23:14:59 EST Fri 16 Nov 2018
Enter Symbol
or Name
USA
CA



Login ID:
Password:
Save
Fortuna Silver Mines Inc
Symbol C : FVI
Shares Issued 159,919,595
Close 2018-11-08 C$ 4.88
Recent Sedar Documents

Fortuna Silver earns $6.9-million (U.S.) in Q3

2018-11-08 20:48 ET - News Release

Mr. Jorge Ganoza reports

FORTUNA REPORTS CONSOLIDATED FINANCIAL RESULTS FOR THE THIRD QUARTER 2018

Fortuna Silver Mines Inc. had net income of $6.9-million, earnings per share of four cents and revenue of $59.6-million in the third quarter of 2018 (all amounts expressed in U.S. dollars, unless otherwise stated).

Jorge A. Ganoza, president and chief executive officer, commented, "We have delivered a solid quarter in spite of a 12-per-cent and 5-per-cent decrease in silver and gold prices, respectively, in the third quarter, with earnings per share of four cents, EBITDA of $24.2-million and free cash flow, excluding Lindero construction costs, of $13.6-million." Mr. Ganoza concluded: "The rate of spending at Lindero continues to increase as construction activities accelerate towards year-end. It is estimated that a total of between $110-million to $130-million will be spent in 2018. Construction activities are progressing according to the projects schedule with commercial production planned for the end of the third quarter of 2019."

Third quarter consolidated financial highlights:

  • Sales of $59.6-million, compared with $64.0-million in Q3 2017;
  • Net income of $6.9-million, compared with $10.3-million in Q3 2017;
  • Earnings per share of four cents, compared with six cents in Q3 2017;
  • Net cash provided by operations of $21.5-million and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $24.2-million, compared with $20.3-million and $30.6-million, respectively, in Q3 2017;
  • Free cash flow, excluding Lindero construction costs (1), of $13.6-million and $42.2-million for the three and nine months ended Sept. 30, 2018;
  • Cash position, including short-term investments, as at Sept. 30, 2018, was $176.7-million;
  • Silver and gold production totalled 2,230,465 and 12,542 ounces, compared with 2,009,362 and 13,412 in Q3 2017;
  • AISC (all-in sustaining cost) (1) per silver equivalent (AgEq) (2) ounce (oz) was $10.8, compared with $11.1 in Q3 2017.

(1) All-in sustaining cash cost and free cash flow, excluding Lindero construction costs, are non-GAAP (generally accepted accounting principles) financial measures.

(2) AISC per ounce AgEq calculated at realized metal prices of $1,211 per ounce gold (Au), $14.8 per ounce silver (Ag), $1.0 per pound (lb) lead (Pb) and $1.2 per pound zinc (Zn).

 
                                    THIRD QUARTER CONSOLIDATED FINANCIAL RESULTS 

Consolidated metrics                    Q3 2018                Q3 2017                YTD 2018                YTD 2017
Financial (in millions of dollars, 
except per-share information 
and all-in sustaining cash costs)
Sales                                $     59.6             $     64.0             $     203.7              $    192.8
Mine operating income                      16.5                   24.9                    79.2                    74.3
Operating income                           10.5                   18.9                    55.3                    52.7
Net income                                  6.9                   10.3                    31.8                    32.2
Earnings per share (basic)                 0.04                   0.06                    0.20                    0.20
Earnings per share (diluted)               0.04                   0.06                    0.20                    0.20
Adjusted net income (1)                     7.1                   13.1                    30.2                    36.4
Adjusted EBITDA (1)                        24.2                   30.6                    91.2                    87.3
Free cash flow (1)                        (19.3)                   8.3                   (26.9)                    9.9
Free cash flow excluding 
Lindero construction costs (1)             13.6                   11.7                    42.2                    17.7
Capex (sustaining)                          5.4                    7.5                    14.6                    19.9
Capex (non-sustaining)                      0.6                    2.4                     2.1                     2.9
Capex (Lindero)                            24.5                    3.7                    41.8                     8.3
Capex (Brownfield)                          2.4                    2.2                     7.1                     7.8
AISC ($/oz Ag) (1) (2)                      7.1                    6.1                     4.1                     6.8
AISC ($/oz AgEq) (1) (3)                   10.8                   11.1                    10.1                    11.4

                                                                                Sept. 30, 2018           Dec. 31, 2017
Cash, cash equivalents and 
short-term investments                                                             $     176.7              $    212.6
Total assets                                                                       $     738.3              $    706.6
Non-current bank loan                                                              $      39.6              $     39.9

(1) Non-GAAP financial measure. 

(2) Net of byproducts from gold, lead and zinc.

(3) AISC per ounce AgEq calculated at realized metal prices of $1,211 per oz Au, $14.8 per oz Ag, $1.0 per lb Pb and 
$1.2 per lb Zn.

Net income for the three months ended Sept. 30, 2018, was $6.9-million or four cents per share, compared with $10.3-million or six cents per share for the comparable quarter in 2017. Sales for the third quarter of 2018 decreased 7 per cent to $59.6-million compared with $64.0-million for the comparable quarter in 2017, due primarily to a decline in metal prices for silver, lead and zinc, and, to a lesser extent, the timing of recognizing revenue on concentrates delivered to the warehouse prior to the end of the quarter of about $1.5-million, but which were not recognized in sales for the third quarter.

Operating income for the three months ended Sept. 30, 2018, was $10.5-million, a 44-per-cent decrease from the $18.9-million of operating income for the comparable quarter in 2017. The key drivers for the decrease were lower sales from a decline in metal prices, higher production costs at the Caylloma mine as well as a $1.4-million provision for a community support obligation that will be paid over the next 2.5 years.

Adjusted net income decreased 46 per cent during the quarter to $7.1-million, compared with $13.1-million for 2017. Adjusted EBITDA decreased 21 per cent to $24.2-million, compared with $30.6-million for the comparable period in 2017.

Free cash flow, excluding Lindero construction costs, was $13.6-million in the quarter and $42.2-million year to date. At Sept. 30, 2018, the company had cash, cash equivalents and short-term investments of $176.7-million, which, along with the company's undrawn credit facility of $80.0-million, will provide sufficient liquidity to meet Fortuna's financing needs during the construction of the Lindero project.

                                           SAN JOSE MINE, MEXICO
                      
                                      Three months ended Sept. 30,             Nine months ended Sept. 30,
Mine production                          2018                2017                2018                2017

Tonnes milled                         262,710             263,697             784,297             799,420
Average tonnes milled per day           2,985               3,038               2,994               3,054
Silver                                 
Grade (g/t)                               258                 229                 270                 231
Recovery (%)                               91                  91                  92                  92
Production (oz)                     1,991,211           1,774,556           6,261,137           5,454,793
Metal sold (oz)                     1,904,179           1,739,066           6,103,319           5,392,495
Realized price ($/oz)                   14.82               16.85               16.08               17.16
Gold                                    
Grade (g/t)                              1.61                1.71                1.80                1.74
Recovery (%)                               91                  91                  92                  91
Production (oz)                        12,387              13,248              41,692              40,773
Metal sold (oz)                        12,098              12,817              40,943              40,079
Realized price ($/oz)                   1,211               1,280               1,285               1,251
Unit costs                                                                                               
Production cash cost 
($/oz Ag) (1) (2)                         1.8                 1.5                 0.3                 1.3
Production cash cost   
($/oz AgEq) (1) (3)                       6.1                 6.5                 5.7                 6.3
Production cash cost ($/t) (1)           63.3                62.2                63.0                60.3
Unit net smelter return ($/t)           157.3               162.6               183.8               165.8
AISC ($/oz Ag) (1) (2)                    6.4                 7.8                 5.0                 7.4
AISC ($/oz AgEq) (1) (3)                  9.1                10.5                 8.8                10.3

(1) Non-GAAP financial measure. 

(2) Net of byproduct credits from gold.

(3) AISC per oz AgEq calculated at realized metal prices of $1,211 per oz Au and $14.8 per oz Ag.

The San Jose mine produced 1,991,211 ounces of silver, representing a 12-per-cent increase in silver production over the same period in 2017, while gold production declined 6 per cent to 12,387 ounces compared with 13,248 ounces during the same period in 2017. Average head grades for silver and gold were 258 g/t and 1.61 g/t, which were 13 per cent higher and 6 per cent lower than the same period in 2017.

Cash cost per tonne of processed ore increased 2 per cent to $63.3 for the third quarter, compared with $62.2 for the same quarter in 2017, due primarily to higher energy tariffs and partially offset by lower mining costs. Cash cost per for the nine months ended Sept. 30, 2018, increased 4 per cent to $63.0, compared with $60.3 for the comparable period in 2017, and was slightly above the company's annual guidance. Cash cost per tonne for the year is expected to remain within 5 per cent of the company's annual guidance of $61.2.

                                            CAYLLOMA MINE, PERU 
                      
                                      Three months ended Sept. 30,             Nine months ended Sept. 30,
Mine production                          2018                2017                2018                2017

Tonnes milled                         135,996             133,726             399,739             395,069
Average tonnes milled per day           1,511               1,486               1,503               1,480
Silver                                  
Grade (g/t)                                65                  66                  64                  66
Recovery (%)                               85                  83                  85                  84
Production (oz)                       239,253             234,806             692,101             704,624
Metal sold (oz)                       250,255             226,155             696,765             691,659
Realized price ($/oz)                   15.01               16.89               16.07               17.19
Lead                                     
Grade (%)                                2.74                2.87                2.70                2.77
Recovery (%)                               92                  91                  91                  91
Production (000 lb)                     7,576               7,650              21,802              22,031
Metal sold (000 lb)                     7,822               7,291              21,972              21,454
Realized price ($/lb)                    0.96                1.06                1.06                1.03
Zinc 
Grade (%)                                4.24                4.26                4.27                4.16
Recovery (%)                               90                  90                  90                  90
Production (000 lb)                    11,483              11,241              33,947              32,670
Metal sold (000 lb)                    11,647              10,867              34,154              32,512
Realized price ($/lb)                    1.15                1.35                1.37                1.26 
Unit costs                                                                                                
Production cash cost 
($/oz Ag) (1) (2)                       (22.6)              (39.5)              (40.1)              (31.2)
Production cash cost 
($/oz AgEq) (1) (3)                       8.5                 7.2                 7.4                 8.0
Production cash cost ($/t) (1)           88.5                76.0                81.4                78.1
Unit net smelter return ($/t)           151.7               170.4               173.7               159.9
AISC ($/oz Ag) (1) (2)                    1.4               (18.8)              (16.8)              (11.2)
AISC ($/oz AgEq) (1) (3)                 12.3                10.5                10.8                11.4

(1) Non-GAAP financial measure. 

(2) Net of byproduct credits from gold, lead and zinc.

(3) AISC per ounce AgEq calculated at realized metal prices of $1,211 per oz Au, $15.0 per oz Ag, $1.0 
per lb Pb and $1.2 per lb Zn.

The Caylloma mine produced 7.6 million pounds of lead and 11.5 million pounds of zinc during the third quarter of 2018, representing a 2-per-cent increase in zinc production, a 1-per-cent decrease in lead production over the same period in 2017. Average head grades for lead and zinc were 2.74 per cent and 4.24 per cent. Silver production was 239,253 ounces, which was 2 per cent higher than the comparable period in 2017.

Cash cost per tonne of processed ore for the third quarter of 2018 was $88.5 or 16 per cent higher than the $76.0 cash cost for the comparable quarter in 2017. Cash cost per tonne on a year-to-date basis was $81.4 or 4 per cent above 2017. The slightly higher cash cost for the nine months ended Sept. 30, 2018, was due to higher labour and related personnel expenses that came into effect in August, 2018. The company expects an incremental cost of approximately $1.1 in the fourth quarter, relating to a community support agreement entered into in the third quarter. Cash cost per tonne for the year is expected to be within 5 per cent of the company's annual guidance of $81.3.

Conference call to review third quarter financial and operations results

Date:  Friday, Nov. 9, 2018

Time:  9 a.m. Pacific Time (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:  10460

Playback of the conference call will be available until Nov. 23, 2018, at 11:59 p.m. Eastern Time. Playback of the webcast will be available until Nov. 8, 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 metals 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.

© 2018 Canjex Publishing Ltd. All rights reserved.