
|
- |
|
Ounces
of gold sold |
|
|
29,530 |
|
|
- |
|
All-in
sustaining cash cost per ounce of gold sold |
|
|
1,147 |
|
|
- |
|
All-in
cash cost per ounce of gold sold |
|
|
1,147 |
|
|
- |
|
1 Presented on a
cash basis |
Reconciliation of Production Cash Cost
per Tonne and Cash Cost per Payable Ounce of Silver Equivalent Sold
for Three Months Ended March 31, 2022 and 2021
|
|
|
|
|
|
San Jose
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cost of sales |
|
|
28,899 |
|
|
28,708 |
|
Changes in concentrate
inventory |
|
|
77 |
|
|
29 |
|
Depletion and depreciation in
concentrate inventory |
|
|
(21 |
) |
|
14 |
|
Inventory adjustment |
|
|
537 |
|
|
80 |
|
Royalties and mining
taxes |
|
|
(1,392 |
) |
|
(1,343 |
) |
Workers participation |
|
|
(727 |
) |
|
(1,709 |
) |
Depletion and depreciation |
|
|
(8,287 |
) |
|
(7,604 |
) |
Cash cost3 |
A |
|
19,086 |
|
|
18,175 |
|
Total
processed ore (tonnes) |
B |
|
250,947 |
|
|
259,803 |
|
Production cash cost per tonne3 ($/t) |
=A/B |
|
76.05 |
|
|
69.96 |
|
Cash cost3 |
A |
|
19,086 |
|
|
18,175 |
|
Changes in concentrate
inventory |
|
|
(77 |
) |
|
(29 |
) |
Depletion and depreciation in
concentrate inventory |
|
|
21 |
|
|
(14 |
) |
Inventory adjustment |
|
|
(537 |
) |
|
(80 |
) |
Treatment charges |
|
|
872 |
|
|
(239 |
) |
Refining charges |
|
|
91 |
|
|
1,014 |
|
Cash cost applicable per
payable ounce sold3 |
C |
|
19,456 |
|
|
18,827 |
|
Payable
ounces of silver equivalent sold1 |
D |
|
1,867,871 |
|
|
2,245,819 |
|
Cash
cost per ounce of payable silver equivalent sold2,3 ($/oz) |
=C/D |
|
10.42 |
|
|
8.38 |
|
Mining cost per tonne3 |
|
|
37.45 |
|
|
37.35 |
|
Milling cost per tonne |
|
|
18.01 |
|
|
16.83 |
|
Indirect cost per tonne |
|
|
14.63 |
|
|
10.64 |
|
Community relations cost per
tonne |
|
|
4.84 |
|
|
0.32 |
|
Distribution cost per tonne |
|
|
1.12 |
|
|
4.82 |
|
Production cash cost per tonne3 ($/t) |
|
|
76.05 |
|
|
69.96 |
|
1 Silver
equivalent sold for Q1 2022 is calculated using a silver to gold
ratio of 77.9:1 (Q1 2021: 68.1:1). |
2 Silver
equivalent is calculated using the realized prices for gold and
silver. Refer to Financial Results – Sales and Realized Prices |
3 March 31, 2021
restated, Sustaining leases moved to All-In Sustaining |
|
|
|
|
|
|
Caylloma
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cost of sales |
|
|
16,021 |
|
|
15,617 |
|
Changes in concentrate
inventory |
|
|
111 |
|
|
65 |
|
Depletion and depreciation in
concentrate inventory |
|
|
(126 |
) |
|
4 |
|
Inventory adjustment |
|
|
272 |
|
|
- |
|
Royalties and mining
taxes |
|
|
(247 |
) |
|
(27 |
) |
Provision for community
support |
|
|
(126 |
) |
|
- |
|
Workers participation |
|
|
(613 |
) |
|
(640 |
) |
Depletion and depreciation |
|
|
(3,414 |
) |
|
(4,061 |
) |
Cash cost3 |
A |
|
11,878 |
|
|
10,958 |
|
Total
processed ore (tonnes) |
B |
|
132,574 |
|
|
131,887 |
|
Production cash cost per tonne3 ($/t) |
=A/B |
|
89.60 |
|
|
83.09 |
|
Cash cost |
A |
|
11,878 |
|
|
10,958 |
|
Changes in concentrate
inventory |
|
|
(111 |
) |
|
(65 |
) |
Depletion and depreciation in
concentrate inventory |
|
|
126 |
|
|
(4 |
) |
Inventory adjustment |
|
|
(272 |
) |
|
- |
|
Treatment charges |
|
|
3,914 |
|
|
3,157 |
|
Refining charges |
|
|
392 |
|
|
405 |
|
Cash cost applicable per
payable ounce sold3 |
C |
|
15,927 |
|
|
14,451 |
|
Payable
ounces of silver equivalent sold1 |
D |
|
1,285,610 |
|
|
1,103,000 |
|
Cash
cost per ounce of payable silver equivalent sold2,3 ($/oz) |
=C/D |
|
12.39 |
|
|
13.10 |
|
Mining cost per tonne |
|
|
35.29 |
|
|
31.98 |
|
Milling cost per tonne |
|
|
16.23 |
|
|
13.57 |
|
Indirect cost per tonne |
|
|
30.60 |
|
|
29.56 |
|
Community relations cost per
tonne |
|
|
7.04 |
|
|
0.55 |
|
Distribution cost per tonne |
|
|
0.45 |
|
|
7.43 |
|
Production cash cost per tonne3 ($/t) |
|
|
89.60 |
|
|
83.09 |
|
1 Silver
equivalent sold for Q1 2022 is calculated using a silver to gold
ratio of 76.9:1 (Q1 2021: 67.5:1), silver to lead ratio of 1:22.5
pounds (Q1 2021: 1:28.6), and silver to zinc ratio of 1:14.0 pounds
(Q1 2021: 1:21.1). |
2 Silver
equivalent is calculated using the realized prices for gold,
silver, lead, and zinc. Refer to Financial Results - Sales and
Realized Prices |
3 March 31, 2021
restated, Sustaining leases moved to All-In Sustaining |
Reconciliation of All-in Sustaining Cash
Cost and All-in Cash Cost per Payable Ounce of Silver Equivalent
Sold for Three Months Ended March 31, 2022 and 2021
|
|
|
|
|
|
|
|
San Jose
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cash cost applicable4 |
|
|
19,456 |
|
|
18,827 |
|
Royalties and mining
taxes |
|
|
1,392 |
|
|
3,683 |
|
Workers' participation |
|
|
909 |
|
|
2,136 |
|
General
and administrative expenses (operations) |
|
|
1,590 |
|
|
1,675 |
|
Adjusted operating cash
cost4 |
|
|
23,347 |
|
|
26,321 |
|
Care and maintenance costs
(impact of COVID-19) |
|
|
2 |
|
|
- |
|
Sustaining leases4 |
|
|
157 |
|
|
44 |
|
Sustaining capital
expenditures3 |
|
|
3,575 |
|
|
1,987 |
|
Brownfields exploration expenditures3 |
|
|
1,529 |
|
|
1,736 |
|
All-in sustaining cash
cost |
|
|
28,610 |
|
|
30,088 |
|
Non-sustaining capital expenditures3 |
|
|
415 |
|
|
274 |
|
All-in cash cost |
|
|
29,025 |
|
|
30,362 |
|
Payable
ounces of silver equivalent sold1 |
|
|
1,867,871 |
|
|
2,245,819 |
|
All-in
sustaining cash cost per ounce of payable silver equivalent
sold2 |
|
|
15.32 |
|
|
13.40 |
|
All-in
cash cost per ounce of payable silver equivalent sold2 |
|
|
15.54 |
|
|
13.52 |
|
1 Silver
equivalent sold for Q1 2022 is calculated using a silver to gold
ratio of 77.9:1 (Q1 2021: 68.1:1) |
2 Silver
equivalent is calculated using the realized prices for gold and
silver. Refer to Financial Results - Sales and Realized Prices |
3 Presented on a
cash basis |
4 March 31, 2021
restated, Sustaining leases moved from Cash Cost |
|
|
|
|
|
|
|
|
Caylloma
Mine |
|
|
Three months ended March 31, |
(Expressed in $'000's, except unit costs) |
|
|
2022 |
|
|
2021 |
|
Cash cost applicable4 |
|
|
15,927 |
|
|
14,451 |
|
Royalties and mining
taxes |
|
|
247 |
|
|
688 |
|
Workers' participation |
|
|
705 |
|
|
736 |
|
General
and administrative expenses (operations) |
|
|
1,058 |
|
|
1,278 |
|
Adjusted operating cash
cost4 |
|
|
17,937 |
|
|
17,153 |
|
Sustaining leases4 |
|
|
708 |
|
|
648 |
|
Sustaining capital
expenditures3 |
|
|
3,949 |
|
|
1,972 |
|
Brownfields exploration expenditures3 |
|
|
324 |
|
|
630 |
|
All-in
sustaining cash cost |
|
|
22,918 |
|
|
20,403 |
|
All-in cash cost |
|
|
22,918 |
|
|
20,403 |
|
Payable
ounces of silver equivalent sold1 |
|
|
1,285,610 |
|
|
1,103,000 |
|
All-in
sustaining cash cost per ounce of payable silver equivalent
sold2 |
|
|
17.83 |
|
|
18.50 |
|
All-in
cash cost per ounce of payable silver equivalent sold2 |
|
|
17.83 |
|
|
18.50 |
|
1 Silver
equivalent sold for Q1 2022 is calculated using a silver to gold
ratio of 76.9:1 (Q1 2021: 67.5:1), silver to lead ratio of 1:22.5
pounds (Q1 2021: 1:28.6), and silver to zinc ratio of 1:14.0 pounds
(Q1 2021: 1:21.1). |
2 Silver
equivalent is calculated using the realized prices for gold,
silver, lead, and zinc. Refer to Financial Results - Sales and
Realized Prices |
3 Presented on a
cash basis |
4 March 31, 2021
restated, Sustaining leases moved from Cash Cost |
Additional information regarding the Company’s
financial results and activities underway are available in the
Company’s first quarter 2022 Financial Statements and accompanying
Q1 2022 MD&A, which are available for download on the Company’s
website, www.fortunasilver.com, on SEDAR at www.sedar.com and on
EDGAR at www.sec.gov/edgar.
Conference Call and Webcast
A conference call to discuss the financial and
operational results will be held on Thursday, May 12, 2022 at 9:00
a.m. Pacific time | 12:00 p.m. Eastern time. Hosting the call will
be Jorge A. Ganoza, President and CEO, Luis D. Ganoza, Chief
Financial Officer, Cesar Velasco, Chief Operating Officer - Latin
America, and Paul Criddle, Chief Operating Officer - West
Africa.
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/1696/43329 or over the
phone by dialing in just prior to the starting time.
Conference call details:
Date: Thursday, May 12, 2022Time: 9:00 a.m.
Pacific time | 12:00 p.m. Eastern time
Dial in number (Toll Free): +1. 888.506.0062Dial
in number (International): +1.973.528.0011Entry code: 798106
Replay number (Toll Free): +1.877.481.4010Replay
number (International): +1.919.882.2331Replay Passcode: 45424
Playback of the earnings call will be available
until Thursday, May 26, 2022. Playback of the webcast will be
available until Friday, May 12, 2023. In addition, a transcript of
the call will be archived on the Company’s website.
About Fortuna Silver Mines
Inc.
Fortuna Silver Mines Inc. is a Canadian precious
metals mining company with four operating mines in Argentina,
Burkina Faso, Mexico and Peru, and a fifth mine under construction
in Côte d’Ivoire. Sustainability is integral to all our operations
and relationships. We produce gold and silver and generate shared
value over the long-term for our stakeholders through efficient
production, environmental protection and social responsibility. For
more information, please visit our website.
ON BEHALF OF THE BOARD
Jorge A. GanozaPresident, CEO,
and DirectorFortuna Silver Mines Inc.
Investor Relations: Carlos Baca
| 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 anticipated performance in 2022; estimated capital
expenditures in 2022 and exploration spending in 2022, including
amounts for exploration activities at the Séguéla and San Jose
properties; the Company’s plans for the construction of the open
pit mine at the Séguéla project in Cote d’Ivoire; the economics for
the construction of the mine at the Séguéla project as set out in
the feasibility study, the estimated construction capital
expenditures for the project, the timelines and schedules for the
construction and production of gold at the Séguéla project;
statements regarding the Company's liquidity; the Company's
business strategy, plans and outlook; the merit of the Company's
mines and mineral properties; mineral resource and reserve
estimates; production costs; timelines; the future financial or
operating performance of the Company; anticipated approvals and
other matters. 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; the impact of the
COVID-19 pandemic on the Company’s mining operations and
construction activities; the risks relating to a global pandemic,
including the COVID-19 pandemic, as well as risks associated with
war or other geo-political hostilities, such as the Ukrainian –
Russian conflict, any of which could continue to cause a disruption
in global economic activity; the risks associated with the
completion of the Roxgold Acquisition, including the ability of the
Company to successfully consolidate functions, integrate
operations, procedures and personnel; adverse changes in prices for
gold, silver and other metals; the ability of the Company to
successfully challenge an alleged typographical error in the
environmental impact authorization ("EIA") granted for the San Jose
Mine in December 2021; fluctuation in currencies and foreign
exchange rates; inflation; the imposition of capital controls in
countries in which the Company operates; any extension of the
currency controls in Argentina; changes in the prices of key
supplies; 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; changes to
current estimates of mineral reserves and resources; changes to
production and cost estimates; changes in the position of
regulatory authorities with respect to the granting of approvals or
permits; governmental and other approvals; changes in government,
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 the accuracy of the
Company’s current mineral resource and reserve estimates; that the
Company’s activities will be conducted in accordance with the
Company’s public statements and stated goals; that there will be no
material adverse change affecting the Company, its properties or
changes to production estimates (which assume accuracy of projected
ore grade, mining rates, recovery timing, and recovery rate
estimates and may be impacted by unscheduled maintenance, labour
and contractor availability and other operating or technical
difficulties); the construction at the Séguéla gold Project will
continue on the time line and in accordance with the Budget as
planned; the duration and impacts of COVID-19; geo-political
uncertainties that may affect the Company’s production, workforce,
business, operations and financial condition; that the Company will
the expected trends in mineral prices and currency exchange rates;
that the Company will succeed in challenging the alleged
typographical error in the December 2021 extension to the San Jose
EIA; that all required approvals and permits will be obtained for
the Company’s business and operations on acceptable terms; that
there will be no significant disruptions affecting the Company's
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 these 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.
Cautionary Note to United States Investors
Concerning Estimates of Reserves and Resources
Reserve and resource estimates included in this
news release have been prepared in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101") and the Canadian Institute of Mining, Metallurgy, and
Petroleum Definition Standards on Mineral Resources and Mineral
Reserves. NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for public disclosure by
a Canadian company of scientific and technical information
concerning mineral projects. Unless otherwise indicated, all
mineral reserve and mineral resource estimates contained in the
technical disclosure have been prepared in accordance with NI
43-101 and the Canadian Institute of Mining, Metallurgy and
Petroleum Definition Standards on Mineral Resources and Reserves.
Canadian standards, including NI 43-101, differ significantly from
the requirements of the Securities and Exchange Commission, and
mineral reserve and resource information included in this news
release may not be comparable to similar information disclosed by
U.S. companies.
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