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Fortuna Reports Results for Fourth Quarter and Full Year 2021

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Fortuna Reports Results for Fourth Quarter and Full Year 2021

 

 

 

 

 

Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reported its consolidated financial and operating results for the fourth quarter and full year 2021.

 

Fourth Quarter 2021 Highlights

  • Record sales of $198.9 million, an increase of 92% from the $103.5 million reported in Q4 2020, due primarily to the contribution of gold sales from the Yaramoko Mine of $52.2 million and from the Lindero Mine of $65.6 million
  • Cost of sales of $140.6 million compared to $56.6 million reported in Q4 2020
  • Net income of $16.6 million or $0.05 per share, compared to $18.6 million or $0.1 net income per share reported in Q4 2020
  • Adjusted net income1 of $29.1 million compared to $23.0 million reported in Q4 2020
  • Adjusted EBITDA1 of $89.6 million compared to $44.8 million reported in Q4 2020
  • Net cash provided by operating activities of $57.1 million, compared to $31.3 million reported in Q4 2020
  • Free cash flow from ongoing operations1 of $30.9 million compared to $34.5 million reported in Q4 2020

 

Full Year 2021 Highlights

  • Sales of $599.9 million, compared to $279.0 million in 2020
  • Cost of sales of $394.4 million, compared to $168.7 million in 2020
  • Net income of $59.4 million, compared to $21.6 million in 2020
  • Adjusted net income1 of $100.6 million, compared to $31.8 million in 2020
  • Adjusted EBITDA1 of $280.7 million, compared to $112.6 million in 2020
    • Net cash provided by operating activities of $147.1 million, compared to $93.4 million reported in Q4 2020
  • Free cash flow1 from ongoing operations1 of $97.0 million, compared to $78.9 million in 2020
  • Cash and cash equivalents as at December 31, 2021 was $107.1 million, compared to $131.9 million in 2020
  • Silver and gold production of 7,498,701 ounces and 207,192 ounces, respectively, compared to 7,133,717 ounces and 55,349 ounces in 2020, respectively
  • AISC1 per ounce of gold sold of $1,116 and $1,317 for the Lindero and Yaramoko mines, respectively
  • AISC1,2 per silver equivalent ounce of payable silver sold of $14.38 and $18.94 for the San Jose and Caylloma mines, respectively, compared to $11.56 and $17.37 in 2020, respectively

 

Jorge A. Ganoza, President and CEO, commented, “Fortuna’s record sales and adjusted EBITDA in the fourth quarter of approximately $199 million and $90 million respectively, reflect strong operating results across our four mines in Latin America and West Africa. Lindero’s solid performance in the quarter is particularly worth highlighting as the mine delivered 36,072 ounces of gold, in line with expectations and 37% above its gold production for the third quarter.” Mr. Ganoza added, “With free cash flow generation from operations1 of $33 million in the quarter and the expansion of our corporate revolving credit facility to $200 million, we closed 2021 with a strong liquidity position of $187 million, $51 million over the third quarter considering $20 million in funding for the construction of the Séguéla Mine.” Mr. Ganoza concluded, “Throughout 2022, we expect to spend $110 million in Séguéla and $20 million in Brownfields exploration, which includes $7.4 million at San Jose and $7.2 million at Séguéla.”

 

Notes:

  1. Refer to the 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. AISC ($/oz Ag Eq) is calculated at realized metal prices, refer to mine site results for realized prices and to the Non-IFRS Financial Measures section for silver equivalent ratio

 

Fourth Quarter 2021 and Full Year 2021 Consolidated Results

 

                         
    Three months ended December 31       Years ended December 31    
    2021   2020   % Change   2021   2020   % Change
Sales   198.9   103.5   92 %   599.9   279.0   115 %
Mine operating income   58.3   46.9   24 %   205.5   110.2   86 %
Operating income   38.9   28.2   38 %   136.9   57.2   139 %
Net income   16.6   18.6   (11 )%   59.4   21.6   175 %
Earnings (loss) per share – basic   0.05   0.10   (48 )%   0.24   0.12   100 %
Adjusted net income1   29.1   23.0   27 %   100.6   31.8   216 %
Adjusted EBITDA1   89.6   44.8   100 %   280.7   112.6   149 %
Net cash provided by operating activities   57.1   31.3   82 %   147.1   93.4   57 %
Free cash flow from ongoing operations1   30.9   34.5   (10 )%   97.0   78.9   23 %
Capital expenditures2                        
Sustaining   31.6   7.4   328 %   77.2   18.1   326 %
Non-sustaining3   2.6   0.6   354 %   9.5   1.1   734 %
Lindero construction     20.4   (100 )%   12.8   68.9   (81 )%
Séguéla construction   19.8     100 %   34.2     100 %
Brownfields   8.2   1.8   351 %   18.9   4.9   284 %
As at               December 31, 2021   December 31, 2020   % Change
Cash and cash equivalents       107.1   131.9   (19 )%
 

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.

Capital expenditures are presented on a cash basis  
3 Non-sustaining expenditures include greenfields exploration  
Figures may not add due to rounding  

 

Fourth Quarter 2021 Results

 

Sales for the quarter were $198.9 million, a 92% increase from the $103.5 million reported in the same period in 2020. The increase was driven by the contribution from the Lindero and Yaramoko mines. Lindero recognized adjusted sales of $65.6 million from the sale of 36,389 ounces of gold. Yaramoko recognized adjusted sales of $52.2 million from the sale of 29,077 ounces of gold. The San Jose Mine recognized adjusted sales of $56.7 million, a 6% decrease from the $60.5 million reported in the same period in 2020. Lower sales at San Jose were driven by a 6% decrease in the volume of gold ounces sold. The Caylloma Mine recognized adjusted sales of $24.4 million, a 7% increase from the $22.7 million reported in the same period in 2020. The increased sales at Caylloma were driven by higher lead and zinc prices, partially offset by lower volumes of metal sold.

 

Operating income for the quarter was $38.9 million, a $10.7 million increase from the $28.2 million reported in the same period in 2020. The higher operating income was driven by the contribution of Lindero and Yaramoko, partially offset by lower operating income at San Jose and low-grade inventory write-downs in the current quarter of $5.3 million (Yaramoko: $4.2 million; Lindero: $1.1 million).

 

Net income for the quarter was $16.6 million, a $2.0 million decrease from the $18.6 million reported in the same period in 2020. The lower net income was due to a $4.2 million loss on derivative contracts, higher interest expense of $2.7 million, and a higher effective tax rate (Q4 2021: 45%; Q4 2020: 34%).

 

Adjusted net income for the quarter was $29.1 million compared to $23.0 million reported in the same period in 2020.

 

Adjusted EBITDA for the quarter was $89.6 million, a margin of 45% over sales, compared to $44.8 million reported in the same period in 2020, a margin of 43% over sales.

 

Full Year 2021 Results

 

Consolidated sales for the year ended December 31, 2021 increased 115% to $599.9 million compared to $279.0 million for the same period in 2020. The increase was driven by the contribution of Yaramoko and Lindero as well as higher silver prices in 2021 compared to 2020. Lindero recognized $179.0 million in gold doré sales comprising 100,177 ounces of gold. Yaramoko recognized $101.3 million of gold doré sales comprising 56,571 ounces of gold. Sales at San Jose increased 13% to $216.1 million as realized silver price increased 18% compared to 2020, along with a 3% increase in the volume of silver and gold ounces sold. Sales at Caylloma increased 53% to $103.5 million due primarily to an increase in the volume of metals sold and increases in the realized prices of lead and zinc of 20% and 32%, respectively, compared to realized prices in 2020.

 

Operating income for the the year ended December 31, 2021 was $136.9 million, a $79.7 million increase from the $57.2 million reported in the same period in 2020. The higher operating income was driven mainly by the contribution of Lindero of $45.2 million and Yaramoko of $17.0 million, and higher operating income at Caylloma of $23.9 million. This was partially offset by the San Jose Progreso royalty settlement of $14.3 million, and low-grade inventory write-downs amounting $7.0 million of which, Yaramoko and Lindero accounted for $4.2 million and $2.8 million, respectively.

 

Net income for the year ended December 31, 2021 was $59.4 million, a $37.8 million increase from the $21.6 million reported in 2020. The higher net income was offset by $14.1 million in transaction costs associated with the Company’s acquisition (the “Roxgold Acquisition”) of all of the issued and outstanding common shares of Roxgold Inc., as well as higher interest expenses of $10.2 million. Interest expense was $8.7 million higher in 2021 compared to 2020 as $9.4 million was capitalized in 2020 related to the construction of the Lindero Mine.

 

Adjusted net income for the year ended December 31, 2021 was $100.6 million compared to $31.8 million in 2020.

 

Adjusted EBITDA for the year ended December 31, 2021 was $280.7 million compared to $112.6 million in 2020.

 

Liquidity

 

Free cash flow from ongoing operations for the three months ended December 31, 2021 was $30.9 million compared to $34.5 million in the same period in 2020. Free cash flow from ongoing operations for the year ended December 31, 2021 was $97.0 million compared to $78.9 million in 2020.

 

Total liquidity available to the Company as at December 31, 2021 was $187.1 million. The Company’s $200.0 million revolving credit facility was fully available as at the end of December 2021 and $80.0 million remained undrawn.

 

Lindero Mine, Argentina

 

The table below shows the key metrics used to measure the operating performance of the Lindero Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, and gold production. The Lindero Mine was under construction during a portion of the fourth quarter of 2020, with first gold poured in October 2020.

 

                         
      Three months ended December 31,     Years ended December 31,
         2021     2020     2021     2020
Mine Production                        
Tonnes placed on the leach pad     1,459,513     950,000     6,453,647     1,610,000
                         
Gold                        
Grade (g/t)     1.04     1.13     0.96     1.00
Production (oz)     36,072     13,435     104,161     13,435
Metal sold (oz)     36,389     10,935     100,177     10,935
Realized price ($/oz)     1,802     1,853     1,785     1,853
                         
Unit Costs2                        
Cash cost ($/oz Au)1     585     657     617     657
All-in sustaining cash cost ($/oz Au)1     994         1,116    
                         
Capital expenditures ($000’s)                        
Sustaining     7,214     1,410     27,522     1,410
Non-sustaining     233         323    
Brownfields     389         875    
 

Cash cost and AISC are non-IFRS financial measures. 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 First gold was poured at Lindero in October 2020.

 

During the fourth quarter of 2021, the onsite impact of COVID-19 continued to be minimal as the site reported 60 positive cases with no disruptions to operations. Travel restrictions in Argentina were also lifted in November 2021 which led to an improvement in lead times and onsite technical assistance from foreign vendors.

 

In the fourth quarter of 2021, a total of 1,459,513 tonnes of ore were placed on the heap leach pad averaging 1.04 g/t gold, containing an estimated 48,900 ounces of gold. Total gold production was 36,072 ounces of gold. Gold production for 2021 totaled 104,161 ounces, comprised of 99,313 ounces in doré, 730 ounces of gold contained in precipitate/sludge and 4,118 ounces of gold-in-carbon (GIC) inventory, in the upper range of the updated production and cost guidance issued in July 2021 (refer to Fortuna news release dated July 19, 2021, “Fortuna reports production of 55,953 gold equivalent ounces for the second quarter and issues updated guidance for 2021”).

 

All processing areas performed according to plan:

  • 1,444,260 tonnes of ore crushed and placed on the leach pad via conveyor stacking during the fourth quarter, a 17% increase over the previous quarter.
  • Conveyor stacking averaged 16,228 tonnes per day during the fourth quarter, an increase of 21% over the previous quarter; including 31 days of conveyor stacking throughput over 18,750 tonnes per day
  • The SART plant reached full design capacity of 393 cubic meters per hour in December of 2021, in line with plan
  • The expansion of the carbon columns at the ADR plant was successfully commissioned in the fourth quarter of 2021 and is performing according to plan

 

Cash cost per ounce of gold for the three and twelve months ended December 31, 2021 was $585 and $617 per ounce, respectively.

 

All-in sustaining cash costs per gold ounce sold was $994 during Q4 2021 and $1,116 in 2021 in line with the Company’s updated cost guidance.

 

Total sustaining capital expenditures of $7.2 million during the quarter were primarily related to the completion of the ADR plant expansion, $4.2 million, and capitalized stripping, $2.0 million.

 

Yaramoko Mine, Burkina Faso

 

The table below shows the key metrics used to measure the operating performance of the Yaramoko Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, and gold production. The Company acquired the Yaramoko Mine in connection with the Roxgold Acquisition, which closed on July 2, 2021. Accordingly, all production, operating and financial results in respect of the Yaramoko Mine for the year ended December 31, 2021 included in this news release reflect only those results from July 2, 2021 to December 31, 2021, unless indicated otherwise.

 

                         
      Three months ended December 31,     Years ended December 31,
         2021     2020     2021     2020
Mine Production                        
Tonnes milled     132,188         258,866    
                         
Gold                        
Grade (g/t)     6.99         7.13    
Production (oz)     28,787         57,538    
Metal sold (oz)     29,077         56,571    
Realized price ($/oz)     1,796         1,789    
                         
Unit Costs                        
Cash cost ($/oz Au)1     754         739    
All-in sustaining cash cost ($/oz Au)1     1,436         1,317    
                         
Capital expenditures ($000’s)                        
Sustaining     13,520         21,387    
Non-sustaining                
Brownfields     47         138    
 

Cash cost and AISC are non-IFRS financial measures. 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 on the calculation of these measures.

The Yaramoko Mine was acquired as part of the Roxgold Acquisition. As such comparative figures for previous quarters and years are not presented. Operating and financial results for the year ended December 31, 2021 are for the period from July 2, 2021 to December 31, 2021.

 

 

The Yaramoko Mine produced 28,787 ounces of gold in the fourth quarter of 2021 with an average gold head grade of 6.99 g/t; below the plan for the quarter. Total gold production for the second semester of 2021 totaled 57,538 ounces of gold which was below guidance for the period. The production shortfall was the result of lower than planned mill feed grade in the fourth quarter of 2021, caused by the delay in mining of several high-grade stopes and some localized grade variability in the 55 Zone. The unmined stopes was resequenced into the mine plan in the first quarter of 2022.

 

Cash cost per gold ounce sold was $754, which was above plan, primarily due to lower production during Q4 2021 and $739 for the second semester of 2021.

 

All-in sustaining cash cost per gold ounce sold was $1,436 and $1,317 for Q4 2021 and for the second semester of 2021, respectively, which were above the Company’s guidance. Higher all-in sustaining cash costs were the result of lower ounces sold due to the mine sequencing issue described.

 

Sustaining capital expenditures of $21.5 million during the second half of the year were related primarily to underground mine development costs and construction of a ventilation raise.

 

San Jose Mine, Mexico

 

The following table shows the key metrics used to measure the operating performance of the San Jose Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, gold and silver production and unit costs:

 

                         
      Three months ended December 31,     Years ended December 31,
         2021        2020        2021        2020
Mine Production                        
Tonnes milled     262,802     272,179     1,041,154     934,381
Average tonnes milled per day     2,920     3,024     2,964     2,647
                         
Silver                        
Grade (g/t)     219     206     209     224
Recovery (%)     93     91     92     92
Production (oz)     1,717,533     1,648,816     6,425,029     6,165,606
Metal sold (oz)     1,729,152     1,721,697     6,433,808     6,225,433
Realized price ($/oz)     23.39     24.45     25.15     21.26
                         
Gold                        
Grade (g/t)     1.27     1.26     1.29     1.38
Recovery (%)     92     91     91     91
Production (oz)     9,929     10,095     39,406     37,805
Metal sold (oz)     9,983     10,594     39,404     38,391
Realized price ($/oz)     1,797     1,875     1,798     1,786
                         
Unit Costs                        
Production cash cost ($/t)2     79.66     71.48     75.80     68.79
Production cash cost ($/oz Ag Eq)1,2     9.35     8.75     9.30     7.63
Net smelter return ($/t)     207.57     203.80     210.99     199.22
All-in sustaining cash cost ($/oz Ag Eq)1,2     14.92     13.33     14.38     11.56
                         
Capital expenditures ($000’s)                        
Sustaining     5,137     4,022     14,492     10,787
Non-sustaining     518     568     2,294     942
Brownfields     2,176     1,643     8,784     4,406
 

1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively

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 section at the end of this news release, and the 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.

 

The San Jose Mine produced 1,717,533 ounces of silver and 9,929 ounces of gold during the three months ended December 31, 2021, which represents an 4% increase and 2% decrease over the same period in 2020, respectively. The decrease in gold production was due to lower tonnes milled.

 

Annual production of silver and gold totaled 6,425,029 ounces and 39,406 ounces, an increase of 4% for both from 2020 annual production, respectively, which was in line with guidance.

 

The cash cost per tonne for the three months ended December 31, 2021 was $79.66 per tonne compared to $71.48 per tonne in the same period in 2020 primarily due to higher indirect costs. Cash cost per tonne for the full year 2021 increased to $75.80 compared to $68.79 for 2020 due to higher mine preparation and support and higher indirect costs.

 

The all-in sustaining cash cost of payable silver equivalent for the full year 2021 increased 24% to $14.38 per ounce compared to $11.56 for the same period in 2020. The increase was primarily as a result of additional sustaining capital expenditures and Brownfields exploration which were limited in 2020 due to the impacts of business restrictions relating to the COVID-19 pandemic. All-in sustaining cash costs for the year were in line with guidance.

 

Caylloma Mine, Peru

 

The following table shows the key metrics used to measure the operating performance of the Caylloma Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, silver, lead and zinc production and unit costs:

 

                         
      Three months ended December 31,     Years ended December 31,
         2021     2020     2021     2020
Mine Production                        
Tonnes milled     137,838     136,132     539,779     510,047
Average tonnes milled per day     1,549     1,530     1,525     1,433
                         
Silver                        
Grade (g/t)     73     73     76     72
Recovery (%)     81     82     82     82
Production (oz)     262,710     263,921     1,073,672     968,111
Metal sold (oz)     243,869     262,356     1,074,364     967,199
Realized price ($/oz)     23.39     24.30     25.25     20.63
                         
Gold                        
Grade (g/t)     0.44     0.60     0.49     0.41
Recovery (%)     70     69     71     61
Production (oz)     1,374     1,827     6,086     4,109
Metal sold (oz)     1,297     1,768     6,140     4,049
Realized price ($/oz)     1,798     1,865     1,792     1,861
                         
Lead                        
Grade (%)     3.20     3.16     3.16     3.00
Recovery (%)     87     89     88     88
Production (000’s lbs)     8,419     8,426     32,990     29,628
Metal sold (000’s lbs)     7,945     8,386     33,299     29,582
Realized price ($/lb)     1.06     0.86     1.00     0.83
                         
Zinc                        
Grade (%)     4.25     4.69     4.56     4.61
Recovery (%)     87     88     88     88
Production (000’s lbs)     11,380     12,434     47,549     45,545
Metal sold (000’s lbs)     11,053     12,154     47,828     45,154
Realized price ($/lb)     1.51     1.18     1.36     1.03
                         
Unit Costs                        
Production cash cost ($/t)2     97.87     81.65     88.41     77.19
Production cash cost ($/oz Ag Eq)1,2     13.83     14.61     13.46     14.06
Net smelter return ($/t)     186.71     163.57     192.02     131.40
All-in sustaining cash cost ($/oz Ag Eq)1,2     20.71     18.69     18.94     17.37
                         
Capital expenditures ($000’s)                        
Sustaining     5,755     1,950     13,758     5,909
Brownfields     1,027     170     3,731     514
 

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 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 on the calculation of these measures.

 

The Caylloma Mine produced 262,710 ounces of silver, 8.4 million pounds of lead and 11.4 million pounds of zinc during the three months ended December 31, 2021, which was in line with the same period in 2020 except for zinc which was lower by 8% due to a lower head grade. Gold production totaled 1,374 ounces with an average head grade of 0.44 g/t.

 

Annual production of silver, lead and zinc totaled 1,073,672 ounces of silver, 33.0 million pounds of lead, and 47.5 million pounds of zinc, which represent an 11% increase in silver, 11% increase in lead, and a 4% increase in zinc production compared to 2020. Gold production for the full year 2021 totaled 6,086 ounces, which was an increase of 48% over 2020, with an average head grade of 0.49 g/t. Production for the year was in line with guidance.

 

The cash cost per tonne of processed ore for the three months ended December 31, 2021 increased 20% to $97.87 compared to $81.65 in the same period in 2020. The increase was the result of higher mining costs related to shotcrete and transportation and higher energy costs at the plant. Cash cost per tonne for the full year 2021 increased to $88.41 compared to $76.59 for 2020 due to higher mine preparation and support and higher indirect costs related to administration and energy.

 

The all-in sustaining cash cost for the three months ended December 31, 2021 increased 11% to $20.71 per ounce compared to $18.69 per ounce for the same period in 2020. The increase was driven by higher sustaining capital expenditures and Brownfields exploration .

 

The all-in sustaining cash cost for the full year 2021 increased 9% to $18.94 per ounce compared to $17.37 per ounce in 2020 due to higher sustaining capital expenditures and Brownfields exploration. The increase was primarily due to the significantly decreased capital expenditures in 2020 due to the impacts of business restrictions relating to COVID-19 pandemic. The Caylloma Mine finished 2021 slightly below cost guidance as a result of higher silver equivalent metal sales.

 

Qualified Person

 

Eric N. Chapman, Senior Vice President of Technical Services of Fortuna, 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.

 

Reconciliation to Adjusted Net Income for the three and twelve months ended December 31, 2021 and 2020

 

                       
    Three months ended December 31,     Years ended December 31,
Consolidated   2021     2020     2021     2020  
Net income   16.6     18.6     59.4     21.6  
Adjustments, net of tax:                      
Community support provision and accruals1   1.3     0.2     1.4     0.2  
Foreign exchange loss, Lindero Mine2   0.3     3.2     4.1     11.8  
Share of loss from associates               0.1  
Investment income               (3.3 )
Roxgold transaction costs           14.1      
SGM Royalty settlement   1.0         9.8      
Inventory adjustment   4.6         6.3      
Accretion on right of use assets   1.0         2.2      
Other non-cash/non-recurring items   4.3     1.0     3.3     1.4  
Adjusted Net Income (loss)   29.1     23.0     100.6     31.8  
Amounts are recorded in Cost of sales                      
Amounts are recorded in General and Administration                      

 

Reconciliation to Adjusted EBITDA for the three and twelve months ended December 31, 2021 and 2020

 

                       
    Three months ended December 31,     Years ended December 31,
    2021     2020       2021     2020  
Net income   16.6     18.6       59.4     21.6  
Adjustments:                      
Community support provision and accruals   2.1     (0.4 )     1.9     (0.4 )
Inventory adjustment   5.3           7.0      
Foreign exchange loss, Lindero Mine   0.3     3.2       4.1     11.8  
Foreign exchange loss, Séguéla Project   0.2           0.2      
Net finance items   3.7     0.2       12.3     1.2  
Depreciation, depletion, and amortization   44.8     13.9       122.3     45.7  
Income taxes   13.5     9.1       47.7     37.4  
Share of loss from associates                 0.1  
Investment income                 (3.3 )
SGM Royalty settlement             9.6      
Roxgold transaction costs             14.1      
Other non-cash/non-recurring items   3.1     0.2       2.1     (1.5 )
Adjusted EBITDA   89.6     44.8       280.7     112.6  

 

Reconciliation of free cash flow from ongoing operations for three and twelve months ended December 31, 2021 and 2020

 

                       
    Three months ended December 31,     Years ended December 31,
Consolidated   2021       2020       2021       2020  
          (Restated)           (Restated)
Net cash provided by operating activities   57.1       31.3       147.1       93.4  
Adjustments                      
Roxgold Acquisition transaction costs               27.9        
Change in long term receivables and assets   0.0       0.9       0.0       (0.1 )
Additions to mineral properties, plant and equipment   (35.3 )     (9.2 )     (90.7 )     (23.0 )
Impact of adoption in IAS 16 and Production costs         21.9             21.9  
Current income tax expense   (16.5 )     (13.3 )     (51.7 )     (38.8 )
Income taxes paid   19.1       5.6       62.7       28.2  
Other adjustments   6.4       (2.7 )     1.6       (2.7 )
Free cash flow from ongoing operations   30.9       34.5       97.0       78.9  

 

Reconciliation of cash cost per ounce of gold sold for the three and twelve months ended December 31, 2021 and 2020

 

                         
Lindero Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021       2020     2021       2020
Cost of sales     46,915           122,889      
Changes in doré inventory     353           2,066      
Inventory adjustment     (1,072 )         (2,815 )    
Export duties     (4,891 )         (13,410 )    
Depletion and depreciation     (19,154 )         (43,665 )    
By product credits     (77 )         (260 )    
Production cash cost     22,074           64,805      
Changes in doré inventory     (353 )         (2,066 )    
Realized gain in diesel hedge     (438 )         (963 )    
Cash cost applicable per gold ounce sold A   21,283           61,776      
Ounces of gold sold B   36,375           100,137      
Cash cost per ounce of gold sold ($/oz) =A/B   585           617      

 

 

 

                         
Yaramoko Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021       2020     2021       2020
Cost of sales     42,381           80,812      
Changes in doré inventory     719           1,542      
Inventory adjustment     (4,153 )         (4,153 )    
Export duties     (3,018 )         (5,993 )    
Depletion and depreciation     (13,235 )         (28,974 )    
By product credits     (195 )         (134 )    
Production cash cost     22,499           43,100      
Changes in doré inventory     (719 )         (1,542 )    
Refining charges     133           271      
Cash cost applicable per gold ounce sold A   21,913           41,829      
Ounces of gold sold B   29,077           56,571      
Cash cost per ounce of gold sold ($/oz) =A/B   754           739      

 

 

Reconciliation of all-in sustaining cash cost per ounce of gold sold for the three and twelve months ended December 31, 2021 and 2020

 

                         
Lindero Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021     2020     2021     2020
Cash cost applicable     21,283         61,776    
Export duties and mining taxes     4,891         13,410    
General and administrative expenses (operations)     1,640         5,643    
Adjusted operating cash cost     27,814         80,829    
Sustaining leases     752         2,548    
Sustaining capital expenditures1     7,214         27,522    
Brownfields exploration expenditures1     389         875    
All-in sustaining cash cost     36,169         111,774    
Non-sustaining capital expenditures1     233         323    
All-in cash cost     36,402         112,097    
Ounces of gold sold     36,375         100,137    
All-in sustaining cash cost per ounce of gold sold     994         1,116    
All-in cash cost per ounce of gold sold     1,001         1,119    
Presented on a cash basis

 

                         
Yaramoko Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021     2020     2021     2020
Cash cost applicable     21,913         41,829    
Inventory net realizable value adjustment     1,285         1,285    
Export duties and mining taxes     3,018         5,993    
General and administrative expenses (operations)     514         953    
Adjusted operating cash cost     26,730         50,060    
Sustaining leases     1,467         2,934    
Sustaining capital expenditures1     13,520         21,387    
Brownfields exploration expenditures1     47         138    
All-in sustaining cash cost     41,764         74,519    
All-in cash cost     41,764         74,519    
Ounces of gold sold     29,077         56,571    
All-in sustaining cash cost per ounce of gold sold     1,436         1,317    
All-in cash cost per ounce of gold sold     1,436         1,317    
Presented on a cash basis
Adjustment related to current stockpile

 

 

Reconciliation of production cash cost per tonne and cash cost per payable ounce of silver equivalent sold for the three and twelve months ended December 31, 2021 and 2020

 

                         
San Jose Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021       2020       2021       2020  
Cost of sales     32,705       31,027       122,756       104,315  
Changes in concentrate inventory     (118 )     (1,477 )     163       (1,200 )
Depletion and depreciation in concentrate inventory     11       967       32       380  
Inventory adjustment     (52 )     16       (6 )     18  
Royalties and mining taxes     (1,587 )     (1,411 )     (5,955 )     (4,289 )
Workers participation     (1,236 )     (1,501 )     (5,809 )     (6,560 )
Depletion and depreciation     (8,789 )     (8,165 )     (32,257 )     (28,387 )
Cash cost A   20,934       19,456       78,924       64,277  
Total processed ore (tonnes) B   262,802       272,179       1,041,154       934,382  
Production cash cost per tonne ($/t) =A/B   79.66       71.48       75.80       68.79  
Cash cost A   20,934       19,456       78,924       64,277  
Changes in concentrate inventory     118       1,477       (163 )     1,200  
Depletion and depreciation in concentrate inventory     (11 )     (967 )     (32 )     (380 )
Inventory adjustment     52       (16 )     6       (18 )
Treatment charges     190       303       (251 )     406  
Refining charges     1,157       976       4,318       3,530  
Cash cost applicable per payable ounce sold C   22,440       21,229       82,802       69,015  
Payable ounces of silver equivalent sold1 D   2,400,989       2,425,395       8,902,680       9,044,605  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   9.35       8.75       9.30       7.63  
Mining cost per tonne     37.90       36.67       38.74       35.43  
Milling cost per tonne     16.56       16.02       16.68       16.31  
Indirect cost per tonne     16.84       11.56       13.72       9.69  
Community relations cost per tonne     5.15       0.87       4.79       0.97  
Distribution cost per tonne     3.20       6.36       1.88       6.39  
Production cash cost per tonne ($/t)     79.66       71.48       75.80       68.79  
1 Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)
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
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021       2020       2021       2020  
Cost of sales     18,585       15,475       67,917       54,357  
Changes in concentrate inventory     939       318       297       345  
Depletion and depreciation in concentrate inventory     165       (229 )     61       (2 )
Inventory adjustment     (61 )     (13 )     (61 )     (13 )
Royalties and mining taxes     (188 )     (133 )     (345 )     (523 )
Provision for community support     (2,125 )           (2,125 )     101  
Workers participation     (214 )     (488 )     (1,838 )     (899 )
Depletion and depreciation     (3,607 )     (3,815 )     (16,182 )     (13,994 )
Cash cost A   13,494       11,115       47,724       39,372  
Total processed ore (tonnes) B   137,838       136,132       539,779       510,048  
Production cash cost per tonne ($/t) =A/B   97.89       81.65       88.41       77.19  
Cash cost A   13,494       11,115       47,724       39,372  
Changes in concentrate inventory     (939 )     (318 )     (297 )     (345 )
Depletion and depreciation in concentrate inventory     (165 )     229       (61 )     2  
Inventory adjustment     61       13       61       13  
Treatment charges     4,629       5,357       15,754       19,334  
Refining charges     378       410       1,670       1,493  
Cash cost applicable per payable ounce sold C   17,458       16,806       64,851       59,869  
Payable ounces of silver equivalent sold1 D   1,261,967       1,150,047       4,819,365       4,258,979  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   13.83       14.61       13.46       14.06  
Mining cost per tonne     42.02       34.89       34.71       33.85  
Milling cost per tonne     16.27       15.62       15.34       14.39  
Indirect cost per tonne     29.45       23.21       29.49       21.62  
Community relations cost per tonne     7.96       1.57       7.77       0.78  
Distribution cost per tonne     2.18       6.36       1.10       6.55  
Production cash cost per tonne ($/t)     97.87       81.65       88.41       77.19  
 

1 Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1), silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)

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 twelve months ended December 31, 2021 and 2020

 

                         
San Jose Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021     2020     2021     2020
Cash cost applicable     22,440     21,229     82,802     69,015
Royalties and mining taxes     1,587     1,411     5,955     4,289
Workers’ participation     1,545     1,876     7,261     8,200
General and administrative expenses (operations)     2,779     2,086     8,111     6,027
Adjusted operating cash cost     28,351     26,602     104,129     87,531
Care and maintenance costs (impact of COVID-19)                 1,568
Sustaining leases     161     63     608     251
Sustaining capital expenditures3     5,137     4,022     14,492     10,787
Brownfields exploration expenditures3     2,176     1,643     8,784     4,406
All-in sustaining cash cost     35,825     32,330     128,013     104,543
Non-sustaining capital expenditures3     518     568     2,294     942
All-in cash cost     36,343     32,898     130,307     105,485
Payable ounces of silver equivalent sold1     2,400,989     2,425,395     8,902,680     9,044,605
All-in sustaining cash cost per ounce of payable silver equivalent sold2     14.92     13.33     14.38     11.56
All-in cash cost per ounce of payable silver equivalent sold2     15.14     13.56     14.64     11.66
 

1 Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)

2 Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results – Sales and Realized Prices
Presented on a cash basis

 

 

 

                         
Caylloma Mine     Three months ended
December 31,
    Years ended
December 31,
(Expressed in $’000’s, except unit costs)     2021     2020     2021     2020
Cash cost applicable     17,458     16,806     64,851     59,869
Royalties and mining taxes     188     133     345     523
Workers’ participation     244     559     2,129     1,036
General and administrative expenses (operations)     786     1,182     3,625     3,520
Adjusted operating cash cost     18,676     18,680     70,950     64,948
Sustaining leases     681     696     2,851     2,626
Sustaining capital expenditures3     5,755     1,950     13,758     5,909
Brownfields exploration expenditures3     1,027     170     3,731     514
All-in sustaining cash cost     26,139     21,496     91,290     73,997
All-in cash cost     26,139     21,496     91,290     73,997
Payable ounces of silver equivalent sold1     1,261,967     1,150,047     4,819,365     4,258,979
All-in sustaining cash cost per ounce of payable silver equivalent sold2     20.71     18.69     18.94     17.37
All-in cash cost per ounce of payable silver equivalent sold2     20.71     18.69     18.94     17.37
 

1 Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1) , silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)

Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results – Sales and Realized Prices
Presented on a cash basis

 

Additional information regarding the Company’s financial results and activities underway are available in the Company’s audited consolidated financial statements for the year ended December 31, 2021 and accompanying 2021 MD&A, which are available for download on the Company’s website, on SEDAR and on 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 March 24, 2022

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