Mr. Jorge Ganoza reports
FORTUNA REPORTS CONSOLIDATED FINANCIAL RESULTS FOR THE SECOND QUARTER 2018
Fortuna Silver Mines Inc. had net income of $11.2-million, earnings per share of seven cents and revenue of $73.7-million in the second quarter of 2018. (All amounts are expressed in U.S. dollars, unless otherwise stated.)
Jorge A. Ganoza, president and chief executive officer, commented, "Our financial results for the second quarter of 2018 continue to reflect San Jose's strong silver and gold production during the year resulting in the company's record adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] for the second quarter and first half of 2018 of $35.2-million and $67.0-million."
Mr. Ganoza concluded: "Free cash flow for the second quarter and first half of 2018, excluding Lindero construction costs, totalled $9.1-million and $28.0-million. This attests to the capacity of our business to translate high margins into free cash flow, contributing significantly to our strong liquidity position."
Second quarter consolidated financial highlights:
- Sales of $73.7-million, compared with $63.9-million in second quarter 2017;
- Net income of $11.2-million, compared with $8.9-million in second quarter 2017;
- Earnings per share of seven cents, compared with six cents in second quarter 2017;
- Cash flow from operations of $21.9-million and adjusted EBITDA of $35.2-million, compared with $12.0-million and $26.5-million, respectively, in second quarter 2017;
- Free cash flow excluding the Lindero construction of $9.1-million and $28.0-million year to date;
- Cash position, including short-term investments, as at June 30, 2018, was $198.3-million;
- Silver and gold production of 2,321,315 and 14,557 ounces, respectively;
- AISC (all-in sustaining cash cost) (1) per silver equivalent ounce (2, 3) was $10 compared with $12.10 in second quarter 2017.
(1) All-in sustaining cash cost is a non-generally accepted accounting principle financial measure.
(2) AISC per ounce silver equivalent calculated at realized metal prices of $1,299 per oz gold, $16.60 per oz silver, $1.10 per tonne lead and $1.40 per tonne zinc.
(3) AgEq production is calculated using ratios of Ag to Au equals 65 to 1; Ag to Pb (pound) equals 1 to 15.6; Ag to Zn (lb) equals 1 to 12.9.
CONSOLIDATED FINANCIAL RESULTS
Consolidated metrics Q2 2018 Q2 2017 YTD 2018 YTD 2017
Financial (expressed in $ millions
except per-share information)
Sales $73.7 $63.9 $144.1 $128.7
Mine operating income 31.4 22.2 62.7 49.4
Operating income 22.4 14.2 44.8 33.8
Net income 11.2 8.9 24.9 21.9
Earnings per share (basic) 0.07 0.06 0.16 0.14
Earnings per share (diluted) 0.07 0.06 0.16 0.14
Adjusted net income (1) 10.0 9.2 23.1 23.3
Adjusted EBITDA (1) 35.2 26.5 67.0 56.7
Free cash flow (1) (20.2) 1.9 (7.8) 1.9
Free cash flow excluding Lindero
construction (1) 9.1 4.4 28.0 6.3
Capex (sustaining) 5.1 7.4 9.2 12.4
Capex (non-sustaining) 0.9 - 1.1 -
Capex (Lindero) 12.8 2.7 17.7 4.6
Capex (brownfield) 2.3 2.9 4.6 5.6
AISC ($/oz Ag) (2) 3.2 8.2 2.7 7.2
AISC ($/oz AgEq) (3) 10.0 12.1 9.7 11.5
(1) Non-generally accepted accounting principle financial measure.
(2) All-in sustaining cash cost is a non-GAAP financial measure.
(3) AISC (all-in sustaining cash cost) per ounce silver equivalent
calculated at realized metal prices of $1,299 per oz gold, $16.60
per oz silver, $1.10 per tonne lead and $1.40 per tonne zinc.
Net income for the three months ended June 30, 2018, was $11.2-million or seven cents per share compared with $8.9-million or six cents per share for the comparable quarter in 2017.
Higher sales and lower mine operating costs resulted in a 58-per-cent increase in operating income, which was partially offset by a higher effective tax rate. The effective tax rate for the second quarter 2018 was 56 per cent compared with 40 per cent for the same period in 2017. The increase in the effective tax rate was due primarily to the Argentine peso declining 35 per cent against the U.S. dollar, which increased the deferred income tax expense by $1.5-million, and a $1.3-million withholding tax charge related to expected dividend repatriation from its subsidiaries. The impact these two items had on earnings per share for the second quarter was two cents per share.
Adjusted net income increased 9 per cent during the quarter to $10.0-million compared with $9.2-million for 2017. Adjusted EBITDA increased 33 per cent to $35.2-million compared with $26.5-million for the comparable period in 2017 due primarily to increased sales volume and higher prices for gold, lead and zinc.
Free cash flow, excluding Lindero construction costs, was $9.1-million in the quarter and $28.0-million year to date. At June 30, 2018, the company had cash, cash equivalents and short-term investments of $198.3-million, which, along with the company's undrawn credit facility of $80.0-million, will provide sufficient liquidity to meet its financing needs during the construction of the Lindero project.
The financial statements and management's discussion and analysis are available on SEDAR and have also been posted on the company's website.
Conference call to review second quarter financial and operations results
Date: Aug. 9, 2018
Time: 9 a.m. Pacific Time or 12 p.m. Eastern Time
Dial-in number (toll-free): 1-877-407-8035
Dial-in number (international): 1-201-689-8035
Replay number (toll-free): 1-877-481-4010
Replay number (international): 1-919-882-2331
Replay passcode: 10455
Playback of the conference call will be available until Aug. 23, 2018, at 11:59 p.m. Eastern Time. Playback of the webcast will be available until Aug. 9, 2019. In addition, a transcript of the call will be archived on the company's website.
About Fortuna Silver Mines Inc.
Fortuna is a growth-oriented, precious metal producer with its primary assets being the Caylloma silver mine in southern Peru, the San Jose silver-gold mine in Mexico and the Lindero gold project in Argentina. The company is selectively pursuing acquisition opportunities throughout the Americas and in select other areas.
We seek Safe Harbor.
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