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Fortuna Reports Second Quarter Unaudited 2021 Financial Results

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Fortuna Reports Second Quarter Unaudited 2021 Financial Results

 

 

 

 

 

Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reported second quarter 2021 net income of $16.2 million, adjusted net income1 of $21.5 million, and adjusted EBITDA1 of $54.9 million.

 

Jorge A. Ganoza, President and CEO, commented, “In spite of COVID-19 related challenges at Lindero, which have led us to revise guidance for the year, our second quarter results continue to reflect the strength of our business with record sales of $120.5 million and consolidated EBITDA1 margins above 45%.” Mr. Ganoza continued, “At Lindero, we have been gradually overcoming the COVID-19 travel restrictions which have limited access to on-site foreign technical support, and are now seeing continued improvement in mechanical availability and equipment productivity.” Mr. Ganoza added, “We look forward to the contribution of the Roxgold acquisition to our financial performance starting in Q3, with the forecasted addition of 62,000 to 66,000 gold ounces of production from the Yaramoko mine for the second half of 2021 at an AISC1 below $1,150 per ounce.”

 

Second Quarter 2021 Highlights

 

  • Record sales of $120.5 million, an increase of 171% from the $44.5 million reported in the same period in 2020, due to higher gold and silver sales volumes and higher realized prices for all metals, and sales from the Lindero mine of $ 34.2 million
  • Net income of $16.2 million or $0.09 per share, an increase of $21.9 million and $0.12 per share, from the $5.7 million net loss or $0.03 net loss per share reported in Q2 2020
  • Adjusted net income1 of $21.5 million compared to $5.1 million net loss in Q2 2020
  • Adjusted EBITDA1 of $54.9 million compared to $9.4 million reported in Q2 2020
  • Free cash flow from ongoing operations1 of $18.5 million compared to $0.2 million reported in Q2 2020
  • As of June 30, 2021, the Company had cash and cash equivalents of $121.8 million, a decrease of $10.1 million from December 31, 2020, primarily due to a $35.3 million promissory note that was provided to Roxgold Inc. to cover a portion of the expected acquisition closing costs
  • Silver and gold production of 1,892,822 ounces and 31,048 ounces, respectively
  • AISC1,2 per silver equivalent ounce of payable silver sold of $13.61 and $18.45 for the San Jose Mine and Caylloma Mine, respectively, and AISC1 per ounce of gold sold of $1,214 for the Lindero Mine
  • Completed the business combination with Roxgold on July 2, 2021 creating a low-cost intermediate global precious metals producer with extensive brownfields and greenfields organic growth potential in the Americas and West Africa; and led by a highly experienced management team

 

____________________________________
1 Refer to Non-IFRS Financial Measures at the end of this news release
2 AISC/oz Ag Eq calculated at realized metal prices, refer to mine site results for realized prices and Non-IFRS Financial Measures for silver equivalent ratio

 

 

                         
    Three months ended June 30       Six months ended June 30    
    2021   2020     % Change   2021   2020     % Change
Sales   120.5   44.5     171 %   238.3   92.0     159 %
Mine operating income   48.5   13.8     251 %   99.8   21.2     371 %
Operating income (loss)   35.9   (1.3 )   2,862 %   76.2   0.5     15,140 %
Net income (loss)   16.2   (5.7 )   384 %   42.6   (10.2 )   518 %
Earnings (loss) per share – basic   0.09   (0.03 )   364 %   0.23   (0.06 )   476 %
Adjusted net income1   21.5   (5.1 )   522 %   49.0   (7.3 )   771 %
Adjusted EBITDA1   54.9   9.4     484 %   115.7   25.4     356 %
Net cash provided by operating activities   29.5   0.8     3,588 %   50.7   4.5     1,027 %
Free cash flow from ongoing operations1   18.5   0.2     10,696 %   35.8   14.3     151 %
Capex                        
Sustaining   13.0   2.1     519 %   21.0   5.6     275 %
Non-sustaining   0.7   0.1     600 %   1.0   0.2     416 %
Lindero   1.4   4.9     (71 %)   4.0   26.3     (85 %)
Brownfields   3.4   0.3     1,033 %   5.9   1.8     230 %
 

 

As at

              Jun 30, 2021   Dec 31, 2020   % Change
Cash and cash equivalents       121.8   131.9     (8 %)
Refer to Non-IFRS financial measures and Forward Looking Statements at the end of this news release  

 

 

Second Quarter 2021 Results

 

Sales for the three months ended June 30, 2021 were $120.5 million, an increase of 171% from the $44.5 million reported in Q2 2020. Lindero reported sales of $34.2 million from 18,924 ounces of gold ounces sold. San Jose reported sales of $60.3 million, an increase of 98% from the $30.5 million reported in Q2 2020 due to a 58% and 52% increase in the volume of silver and gold ounces sold, respectively, and higher realized metal prices, primarily silver. Caylloma reported sales of $26.0 million, a 86% increase from the $14.0 million reported in Q2 2020 due to higher realized prices, primarily zinc and silver, and higher volumes of metal sold, primarily gold.

 

Operating income for the three months ended June 30, 2021 was $35.9 million, an increase of $37.2 million compared to Q2 2020. The increase was due primarily to higher silver and gold prices, and Lindero’s contribution to mine operating income of $7.2 million.

Ne

t income for the three months ended June 30, 2021 was $16.2 million, a $21.9 million increase over the $5.7 million net loss reported in Q2 2020. The effective tax rate for the quarter was 43%.

 

Adjusted EBITDA for the three months ended June 30, 2021 was $54.9 million, an increase of $45.5 million compared to the $9.4 million reported in Q2 2020. The increase reflects Lindero´s contribution to adjusted EBITDA of $16.2 million as well as higher EBITDA at San Jose and Caylloma.

 

Free cash flow from ongoing operations for the three months ended June 30, 2021 was $18.5 million compared to $0.2 million in Q2 2020.

 

Liquidity

 

As of June 30, 2021, the Company had cash and cash equivalents of $121.8 million, a decrease of $10.1 million from December 31, 2020, primarily due to a $35.3 million promissory note that was provided to Roxgold to cover a portion of the expected acquisition closing costs.

 

The Company’s $120.0 million credit facility remains fully drawn as of June 30, 2021 and is set to expire on January 26, 2022. It is contemplated that during the third quarter of 2021, the Company’s existing credit facility will be replaced by a new credit facility in the increased amount of $200.0 million pursuant to an amended and restated credit agreement with the Company’s existing and new lenders.

 

Lindero Mine

 

               
    Three months ended June 30,     Six months ended June 30,
    2021 2020        2021 2020
Mine Production              
Tonnes placed on the leach pad   1,477,000     3,607,000
               
Gold              
Grade (g/t)   0.95     0.87
Production (oz)   19,521     41,853
Metal sold (oz)   18,924     40,213
Realized price ($/oz)   1,804     1,777
               
Unit Costs              
Cash cost ($/oz Au)1   673     655
All-in sustaining cash cost ($/oz Au)1   1,214     1,130
               
Capital expenditures ($000’s)              
Sustaining   6,615     10,655
Brownfields   351     442
Refer to Non-IFRS Financial Measures

 

 

Argentina suffered a surge of COVID-19 during the second quarter of 2021 with the infection rate peaking at 41,000 cases per day. Extended nationwide COVID-19 related travel restrictions continued to limit onsite access to foreign vendor support affecting ramp up activities at Lindero.

 

The COVID-19 infection rate at Lindero increased during the second quarter of 2021 and had a significant impact on the operation´s performance as 163 personnel tested positive, representing 18 percent of the workforce. During the quarter, the Company intermittently voluntarily suspended onsite operations for a total of 16 days which directly impacted ramp up progress and reduced the amount of ore delivered to the heap leach pad. Strict government mandated travel restrictions have led to disruptions in the hiring and movement of skilled personnel and delays in access to foreign vendor support, which resulted in higher mechanical downtime leading to lower tonnes of processed ore being delivered to the leach pad.

 

In the second quarter of 2021, a total of 1,477,000 tonnes of ore were placed on the leach pad averaging 0.95 g/t gold containing an estimated 44,889 ounces of gold. Total gold production for the quarter was 19,521 ounces, 73 percent of the plan.

 

Cash cost per gold ounce sold was $673, as the mine continues to ramp-up production.

 

All-in sustaining cash costs per gold ounce sold was $1,214, in line with the Company’s original guidance for the first half of the year of between $1,130 and $1,335 per gold ounce sold, due primarily to the timing of sustaining capital expenditures.

 

In the second quarter of 2021, sustaining capital expenditures included $2.3 million of capitalized stripping, $1.7 million for leach pad expansion, and $1.2 million for the ADR plant.

 

The Company´s updated gold production guidance range for Lindero of between 90 and 110 thousand ounces reflects the direct and indirect impact of COVID-19 related challenges. These factors have been evaluated and their effect considered for the second half of the year (refer Fortuna news release dated July 19, 2021).

 

San Jose Mine

 

               
    Three months ended June 30,     Six months ended June 30,
    2021 2020        2021 2020
Mine Production              
Tonnes milled   269,565 160,151     529,368 406,977
Average tonnes milled per day   3,029 1,799     3,038 2,313
               
Silver              
Grade (g/t)   205 220     211 217
Recovery (%)   92 91     91 91
Production (oz)   1,624,394 1,029,049     3,270,838 2,599,250
Metal sold (oz)   1,621,410 1,025,242     3,263,710 2,618,796
Realized price ($/oz)   26.90 17.28     26.53 16.56
               
Gold              
Grade (g/t)   1.30 1.42     1.33 1.37
Recovery (%)   91 91     91 91
Production (oz)   10,266 6,654     20,567 16,284
Metal sold (oz)   10,212 6,703     20,499 16,480
Realized price ($/oz)   1,826 1,728     1,804 1,635
               
Unit Costs              
Production cash cost ($/t)2   75.50 65.98     72.86 69.10
Production cash cost ($/oz Ag Eq)1,2   9.57 7.26     8.99 7.67
Net smelter return ($/t)   219.52 170.72     221.57 160.77
All-in sustaining cash cost ($/oz Ag Eq)1,2   13.61 11.04     13.50 10.85
               
Capital expenditures ($000’s)              
Sustaining   3,985 1,170     5,972 2,743
Non-sustaining   757 122     1,031
Brownfields   2,154 194     3,890 1,500
 

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

Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS

 

 

Financial Measures

 

 

The San Jose Mine produced 1,624,394 ounces of silver and 10,266 ounces of gold during the three months ended June 30, 2021, which represents an increase of 58% and 54%, respectively, compared to Q2 2020. The increase was due primarily to 68% higher tonnes milled in the second quarter of 2021 compared to Q2 2020, which was impacted by the 54-day shutdown of operations from government mandated restrictions in response to COVID-19.

 

The production cash cost per tonne for the three months ended June 30, 2021 was $75.50 an increase from the $65.98 per tonne in Q2 2020 primarily due to a stronger US dollar during Q2 2020 and higher planned mining preparation activities during the current quarter.

 

The all-in sustaining cash cost of payable silver equivalent for the three months ended June 30, 2021 was $13.61 per ounce, an increase of 23% compared to $11.04 per ounce in Q2 2020. The increase was due primarily to higher production cash costs as noted above, increases in sustaining and brownfields capital expenditures, and higher royalties, offset partly by higher silver equivalent sales.

 

Capital expenditures totalled $6.9 million for the three months ended June 30, 2021, an increase of 364% compared to Q2 2020, as COVID-19 restrictions more significantly impacted operations during Q2 2020.

 

Caylloma Mine

                         
      Three months ended June 30,     Six months ended June 30,
         2021        2020        2021        2020
Mine Production                        
Tonnes milled     133,645     134,172     265,532     266,913
Average tonnes milled per day     1,536     1,525     1,517     1,500
                         
Silver                        
Grade (g/t)     76     72     77     69
Recovery (%)     83     79     82     83
Production (oz)     268,428     244,873     535,739     493,984
Metal sold (oz)     275,652     275,085     534,963     487,562
Realized price ($/oz)     26.54     16.06     26.42     16.73
                         
Lead                        
Grade (%)     3.09     2.77     3.15     2.86
Recovery (%)     90     83     89     86
Production (000’s lbs)     8,144     6,777     16,325     14,499
Metal sold (000’s lbs)     8,497     7,696     16,495     14,312
Realized price ($/lb)     0.95     0.75     0.94     0.80
                         
Zinc                        
Grade (%)     4.58     4.29     4.64     4.43
Recovery (%)     87     87     87     87
Production (000’s lbs)     11,764     10,977     23,733     22,797
Metal sold (000’s lbs)     11,755     11,859     24,021     22,371
Realized price ($/lb)     1.33     0.89     1.28     0.93
                         
Unit Costs                        
Production cash cost ($/t)2     91.15     74.92     89.59     77.86
Production cash cost ($/oz Ag Eq)1,2     14.54     13.85     14.12     13.84
Net smelter return ($/t)     189.10     91.17     192.70     102.12
All-in sustaining cash cost ($/oz Ag Eq)1,2     18.45     15.34     18.48     16.16
                         
Capital expenditures ($000’s)                        
Sustaining     2,478     955     4,449     2,829
Brownfields     979     86     1,609     349
1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period
2 Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS

 

Financial Measures

 

The Caylloma Mine produced 268,428 ounces of silver, 8.1 million pounds of lead and 11.8 million pounds of zinc during the three months ended June 30, 2021, an increase of 10%, 20%, and 7% respectively compared to Q2 2020. The increased metal production was due to higher head grades. Gold production for the second quarter of 2021 totaled 1,261 ounces with an average head grade of 0.42 g/t.

 

The production cash cost per tonne for the three months ended June 30, 2021 was $91.15, an increase of 22% compared to Q2 2020. The increase was due primarily to Q2 2020 having lower costs than planned due to a shutdown of mining operations in April 2020 without any significant impact on tonnes processed during the quarter.

 

The all-in sustaining cash cost of payable silver equivalent for the three months ended June 30, 2021 was $18.45 per ounce, an increase of 20% compared to the $15.34 per ounce in Q2 2020The increase was due primarily to higher production cash costs as noted above, increases in sustaining and brownfields capital expenditures, and higher royalties, offset partly by higher silver equivalent sales.

 

Corporate Update

 

On July 2, 2021, Fortuna and Roxgold completed the previously announced business combination between Fortuna and Roxgold to create a global growth-oriented intermediate gold and silver producer. Roxgold’s principal assets are the producing Yaramoko mine in Burkina Faso, the Séguéla advanced development gold project in Côte D’Ivoire, and the Boussoura exploration property in Burkina Faso.

 

Qualified Person

 

Eric Chapman, Vice President of Technical Services, is a Professional Geoscientist of the Association of Professional Engineers and Geoscientists of the Province of British Columbia (Registration Number 36328), and is the Company’s Qualified Person (as defined by National Instrument 43-101). Mr. Chapman has reviewed and approved the scientific and technical information contained in this news release and has verified the underlying data.

 

 

Non-IFRS Financial Measures

 

The following tables represent the calculation of certain Non-IFRS financial measures as referenced in this news release. In alignment with the World Gold Council standard for all-in sustaining cash cost and all-in cash cost, the Company has presented the cash cost figures on a sold ounce basis for all periods presented and has excluded royalties that are under the scope of IAS 12 – Income Taxes, with the change from the previously presented figures being applied retrospectively to prior periods.

 

Reconciliation to Adjusted Net Income for the three and six months ended June 30, 2021 and 2020

 

               
      Three months ended June 30,   Six months ended June 30,
       2021 2020   2021 2020  
Net income (loss)     16.2 (5.7 )   42.6 (10.2 )
Adjustments, net of tax:              
Community support provision and accruals1     0.1     0.1 (0.1 )
Foreign exchange loss, Lindero Mine2     0.5 2.7     2.6 6.0  
Share of loss from associates         0.1  
Investment income     (2.2 )   (3.3 )
Roxgold transaction costs     3.5     3.5  
Other non-cash items     1.2 0.1     0.2 0.2  
Adjusted net income (loss)     21.5 (5.1 )   49.0 (7.3 )
Amounts are recorded in Cost of sales              
Amounts are recorded in General and Administration              

 

 

Reconciliation to Adjusted EBITDA for the three and six months ended June 30, 2021 and 2020

 

               
    Three months ended June 30,     Six months ended June 30,
Consolidated   2021   2020       2021   2020  
Net income (loss)   16.2   (5.7 )     42.6   (10.2 )
Adjustments:              
Community support provision   (0.1 )       (0.1 ) (0.1 )
Inventory adjustment     0.1       (0.1 )  
Foreign exchange loss, Lindero Mine   0.5   2.7       2.6   6.0  
Net finance items   2.1   0.3       4.6   0.7  
Depreciation, depletion, and amortization   20.5   8.9       39.7   20.4  
Income taxes   12.0   6.2       25.3   13.3  
Share of loss from associates             0.1  
Investment income     (2.2 )       (3.3 )
Other non-cash items   3.7   (0.9 )     1.1   (1.5 )
Adjusted EBITDA   54.9   9.4       115.7   25.4  
               

 

 

Reconciliation to Free Cash Flow from ongoing operations for three and six months ended June 30, 2021 and 2020

 

               
    Three months ended June 30,     Six months ended June 30,
Consolidated   2021   2020       2021   2020  
      (Restated)         (Restated)  
Net cash provided by operating activities   29.5   0.8       50.7   4.5  
Adjustments              
Roxgold transaction costs   3.5         3.5    
Change in long term receivables and assets   0.0   (0.4 )     (0.1 ) (0.6 )
Additions to mineral properties, plant and equipment   (13.8 ) (3.3 )     (23.2 ) (8.3 )
Impact of adoption in IAS 16 and Production costs     2.6         12.2  
Current income tax expense   (12.2 ) (4.0 )     (26.2 ) (10.0 )
Income taxes paid   11.4   4.5       31.0   16.5  
Free cash flow from ongoing operations   18.5   0.2       35.8   14.3  

 

 

Reconciliation of Production Cash Cost per Tonne and Cash Cost per Payable Ounce of Silver Equivalent Sold for the three and six months ended June 30, 2021 and 2020

 

                         
San Jose Mine     Three months ended June 30,     Six months ended June 30,
      2021       2020       2021       2020  
Cost of sales     31,363       16,427       60,071       43,714  
Changes in concentrate inventory     65       286       94       (64 )
Depletion and depreciation in concentrate inventory     (47 )     (110 )     (33 )     5  
Inventory adjustment     1       (118 )     81       2  
IFRS 16 embedded lease adjustment     57       4       101       10  
Royalties and mining taxes     (1,384 )     (749 )     (2,727 )     (1,639 )
Workers participation     (1,646 )     (803 )     (3,355 )     (2,089 )
Depletion and depreciation     (8,056 )     (4,371 )     (15,660 )     (11,818 )
Cash cost A   20,353       10,566       38,572       28,121  
Total processed ore (tonnes) B   269,565       160,151       529,368       406,977  
Production cash cost per tonne ($/t) =A/B   75.50       65.98       72.86       69.10  
Cash cost A   20,353       10,566       38,572       28,121  
Changes in concentrate inventory     (65 )     (286 )     (94 )     64  
Depletion and depreciation in concentrate inventory     47       110       33       (5 )
Inventory adjustment     (1 )     118       (81 )     (2 )
Treatment charges     2,420       103       2,181       219  
Refining charges     (1,392 )     1,171       (378 )     2,744  
Cash cost applicable per payable ounce sold C   21,362       11,782       40,233       31,141  
Payable ounces of silver equivalent sold1 D   2,231,385       1,622,866       4,477,204       4,061,802  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   9.57       7.26       8.99       7.67  
Mining cost per tonne     40.98       38.44       39.28       36.65  
Milling cost per tonne     16.13       13.88       16.48       17.10  
Indirect cost per tonne     12.64       7.72       11.66       8.62  
Community relations cost per tonne     1.01       5.88       0.67       2.70  
Distribution cost per tonne     4.74       0.06       4.77       4.03  
Production cash cost per tonne ($/t)     75.50       65.98       72.86       69.10  
1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 67.9:1 (Q2 2020: 100:1) and for Q2 2021 YTD: silver to gold ratio of 68.0:1 (Q2 2020 YTD: 98.8:1)
2 Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results – Sales and Realized Prices

 

 

                 
Caylloma Mine     Three months ended June 30,     Six months ended June 30,
      2021   2020       2021   2020  
Cost of sales     16,413   14,280       32,030   27,070  
Changes in concentrate inventory     (294 ) (1,538 )     (229 ) 289  
Depletion and depreciation in concentrate inventory     18   655       22   129  
IFRS 16 embedded lease adjustment     645   491       1,293   1,059  
Royalties and mining taxes     (62 ) (153 )     (89 ) (319 )
Provision for community support       27         99  
Workers participation     (573 ) 192       (1,213 ) 172  
Depletion and depreciation     (3,965 ) (3,902 )     (8,026 ) (7,718 )
Cash cost A   12,182   10,052       23,788   20,781  
Total processed ore (tonnes) B   133,645   134,172       265,532   266,913  
Production cash cost per tonne ($/t) =A/B   91.15   74.92       89.59   77.86  
Cash cost A   12,182   10,052       23,788   20,781  
Changes in concentrate inventory     294   1,538       229   (289 )
Depletion and depreciation in concentrate inventory     (18 ) (655 )     (22 ) (129 )
Treatment charges     3,590   5,101       6,747   9,563  
Refining charges     428   419       833   743  
Cash cost applicable per payable ounce sold C   16,476   16,455       31,575   30,669  
Payable ounces of silver equivalent sold1 D   1,132,781   1,188,319       2,235,781   2,215,414  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   14.54   13.85       14.12   13.84  
Mining cost per tonne     35.60   34.67       36.24   37.34  
Milling cost per tonne     15.50   13.43       14.54   13.69  
Indirect cost per tonne     30.95   19.45       30.26   19.87  
Community relations cost per tonne     1.13   6.83       0.85   3.63  
Distribution cost per tonne     7.97   0.54       7.70   3.33  
Production cash cost per tonne ($/t)     91.15   74.92       89.59   77.86  
1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 68.1:1 (Q2 2020: 105.9:1) , silver to lead ratio of 1:27.9 pounds (Q2 2020: 1:21.3), and silver to zinc ratio of 1:20.0 pounds (Q2 2020: 1:18.1). YTD 2021: silver to gold ratio of 67.8:1 (Q2 2020 YTD: 98.5:1), silver to lead ratio of 1:28.2 pounds (Q2 2020 YTD: 1:20.9), and silver to zinc ratio of 1:20.6 pounds (Q2 2020 YTD: 1:17.9)
2 Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results – Sales and Realized Prices
 

 

 

Reconciliation of All-in Sustaining Cash Cost and All-in Cash Cost per Payable Ounce of Silver Equivalent Sold for three and six months ended June 30, 2021 and 2020

 

                     
San Jose Mine     Three months ended June 30,     Six months ended June 30,
      2021   2020       2021     2020  
Cash cost applicable     21,362   11,782       40,233     31,141  
Royalties and mining taxes     (956 ) 749       2,727     1,639  
Workers’ participation     2,058   1,004       4,194     2,611  
General and administrative expenses (operations)     1,771   1,444       3,446     2,865  
Adjusted operating cash cost     24,235   14,979       50,600     38,256  
Care and maintenance costs (impact of COVID-19)       1,568           1,568  
Sustaining capital expenditures3     3,985   1,170       5,972     2,743  
Brownfields exploration expenditures3     2,154   194       3,890     1,500  
All-in sustaining cash cost     30,374   17,911       60,462     44,067  
Non-sustaining capital expenditures3     757   122       1,031     249  
All-in cash cost     31,131   18,033       61,493     44,316  
Payable ounces of silver equivalent sold1     2,231,451   1,622,866       4,477,204     4,061,802  
All-in sustaining cash cost per ounce of payable silver equivalent sold2     13.61   11.04       13.50     10.85  
All-in cash cost per ounce of payable silver equivalent sold2     13.95   11.11       13.73     10.91  
1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 67.9:1 (Q2 2020: 100:1) and for Q2 2021 YTD: silver to gold ratio of 68.0:1 (Q2 2020 YTD: 98.8:1)
2 Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results – Sales and Realized Prices
Presented on a cash basis
 

 

                     
Caylloma Mine     Three months ended June 30,     Six months ended June 30,
      2021   2020       2021     2020  
Cash cost applicable     16,476   16,455       31,575     30,669  
Royalties and mining taxes     (599 ) 153       89     319  
Workers’ participation     685   (192 )     1,421     (167 )
General and administrative expenses (operations)     885   771       2,163     1,813  
Adjusted operating cash cost     17,447   17,187       35,248     32,634  
Sustaining capital expenditures3     2,478   955       4,450     2,829  
Brownfields exploration expenditures3     979   86       1,609     349  
All-in sustaining cash cost     20,904   18,228       41,307     35,812  
All-in cash cost     20,904   18,228       41,307     35,812  
Payable ounces of silver equivalent sold1     1,132,781   1,188,319       2,235,781     2,215,414  
All-in sustaining cash cost per ounce of payable silver equivalent sold2     18.45   15.34       18.48     16.16  
All-in cash cost per ounce of payable silver equivalent sold2     18.45   15.34       18.48     16.16  
1 Silver equivalent sold for Q2 2021 is calculated using a silver to gold ratio of 68.1:1 (Q2 2020: 105.9:1) , silver to lead ratio of 1:27.9 pounds (Q2 2020: 1:21.3), and silver to zinc ratio of 1:20.0 pounds (Q2 2020: 1:18.1). YTD 2021: silver to gold ratio of 67.8:1 (Q2 2020 YTD: 98.5:1), silver to lead ratio of 1:28.2 pounds (Q2 2020 YTD: 1:20.9), and silver to zinc ratio of 1:20.6 pounds (Q2 2020 YTD: 1:17.9)
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.

 

 

Reconciliation of Cash Cost per Ounce of Gold Sold for the three and six months ended June 30, 2021 and 2020

                 
Lindero Mine     Three months ended June 30,     Six months ended June 30,
      2021   2020     2021   2020
Cost of sales     24,280       46,466  
Changes in dore inventory     1,652         1,002  
IFRS 16 embedded lease adjustment     538       1,056  
Export duties     (2,582 )     (5,382 )
Depletion and depreciation     (9,175 )     (15,420 )
By product credits     (70 )     (128 )
Production cash cost A   14,643       27,594  
Changes in concentrate inventory     (1,652 )       (1,002 )
Realized gain in diesel hedge     (253 )       (253 )  
Treatment charges     (10 )      
Cash cost applicable per gold ounce sold A   12,728       26,339  
Ounces of gold sold B   18,924       40,213  
Cash cost per ounce of gold sold ($/oz) =A/B   673       655  

 

 

Reconciliation of All-in Sustaining Cash Cost per Ounce of Gold Sold for the three and six months ended June 30, 2021 and 2020

 

                 
Lindero Mine     Three months ended June 30,     Six months ended June 30,
      2021 2020     2021 2020
Cash cost applicable     12,728     26,339
Export duties and mining taxes     1,801     5,382
General and administrative expenses (operations)     1,478     2,616
Adjusted operating cash cost     16,007     34,337
Sustaining capital expenditures1     6,615     10,655
Brownfields exploration expenditures1     351     442
All-in sustaining cash cost     22,973     45,434
All-in cash cost     22,973     45,434
Ounces of gold sold     18,924     40,213
All-in sustaining cash cost per ounce of gold sold     1,214     1,130
All-in cash cost per ounce of gold     1,214     1,130
Presented on a cash basis

 

Additional information regarding the Company’s financial results and activities underway are available in the Company’s second quarter 2021 Financial Statements and accompanying Management’s Discussion and Analysis for the three and six months ended June 30, 2021, which are available for download on the Company’s website, www.fortunasilver.com, on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

 

About Fortuna Silver Mines Inc.

 

Fortuna Silver Mines Inc. is a Canadian precious metals mining company with four operating mines in Argentina, Burkina Faso, Mexico and Peru, and an advanced development project in Côte d’Ivoire. Sustainability is integral to all our operations and relationships. We produce gold and silver and generate shared value over the long-term for our shareholders and stakeholders through efficient production, environmental protection, and social responsibility.

 

Posted August 12, 2021

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