Fortuna Reports Second Quarter Unaudited 2021 Financial Results
VANCOUVER, Aug. 11, 2021 - Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) ("Fortuna" or the "Company") today reported second quarter 2021 net income of $16.2 million, adjusted net income1 of $21.5 million, and adjusted EBITDA1 of $54.9 million.
Jorge A. Ganoza, President and CEO, commented, "In spite of COVID-19 related challenges at Lindero, which have led us to revise guidance for the year, our second quarter results continue to reflect the strength of our business with record sales of $120.5 million and consolidated EBITDA1 margins above 45%." Mr. Ganoza continued, "At Lindero, we have been gradually overcoming the COVID-19 travel restrictions which have limited access to on-site foreign technical support, and are now seeing continued improvement in mechanical availability and equipment productivity." Mr. Ganoza added, "We look forward to the contribution of the Roxgold acquisition to our financial performance starting in Q3, with the forecasted addition of 62,000 to 66,000 gold ounces of production from the Yaramoko mine for the second half of 2021 at an AISC1 below $1,150 per ounce."
Second Quarter 2021 Highlights
- Record sales of $120.5 million, an increase of 171% from the $44.5 million reported in the same period in 2020 ("Q2 2020"), due to higher gold and silver sales volumes and higher realized prices for all metals, and sales from the Lindero mine of $ 34.2 million
- Net income of $16.2 million or $0.09 per share, an increase of $21.9 million and $0.12 per share, from the $5.7 million net loss or $0.03 net loss per share reported in Q2 2020
- Adjusted net income1 of $21.5 million compared to $5.1 million net loss in Q2 2020
- Adjusted EBITDA1 of $54.9 million compared to $9.4 million reported in Q2 2020
- Free cash flow from ongoing operations1 of $18.5 million compared to $0.2 million reported in Q2 2020
- As of June 30, 2021, the Company had cash and cash equivalents of $121.8 million, a decrease of $10.1 million from December 31, 2020, primarily due to a $35.3 million promissory note that was provided to Roxgold Inc. ("Roxgold") to cover a portion of the expected acquisition closing costs
- Silver and gold production of 1,892,822 ounces and 31,048 ounces, respectively
- AISC1,2 per silver equivalent ounce of payable silver sold of $13.61 and $18.45 for the San Jose Mine and Caylloma Mine, respectively, and AISC1 per ounce of gold sold of $1,214 for the Lindero Mine
- Completed the business combination with Roxgold on July 2, 2021 creating a low-cost intermediate global precious metals producer with extensive brownfields and greenfields organic growth potential in the Americas and West Africa; and led by a highly experienced management team
____________________________________
1 Refer to Non-IFRS Financial Measures at the end of this news release
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 ratio
| Three months ended June 30 | Six months ended June 30 | |||||||||||||||
| 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||
| Sales | 120.5 | 44.5 | 171 | % | 238.3 | 92.0 | 159 | % | ||||||||
| Mine operating income | 48.5 | 13.8 | 251 | % | 99.8 | 21.2 | 371 | % | ||||||||
| Operating income (loss) | 35.9 | (1.3 | ) | 2,862 | % | 76.2 | 0.5 | 15,140 | % | |||||||
| Net income (loss) | 16.2 | (5.7 | ) | 384 | % | 42.6 | (10.2 | ) | 518 | % | ||||||
| Earnings (loss) per share - basic | 0.09 | (0.03 | ) | 364 | % | 0.23 | (0.06 | ) | 476 | % | ||||||
| Adjusted net income1 | 21.5 | (5.1 | ) | 522 | % | 49.0 | (7.3 | ) | 771 | % | ||||||
| Adjusted EBITDA1 | 54.9 | 9.4 | 484 | % | 115.7 | 25.4 | 356 | % | ||||||||
| Net cash provided by operating activities | 29.5 | 0.8 | 3,588 | % | 50.7 | 4.5 | 1,027 | % | ||||||||
| Free cash flow from ongoing operations1 | 18.5 | 0.2 | 10,696 | % | 35.8 | 14.3 | 151 | % | ||||||||
| Capex | ||||||||||||||||
| Sustaining | 13.0 | 2.1 | 519 | % | 21.0 | 5.6 | 275 | % | ||||||||
| Non-sustaining | 0.7 | 0.1 | 600 | % | 1.0 | 0.2 | 416 | % | ||||||||
| Lindero | 1.4 | 4.9 | (71 | %) | 4.0 | 26.3 | (85 | %) | ||||||||
| Brownfields | 3.4 | 0.3 | 1,033 | % | 5.9 | 1.8 | 230 | % | ||||||||
| As at | Jun 30, 2021 | Dec 31, 2020 | % Change | |||||||||||||
| Cash and cash equivalents | 121.8 | 131.9 | (8 | %) | ||||||||||||
| 1 Refer to Non-IFRS financial measures and Forward Looking Statements at the end of this news release | ||||||||||||||||
Second Quarter 2021 Results
Sales for the three months ended June 30, 2021 were $120.5 million, an increase of 171% from the $44.5 million reported in Q2 2020. Lindero reported sales of $34.2 million from 18,924 ounces of gold ounces sold. San Jose reported sales of $60.3 million, an increase of 98% from the $30.5 million reported in Q2 2020 due to a 58% and 52% increase in the volume of silver and gold ounces sold, respectively, and higher realized metal prices, primarily silver. Caylloma reported sales of $26.0 million, a 86% increase from the $14.0 million reported in Q2 2020 due to higher realized prices, primarily zinc and silver, and higher volumes of metal sold, primarily gold.
Operating income for the three months ended June 30, 2021 was $35.9 million, an increase of $37.2 million compared to Q2 2020. The increase was due primarily to higher silver and gold prices, and Lindero's contribution to mine operating income of $7.2 million.
Net income for the three months ended June 30, 2021 was $16.2 million, a $21.9 million increase over the $5.7 million net loss reported in Q2 2020. The effective tax rate for the quarter was 43%.
Adjusted EBITDA for the three months ended June 30, 2021 was $54.9 million, an increase of $45.5 million compared to the $9.4 million reported in Q2 2020. The increase reflects Lindero´s contribution to adjusted EBITDA of $16.2 million as well as higher EBITDA at San Jose and Caylloma.
Free cash flow from ongoing operations for the three months ended June 30, 2021 was $18.5 million compared to $0.2 million in Q2 2020.
Liquidity
As of June 30, 2021, the Company had cash and cash equivalents of $121.8 million, a decrease of $10.1 million from December 31, 2020, primarily due to a $35.3 million promissory note that was provided to Roxgold to cover a portion of the expected acquisition closing costs.
The Company's $120.0 million credit facility remains fully drawn as of June 30, 2021 and is set to expire on January 26, 2022. It is contemplated that during the third quarter of 2021, the Company's existing credit facility will be replaced by a new credit facility in the increased amount of $200.0 million pursuant to an amended and restated credit agreement with the Company's existing and new lenders.
Lindero Mine
| Three months ended June 30, | Six months ended June 30, | ||||||
| 2021 | 2020 | 2021 | 2020 | ||||
| Mine Production | |||||||
| Tonnes placed on the leach pad | 1,477,000 | - | 3,607,000 | - | |||
| Gold | |||||||
| Grade (g/t) | 0.95 | - | 0.87 | - | |||
| Production (oz) | 19,521 | - | 41,853 | - | |||
| Metal sold (oz) | 18,924 | - | 40,213 | - | |||
| Realized price ($/oz) | 1,804 | - | 1,777 | - | |||
| Unit Costs | |||||||
| Cash cost ($/oz Au)1 | 673 | - | 655 | - | |||
| All-in sustaining cash cost ($/oz Au)1 | 1,214 | - | 1,130 | - | |||
| Capital expenditures ($000's) | |||||||
| Sustaining | 6,615 | - | 10,655 | - | |||
| Brownfields | 351 | - | 442 | - | |||
| 1 Refer to Non-IFRS Financial Measures | |||||||
Argentina suffered a surge of COVID-19 during the second quarter of 2021 with the infection rate peaking at 41,000 cases per day. Extended nationwide COVID-19 related travel restrictions continued to limit onsite access to foreign vendor support affecting ramp up activities at Lindero.
The COVID-19 infection rate at Lindero increased during the second quarter of 2021 and had a significant impact on the operation´s performance as 163 personnel tested positive, representing 18 percent of the workforce. During the quarter, the Company intermittently voluntarily suspended onsite operations for a total of 16 days which directly impacted ramp up progress and reduced the amount of ore delivered to the heap leach pad. Strict government mandated travel restrictions have led to disruptions in the hiring and movement of skilled personnel and delays in access to foreign vendor support, which resulted in higher mechanical downtime leading to lower tonnes of processed ore being delivered to the leach pad.
In the second quarter of 2021, a total of 1,477,000 tonnes of ore were placed on the leach pad averaging 0.95 g/t gold containing an estimated 44,889 ounces of gold. Total gold production for the quarter was 19,521 ounces, 73 percent of the plan.
Cash cost per gold ounce sold was $673, as the mine continues to ramp-up production.
All-in sustaining cash costs per gold ounce sold was $1,214, in line with the Company's original guidance for the first half of the year of between $1,130 and $1,335 per gold ounce sold, due primarily to the timing of sustaining capital expenditures.
In the second quarter of 2021, sustaining capital expenditures included $2.3 million of capitalized stripping, $1.7 million for leach pad expansion, and $1.2 million for the ADR plant.
The Company´s updated gold production guidance range for Lindero of between 90 and 110 thousand ounces reflects the direct and indirect impact of COVID-19 related challenges. These factors have been evaluated and their effect considered for the second half of the year (refer Fortuna news release dated July 19, 2021).
San Jose Mine
| Three months ended June 30, | Six months ended June 30, | ||||||
| 2021 | 2020 | 2021 | 2020 | ||||
| Mine Production | |||||||
| Tonnes milled | 269,565 | 160,151 | 529,368 | 406,977 | |||
| Average tonnes milled per day | 3,029 | 1,799 | 3,038 | 2,313 | |||
| Silver | |||||||
| Grade (g/t) | 205 | 220 | 211 | 217 | |||
| Recovery (%) | 92 | 91 | 91 | 91 | |||
| Production (oz) | 1,624,394 | 1,029,049 | 3,270,838 | 2,599,250 | |||
| Metal sold (oz) | 1,621,410 | 1,025,242 | 3,263,710 | 2,618,796 | |||
| Realized price ($/oz) | 26.90 | 17.28 | 26.53 | 16.56 | |||
| Gold | |||||||
| Grade (g/t) | 1.30 | 1.42 | 1.33 | 1.37 | |||
| Recovery (%) | 91 | 91 | 91 | 91 | |||
| Production (oz) | 10,266 | 6,654 | 20,567 | 16,284 | |||
| Metal sold (oz) | 10,212 | 6,703 | 20,499 | 16,480 | |||
| Realized price ($/oz) | 1,826 | 1,728 | 1,804 | 1,635 | |||
| Unit Costs | |||||||
| Production cash cost ($/t)2 | 75.50 | 65.98 | 72.86 | 69.10 | |||
| Production cash cost ($/oz Ag Eq)1,2 | 9.57 | 7.26 | 8.99 | 7.67 | |||
| Net smelter return ($/t) | 219.52 | 170.72 | 221.57 | 160.77 | |||
| All-in sustaining cash cost ($/oz Ag Eq)1,2 | 13.61 | 11.04 | 13.50 | 10.85 | |||
| Capital expenditures ($000's) | |||||||
| Sustaining | 3,985 | 1,170 | 5,972 | 2,743 | |||
| Non-sustaining | 757 | 122 | 1,031 | - | |||
| Brownfields | 2,154 | 194 | 3,890 | 1,500 | |||
| 1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period | |||||||
| 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 1,624,394 ounces of silver and 10,266 ounces of gold during the three months ended June 30, 2021, which represents an increase of 58% and 54%, respectively, compared to Q2 2020. The increase was due primarily to 68% higher tonnes milled in the second quarter of 2021 compared to Q2 2020, which was impacted by the 54-day shutdown of operations from government mandated restrictions in response to COVID-19.
The production cash cost per tonne for the three months ended June 30, 2021 was $75.50 an increase from the $65.98 per tonne in Q2 2020 primarily due to a stronger US dollar during Q2 2020 and higher planned mining preparation activities during the current quarter.
The all-in sustaining cash cost of payable silver equivalent for the three months ended June 30, 2021 was $13.61 per ounce, an increase of 23% compared to $11.04 per ounce in Q2 2020. The increase was due primarily to higher production cash costs as noted above, increases in sustaining and brownfields capital expenditures, and higher royalties, offset partly by higher silver equivalent sales.
Capital expenditures totalled $6.9 million for the three months ended June 30, 2021, an increase of 364% compared to Q2 2020, as COVID-19 restrictions more significantly impacted operations during Q2 2020.
Caylloma Mine
| Three months ended June 30, | Six months ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Mine Production | ||||||||||||
| Tonnes milled | 133,645 | 134,172 | 265,532 | 266,913 | ||||||||
| Average tonnes milled per day | 1,536 | 1,525 | 1,517 | 1,500 | ||||||||
| Silver | ||||||||||||
| Grade (g/t) | 76 | 72 | 77 | 69 | ||||||||
| Recovery (%) | 83 | 79 | 82 | 83 | ||||||||
| Production (oz) | 268,428 | 244,873 | 535,739 | 493,984 | ||||||||
| Metal sold (oz) | 275,652 | 275,085 | 534,963 | 487,562 | ||||||||
| Realized price ($/oz) | 26.54 | 16.06 | 26.42 | 16.73 | ||||||||
| Lead | ||||||||||||
| Grade (%) | 3.09 | 2.77 | 3.15 | 2.86 | ||||||||
| Recovery (%) | 90 | 83 | 89 | 86 | ||||||||
| Production (000's lbs) | 8,144 | 6,777 | 16,325 | 14,499 | ||||||||
| Metal sold (000's lbs) | 8,497 | 7,696 | 16,495 | 14,312 | ||||||||
| Realized price ($/lb) | 0.95 | 0.75 | 0.94 | 0.80 | ||||||||
| Zinc | ||||||||||||
| Grade (%) | 4.58 | 4.29 | 4.64 | 4.43 | ||||||||
| Recovery (%) | 87 | 87 | 87 | 87 | ||||||||
| Production (000's lbs) | 11,764 | 10,977 | 23,733 | 22,797 | ||||||||
| Metal sold (000's lbs) | 11,755 | 11,859 | 24,021 | 22,371 | ||||||||
| Realized price ($/lb) | 1.33 | 0.89 | 1.28 | 0.93 | ||||||||
| Unit Costs | ||||||||||||
| Production cash cost ($/t)2 | 91.15 | 74.92 | 89.59 | 77.86 | ||||||||
| Production cash cost ($/oz Ag Eq)1,2 | 14.54 | 13.85 | 14.12 | 13.84 | ||||||||
| Net smelter return ($/t) | 189.10 | 91.17 | 192.70 | 102.12 | ||||||||
| All-in sustaining cash cost ($/oz Ag Eq)1,2 | 18.45 | 15.34 | 18.48 | 16.16 | ||||||||
| Capital expenditures ($000's) | ||||||||||||
| Sustaining | 2,478 | 955 | 4,449 | 2,829 | ||||||||
| Brownfields | 979 | 86 | 1,609 | 349 | ||||||||
| 1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period | ||||||||||||
| 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 268,428 ounces of silver, 8.1 million pounds of lead and 11.8 million pounds of zinc during the three months ended June 30, 2021, an increase of 10%, 20%, and 7% respectively compared to Q2 2020. The increased metal production was due to higher head grades. Gold production for the second quarter of 2021 totaled 1,261 ounces with an average head grade of 0.42 g/t.
The production cash cost per tonne for the three months ended June 30, 2021 was $91.15, an increase of 22% compared to Q2 2020. The increase was due primarily to Q2 2020 having lower costs than planned due to a shutdown of mining operations in April 2020 without any significant impact on tonnes processed during the quarter.
The all-in sustaining cash cost of payable silver equivalent for the three months ended June 30, 2021 was $18.45 per ounce, an increase of 20% compared to the $15.34 per ounce in Q2 2020. The increase was due primarily to higher production cash costs as noted above, increases in sustaining and brownfields capital expenditures, and higher royalties, offset partly by higher silver equivalent sales.
Corporate Update
On July 2, 2021, Fortuna and Roxgold completed the previously announced business combination between Fortuna and Roxgold (the "Transaction") to create a global growth-oriented intermediate gold and silver producer. Roxgold's principal assets are the producing Yaramoko mine in Burkina Faso, the Séguéla advanced development gold project in Côte D'Ivoire, and the Boussoura exploration property in Burkina Faso.
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 following tables represent the calculation of certain Non-IFRS financial measures as referenced in this news release. In alignment with the World Gold Council standard for all-in sustaining cash cost and all-in cash cost, the Company has presented the cash cost figures on a sold ounce basis for all periods presented and has excluded royalties that are under the scope of IAS 12 - Income Taxes, with the change from the previously presented figures being applied retrospectively to prior periods.
Reconciliation to Adjusted Net Income for the three and six months ended June 30, 2021 and 2020
| Three months ended June 30, | Six months ended June 30, | ||||||||
| 2021 | 2020 | 2021 | 2020 | ||||||
| Net income (loss) | 16.2 | (5.7 | ) | 42.6 | (10.2 | ) | |||
| Adjustments, net of tax: | |||||||||
| Community support provision and accruals1 | 0.1 | - | 0.1 | (0.1 | ) | ||||
| Foreign exchange loss, Lindero Mine2 | 0.5 | 2.7 | 2.6 | 6.0 | |||||
| Share of loss from associates | - | - | - | 0.1 | |||||
| Investment income | - | (2.2 | ) | - | (3.3 | ) | |||
| Roxgold transaction costs | 3.5 | - | 3.5 | - | |||||
| Other non-cash items | 1.2 | 0.1 | 0.2 | 0.2 | |||||
| Adjusted net income (loss) | 21.5 | (5.1 | ) | 49.0 | (7.3 | ) | |||
| 1 Amounts are recorded in Cost of sales | |||||||||
| 2 Amounts are recorded in General and Administration | |||||||||
Reconciliation to Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020
| Three months ended June 30, | Six months ended June 30, | ||||||||||
| Consolidated | 2021 | 2020 | 2021 | 2020 | |||||||
| Net income (loss) | 16.2 | (5.7 | ) | 42.6 | (10.2 | ) | |||||
| Adjustments: | |||||||||||
| Community support provision | (0.1 | ) | - | (0.1 | ) | (0.1 | ) | ||||
| Inventory adjustment | - | 0.1 | (0.1 | ) | - | ||||||
| Foreign exchange loss, Lindero Mine | 0.5 | 2.7 | 2.6 | 6.0 | |||||||
| Net finance items | 2.1 | 0.3 | 4.6 | 0.7 | |||||||
| Depreciation, depletion, and amortization | 20.5 | 8.9 | 39.7 | 20.4 | |||||||
| Income taxes | 12.0 | 6.2 | 25.3 | 13.3 | |||||||
| Share of loss from associates | - | - | - | 0.1 | |||||||
| Investment income | - | (2.2 | ) | - | (3.3 | ) | |||||
| Other non-cash items | 3.7 | (0.9 | ) | 1.1 | (1.5 | ) | |||||
| Adjusted EBITDA | 54.9 | 9.4 | 115.7 | 25.4 | |||||||
Reconciliation to Free Cash Flow from ongoing operations for three and six months ended June 30, 2021 and 2020
| Three months ended June 30, | Six months ended June 30, | ||||||||||
| Consolidated | 2021 | 2020 | 2021 | 2020 | |||||||
| (Restated) | (Restated) | ||||||||||
| Net cash provided by operating activities | 29.5 | 0.8 | 50.7 | 4.5 | |||||||
| Adjustments | |||||||||||
| Roxgold transaction costs | 3.5 | - | 3.5 | - | |||||||
| Change in long term receivables and assets | 0.0 | (0.4 | ) | (0.1 | ) | (0.6 | ) | ||||
| Additions to mineral properties, plant and equipment | (13.8 | ) | (3.3 | ) | (23.2 | ) | (8.3 | ) | |||
| Impact of adoption in IAS 16 and Production costs | - | 2.6 | - | 12.2 | |||||||
| Current income tax expense | (12.2 | ) | (4.0 | ) | (26.2 | ) | (10.0 | ) | |||
| Income taxes paid | 11.4 | 4.5 | 31.0 | 16.5 | |||||||
| Free cash flow from ongoing operations | 18.5 | 0.2 | 35.8 | 14.3 | |||||||
Reconciliation of Production Cash Cost per Tonne and Cash Cost per Payable Ounce of Silver Equivalent Sold for the three and six months ended June 30, 2021 and 2020
| San Jose Mine | Three months ended June 30, | Six months ended June 30, | ||||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||||
| Cost of sales | 31,363 | 16,427 | 60,071 | 43,714 | ||||||||||||
| Changes in concentrate inventory | 65 | 286 | 94 | (64 | ) | |||||||||||
| Depletion and depreciation in concentrate inventory | (47 | ) | (110 | ) | (33 | ) | 5 | |||||||||
| Inventory adjustment | 1 | (118 | ) | 81 | 2 | |||||||||||
| IFRS 16 embedded lease adjustment | 57 | 4 | 101 | 10 | ||||||||||||
| Royalties and mining taxes | (1,384 | ) | (749 | ) | (2,727 | ) | (1,639 | ) | ||||||||
| Workers participation | (1,646 | ) | (803 | ) | (3,355 | ) | (2,089 | ) | ||||||||
| Depletion and depreciation | (8,056 | ) | (4,371 | ) | (15,660 | ) | (11,818 | ) | ||||||||
| Cash cost | A | 20,353 | 10,566 | 38,572 | 28,121 | |||||||||||
| Total processed ore (tonnes) | B | 269,565 | 160,151 | 529,368 | 406,977 | |||||||||||
| Production cash cost per tonne ($/t) | =A/B | 75.50 | 65.98 | 72.86 | 69.10 | |||||||||||
| Cash cost | A | 20,353 | 10,566 | 38,572 | 28,121 | |||||||||||
| Changes in concentrate inventory | (65 | ) | (286 | ) | (94 | ) | 64 | |||||||||
| Depletion and depreciation in concentrate inventory | 47 | 110 | 33 | (5 | ) | |||||||||||
| Inventory adjustment | (1 | ) | 118 | (81 | ) | (2 | ) | |||||||||
| Treatment charges | 2,420 | 103 | 2,181 | 219 | ||||||||||||
| Refining charges | (1,392 | ) | 1,171 | (378 | ) | 2,744 | ||||||||||
| Cash cost applicable per payable ounce sold | C | 21,362 | 11,782 | 40,233 | 31,141 | |||||||||||
| Payable ounces of silver equivalent sold1 | D | 2,231,385 | 1,622,866 | 4,477,204 | 4,061,802 | |||||||||||
| Cash cost per ounce of payable silver equivalent sold2 ($/oz) | =C/D | 9.57 | 7.26 | 8.99 | 7.67 | |||||||||||
| Mining cost per tonne | 40.98 | 38.44 | 39.28 | 36.65 | ||||||||||||
| Milling cost per tonne | 16.13 | 13.88 | 16.48 | 17.10 | ||||||||||||
| Indirect cost per tonne | 12.64 | 7.72 | 11.66 | 8.62 | ||||||||||||
| Community relations cost per tonne | 1.01 | 5.88 | 0.67 | 2.70 | ||||||||||||
| Distribution cost per tonne | 4.74 | 0.06 | 4.77 | 4.03 | ||||||||||||
| Production cash cost per tonne ($/t) | 75.50 | 65.98 | 72.86 | 69.10 | ||||||||||||
| 1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 67.9:1 (Q2 2020: 100:1) and for Q2 2021 YTD: silver to gold ratio of 68.0:1 (Q2 2020 YTD: 98.8:1) | ||||||||||||||||
| 2 Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results - Sales and Realized Prices | ||||||||||||||||
| Caylloma Mine | Three months ended June 30, | Six months ended June 30, | ||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Cost of sales | 16,413 | 14,280 | 32,030 | 27,070 | ||||||||
| Changes in concentrate inventory | (294 | ) | (1,538 | ) | (229 | ) | 289 | |||||
| Depletion and depreciation in concentrate inventory | 18 | 655 | 22 | 129 | ||||||||
| IFRS 16 embedded lease adjustment | 645 | 491 | 1,293 | 1,059 | ||||||||
| Royalties and mining taxes | (62 | ) | (153 | ) | (89 | ) | (319 | ) | ||||
| Provision for community support | - | 27 | - | 99 | ||||||||
| Workers participation | (573 | ) | 192 | (1,213 | ) | 172 | ||||||
| Depletion and depreciation | (3,965 | ) | (3,902 | ) | (8,026 | ) | (7,718 | ) | ||||
| Cash cost | A | 12,182 | 10,052 | 23,788 | 20,781 | |||||||
| Total processed ore (tonnes) | B | 133,645 | 134,172 | 265,532 | 266,913 | |||||||
| Production cash cost per tonne ($/t) | =A/B | 91.15 | 74.92 | 89.59 | 77.86 | |||||||
| Cash cost | A | 12,182 | 10,052 | 23,788 | 20,781 | |||||||
| Changes in concentrate inventory | 294 | 1,538 | 229 | (289 | ) | |||||||
| Depletion and depreciation in concentrate inventory | (18 | ) | (655 | ) | (22 | ) | (129 | ) | ||||
| Treatment charges | 3,590 | 5,101 | 6,747 | 9,563 | ||||||||
| Refining charges | 428 | 419 | 833 | 743 | ||||||||
| Cash cost applicable per payable ounce sold | C | 16,476 | 16,455 | 31,575 | 30,669 | |||||||
| Payable ounces of silver equivalent sold1 | D | 1,132,781 | 1,188,319 | 2,235,781 | 2,215,414 | |||||||
| Cash cost per ounce of payable silver equivalent sold2 ($/oz) | =C/D | 14.54 | 13.85 | 14.12 | 13.84 | |||||||
| Mining cost per tonne | 35.60 | 34.67 | 36.24 | 37.34 | ||||||||
| Milling cost per tonne | 15.50 | 13.43 | 14.54 | 13.69 | ||||||||
| Indirect cost per tonne | 30.95 | 19.45 | 30.26 | 19.87 | ||||||||
| Community relations cost per tonne | 1.13 | 6.83 | 0.85 | 3.63 | ||||||||
| Distribution cost per tonne | 7.97 | 0.54 | 7.70 | 3.33 | ||||||||
| Production cash cost per tonne ($/t) | 91.15 | 74.92 | 89.59 | 77.86 | ||||||||
| 1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 68.1:1 (Q2 2020: 105.9:1) , silver to lead ratio of 1:27.9 pounds (Q2 2020: 1:21.3), and silver to zinc ratio of 1:20.0 pounds (Q2 2020: 1:18.1). YTD 2021: silver to gold ratio of 67.8:1 (Q2 2020 YTD: 98.5:1), silver to lead ratio of 1:28.2 pounds (Q2 2020 YTD: 1:20.9), and silver to zinc ratio of 1:20.6 pounds (Q2 2020 YTD: 1:17.9) | ||||||||||||
| 2 Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices | ||||||||||||
Reconciliation of All-in Sustaining Cash Cost and All-in Cash Cost per Payable Ounce of Silver Equivalent Sold for three and six months ended June 30, 2021 and 2020
| San Jose Mine | Three months ended June 30, | Six months ended June 30, | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Cash cost applicable | 21,362 | 11,782 | 40,233 | 31,141 | ||||||||||
| Royalties and mining taxes | (956 | ) | 749 | 2,727 | 1,639 | |||||||||
| Workers' participation | 2,058 | 1,004 | 4,194 | 2,611 | ||||||||||
| General and administrative expenses (operations) | 1,771 | 1,444 | 3,446 | 2,865 | ||||||||||
| Adjusted operating cash cost | 24,235 | 14,979 | 50,600 | 38,256 | ||||||||||
| Care and maintenance costs (impact of COVID-19) | - | 1,568 | - | 1,568 | ||||||||||
| Sustaining capital expenditures3 | 3,985 | 1,170 | 5,972 | 2,743 | ||||||||||
| Brownfields exploration expenditures3 | 2,154 | 194 | 3,890 | 1,500 | ||||||||||
| All-in sustaining cash cost | 30,374 | 17,911 | 60,462 | 44,067 | ||||||||||
| Non-sustaining capital expenditures3 | 757 | 122 | 1,031 | 249 | ||||||||||
| All-in cash cost | 31,131 | 18,033 | 61,493 | 44,316 | ||||||||||
| Payable ounces of silver equivalent sold1 | 2,231,451 | 1,622,866 | 4,477,204 | 4,061,802 | ||||||||||
| All-in sustaining cash cost per ounce of payable silver equivalent sold2 | 13.61 | 11.04 | 13.50 | 10.85 | ||||||||||
| All-in cash cost per ounce of payable silver equivalent sold2 | 13.95 | 11.11 | 13.73 | 10.91 | ||||||||||
| 1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 67.9:1 (Q2 2020: 100:1) and for Q2 2021 YTD: silver to gold ratio of 68.0:1 (Q2 2020 YTD: 98.8:1) | ||||||||||||||
| 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 | ||||||||||||||
| Caylloma Mine | Three months ended June 30, | Six months ended June 30, | ||||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||||
| Cash cost applicable | 16,476 | 16,455 | 31,575 | 30,669 | ||||||||||
| Royalties and mining taxes | (599 | ) | 153 | 89 | 319 | |||||||||
| Workers' participation | 685 | (192 | ) | 1,421 | (167 | ) | ||||||||
| General and administrative expenses (operations) | 885 | 771 | 2,163 | 1,813 | ||||||||||
| Adjusted operating cash cost | 17,447 | 17,187 | 35,248 | 32,634 | ||||||||||
| Sustaining capital expenditures3 | 2,478 | 955 | 4,450 | 2,829 | ||||||||||
| Brownfields exploration expenditures3 | 979 | 86 | 1,609 | 349 | ||||||||||
| All-in sustaining cash cost | 20,904 | 18,228 | 41,307 | 35,812 | ||||||||||
| All-in cash cost | 20,904 | 18,228 | 41,307 | 35,812 | ||||||||||
| Payable ounces of silver equivalent sold1 | 1,132,781 | 1,188,319 | 2,235,781 | 2,215,414 | ||||||||||
| All-in sustaining cash cost per ounce of payable silver equivalent sold2 | 18.45 | 15.34 | 18.48 | 16.16 | ||||||||||
| All-in cash cost per ounce of payable silver equivalent sold2 | 18.45 | 15.34 | 18.48 | 16.16 | ||||||||||
| 1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 68.1:1 (Q2 2020: 105.9:1) , silver to lead ratio of 1:27.9 pounds (Q2 2020: 1:21.3), and silver to zinc ratio of 1:20.0 pounds (Q2 2020: 1:18.1). YTD 2021: silver to gold ratio of 67.8:1 (Q2 2020 YTD: 98.5:1), silver to lead ratio of 1:28.2 pounds (Q2 2020 YTD: 1:20.9), and silver to zinc ratio of 1:20.6 pounds (Q2 2020 YTD: 1:17.9) | ||||||||||||||
| 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. | ||||||||||||||
Reconciliation of Cash Cost per Ounce of Gold Sold for the three and six months ended June 30, 2021 and 2020
| Lindero Mine | Three months ended June 30, | Six months ended June 30, | ||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||
| Cost of sales | 24,280 | - | 46,466 | - | ||||||
| Changes in dore inventory | 1,652 | 1,002 | - | |||||||
| IFRS 16 embedded lease adjustment | 538 | - | 1,056 | - | ||||||
| Export duties | (2,582 | ) | - | (5,382 | ) | - | ||||
| Depletion and depreciation | (9,175 | ) | - | (15,420 | ) | - | ||||
| By product credits | (70 | ) | - | (128 | ) | - | ||||
| Production cash cost | A | 14,643 | - | 27,594 | - | |||||
| Changes in concentrate inventory | (1,652 | ) | (1,002 | ) | - | |||||
| Realized gain in diesel hedge | (253 | ) | (253 | ) | ||||||
| Treatment charges | (10 | ) | - | - | - | |||||
| Cash cost applicable per gold ounce sold | A | 12,728 | - | 26,339 | - | |||||
| Ounces of gold sold | B | 18,924 | - | 40,213 | - | |||||
| Cash cost per ounce of gold sold ($/oz) | =A/B | 673 | - | 655 | - | |||||
Reconciliation of All-in Sustaining Cash Cost per Ounce of Gold Sold for the three and six months ended June 30, 2021 and 2020
| Lindero Mine | Three months ended June 30, | Six months ended June 30, | ||||||
| 2021 | 2020 | 2021 | 2020 | |||||
| Cash cost applicable | 12,728 | - | 26,339 | - | ||||
| Export duties and mining taxes | 1,801 | - | 5,382 | - | ||||
| General and administrative expenses (operations) | 1,478 | - | 2,616 | - | ||||
| Adjusted operating cash cost | 16,007 | - | 34,337 | - | ||||
| Sustaining capital expenditures1 | 6,615 | - | 10,655 | - | ||||
| Brownfields exploration expenditures1 | 351 | - | 442 | - | ||||
| All-in sustaining cash cost | 22,973 | - | 45,434 | - | ||||
| All-in cash cost | 22,973 | - | 45,434 | - | ||||
| Ounces of gold sold | 18,924 | - | 40,213 | - | ||||
| All-in sustaining cash cost per ounce of gold sold | 1,214 | - | 1,130 | - | ||||
| All-in cash cost per ounce of gold | 1,214 | - | 1,130 | - | ||||
| 1 Presented on a cash basis | ||||||||
Additional information regarding the Company's financial results and activities underway are available in the Company's second quarter 2021 Financial Statements and accompanying Management's Discussion and Analysis for the three and six months ended June 30, 2021, 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, August 12, 2021 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/1696/42323 or over the phone by dialing in just prior to the starting time.
Conference call details:
Date: Thursday, August 12, 2021
Time: 9:00 a.m. Pacific time | 12:00 p.m. Eastern time
Dial in number (Toll Free): +1. 888.506.0062
Dial in number (International): +1.973.528.0011
Entry code: 215628
Replay number (Toll Free): +1.877.481.4010
Replay number (International): +1.919.882.2331
Replay Passcode: 42323
Playback of the earnings call will be available until Thursday, August 26, 2021. Playback of the webcast will be available until Friday, August 12, 2022. In addition, a transcript of the call will be archived on the Company's website at https://fortunasilver.com/investors/financial-reports/.
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 an advanced development project 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 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. Ganoza
President, CEO, and Director
Fortuna 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 2021; estimated updated production forecasts and sales for 2021; estimated updated production costs and all-in sustaining cash costs for 2021; estimated capital expenditures in 2021; estimated production and all-in sustaining cash costs for the Yaramoko mine in the second half of 2021; estimated brownfields and greenfields expenditures in 2021; the future estimated impact of COVID-19 on the Company's production, workforce, business, operations and financial condition; metal price estimates; estimated metal grades in 2021; the estimated amount of ore to be placed on the leach pad at the Lindero Mine in 2021, the grade of gold and the amount of gold estimated to be contained therein; the timing of the commencement of steady state production at the Lindero Mine; undisclosed risks and liabilities relating to the Roxgold business combination; risks that the anticipated benefits of the Roxgold business combination will not be realized or fully realized; the anticipated timing for the construction decision at the Séguéla Gold Project; the entering into of a new credit facility in the third quarter of 2021; 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; expenditures; 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 duration and impacts of COVID-19 on the Company's production, workforce, business, operations and financial condition, and the risks relating to a global pandemic, which unless contained could cause a prolonged slowdown in global economic growth; uncertainties related to the impacts of COVID-19 which may include: changing market conditions, changing restrictions on the mining industry in the countries in which the Company operates, the ability to operate as a result of government imposed restrictions, including restrictions on travel, the transportation of concentrates and doré, access to refineries, the impact of additional waves of the pandemic or increases in incidents of COVID-19 in the countries in which we operate; the duration of any suspension of operations at the Company's mines as a result of COVID-19 which may affect production and the Company' business operations and financial condition; the risks associated with the completion of the business combination with Roxgold, including the ability of the Company to successfully consolidate functions, integrate operations, procedures and personnel; changes in prices for gold, silver and other metals; 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; delays in the ramp up of production at Lindero which may cause delays in the commencement of commercial production; 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; governmental and other approvals; changes in government, political unrest or instability in countries where Fortuna is active; labor relations issues; there can be no assurance that the Company will be able to enter into a new credit facility on terms acceptable to it, or at all; 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; the world-wide economic and social impact of COVID-19, and the duration and extent of the impact of the pandemic and related restrictions on the Company's workforce, suppliers and the effect that any adverse changes would have on the Company's business; the effect that any further suspensions of operations as a result of the pandemic would have on the Company's business and financial and operational results; 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.
Non-IFRS Financial Measures
This news release also refers to Non-IFRS financial measures, such as production cash cost per tonne; cash cost per payable ounce of silver; all-in sustaining cash cost; all-in cash cost; adjusted net (loss) income; operating cash flow per share before changes in working capital, income taxes, and interest income; and adjusted EBITDA. These measures do not have a standardized meaning or method of calculation, even though the descriptions of such measures may be similar. These performance measures have no meaning under International Financial Reporting Standards (IFRS) and therefore, amounts presented may not be comparable to similar data presented by other mining companies.
