Fortuna Silver Mines (FSM) 24 Mar 222021 Q4 Earnings call transcript

Good day, ladies and gentlemen, and welcome to the Fortuna Silver Mines Q4 Full Year 2021 Financial and Operational Results Call. At this time, all participants have been placed on a listen-only mode and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Carlos Baca, Director of Investor Relations. Sir, the floor is yours.

Thank you, Holly. at gentlemen, Mines like [Technical and box our and to welcome Difficulty] ladies on Silver Fortuna to homepage morning, I to would you presentation Good www.fortunasilver.com. our financial

in during stated. and As a reader included call discussed figures Earnings in yesterday’s in contained call the presented subject release in Presentation. to today’s advisories and this U.S. news Call reminder, otherwise the are in dollars, made unless statements Financial the are presentation

Jorge, to forecast or in that I like I the turn material subject call Before making and reflected information. the number risks, Certain were call beliefs. or assumptions a forward-looking information the as that to indicate forward-looking Company’s in other our and information. of earnings is Actual uncertainties, is a would forward-looking this forward-looking projection estimates, over forecast to could factors. on the information conclusion factors This a results in differ current applied drawing contains materially expectations, projection or or conclusion, based from

Alberto forward-looking of to by like such over which available required Jorge information assumptions drawing Ganoza, on publicly making would that forecast and actual material update now are in materially or SEDAR. or as to differ except the forward-looking Company’s applied were forecast MD&A, assumes Fortuna. could the the or in the the the to factors conclusion, Additional results and from in Company information or in reflected forward-looking factors no form co-Founder cause call I our contained obligation projection material conclusion in that about information the annual the to is law. The turn projection as information a future, information,

be on details be with business I’ll Carlos. you you, on the the by performance of performance the and Cesar who the quarter the highlights will respective Luis, providing be assets Paul, in and and year. CFO; for first updates And on assisted of our their sharing of months the will regions. Thank the I

margin an low to adjusted of adjusted sales $XX the For the million. significant in compared The the with million, financial a the mid-XXs. our $XXX figures X.X. will million, The the to a we liquidity contribution percentage growth At production which, Mine, year the Yaramoko debt of reported ago, keeping record of in Company remains our end of the are all year EBITDA $XXX $XX.X mine. the of particular, million, the quarter year, of EBITDA while of ran well-funded Fortuna’s gold increase XX% ratio Séguéla construction, to the and at fifth strong compared completed, We the its remains drivers capital XX,XXX ounces adjusted EBITDA And in quarter, for an at be which operating Mine in delivered business net to Mine. Lindero income and of meet a projects the ago year. position once

delivering align an and at end of project. our first gold is mid-XXXX. The timeline Séguéla February, is in for of excellent with tracking the complete, XX% As budget team construction the performance the

to later detail placing provide can on We’re the mid West for concrete initiate preparing late Officer Africa Criddle, to Operating Paul Chief further in call. our April.

resource the the located recent the of resource camp of a ounces is discovery announcement Sunbird. exploration we kilometers to XXX,XXX X Séguéla the site. from continue front, exhibit at with Séguéla recent only On maiden the growth the Sunbird mill potential inferred

at expanding We year. exploration the remains high opportunities a the area Séguéla resources to a continue expectation to big with this have focus where drilling respect for

[Technical the southern authorities Difficulty] XXrd, San Jose on to trying of failed through October mine located of Mexican the Mexico in month last When times During XXXX, state renew our in went Oaxaca. we at

line. Please reconnect hold, ladies and gentlemen, Carlos’ we while

our on here line the end. lost We Sorry.

retake So, the of San think permit mine. discussion, I’ll at issue I try lost the the line, Jose is the to discussion our I where which

on to in reduced only in be any I authorities a renewal no years, late term renew providing key typographical claiming in two XX a October Mexican is December finally for As The granted was stating, a the XXrd, permit. failed environmental the was operating any support document. years. communications subsequent of to The impact our assessment, for the kind error, in requested XX-year authority reduction

preliminary constructive parallel court favor. a ruling We to believe our and we accepted We this will the and case federal legal a in this, and situation, from mine continue the this our view our of court this dialogue grief, judge administratively. did year. contesting are not operations. this resolve has resolve In injunction is actions, day our one trying granted with hear in later all what trying to nonsensical in of lose to authorities we a Through

was, in plan, issue the topical second successfully Another which in Integration Roxgold XXX-day the fourth quarter. of half XXXX concluded was

last at around where the maintain objectives to that XXXX XX%. for XX% year aiming workforce, above we average, we company, Vice of aiming at executives and process, was with combined the talented in and the all a incorporated I women are a Senior for XXXX. performance Exploration; to the we corporate Senior Roxgold year, executive President we have XX% as is of Weedon, President in industry one team, senior back we With As above good, were Last sustainability and get Company of to our respect Julien to XXXX, Vice which two and ended into are In for of as Baudrand, the our Paul year, KPI, XXXX, -- are mean, the exception Sustainability. of prioritized KPIs outcomes and which on XX%. improve performance,

sustainability in initiatives motion. XXXX, For certain have we important

for working the ICMM adoption management. global have plan been on standard tailings We industry for the

with standard make to expect adoption the respect our public We year, and to XXXX. commitments be the under during plan able this for objectives to

this commitments relevant will Board our climate we approved shortly, public topic. sets on Additionally, very making which statement, positioning out be our change

findings implemented reported of life was loss of this the performance investigation safety of On XXth, start we of tragedy member tragic at are the on a team in Argentina. January process and plant advanced, and tainted Our action The plans safety at our the Mine the And our year. visitors sure Lindero and the again. our of is seriousness. health this and across contractors the utmost have like to nothing of all make paramount our all we with sites and to sites employees, ever been take responsibility happens

we compared of at line we gold a equivalent, million During above guidance gold an was XXX,XXX ago. of ounces produced ounces at QX, our equivalent XXX% ounces, we with X gold XXXX, X% production basically for a ounces XX,XXX XX,XXX record production look year. production Silver at year If in was increase last provided production to produced the midyear.

zinc XX% precious sales, XX% zinc with which for resources accounted year, metals to and the I many close years prices pound. think $X.XX in the morning, and reported we price environment at today’s of -- mineral XX%, we balance this and accounted haven’t On for per updated we’re over byproduct, XXth, enjoying being annual For reserves. lead, mineral silver for also for March gold seen the our

the a X.X a stand and to Our increase respect million gold reserves at year compared are decrease Silver an a XX% stand million almost of reserves ounces, Company ounces, a year ago. record XX XX% ago. to of strong with for

with a Yaramoko gold Paul we And our have With annual in line drilling the our cost and San budget Séguéla for over with these underground assets, in year focus XXXX, higher the our this cost to mines that reserve on experience silver did For at sustaining to a is all-in respect year quarter full year. and shorter by compared guidance. Jose, exploration all-in And guidance well-funded of million, on $XX presentation down ago, And cost assets, the our with Caylloma XX,XXX call. we the although lives. discussed with and further sustaining year. meters a higher be for the are of Lindero can for record line

Now, ahead Luis and share brief go a financials. discussion on I let will

Thank financial you, a for XX reference results. XX I’ll discussion Jorge. our slides on brief and

driven XX% on sales silver Yaramoko, and gold $XXX we the ounce, QX contribution per of respectively. the last up of $X,XXX and million, quarter. million million mentioned, year. compared prior QX driven income was of or prior above at by prior by XX% XX% Lindero and the higher XXXX and and XXXX however, XXXX loss higher million record million, or XXXX of $X.X $XX the X% margin the on were XX% result, over slightly Jorge XXXX. set below operating expenses had As contribution a to in from QX Yaramoko. of -- to tax was and higher QX operating of higher was XX% effective prices over XXX% a slightly rate. and realized were year higher And Lindero million, results the $XX.X This did year $X.X prior derivatives income X%, $X.X of by interest $XX These by by over close down for have a We EBITDA gold year. for Net EBITDA was production in

adjusting Our adjusting write-downs and contracts. XXXX, for XX% $X.X after on over mainly an million losses QX increased derivative inventory income realized or

available credit $XX $XXX respect With $XX flow construction on into to half XXXX the a this was last was around exploration. million CapEx million with flow under operations in prior the we from million, revolving related in cash free liquidity a and conversion of between $XX year. environment, Séguéla of Jorge to average. we high In factors closed working timing XX, due XXXX, our year to free current Our price percentage of for at our cash cash particularly In see to close the of from we year similar to QX $XXX liquidity million in and XX% undrawn spent total, XX% This QX as compared as the million XX% mentioned XXXX. capital. EBITDA in shown Company. to slide million to second converted expect and We $XXX percentage for facility to the position,

modest during Back We you expect net $XXX very activities million $XX finally, debt additional Company’s at spend in construction Jorge. remains at million. XXXX. an to And to levels the

Cesar, to… do want you

we In delivering good consolidated record gold performance with production Thank you, operations Lindero all production Jorge. quarter. in Latin from a perspective, for a America, three the saw

with the As placed on plant The X.X of plant Lindero fourth planned an of is guidance to or gold production for was via copper year. and is to representing successfully expectations. quarter in third the XX, processing as leach as slide areas before, and control. under according we performing well crushed the the see can increase plan upper during the and is I tons operating according with million finished stacking, over in range of mentioned ADR’s pad All XX% The performed the commissioned record quarter. SART conveyor expansion

in and and slides as planned XX X,XXX a operations, both far accordance of them our guidance Back gold Caylloma for as in with and with bonus of results shown year. you, delivered ounces Jose from to As XX, nice Caylloma San the of Jorge. as

want Yaramoko Thank construction? to on us update Paul, an you Séguéla performance and on you. with do share

Thanks, quarter several our coupled This mine Jorge. total mentioned, Yaramoko tonnages finished moved, the the in the with throughput stopes production approximately we for and grade mill to localized But in plans, principally a expectation. period. the in behind realized period, due high delay some was but below dilution grade as in Mine stoping. by and of did on-track that offset scheduled. drilling grade fourth XX% year terms

QX. the As for cost a for we did a nature of cost fixed the high the realize sustaining Yaramoko, in all-in period. result, has That higher given turned operation

earlier, Séguéla. The to to project, advance by Jorge Turning mentioned smoothly. as continued

We’ll Those being making the they’re contract and facility key and plan. in coming the And As of forward the point in for of bulk now time, Lycopodium, on-track our scopes But to the up February earthworks at the de-risking in advanced some key processing structural cases of this our near progress. in concrete on very with on -- ramping ahead to at of key expect deliveries weeks commence project, schedule scopes the we months. steel XX% for completion. and budget completion, coming the project site EPC mobilization so. remain good the of ground look pleasingly we equipment XXth,

very we’re how So, are pleased things progressing.

of photos some can things key the milestone, projects to Jorge. storage a delivered presentation, provided the project the you world, terms in the dam the risk in in part scopes gold tailings in of any project like this see water be As out representing of derisked ways budget. able being of -- and on Thank and time are key on significant dam the and you, in up ground,

Carlos? Okay.

the Thank would you. may turn We to call any to over now that have. questions like you

question. your Your pose your Day. Instructions] from first [Operator today is question for coming Please Adrian affiliation, then announce

the mentioned Are then, And on a metals? afternoon. you -- Management. you loss on? tell Good what loss? Day derivatives Adrian Could are us they currencies Yes. realized the you derivatives, Asset or was this can

Yes. Adrian. Hi,

yielding results, the beginning of and place $X,XXX our Lindero all and of unrealized reported hedge for bulk which in positive Caylloma There also basically diesel and the $X,XXX. out the lead. that are the detail would million, of and And go items hedges $X quarter are in structure. back for offset $X of of were put of the are around to cost those loss over be ranges consumption, of out of amount the at of for on a So, those significant metal, is we are XXXX a are other the right? is for production bit is XXXX the really that that and prices hedges they The half and zinc up component million XXXX, bit zinc for XXXX the in terms a certainly there

so Okay. Thank you much.

Trevor Your is next affiliation, coming question. pose announce Turnbull. from question then your your Please

Trevor Yes, hi. from Scotiabank. It’s Turnbull

I question think a was it’s for at probably Yaramoko. curious I Paul.

stopes, You grade in that stopes kind the around that about had year, so. QX it year, just should profile. be getting you delays for MD&A saw gram think grade And wanted also higher end getting the QX. still last ended I was was grade that of year this in of some I the to be the talked the the you we X the X.X that mark. guidance going But the how mentioned, to of some wondered stopes access at the in grams to like head of here think around coming some those or grade knowing to access feel those higher to. I you’re about I

down grade, rather are in north higher off something significantly that for then the tailing average? So, QX get X.X grams of we still to gram X from say looking and to

of it case of caused higher little but was project the look, see of seems a a to we and So, thousand really handful reason. and ounces, track expect to a for the Yes, QX, really, it’s year stopes couple miss. -- slight be that some for a that Yaramoko seem different to QX

trend to that appears yes, So, continue.

of a -- next I X-gram of for we’ve end noted of last think what seen range. grade have for tear curve the reserves the general, ton start year, in it and for we what the plan per is flatter and that this the XXXX in

path continue more general question Okay. on was There just one And about a I of a at kind then, to contracts. Séguéla. I talk construction had think was items, of to few finalize the which critical

there You have else is about? or the you the I the plant. already contract. still are Was mining that’s a last the contract maximum to big know price of finalize really And EPC for anything there, it mining think waiting to kind just in one contract

Yes.

on package in contract components the front of key You are that right to schedule. all And [Indiscernible] mining path advanced also track QX component, several production the EPC well, early mill. that the on-track are there, on agreement The in little be bit and if SAG the critical within which for project schedule, in late a executed are the that. is not and is is item QX, Trevor. front. The guess I due there we fact the

track rate is better. not bit a as So, advance today, good on and if sit we’re we

Great.

at all progress had. Séguéla. good you. continued I Thank seeing to forward look Yes, Okay. But, that’s

Trevor. Thanks,

is coming Don your from then your Your pose next question for today announce question. Please DeMarco. affiliation,

Thank you, operator.

see last pour million ramping over there midyear $XXX financials before a about after. clear is the CapEx spent be that I CapEx to first the million those could on are you XXXX? year. be we Paul. up million. I’m in National Financial. for maybe that of Adding wondering that together should My was $XX just And and about quarter confirm maybe Jorge question order implies which is Bank there’s XXXX, So, maybe first XXXX, and $XX Don I in modeling The is million, in maybe what Séguéla. million to about us my the name on was with And Hi, $XX DeMarco spent $XXX takes and if

is right? in would numbers tailing should So, Do we those the we model that XXXX as off -- CapEx suggest?

Yes.

correct, one you Yes. is Let It That here. should me off described. like take be just Don. that tailing

is that CapEx inflation, pressure, total comfortable on XXX the preliminary might CapEx estimate, be any there this are And some indications still you at that facing or with point?

have of early the the were that of that At inflation piece. the critical time risk made for we’re time is -- very of the sort The agreements bits on placed subject of nature Don, equipment are in all being, the comfortable. to

that really risk we table. inflation off And had -- turn so, that the

what -- ongoing But it, access lot it’s is and end that year, I again, think risk, terms to to also it. paid we access committed of an to of probably a area in freight, last of project. price and choose the the we I’m a for toward if that -- of and freight freight the premium secured

example, I’ll which So, you at moment are transformers copper the that the ahead at things project, made couple weeks kV and XXX schedule. of and the of moment the an of HP -- actually pressure are give for out a are

happening holding So, at we’re line for okay. we’re of going I’m but but the mindful the moment, out what’s we moment there, down, the

going decision in the to increased the that of CapEx was I result bear that that in of published ascertain range team with year trying the would team public -- -- feasibility we the we a as -- And it’s items. $XX we And pressures figures to earlier can key what XXXX. smart as in that XXXX. decision, our the we Paul of reasonable with the million that effort of the we far No And we that the were expect. in And we to much study the are the to respect good, agreement time. some those with before early best update considerations CapEx. to feeling a last in could structure in the million And the inflation was September so that -- something exercise $XX the has inflationary safeguard that study time we lock published revision went and on in through add described, those and before of in of type like that that like the are better construction have year, to again, figure, mind a to late as announced and figure, we did closely. trying the monitor against to with construction at early been added

above Okay. Thank success? Yaramoko. asset? see longer-term you recently Yaramoko? update Can We norms. was one some reserves, is resource what reversion XXXX lower for for in for is the we exploration We strategy Or What for hope CapEx that additional last the see on on with Jorge. AISC, lower on this we for hope the week, historical should guidance maybe And to Paul, cost question reserves. that XXXX the there depletion

hopes think similar my I yours. Well, are as

that the of which substantial. say let’s currently inverted at is program, of testing drilling some I the in executing think the some areas, deep are we depth fact open and

simple access to can you platforms As just is a the appreciate get that progress getting drilling ability issue. to

current I’m in sorry. towards up be drilling the that end next, wrapped the of is year. quarter underway. the and It So, continued will

do responded. drilling has if So, into, -- you has spacing generally over -- it continued to deposit like this

get little So that, visibility we’ll more a yes, that quarter this important us bit in you, hear that coming too. I on line for and to mine see is the program

decreases Lindero. Séguéla me. luck development with you. for at Thank Okay. all at That’s Good cost and continued

[Operator Instructions]

of would benefit share just I audience. the here to comment Operator, a for the like

morning, lost heading That here. saying For Stock when $XX market our posted corrected earned around results, no Time. reality, first million Watch year-end of in hours erroneous of Fortuna $XX we an XXXX, that this in at million, the trading was mid-morning Eastern losses

mishap because looking idiot that wanted do right? to are we Watch So, to So, just this think and share I the with was that into this, unfortunate who Stock morning. I this

Instructions] [Operator

to joining Thank today’s to you, us good day. questions, I look no next would quarter. further forward everyone a earnings Holly. for call. If to We Have you listening are thank there like

conclude Thank does and you. event. gentlemen, Ladies this today’s

participation. this You may day. Thank disconnect your time phone you at for lines have and a your wonderful