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Fortuna Reports Third Quarter 2021 Unaudited Financial Results

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Fortuna Reports Third Quarter 2021 Unaudited Financial Results

 

 

 

 

 

Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reported third quarter 2021 net income of $0.2 million, adjusted net income1 of $22.5 million, and adjusted EBITDA1 of $75.3 million.

 

Jorge A. Ganoza, President and CEO, commented, “Our strong adjusted EBITDA1 of $75.3 million with margins of 46% and free cash flow from operations1 of $33.8 million in the third quarter attest to the strength of our business. Our record financial results reflect the sustained upward production trend at the Lindero mine in Argentina and the first quarterly contribution of the Yaramoko mine in Burkina Faso.” Mr. Ganoza concluded, “We expect our robust cash flow generation to continue to be our main source of funding as we ramp up construction activities at the Seguela project in Côte d´Ivoire.”

 

Third Quarter 2021 Highlights

 

  • Record sales of $162.6 million, an increase of 95% from the $83.4 million reported in the same period in 2020, due primarily to gold sales from the Yaramoko mine of $49.0 million and from the Lindero mine of $41.8 million.
  • Net income of $0.2 million or $0.00 per share, compared to $13.1 million or $0.07 net income per share reported in Q3 2020. Net income was lower due primarily to $10.5 million in transaction costs related to the acquisition of Roxgold Inc., and $9.6 million settlement of the disputed royalty claim with the Mexican Geological Service.
  • Adjusted net income1 of $22.5 million compared to $16.1 million reported in Q3 2020.
  • Adjusted EBITDA1 of $75.3 million compared to $42.2 million reported in Q3 2020.
  • Free cash flow from ongoing operations1 of $33.8 million compared to $30.1 million reported in Q3 2020.
  • As of September 30, 2021, the Company had cash and cash equivalents of $135.8 million, an increase of $3.9 million from December 31, 2020.
  • Silver and gold production of 1,711,881 ounces and 65,425 ounces, respectively.
  • AISC1 per ounce of gold sold of $1,270 for the Lindero Mine and $1,188 for the Yaramoko Mine. AISC1,2 per silver equivalent ounce of payable silver sold of $15.51 and $17.66 for the San Jose Mine and Caylloma Mine, respectively.

1 Refer to Non-IFRS financial measures
2 AISC/oz Ag Eq calculated at realized metal prices, refer to mine site results for realized prices and Non-IFRS Financial Measures for silver equivalent ratio

 

 

                         
    Three months ended Sept 30       Nine months ended Sept 30    
    2021     2020   % Change   2021   2020   % Change
Sales   162.6     83.4   95 %   400.9   175.5   128 %
Mine operating income   47.3     42.1   12 %   147.1   63.3   132 %
Operating income   21.8     28.5   (24 )%   98.0   29.0   238 %
Net income   0.2     13.1   (98 )%   42.8   2.9   1,376 %
Earnings (loss) per share – basic   (0.00 )   0.07   (103 )%   0.19   0.02   850 %
Adjusted net income1   22.5     16.1   40 %   71.5   8.9   704 %
Adjusted EBITDA1   75.3     42.2   78 %   191.1   67.8   182 %
Net cash provided by operating activities   39.4     32.4   22 %   90.1   36.9   144 %
Free cash flow from ongoing operations1   33.8     30.1   12 %   66.2   44.5   49 %
Capex                        
Sustaining   25.6     14.8   73 %   46.7   46.8   (0 )%
Non-sustaining   0.7       0 %   1.8   0.2   800 %
Brownfields   4.7     1.0   370 %   10.6   2.9   266 %
As at               Sep 30, 2021   Dec 31, 2020   % Change
Cash and cash equivalents       135.8   131.9   3 %
Refer to Non-IFRS financial measures and Forward Looking Statements at the end of this news release
Figures may not add due to rounding
   
 

 

 

Third Quarter 2021 Results

 

Sales for the three months ended September 30, 2021 were $162.6 million, an increase of 95% from the $83.4 million reported in Q3 2020. Lindero reported adjusted sales of $41.8 million from 23,559 ounces of gold sold. Yaramoko reported adjusted sales of $49.0 million from 27,494 ounces of gold sold. San Jose reported adjusted sales of $43.7 million, a decrease of 32% from the $64.7 million reported in Q3 2020 due to decreases in the price of silver and a 24% and 21% decrease in the volume of silver and gold ounces sold, respectively. Caylloma reported adjusted sales of $28.0 million, a 49% increase from the $18.8 million reported in Q3 2020 due primarily to a 36% increase in the volume of silver sold, and increases in the volume and price of lead and zinc sold.

 

Operating income for the three months ended September 30, 2021 was $21.8 million, a decrease of $6.7 million compared to Q3 2020. The decrease was due primarily to lower sales at the San Jose mine and the $9.6 million settlement of the disputed royalty claim with the SGM plus value added tax paid to the SGM, offset partly by Lindero and Yaramoko’s contribution to operating income of $10.3 million and $10.0 million respectively.

 

Net income for the three months ended September 30, 2021 was $0.2 million, a $12.9 million decrease from the $13.1 million net income reported in Q3 2020, primarily due to lower operating income and $10.5 million in transaction costs related to the acquisition of Roxgold Inc. The effective tax rate for the quarter was 98%.

 

Adjusted EBITDA for the three months ended September 30, 2021 was $75.3 million, an increase of $33.1 million compared to $42.2 million reported in Q3 2020. The increase reflects Lindero and Yaramoko´s contribution to adjusted EBITDA of $21.8 milion and $25.8 million, as well as higher EBITDA at Caylloma.

 

Free cash flow from ongoing operations for the three months ended September 30, 2021 was $33.8 million compared to $30.1 million in Q3 2020.

 

Liquidity

 

As of September 30, 2021, the Company had cash and cash equivalents of $135.8 million, an increase of $3.9 million from December 31, 2020.

 

On November 4, 2021, the Company entered into a fourth amended and restated credit agreement, effective as of November 5, 2021, which converts the Company’s prior non-revolving and revolving facility into a revolving term credit facility in the amount of $200.0 million, subject to the conditions set out below, with a term of four years and a step down to $150.0 million after three years.

 

On closing of the amended credit facility, $120.0 million was available for drawdown and was drawn down in full. If a new environmental impact authorization for the San Jose mine (“San Jose EIA”) (See news release dated October 25, 2021) has not been approved or the existing San Jose EIA has not been extended by January 23, 2022, the availability of the amended credit facility will be reduced to $100.0 million. The total amended credit facility of up to $200.0 million will only become available upon receipt of the new San Jose EIA approval or San Jose EIA extension.

 

On November 10, 2021, Minera Cuzcatlan received written notification from SEMARNAT that its application, made in May 2021, for a 10 year extension to its Environmental Impact Authorization for the San Jose Mine which expired on October 23, 2021 had been denied.  SEMARNAT denied the application for the extension citing a pending evaluation by SEMARNAT related to the regularization of ancillary infrastructure at the mine site. In addition, it cited non receipt of requested information, which the Company has already provided to the authority. The Company is reviewing the reasons for the denial with its advisors, but believes that it is fundamentally  in compliance with all material aspects of the San Jose EIA and is entitled to an extension.

 

The San Jose mine is currently operating under the protection of the Mexican courts which allows the continued operation of the San Jose mine beyond the expiry date of the EIA.  Minera Cuzcatlan has the right and intends to  appeal the decision of SEMARNAT and will continue to pursue all legal protection available to it in order to continue to operate pending the appeal of the decision of SEMARNAT.

 

Under the terms of the amended credit facility, the Company must obtain by November 20, 2021 a permanent injunction or equivalent protection, in form and substance acceptable to the lenders acting reasonably, which allows the Company to continue to operate the mine.

 

 

Lindero Mine, Argentina

 

                     
  Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Mine Production                    
Tonnes placed on the leach pad 1,387,134         4,994,134    
                     
Gold                    
Grade (g/t) 1.10         0.94    
Production (oz) 26,235         68,088    
Metal sold (oz) 23,559         63,788    
Realized price ($/oz) 1,772         1,775    
                     
Unit Costs                    
Cash cost ($/oz Au)1 646         635    
All-in sustaining cash cost ($/oz Au)1 1,270         1,182    
                     
Capital expenditures ($000’s)                    
Sustaining 10,639         21,294    
Brownfields 86         528    
Refer to Non-IFRS Financial Measures
 

 

During the third quarter of 2021, the onsite impact of COVID-19 diminished resulting in less disruptions to the operations, with the company screening 74 positive cases compared to 160 cases registered in the second quarter of 2021. To date, including company and contractor personnel, 94% of the workforce has been vaccinated with one dose and 40% with two doses. The government of Argentina has announced that travel restrictions will start to ease in November, which should improve lead times and onsite technical assistance from foreign vendors.

 

In the third quarter of 2021, a total of 1,387,134 tonnes of ore were placed on the leach pad averaging 1.10 g/t gold containing an estimated 49,247 ounces of gold. Total gold production for the quarter was 26,235 ounces, comprised of 24,318 ounces in doré and an increase of 1,918 ounces of gold-in-carbon (GIC) inventory.

 

Cash cost per gold ounce sold was $646, as the mine continues to ramp-up production.

 

All-in sustaining cash costs per gold ounce sold was $1,270 during the quarter and $1,182 year to date, slightly above the Company’s updated guidance for the full year, due primarily to timing of sustaining capital expenditures and ounces sold. The Company expects the full year results to be in-line with the updated guidance.

 

Total capital expenditures of $10.7 million during the quarter were related primarily to the ADR plant expansion and completion of phase 1B of the leach pad construction.

 

 

Yaramoko Mine Complex, Burkina Faso

 

                     
  Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Mine Production                    
Tonnes milled 126,677         126,677    
                     
Gold                    
Grade (g/t) 7.28         7.28    
Production (oz) 28,751         28,751    
Metal sold (oz) 27,494         27,494    
Realized price ($/oz) 1,783         1,783    
                     
Unit Costs                    
Cash cost ($/oz Au)1 720         720    
All-in sustaining cash cost ($/oz Au)1 1,188         1,188    
                     
Capital expenditures ($000’s)                    
Sustaining 7,398         7,398    
Brownfields 560         560    
Refer to Non-IFRS Financial Measures
 
 

 

The Yaramoko Mine produced 28,751 ounces of gold in the third quarter of 2021 with an average gold head grade of 7.28 g/t; slightly below the plan for the quarter.

 

Unplanned downtime due to the premature changeout of a SAG mill pinion bearing in August contributed to slightly lower mill throughput of 126,677 tonnes in the quarter against a plan of 127,917 tonnes. This, in addition to some necessary re-sequencing of production stopes at the 55 Zone, due to isolated ground conditions causing bridging which resulted in a reprioritization of lower grade stopes, contributed to the minor production shortfall.

 

These issues have been remedied and are not expected to continue nor affect fourth quarter performance which is expected to be in line with guidance.

 

Cash cost per gold ounce sold was $720, which was above plan, primarily due to lower production.

 

All-in sustaining cash cost per gold ounce sold was $1,188, slightly above the Company’s updated guidance, due primarily to the lower production and timing of sustaining capital expenditures. The Company expects the full year results to be in-line with the updated guidance.

 

Capital expenditures of $8.0 million during the quarter related primarily to underground mine development costs.

 

 

San Jose Mine, Mexico

 

                     
  Three months ended Sept 30,     Nine months ended Sept 30,
  2021        2020        2021        2020
Mine Production                    
Tonnes milled 248,984     255,226     778,352     662,203
Average tonnes milled per day 2,862     2,934     2,980     2,518
                     
Silver                    
Grade (g/t) 195     254     206     232
Recovery (%) 92     92     91     92
Production (oz) 1,436,658     1,917,540     4,707,496     4,516,790
Metal sold (oz) 1,440,946     1,884,940     4,704,656     4,503,736
Realized price ($/oz) 24.16     24.87     25.80     20.04
                     
Gold                    
Grade (g/t) 1.22     1.52     1.29     1.42
Recovery (%) 91     92     91     91
Production (oz) 8,910     11,425     29,477     27,709
Metal sold (oz) 8,922     11,317     29,421     27,797
Realized price ($/oz) 1,784     1,921     1,798     1,752
                     
Unit Costs                    
Production cash cost ($/t)2 77.52     67.60     74.22     68.51
Production cash cost ($/oz Ag Eq)1,2 9.99     7.15     9.28     7.21
Net smelter return ($/t) 192.00     255.64     212.00     196.93
All-in sustaining cash cost ($/oz Ag Eq)1,2 15.51     11.39     14.13     10.83
                     
Capital expenditures ($000’s)                    
Sustaining 4,006     3,774     9,978     6,518
Non-sustaining 745         1,776    
Brownfields 2,849     1,017     6,739     2,517
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 1,436,658 ounces of silver and 8,910 ounces of gold during the three months ended September 30, 2021, which represents a decrease of 25% and 22%, respectively, compared to Q3 2020. The decrease was due primarily to lower grades.

 

The production cash cost per tonne for the three months ended September 30, 2021 was $77.52 an increase from the $67.60 per tonne in Q3 2020 primarily due to lower tonnes milled.

 

The all-in sustaining cash cost of payable silver equivalent for the three months ended September 30, 2021 was $15.51 per ounce, an increase from the $11.39 per ounce in Q3 2020. The increase was due primarily to higher production cash costs as noted above, increase in brownfields capital expenditures, higher royalties, and lower silver equivalent sales.

 

Capital expenditures totaled $7.6 million for the three months ended September 30, 2021, an increase from the $4.8 million in Q3 2020. The increase was due to the impact of COVID-19 in Q3 2020, whereby brownfields capital expenditures at the operations were significantly reduced.

 

Caylloma Mine, Peru

 

                     
  Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Mine Production                    
Tonnes milled 136,410     107,002     401,942     373,915
Average tonnes milled per day 1,516     1,189     1,517     1,530
                     
Silver                    
Grade (g/t) 78     74     77     70
Recovery (%) 81     83     82     83
Production (oz) 275,223     210,206     810,962     704,190
Metal sold (oz) 295,532     217,281     830,495     704,843
Realized price ($/oz) 24.67     24.96     25.80     19.27
                     
Lead                    
Grade (%) 3.14     3.15     3.15     2.94
Recovery (%) 87     90     88     87
Production (000’s lbs) 8,245     6,702     24,571     21,201
Metal sold (000’s lbs) 8,859     6,884     25,354     21,196
Realized price ($/lb) 1.06     0.86     0.98     0.82
                     
Zinc                    
Grade (%) 4.74     4.93     4.67     4.58
Recovery (%) 87     89     87     88
Production (000’s lbs) 12,436     10,313     36,169     33,110
Metal sold (000’s lbs) 12,754     10,628     36,775     32,999
Realized price ($/lb) 1.36     1.07     1.31     0.98
                     
Unit Costs                    
Production cash cost ($/t)2 86.04     76.80     85.17     74.72
Production cash cost ($/oz Ag Eq)1,2 12.75     14.40     13.25     13.67
Net smelter return ($/t) 196.00     162.82     193.90     119.79
All-in sustaining cash cost ($/oz Ag Eq)1,2 17.66     19.53     18.17     17.73
                     
Capital expenditures ($000’s)                    
Sustaining 3,575     1,213     8,024     4,042
Brownfields 1,201     65     2,810     415
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 275,223 ounces of silver, 8.2 million pounds of lead and 12.4 million pounds of zinc during the three months ended September 30, 2021, an increase of 31%, 23%, and 21% respectively compared to Q3 2020. The increased metal production was due to higher head grades for all metals and higher recoveries for silver and lead. Gold production for the third quarter of 2021 totaled 1,529 ounces with an average head grade of 0.48 g/t, an increase of 12% over Q3 2020.

 

The production cash cost per tonne for the three months ended September 30, 2021 was $86.04, an increase from the $76.80 in Q3 2020. The increase was due primarily to higher mining costs on increased mine preparation activities and higher planned maintenance costs in the processing plant.

 

The all-in sustaining cash cost of payable silver equivalent for the three months ended September 30, 2021 was $17.66 per ounce, a decrease from the $19.53 per ounce in Q3 2020The decrease was due primarily to higher silver equivalent sales, offset partly by the higher production cash cost per tonne as noted above.

 

Capital expenditures totaled $4.8 million for the three months ended September 30, 2021, an increase from the $1.3 million in Q3 2020. The increase was primarily due to the impact of COVID-19 during Q3 2020, whereby capital expenditures were significantly reduced.

 

On October 16, 2021, the Company signed a community support with the Municipality of Caylloma, which includes a voluntary payment of 2.2 million Peruvian soles per year over the four year term agreement, starting in the fourth quarter of 2021. The resources will be used for the implementation of programs or projects for the sustainable development of the Caylloma District.

 

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.

 

 

 

Reconciliation to Adjusted Net Income for the three and nine months ended September 30, 2021 and 2020

 

                     
  Three months ended Sept 30,     Nine months ended Sept 30,
Consolidated 2021     2020     2021     2020  
Net income 0.2     13.1     42.8     2.9  
Adjustments, net of tax:                    
Community support provision and accruals1         0.1      
Foreign exchange loss, Lindero Mine2 1.2     2.7     3.8     8.6  
Share of loss from associates             0.1  
Investment income             (3.3 )
Roxgold transaction costs 10.5         14.1      
SGM Royalty settlement 6.7         6.7      
Other non-cash/non-recurring items 3.9     0.3     4.0     0.6  
Adjusted Net Income (loss) 22.5     16.1     71.5     8.9  
Amounts are recorded in Cost of sales                    
Amounts are recorded in General and Administration                    
                     

 

 

Reconciliation to Adjusted EBITDA for the three and nine months ended September 30, 2021 and 2020

 

                 
  Three months ended Sept 30,   Nine months ended Sept 30,
Consolidated 2021     2020     2021     2020  
Net income 0.2     13.1     42.8     2.9  
Adjustments:                
Community support provision and accruals     0.1     (0.1 )    
Inventory adjustment 1.8         1.7      
Foreign exchange loss, Lindero Mine 1.2     2.7     3.8     8.7  
Net finance items 4.0     0.4     8.5     1.1  
Depreciation, depletion, and amortization 37.8     11.1     77.5     31.6  
Income taxes 8.9     15.0     34.2     28.3  
Share of loss from associates             0.1  
Investment income             (3.3 )
SGM Royalty settlement 9.6         9.6      
Roxgold transaction costs 10.5         14.1      
Other non-cash/non-recurring items 1.3     (0.2 )   (1.0 )   (1.6 )
Adjusted EBITDA 75.3     42.2     191.1     67.8  

 

Reconciliation of Free Cash Flow from ongoing operations for three and nine months ended September 30, 2021 and 2020

               
  Three months ended Sept 30,   Nine months ended Sept 30,
Consolidated 2021     2020     2021     2020  
      (Restated)         (Restated)  
Net cash provided by operating activities 39.4     32.4     90.1     36.9  
Adjustments              
Roxgold transaction costs 24.9         27.9      
Change in long term receivables and assets 0.1     (0.3 )   (0.0 )   (0.9 )
Additions to mineral properties, plant and equipment (32.2 )   (5.6 )   (55.4 )   (13.8 )
Impact of adoption in IAS 16 and Production costs     13.1         25.2  
Current income tax expense (9.0 )   (15.5 )   (35.2 )   (25.5 )
Income taxes paid 12.6     6.0     43.6     22.6  
Other adjustments (1.9 )       (4.8 )    
Free cash flow from ongoing operations 33.8     30.1     66.2     44.5  

 

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

 

                     
Lindero Mine     Three months ended Sept 30,     Nine months ended Sept 30,
      2021     2020     2021     2020
Cost of sales     29,508         75,974    
Changes in dore inventory     1,456         2,458    
Inventory adjustment     (1,743 )       (1,743 )  
Export duties     (3,137 )       (8,519 )  
Depletion and depreciation     (9,092 )       (24,512 )  
By product credits     (55 )       (183 )  
Production cash cost     16,937         43,475    
Changes in dore inventory     (1,456 )       (2,458 )  
Realized gain in diesel hedge     (272 )       (525 )  
Cash cost applicable per gold ounce sold A   15,209         40,492    
Ounces of gold sold B   23,549         63,762    
Cash cost per ounce of gold sold ($/oz) =A/B   646         635    

 

 

 

                     
Yaramoko Mine     Three months ended Sept 30,     Nine months ended Sept 30,
      2021     2020     2021     2020
Cost of sales     38,431         38,431    
Changes in dore inventory     823         823    
Export duties     (2,975 )       (2,975 )  
Depletion and depreciation     (15,739 )       (15,739 )  
By product credits     (61 )       (61 )  
Production cash cost     20,479         20,479    
Changes in dore inventory     (823 )       (823 )  
Refining charges     138         138    
Cash cost applicable per gold ounce sold A   19,794         19,794    
Ounces of gold sold B   27,475         27,475    
Cash cost per ounce of gold sold ($/oz) =A/B   720         720    

 

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

 

                     
Lindero Mine Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Cash cost applicable 15,209         40,492    
Export duties and mining taxes 3,137         8,519    
General and administrative expenses (operations) 1,387         4,003    
Adjusted operating cash cost 19,733         53,014    
Sustaining leases 740         1,796    
Sustaining capital expenditures1 9,385         20,040    
Brownfields exploration expenditures1 47         489    
All-in sustaining cash cost 29,905         75,339    
All-in cash cost 29,905         75,339    
Ounces of gold sold 23,549         63,762    
All-in sustaining cash cost per ounce of gold sold 1,270         1,182    
All-in cash cost per ounce of gold sold 1,270         1,182    
Presented on a cash basis

 

 

 

                     
Yaramoko Mine Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Cash cost applicable 19,794         19,794    
Export duties and mining taxes 2,975         2,975    
General and administrative expenses (operations) 439         439    
Adjusted operating cash cost 23,208         23,208    
Sustaining leases 1,467         1,467    
Sustaining capital expenditures1 7,398         7,398    
Brownfields exploration expenditures1 560         560    
All-in sustaining cash cost 32,633         32,633    
All-in cash cost 32,633         32,633    
Ounces of gold sold 27,475         27,475    
All-in sustaining cash cost per ounce of gold sold 1,188         1,188    
All-in cash cost per ounce of gold sold 1,188         1,188    
Presented on a cash basis
 

 

 

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

 

                   
San Jose Mine     Three months ended Sept 30,   Nine months ended Sept 30,
      2021     2020     2021     2020  
Cost of sales     29,980     29,574     90,051     73,288  
Changes in concentrate inventory     (31 )   340     63     277  
Depletion and depreciation in concentrate inventory     54     (592 )   21     (587 )
Inventory adjustment     (35 )       46     2  
Royalties and mining taxes     (1,641 )   (1,239 )   (4,368 )   (2,878 )
Workers participation     (1,218 )   (2,970 )   (4,573 )   (5,059 )
Depletion and depreciation     (7,808 )   (7,859 )   (23,468 )   (19,677 )
Cash cost A   19,301     17,254     57,772     45,366  
Total processed ore (tonnes) B   248,984     255,226     778,352     662,203  
Production cash cost per tonne ($/t) =A/B   77.52     67.60     74.22     68.51  
Cash cost A   19,301     17,254     57,772     45,366  
Changes in concentrate inventory     31     (340 )   (63 )   (277 )
Depletion and depreciation in concentrate inventory     (54 )   592     (21 )   587  
Inventory adjustment     35         (46 )   (2 )
Treatment charges     (2,622 )   322     (441 )   103  
Refining charges     3,539     1,064     3,161     2,554  
Cash cost applicable per payable ounce sold C   20,230     18,892     60,362     48,331  
Payable ounces of silver equivalent sold1 D   2,024,487     2,640,492     6,501,691     6,702,294  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   9.99     7.15     9.28     7.21  
Mining cost per tonne     38.00     34.30     38.74     35.74  
Milling cost per tonne     17.22     15.45     16.71     16.46  
Indirect cost per tonne     14.79     9.38     12.66     8.91  
Community relations cost per tonne     3.08     6.51     1.44     4.17  
Distribution cost per tonne     4.43     1.96     4.67     3.23  
Production cash cost per tonne ($/t)     77.52     67.60     74.22     68.51  
1 Silver equivalent sold for Q3 2021 is calculated using a silver to gold ratio of 73.9:1 (Q3 2020: 77.2:1) and for Q3 2021 YTD: silver to gold ratio of 69.7:1 (Q3 2020 YTD: 87.4:1)
2 Silver equivalent is calculated using the realized prices for gold and silver.

 

 

 

                 
Caylloma Mine     Three months ended Sept 30,   Nine months ended Sept 30,
      2021     2020     2021     2020  
Cost of sales     17,302     11,812     49,332     38,882  
Changes in concentrate inventory     (670 )   (262 )   (899 )   27  
Depletion and depreciation in concentrate inventory     133     98     155     227  
Royalties and mining taxes     (68 )   (71 )   (157 )   (390 )
Provision for community support         2         101  
Workers participation     (412 )   (583 )   (1,624 )   (411 )
Depletion and depreciation     (4,549 )   (2,778 )   (12,575 )   (10,496 )
Cash cost A   11,736     8,218     34,232     27,940  
Total processed ore (tonnes) B   136,410     107,002     401,942     373,916  
Production cash cost per tonne ($/t) =A/B   86.04     76.80     85.17     74.72  
Cash cost A   11,736     8,218     34,232     27,940  
Changes in concentrate inventory     670     262     899     (27 )
Depletion and depreciation in concentrate inventory     (133 )   (98 )   (155 )   (227 )
Treatment charges     4,378     4,414     11,125     13,977  
Refining charges     459     339     1,292     1,082  
Cash cost applicable per payable ounce sold C   17,110     13,135     47,393     42,745  
Payable ounces of silver equivalent sold1 D   1,341,997     912,207     3,577,778     3,127,621  
Cash cost per ounce of payable silver equivalent sold2 ($/oz) =C/D   12.75     14.40     13.25     13.67  
Mining cost per tonne     33.82     30.80     32.24     32.64  
Milling cost per tonne     15.95     14.58     15.00     13.94  
Indirect cost per tonne     28.05     23.95     29.50     21.03  
Community relations cost per tonne     0.51     6.92     0.72     4.58  
Distribution cost per tonne     7.71     0.55     7.71     2.53  
Production cash cost per tonne ($/t)     86.04     76.80     85.17     74.72  
1 Silver equivalent sold for Q3 2021 is calculated using a silver to gold ratio of 72.5:1 (Q3 2020: 78.3:1) , silver to lead ratio of 1:23.3 pounds (Q3 2020: 1:29.2), and silver to zinc ratio of 1:18.2 pounds (Q3 2020: 1:23.2). YTD 2021: silver to gold ratio of 69.4:1 (Q3 2020 YTD: 96.4:1), silver to lead ratio of 1:26.3 pounds (Q3 2020 YTD: 1:23.6), and silver to zinc ratio of 1:19.7 pounds (Q3 2020 YTD: 1:19.7)
2 Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc.
 

 

 

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

 

                     
San Jose Mine Three months ended Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Cash cost applicable 20,230     18,897     60,362     48,346
Royalties and mining taxes 1,641     1,239     4,368     2,878
Workers’ participation 1,522     3,713     5,716     6,324
General and administrative expenses (operations) 1,719     1,363     5,022     4,228
Adjusted operating cash cost 25,112     25,212     75,468     61,776
Care and maintenance costs (impact of COVID-19)             1,568
Sustaining leases 184     63     447     188
Sustaining capital expenditures3 3,553     3,774     9,525     6,518
Brownfields exploration expenditures3 2,547     1,017     6,437     2,517
All-in sustaining cash cost 31,397     30,066     91,878     72,567
Non-sustaining capital expenditures3 745     125     1,776     374
All-in cash cost 32,142     30,191     93,654     72,941
Payable ounces of silver equivalent sold1 2,024,487     2,640,492     6,501,691     6,702,294
All-in sustaining cash cost per ounce of payable silver equivalent sold2 15.51     11.39     14.13     10.83
All-in cash cost per ounce of payable silver equivalent sold2 15.88     11.43     14.40     10.88
1 Silver equivalent sold for Q3 2021 is calculated using a silver to gold ratio of 73.9:1 (Q3 2020: 77.2:1) and for Q3 2021 YTD: silver to gold ratio of 69.7:1 (Q3 2020 YTD: 87.4:1)
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 Sept 30,     Nine months ended Sept 30,
  2021     2020     2021     2020
Cash cost applicable 17,110     13,562     47,392     44,825
Royalties and mining taxes 68     71     157     390
Workers’ participation 465     644     1,886     477
General and administrative expenses (operations) 630     701     2,700     2,514
Adjusted operating cash cost 18,273     14,978     52,135     48,206
Sustaining leases 780     695     2,170     1,930
Sustaining capital expenditures3 3,480     1,213     7,930     4,042
Brownfields exploration expenditures3 1,168     65     2,777     415
All-in sustaining cash cost 23,701     16,951     65,012     54,593
All-in cash cost 23,701     17,814     65,012     55,456
Payable ounces of silver equivalent sold1 1,341,997     912,207     3,577,778     3,127,621
All-in sustaining cash cost per ounce of payable silver equivalent sold2 17.66     19.53     18.17     17.73
All-in cash cost per ounce of payable silver equivalent sold2 17.66     19.53     18.17     17.73
1 Silver equivalent sold for Q3 2021 is calculated using a silver to gold ratio of 72.5:1 (Q3 2020: 78.3:1) , silver to lead ratio of 1:23.3 pounds (Q3 2020: 1:29.2), and silver to zinc ratio of 1:18.2 pounds (Q3 2020: 1:23.2). YTD 2021: silver to gold ratio of 69.4:1 (Q3 2020 YTD: 96.4:1), silver to lead ratio of 1:26.3 pounds (Q3 2020 YTD: 1:23.6), and silver to zinc ratio of 1:19.7 pounds (Q3 2020 YTD: 1:19.7)
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 third quarter 2021 Financial Statements and accompanying Management’s Discussion and Analysis for the three and nine months ended September 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 stakeholders through efficient production, environmental protection, and social responsibility.

 

Posted November 11, 2021

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