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Fortuna reports results for the first quarter of 2023

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Fortuna reports results for the first quarter of 2023

 

 

 

 

 

Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reported its financial and operating results for the first quarter of 2023.

 

First Quarter 2023 highlights

 

Financial

  • Adjusted net income of $13.2 million or $0.05 per share
  • Net income of $11.9 million or $0.04 per share
  • Adjusted EBITDA1 of $65.3 million
  • Net cash provided by operating activities $41.8 million and free cash flow from ongoing operations of $8.5 million
  • Liquidity as of March 31, 2023 was $129.7 million

 

Return to Shareholders

  • NCIB share repurchase program renewed for up to 5% of outstanding common shares (refer to Fortuna news release dated April 28, 2023)

 

Operational

  • Gold production of 60,092 ounces
  • Silver production of 1,586,378 ounces
  • Gold equivalent production of 94,110 ounces
  • Consolidated cash costs1 per ounce of gold equivalent sold of $916
  • Consolidated AISC1 per ounce of gold equivalent sold of $1,514
  • Lost Time Injury Frequency Rate of 0.56 and Total Recordable Injury Frequency Rate of 1.39
  • On May 8, 2023 Fortuna announced a definitive agreement to acquire Chesser Resources Ltd. by way of an all share transaction for a total consideration of A$89.0 million (CAD$80.6). Upon completion, the former shareholders of Chesser will own approximately 5.1% of the shares of Fortuna on an undiluted basis. Chesser Resources’ Diamba Sud Project in Senegal expands Fortuna’s advanced exploration pipeline in West Africa.
  • First gold pour at the Séguéla mine in Cote d’Ivoire is planned for May 2023

 

Jorge A. Ganoza, President and CEO, commented, “Production and total cost per ounce for the first quarter were overall on plan, resulting in net earnings per share of $0.04 and free cash flow from operations of $8.5 million. Commissioning activities at Séguéla are well advanced and tracking according to plan for first gold pour in May, giving us a higher level of confidence in a smooth ramp-up process towards design capacity.” Mr. Ganoza continued, “The announced Chesser transaction meets our strategic objective of expanding our asset portfolio of high value opportunities in countries where we operate or near neighbours.” Mr. Ganoza concluded, “The Chesser acquisition provides for an exciting advanced exploration opportunity, expanding our West African presence to Senegal, a mining friendly jurisdiction, and into the heart of the Senegal-Mali shear zone, one of the most prolific gold belts in the West African region.”

 

First Quarter 2023 Consolidated Results

 

             
    Three months ended March 31,
(Expressed in millions)   2023   2022   % Change
Sales   175.7   182.3   (4 %)
Mine operating income   40.4   63.5   (36 %)
Operating (loss) income   23.9   40.7   (41 %)
Net (loss) income   11.9   27.0   (56 %)
(Loss) earnings per share – basic   0.04   0.09   (56 %)
Adjusted net income1   13.2   33.3   (60 %)
Adjusted EBITDA1   65.3   80.3   (19 %)
Net cash provided by operating activities   41.8   33.2   26 %
Free cash flow from ongoing operations1   8.5   9.6   (11 %)
Production cash cost ($/oz Au Eq)   916   772   19 %
All-in sustaining cash cost ($/oz Au Eq)   1,514   1,284   18 %
Capital expenditures2            
Sustaining   27.9   18.0   55 %
Non-sustaining3   1.2   1.9   (37 %)
Séguéla construction   25.7   42.9   (40 %)
Brownfields   4.9   2.5   96 %
As at   March 31, 2023   December 31, 2022   % Change  
Cash and cash equivalents   84.7   80.5   5 %
Net liquidity position   129.7   150.5   (14 %)

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 filed 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 2023 Results

 

Net income for the quarter was $11.9 million compared to $27.0 million in Q1 2022. After adjusting for non-cash and non-recurring items, adjusted net income of $13.2 million for Q1 2023 was $20.1 million lower than Q1 2022. The decrease in adjusted net income was primarily due to higher operating expenses related mainly to higher input costs across our operations and lower operating margins at Yaramoko and Lindero related to lower head grades. This impact was combined with slightly lower sales of $6.7 million, mostly explained by lower silver prices of $22.52 per ounce in Q1 2023 compared to $24.18 per ounce in Q1 2022. These effects were partially offset by lower general and administrative expenses of $2.0 million compared to Q1 2022.

 

Adjusted EBITDA for the quarter was $65.3 million, a 36% margin over sales, compared to $80.3 million reported in Q1 2022, representing a 44% margin over sales. The main driver for the decrease in EBITDA were higher operating costs and slightly lower sales as described above.

 

Net cash generated by operations for the quarter was $41.8 million or $0.14 per share compared to $33.2 million or $0.11 per share in Q1 2022. The increase reflects lower EBITDA of $15.0 million offset by negative changes in working capital in the current quarter of $10.8 million versus negative changes of $27.9 million in Q1 2022, and lower-income taxes paid of $7.1 million.

 

Free cash flow from ongoing operations for the quarter was $8.5 million, compared to $9.6 million in Q1 2022. The decrease is the result of higher net cash generated by operations of $8.6 million compared to the Q1 2022, offset by higher sustaining capex and brownfields exploration at our operating mines of $12.3 million in Q1 2023.

 

Liquidity

 

The Company’s total liquidity available as of March 31, 2023 was $129.7 million, comprised of $84.7 million in cash and cash equivalents, and $45.0 million undrawn on the $250.0 million revolving credit facility.

 

Séguéla Gold Project Construction Update

 

As of March 31, 2023, the Séguéla Gold Project had approximately $22.5 million in remaining spend of the project’s $173.5 million total initial capital, and the project remains on-time and on-budget. The Company’s cash and cash equivalents balance, free cash flow from ongoing operations and undrawn amounts of the revolving credit facility are expected to fund the remaining construction spend of the Séguéla Gold Project.

 

Lindero Mine, Argentina

 

      Three months ended March 31,
      2023     2022  
Mine Production              
Tonnes placed on the leach pad     1,478,148     1,295,755  
               
Gold              
Grade (g/t)     0.71     0.88  
Production (oz)     25,258     30,068  
Metal sold (oz)     26,812     28,619  
Realized price ($/oz)     1,885     1,890  
               
Unit Costs              
Cash cost ($/oz Au)1     891     692  
All-in sustaining cash cost ($/oz Au)1     1,424     1,038  
               
Capital Expenditures ($000’s) 2              
Sustaining     7,745     3,125  
Non-sustaining     187     169  
Brownfields         144  

1 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 filed on SEDAR at www.sedar.com for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.

 

Quarterly Operating and Financial Highlights

 

In the first quarter of 2023, a total of 1,478,148 tonnes of ore were placed on the heap leach pad, with an average gold grade of 0.71 g/t, containing and estimated 33,510 ounces of gold. Gold production for Q1 2023 totaled 25,258 ounces, representing a 16% decrease year-over-year. The decline in gold production can primarily be attributed to a decrease in the head grade of mineralized material placed on the leach pad, which is aligned with the planned mining sequence. Mine production was 1.6 million tonnes of mineralized material, with a strip ratio of 1.07:1. This stripping ratio is consistent with the operation’s plan for the year, which anticipates a ratio of 1.17:1.

 

Cash cost per ounce of gold for Q1 2023, was $891 compared to $692 in the Q1 2022. Cash cost per ounce of gold was higher due to lower production, higher prices of key consumables due to inflation, higher equipment rental costs due to lower fleet availability, and timing of plant maintenance. This was partially offset by higher stripping capitalization.

 

All-in sustaining cash cost per gold ounce sold was $1,424 during Q1 2023 compared with $1,038 in Q1 2022. All-in sustaining cash cost for Q1 2023 was impacted by the cost issues described above, compounded by lower ounces sold and higher sustaining capital spend, partially offset by a positive by-product effect from copper.

 

During the quarter, sustaining capital expenditures were primarily a result of Phase II expansion of the leach pad, routine maintenance, and several minor projects. There were no brownfields exploration capital investments made within this period.

 

Yaramoko Mine Complex, Burkina Faso

 

      Three months ended March 31,
      2023     2022  
Mine Production              
Tonnes milled     139,650     127,968  
               
Gold              
Grade (g/t)     5.94     7.50  
Recovery (%)     97     98  
Production (oz)     26,437     28,235  
Metal sold (oz)     29,530     29,530  
Realized price ($/oz)     1,899     1,878  
               
Unit Costs              
Cash cost ($/oz Au)1     819     705  
All-in sustaining cash cost ($/oz Au)1     1,509     1,147  
               
Capital Expenditures ($000’s) 2              
Sustaining     13,549     7,361  
Brownfields     1,191     488  

1 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 filed on SEDAR at www.sedar.com for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.

 

The Yaramoko Mine produced 26,437 ounces of gold in the Q1 2023 with an average gold head grade of 5.94g/t, a 6% decrease, respectively, when compared to Q1 2022. Higher mill throughput contributed positively to the operation, offset by reduced operating time due to planned maintenance and lower head grades. Production for the quarter was in line with the mining sequence and Mineral Reserves estimate.

 

Underground mineralized material was sourced from the 55 Zone, with development also contributing from outside of the current resource boundary on the western side of the deposit.

 

Cash cost per ounce of gold sold in Q1 2023, was $819, compared to $705 in Q1 2022. Cash cost per ounce increased due to higher processing costs resulting from increased maintenance costs and the impact of inflation on key consumables and mining costs. Processing costs were also higher as a result of processing of increased tonnes at lower grades.

 

All-in sustaining cash cost per gold ounce sold was $1,509 for Q1 2023, compared to $1,147 in Q1 2022. This increase was as a result of a decrease in production, increased cash cost, and higher capital expenditures.

 

Sustaining capital in Q1 2023 increased due to higher mine development. Brownfields expenditure was primarily higher due to an increase in diamond drilling meters.

 

San Jose Mine, Mexico

 

      Three months ended March 31,
         2023        2022  
Mine Production              
Tonnes milled     246,736     250,947  
Average tonnes milled per day     2,869     2,918  
               
Silver              
Grade (g/t)     181     185  
Recovery (%)     91     91  
Production (oz)     1,303,312     1,358,189  
Metal sold (oz)     1,328,333     1,316,193  
Realized price ($/oz)     22.58     24.27  
               
Gold              
Grade (g/t)     1.15     1.13  
Recovery (%)     90     90  
Production (oz)     8,231     8,239  
Metal sold (oz)     8,355     7,952  
Realized price ($/oz)     1,900     1,890  
               
Unit Costs              
Production cash cost ($/t)2     86.66     76.05  
Production cash cost ($/oz Ag Eq)1,2     11.42     10.42  
All-in sustaining cash cost ($/oz Ag Eq)1,2     15.51     15.32  
               
Capital Expenditures ($000’s) 3              
Sustaining     3,772     3,575  
Non-sustaining     269     415  
Brownfields     1,088     1,529  

1 Production cash cost per ounce of silver equivalent and all-in sustaining cash cost per ounce of silver equivalent are calculated using realized metal prices for each period respectively.
2 Production cash cost per tonne, production cash cost per ounce of silver equivalent, and all-in sustaining cash cost per ounce of 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 filed on SEDAR at www.sedar.com for a description of the calculation of these measures.
3 Capital expenditures are presented on a cash basis.

 

In the first quarter of 2023, the San Jose Mine produced 1,303,312 ounces of silver and 8,231 ounces of gold, 4% and unchanged, respectively, when compared to Q1 2022. Production for the quarter was aligned with the mining sequence and Mineral Reserves estimate.

 

The cash cost per tonne for Q1 2023, was $86.66 compared to $76.05 in Q1 2022. The increase was primarily due to inflation and the appreciation of the Mexican Peso, affecting consumables, labor costs and other services paid in local currency.

 

All-in sustaining cash costs of payable per ounce of silver equivalent for Q1 2023, increased 2% to $15.58 per ounce, compared to $15.32 in Q1 2022. The increase was due to higher cash costs partially offset by lower sustaining capital expenditures and increased silver equivalent production, mainly due to lower silver prices.

 

In the first quarter of 2023, sustaining capital expenditures were lower than expected, primarily due to delays in executing purchases related to components and overhauls. This contrasts with Q1 2022, when significant planned mine acquisitions had been carried over from the previous quarter. The decrease in Q1 2023 was partially offset by an increase in expenditures related to development and infill drilling meters. Brownfields exploration expenditures faced challenges from geological and operational delays, but accelerated spending is anticipated in Q2 2023.

 

Caylloma Mine, Peru

 

      Three months ended March 31,
      2023     2022  
Mine Production              
Tonnes milled     125,995     132,574  
Average tonnes milled per day     1,448     1,524  
               
Silver              
Grade (g/t)     85     89  
Recovery (%)     82     82  
Production (oz)     283,066     311,939  
Metal sold (oz)     263,570     294,301  
Realized price ($/oz)     22.24     23.78  
               
Gold              
Grade (g/t)     0.15     0.16  
Recovery (%)     27     37  
Production (oz)     166     258  
Metal sold (oz)     22     325  
Realized price ($/oz)     1,895     1,828  
               
Lead              
Grade (%)     3.74     3.55  
Recovery (%)     92     88  
Production (000’s lbs)     9,509     9,134  
Metal sold (000’s lbs)     8,782     8,575  
Realized price ($/lb)     1.02     1.06  
               
Zinc              
Grade (%)     5.21     4.18  
Recovery (%)     90     89  
Production (000’s lbs)     13,051     10,827  
Metal sold (000’s lbs)     13,815     10,546  
Realized price ($/lb)     1.45     1.69  
               
Unit Costs              
Production cash cost ($/t)2     98.07     89.60  
Production cash cost ($/oz Ag Eq)1,2     13.14     12.39  
All-in sustaining cash cost ($/oz Ag Eq)1,2     16.88     17.83  
               
Capital Expenditures ($000’s) 3              
Sustaining     2,810     3,949  
Brownfields     204     324  

1 Production cash cost per ounce of silver equivalent and all-in sustaining cash cost per ounce of silver equivalent are calculated using realized metal prices for each period respectively.
2 Production cash cost per tonne, production cash cost per ounce of silver equivalent, and all-in sustaining cash cost per ounce of 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 filed on SEDAR at www.sedar.com for a description of the calculation of these measures.
3 Capital expenditures are presented on a cash basis.

 

In the first quarter of 2023, the Caylloma Mine produced 283,066 ounces of silver, 9.5 million pounds of lead, and 13.1 million pounds of zinc. Silver production was 9% lower compared to Q1 2022, but was in line with the mining sequence and Mineral Reserves estimate. Lead and zinc production rose by 4% and 21% respectively, compared to Q1 2022, due to higher head grades from levels 16 and 17 within the Animas vein, and higher tonnes. Gold production totaled 166 ounces with an average head grade of 0.15 g/t.

 

The cash cost per tonne of processed ore in Q1 2023 increased 9% to $98.07 compared to $89.60 in Q1 2022. The increase was mainly due to higher mining costs driven by inflation and its direct impact on the price of materials, compounded by lower tonnes processed.

 

The all-in sustaining cash cost per payable silver equivalent ounce in Q1 2023, decreased 3% to $17.29 per ounce, compared to $17.83 per ounce in Q1 2022. The decrease was mainly increased silver equivalent production, mainly due to lower silver prices.

 

Sustaining capital expenditures in Q1 2023 decreased primarily due to blockades limiting project executions. Spending on execution of the developments located on levels 15 and level 18 at the Animas vein was offset by decreased expenditure on other levels. The decrease in brownfields exploration capital expenditures was primarily due to a decrease in diamond drilling meters.

 

Qualified Person

 

Eric Chapman, Senior 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, 2023 (“Q1 2023 MDA”), 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 the Company uses such measures and ratio. The Q1 2023 MD&A may be accessed on SEDAR at www.sedar.com under the Company’s profile.

 

Except as otherwise described in the Q1 2023 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, 2023 and 2022

 

    Three months ended March 31,
Consolidated (in millions of US dollars)   2023     2022  
Net income   11.9     27.0  
Adjustments, net of tax:          
Foreign exchange loss, Séguéla Project       0.6  
Unrealized loss on derivatives   1.0      
Accretion on right of use assets   0.6     0.6  
Other non-cash/non-recurring items   (0.3 )   1.3  
Adjusted Net Income   13.2     29.5  

1 Amounts are recorded in Cost of sales
2 Amounts are recorded in General and Administration
Figures may not add due to rounding

 

Reconciliation to adjusted EBITDA for the three months ended March 31, 2023 and 2022

 

    Three months ended March 31,
Consolidated (in millions of US dollars)   2023     2022  
Net (loss) income   11.9     27.0  
Adjustments:          
Community support provision and accruals   (0.1 )    
Foreign exchange loss, Séguéla Project       0.6  
Net finance items   2.6     2.8  
Depreciation, depletion, and amortization   44.4     38.1  
Income taxes   7.9     6.8  
Other non-cash/non-recurring items   (1.4 )   5.0  
Adjusted EBITDA   65.3     80.3  

Figures may not add due to rounding

 

Reconciliation of free cash flow from ongoing operations for the three months ended March 31, 2023 and 2022

 

In 2022, the Company changed the method for calculating free cash flow from ongoing operations. The calculation now uses taxes paid as opposed to the previous method which used current income taxes. While this may create larger quarter over quarter fluctuations due to the timing of income tax payments, management believes the revised method is a better representation of the free cash flow generated by the Company’s ongoing operations. Comparative values from 2021 have been restated using the change in the methodology.

 

    Three months ended March 31,
Consolidated (in millions of US dollars)   2023     2022  
        (Restated)  
Net cash provided by operating activities   41.8     33.2  
Adjustments        
Additions to mineral properties, plant and equipment   (30.4 )   (20.5 )
Other adjustments   (2.9 )   (3.1 )
Free cash flow from ongoing operations   8.5     9.6  

Figures may not add due to rounding

 

Reconciliation of cash cost per ounce of gold sold for the three months ended March 31, 2023 and 2022

 

Lindero Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cost of sales     41,725     35,867  
Changes in doré inventory     (1,331 )   1,017  
Inventory adjustment     15     739  
Export duties     (3,926 )   (4,008 )
Depletion and depreciation     (13,192 )   (12,009 )
By product credits     (799 )    
Production cash cost1     22,492     21,607  
Changes in doré inventory     1,331     (1,017 )
Realized gain in diesel hedge         (782 )
Cash cost applicable per gold ounce sold A   23,823     19,808  
Ounces of gold sold B   26,739     28,607  
Cash cost per ounce of gold sold1 ($/oz) =A/B   891     692  
 

 

Yaramoko Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cost of sales     44,863     38,041  
Changes in doré inventory         (1,320 )
Export duties     (3,362 )   (3,333 )
Depletion and depreciation     (17,368 )   (14,028 )
By product credits         (5 )
Production cash cost     24,133     19,355  
Changes in doré inventory         1,320  
Refining charges         155  
Cash cost applicable per gold ounce sold A   24,133     20,830  
Ounces of gold sold B   29,472     29,530  
Cash cost per ounce of gold sold ($/oz) =A/B   819     705  

Reconciliation of cash cost per ounce of gold equivalent sold for the three months ended March 31, 2023 and 2022

 

Consolidated     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cost of sales     135,219     118,828  
Changes in concentrate inventory and dore inventory     (1,534 )   (115 )
Cost of sales-Right of use     694      
Depletion and depreciation in concentrate inventory     (173 )   (147 )
Inventory adjustment     111     2,222  
Royalties, export duties and mining taxes     (8,711 )   (8,980 )
Provision for community support     (25 )   (126 )
Workers’ participation     (463 )   (1,340 )
Depletion and depreciation     (43,955 )   (37,738 )
By product credits     (799 )   (5 )
Production cash cost     80,364     72,599  
Changes in concentrate inventory and dore inventory     1,534     115  
Cost of sales-Right of use     (694 )    
Depletion and depreciation in concentrate inventory     173     147  
Inventory adjustment     (96 )   (1,483 )
Realized gain in diesel hedge         (782 )
Treatment charges     5,038     4,786  
Refining charges     1,191     638  
Cash cost applicable per gold equivalent ounce sold A   87,511     76,021  
Ounces of gold equivalent sold B   95,541     98,448  
Cash cost per ounce of gold equivalent sold ($/oz) =A/B   916     772  

Reconciliation of all-in sustaining cash cost per ounce of gold sold for the three months ended March 31, 2023 and 2022

 

Lindero Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cash cost applicable     23,823     19,808  
Export duties and mining taxes     3,926     4,008  
General and administrative expenses (operations)     1,992     1,905  
Adjusted operating cash cost     29,741     25,721  
Sustaining leases     598     705  
Sustaining capital expenditures1     7,745     3,125  
Brownfields exploration expenditures1         144  
All-in sustaining cash cost     38,084     29,695  
Non-sustaining capital expenditures1     187     169  
All-in cash cost     38,271     29,864  
Ounces of gold sold     26,739     28,607  
All-in sustaining cash cost per ounce of gold sold     1,424     1,038  
All-in cash cost per ounce of gold sold     1,431     1,044  

1 Presented on a cash basis

 

 

               
Yaramoko Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cash cost applicable     24,133     20,830  
Export duties and mining taxes     3,362     3,333  
General and administrative expenses (operations)     889     410  
Adjusted operating cash cost     28,384     24,573  
Sustaining leases     1,359     1,435  
Sustaining capital expenditures1     13,549     7,361  
Brownfields exploration expenditures1     1,191     488  
All-in sustaining cash cost     44,483     33,857  
All-in cash cost     44,483     33,857  
Ounces of gold sold     29,472     29,530  
All-in sustaining cash cost per ounce of gold sold     1,509     1,147  
All-in cash cost per ounce of gold sold     1,509     1,147  

1 Presented on a cash basis

 

Reconciliation of all-in sustaining cash cost per ounce of gold equivalent sold for the three months ended March 31, 2023 and 2022

 

Consolidated     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cash cost applicable     87,511     76,021  
Royalties, export duties and mining taxes     8,711     8,980  
Workers’ participation     538     1,614  
General and administrative expenses (operations)     5,827     4,963  
General and administrative expenses (Corporate)     8,681     11,339  
Adjusted operating cash cost     111,268     102,917  
Care and maintenance costs (impact of COVID-19)         2  
Sustaining leases     2,975     3,005  
Sustaining capital expenditures3     27,876     18,010  
Brownfields exploration expenditures3     2,483     2,485  
All-in sustaining cash cost     144,602     126,419  
Payable ounces of gold equivalent sold     95,541     98,448  
All-in sustaining cash cost per ounce of gold equivalent sold     1,514     1,284  

Gold equivalent was calculated using the realized prices for gold of $1,893/oz Au, $22.5/oz Ag, $2,256/t Pb, and $3,197/t Zn for Q1 2023 and using the realized prices for gold of $1,884/oz Au, $24.2/oz Ag, $2,331/t Pb, and $3,736/t Zn for Q1 2022

 

Reconciliation of production cash cost per tonne and cash cost per payable ounce of silver equivalent sold for the three months ended March 31, 2023 and 2022

 

San Jose Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cost of sales     32,523     28,899  
Changes in concentrate inventory     71     77  
Cost of sales-right of use     133      
Depletion and depreciation in concentrate inventory     (29 )   (21 )
Inventory adjustment     (129 )   537  
Royalties and mining taxes     (1,257 )   (1,392 )
Workers participation     (17 )   (727 )
Depletion and depreciation     (9,912 )   (8,287 )
Cash cost3 A   21,383     19,086  
Total processed ore (tonnes) B   246,736     250,947  
Production cash cost per tonne3 ($/t) =A/B   86.66     76.05  
Cash cost3 A   21,383     19,086  
Changes in concentrate inventory     (71 )   (77 )
Depletion and depreciation in concentrate inventory     29     21  
Inventory adjustment     129     (537 )
Treatment charges     (220 )   872  
Refining charges     944     91  
Cash cost applicable per payable ounce sold3 C   22,194     19,456  
Payable ounces of silver equivalent sold1 D   1,944,265     1,867,871  
Cash cost per ounce of payable silver equivalent sold2,3 ($/oz) =C/D   11.42     10.42  
Mining cost per tonne3     39.05     37.45  
Milling cost per tonne     20.39     18.01  
Indirect cost per tonne     19.56     14.63  
Community relations cost per tonne     1.85     4.84  
Distribution cost per tonne     5.81     1.12  
Production cash cost per tonne3 ($/t)     86.66     76.05  

1 Silver equivalent sold for Q1 2023 is calculated using a silver to gold ratio of 81.2:1 (Q1 2022: 77.9:1).  
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 March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cost of sales     16,108     16,021  
Changes in concentrate inventory     (274 )   111  
Cost of sales-right of use     561      
Depletion and depreciation in concentrate inventory     (144 )   (126 )
Inventory adjustment     225     272  
Royalties and mining taxes     (166 )   (247 )
Provision for community support     (25 )   (126 )
Workers participation     (446 )   (613 )
Depletion and depreciation     (3,483 )   (3,414 )
Cash cost3 A   12,356     11,878  
Total processed ore (tonnes) B   125,996     132,574  
Production cash cost per tonne3 ($/t) =A/B   98.07     89.60  
Cash cost A   12,356     11,878  
Changes in concentrate inventory     274     (111 )
Depletion and depreciation in concentrate inventory     144     126  
Inventory adjustment     (225 )   (272 )
Treatment charges     5,259     3,914  
Refining charges     247     392  
Cash cost applicable per payable ounce sold3 C   18,055     15,927  
Payable ounces of silver equivalent sold1 D   1,373,699     1,285,610  
Cash cost per ounce of payable silver equivalent sold2,3 ($/oz) =C/D   13.14     12.39  
Mining cost per tonne     43.06     35.29  
Milling cost per tonne     15.68     16.23  
Indirect cost per tonne     29.40     30.60  
Community relations cost per tonne     0.61     7.04  
Distribution cost per tonne     9.32     0.45  
Production cash cost per tonne3 ($/t)     98.07     89.60  

1 Silver equivalent sold for Q1 2023 is calculated using a silver to gold ratio of 0.0:1 (Q1 2022: 76.9:1), silver to lead ratio of 1:22.3 pounds (Q1 2022: 1:22.5), and silver to zinc ratio of 1:15.7 pounds (Q1 2022: 1:14.0).  
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 the three months ended March 31, 2023 and 2022

 

San Jose Mine     Three months ended March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cash cost applicable4     22,194     19,456  
Cost of sales-right of use     (133 )    
Royalties and mining taxes     1,257     1,392  
Workers’ participation     21     909  
General and administrative expenses (operations)     1,802     1,590  
Adjusted operating cash cost4     25,141     23,347  
Care and maintenance costs (impact of COVID-19)         2  
Sustaining leases     162     157  
Sustaining capital expenditures3     3,772     3,575  
Brownfields exploration expenditures3     1,088     1,529  
All-in sustaining cash cost     30,163     28,610  
Non-sustaining capital expenditures3     269     415  
All-in cash cost     30,432     29,025  
Payable ounces of silver equivalent sold1     1,944,265     1,867,871  
All-in sustaining cash cost per ounce of payable silver equivalent sold2     15.51     15.32  
All-in cash cost per ounce of payable silver equivalent sold2     15.65     15.54  

1 Silver equivalent sold for Q1 2023 is calculated using a silver to gold ratio of 81.2:1 (Q1 2022: 77.9:1).  
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 March 31,
(Expressed in $’000’s, except unit costs)     2023     2022  
Cash cost applicable4     18,055     15,927  
Cost of sales-right of use     (561 )    
Royalties and mining taxes     166     247  
Workers’ participation     517     705  
General and administrative expenses (operations)     1,144     1,058  
Adjusted operating cash cost4     19,321     17,937  
Sustaining leases     856     708  
Sustaining capital expenditures3     2,810     3,949  
Brownfields exploration expenditures3     204     324  
All-in sustaining cash cost     23,191     22,918  
All-in cash cost     23,191     22,918  
Payable ounces of silver equivalent sold1     1,373,699     1,285,610  
All-in sustaining cash cost per ounce of payable silver equivalent sold2     16.88     17.83  
All-in cash cost per ounce of payable silver equivalent sold2     16.88     17.83  

1 Silver equivalent sold for Q1 2023 is calculated using a silver to gold ratio of 0.0:1 (Q1 2022: 76.9:1), silver to lead ratio of 1:22.3 pounds (Q1 2022: 1:22.5), and silver to zinc ratio of 1:15.7 pounds (Q1 2022: 1:14.0).  
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

 

Additional information regarding the Company’s financial results and activities underway are available in the Company’s audited consolidated financial statements for the three months ended March 31, 2023 and accompanying Q1 2023 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 our fifth mine under construction in Côte d’Ivoire. Sustainability is integral to all our operations and relationships. We produce gold and silver and generate shared value over the long-term for our stakeholders through efficient production, environmental protection, and social responsibility. For more information, please visit our website.

 

Posted May 16, 2023

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