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Fortuna Reports Net Income of $27.0 million in the First Quarter of 2022

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Fortuna Reports Net Income of $27.0 million in the First Quarter of 2022

 

 

 

 

 

Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) 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. 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 ratio
3 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 = 1:0.5
4 For full details see news release dated March 15, 2022

 

 

             
    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  

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

 

             
      Three months ended March 31,
      2022     2021
Mine Production            
Tonnes placed on the leach pad     1,295,755     2,130,000
             
Gold            
Grade (g/t)     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

 

             
      Three months ended March 31,
      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

 

             
      Three months ended March 31,
      2022     2021
Mine Production            
Tonnes milled     250,947     259,803
Average tonnes milled per day     2,918     3,048
             
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

 

             
      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.

 

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.

 

Posted May 12, 2022

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