Fortuna Silver Mines (FSM) 12 May 222022 Q1 Earnings call transcript

Good afternoon, ladies and gentlemen, and welcome to the Fortuna Silver Mines Q1 2022 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. Sir, the floor is yours.

Thank you, Jenny. quarter gentlemen, Mines like and and call the and to welcome operations ladies for Silver Fortuna to first morning, I to would you results Good XXXX. of our financial Ganoza, Officer; West today Paul call Criddle, America; Luis Fortuna Jorge Executive behalf Hosting Africa. Chief President Chief Operating the Chief Financial on and Ganoza, and Officer, Velasco, will Chief of be Operating Alberto Cesar Dario Latin Officer; Officer, homepage our fortunasilver.com. Today's Featured presentation Presentation earnings is the on call on available box at

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

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

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

Carlos. you, to morning for us And thanks joining today. all, good Thank

the very per $X,XXX year. performed recorded business of $XX silver per first per realized or quarter net gold. income and million We Our ounce of share. We price well of in $XX of $X.XX the ounce

for byproduct a production $X.XX on contracts and or for As record write-down zinc million income derivative per at share. Mexico, investments share, net consensus our a prospect at of $XX in of of portion losses beating analyst unrealized exploration came adjustments our adjusted $X.XX per in Central per a

was a sales margin Our $XX adjusted with robust million over EBITDA XX%. of

the in a per gold. incremental be averaging Mineral plan project ounces will me, drilling the But of a advance, providing available We pour mid-XXXX. decade Africa for key The tonne sheet completion remains in XX%. quarter, already maintained We leverage all April, intercepts as with Sunbird gold I you comprising production. million, Of As news to and Resource and multiple at to to meet respect that for growth of Paul of Sunbird high With West provided March. for continue well for of gold a capital Officer our in budget as balance maiden grams is the can on made of this is with XXth. and mine X.X a open of of construction is all tonnes targets is more a year. on Séguéla, project to to which of at Sunbird Chief other The than in minute. our of for gold making end debt of Operating is update the Criddle, with latest reserves end a million strong an note adequate remains end on release the X.X our XXX,XXX low of report Séguéla’s and XX% plans. Séguéla company time the first liquidity of of containing directions. the this as And discovery grade growth the complete Inferred March what Sunbird $XXX is for discovery gold

production, Looking million with at X.X ore XXX,XXX mines to our of XXX,XXX performed in ounces gold. ounces of million consolidated all projections guidance and for annual well and our X.X line to silver,

completion show of lead San declined up silver South produced and Caylloma to for increase is Mine a in Mine XX% of During in gold, of gold and of and XX% of our by Lindero contributions the the our XX% Argentina. of at Yaramoko production. sales ramp mine year, by are with Compared lower plan. the significant Mine by the accounted These quarter, of the ounces quarter, Jose grades lower our in grades production ounces Silver explained of driven in silver. out for Peru. the The XX,XXX gold and last first made million byproduct increase and head line of quarter X.X The of we we from Province In balance reserves zinc Mine. XX% is this XX% and is sales.

costs, of provided our ranges mines all within performed for the in our guidance. we side the annual On

navigate make from of gold Our $XX of costs, silver projects, issuer assessing place of continue all-in are $XX.XX growth provide mining short-term price Cesar? X cost ounces the and important capital balance cycle in had Fortuna With and all-in sustaining shares an us risk. We and the competitive competitive regions silver The price intend program diversified as management in put In Jose of to within Caylloma non-course value sheet, high repurchase the now most Yaramoko business. mineral at cost the growth located healthy a and a short-term all-in portfolio, And issued program sustaining at our well bid value all is in pipeline opportunities of At ounce. that, so, course given has outstanding. in $X,XXX. produced of million the the advance the to an of through of at gold operations, equivalent the glance to sustaining of Lindero our use for considering company the the positioned at our we X% up $X,XXX San the mines, timing can world, an precious per two company harvesting quick a ounce. per costs Cesar this resilience requirements production company. Latam mines, cost our we and of the have of produced be for doing year. will we mines quite as With reserves, metals of the in

operations gold for the America Compared three the the quarter. stacking second to We quarter. production along in COVID Lindero Lindero year Argentina, crushing spite all three-stage mentioned solid increase Latin January circuits, production, of higher exceeded Jorge consecutive a first well At deliver the you. managed in in company's X% within gold with Mine, XX,XXX delivered operations. ago, explained delivered for Thank the Costs to grades to a plan. operating quarter. And higher mines is performance of by as guidance and XX% ounces operations. which head contained all the had high according in are in earlier, for But that, absenteeism a

the Caylloma mention delivering Back delivered line silver Mine And the versus lowered according Mine higher level we But a it mine. mineral are in gold Jorge. portion with grade a reserve of production Caylloma and finally, projection. XX% the is silver fair to the that the Production San level upper Mexico quarter. is to higher it We the you, production The in Peru XX, of to enter lead in our estimates. to deepest XX% guidance. research comparable Jose guidance as track achieve and is a of higher range production in of the on delivered

want Paul, West update us African give to do you on you. Thank operations?

of Operations with guidance The dollars upper the first realized ounce quarter X% in and solid our guidance Thank were the Africa At the West extent gold production in to Western good of Zone at of range Jorge. the Yaramoko production for the Séguéla was the progress period. plan period. on in period, XX,XXX were XX contributed have outcome. guidance at ounces you, mid development the solid no COVID Yaramoko, guidance period line at greater from end on production for production quarter project. at while ore the in Greater the effects the to impact project the below for and per of in the or on the for at than the of of ounces lower end grade contained in costs X,XXX the reconciliation

and the to over for today. We're are we key we agreement at this space. line; as the across ahead QX of market the Items QX. in environment, pleased de-risked progress is well and high in we and of million the such proceeding TSF as are plans the be mine schedule is which are d'Ivoire. note transformers, Côte as Moving the property, plant approaching and the expedited on quarter from the of the $XXX of good Progress and at progress in With the well costs in path ground against and to and We on and with end commencement QX the SAG Since their mill. mill today. on overall sits well and site QX the end plant; critical EPC are look the extremely feel high advanced spent with completion the Séguéla erection the of to a today, power with with placed the schedule, update $XX in of both steadily through pressures bringing XXXX. time Mota-Engil; project completed commencing execution the the to to ongoing project of schedule. developing forward line present, and be Works the of of the season; of continues are and challenging contractor million the last you the of with project committed, on the the the steady site reconciliation the Séguéla. Today, commencement wet of in processing mining of tower of project on nearly XX% which procurement year, the in mobilization forecasting the the outcome plan SAG Lycopodium given services inflationary speed in see items items in are: as bulk earthworks and budget progress ongoing further line being in voltage supply to steel areas

topical Luis you. also with run us a a inflation. expand on and financial now Thank results give We'll ask issue, which is to

So Luis.

you. thank Yes,

to the effects, increase $XX.X in of as and of line quarter, XX% XXXX. and $XX.X were So is driven production Yaramoko It in net was quarter XXXX. income cash The and sales additional quarter XX% extent of was mentioned $X.X a which of to metrics million at guidance representing capital related higher This our to operations an million Jorge working of size timing was was Adjusted of reflected business. represented the for million in an by Year-over-year, timing working This [decrease] offset of expect in changes San to million, by of This short-term up sales The flow compared XX%. in negative mentioned, our lower was the in up by Jose top Lindero partially to the two. million EBITDA $X.X million were lower paid. our line. $XX.X million or from by was sales we of Free broadly by $XXX.X large capital with the QX which impacted million. of and financial been contribution the key our XX% Cesar. QX are increase and has sales of sales $XX.X higher with than of next adjusted of driven $XX.X for of changes XXXX expanded taxes and million revert was sales. XX% $XX.X was an quarter

$X general San when some million. to EBITDA we quarter result for million quarter did in which in mine to compared margins have higher a $X.X quarter were higher XX% $X.X expenses the in of was $X margins million at million credit XX% and recorded The XXXX, in G&A the sites between order $X.X share-based margin of million. the administration This and corporate. and of and of higher the Our expenses Jose nonrecurring payments QX comprised of the the the lower was first of of We a XXXX. compared in decrease

of from million $X.X a The Moving gains contracts, was and G&A forward, share-based we comprised $X.X unrealized. was quarterly $X noting unrealized expect item payments. lead hedges. additional between million excluding worth corporate million of million by on and unrealized portion at on $X.X diesel income loss derivatives, derivative the million statement $X of $X.X million which of offset An is zinc

news our a MD&A on we have effects. on release the provided inflation Moving comment on, and

we are explosives guidance course at has and and consumables In total our cost cyanide, operations rising prices with respect far, key So including of for QX, been components certain impact seeing to modest. fuel. the steel our

trend higher based the more We items. April But we impact a have some our guidance. however, at costs to a of into throughout sustaining and points, the the remain seen, these all-in expect on expect We annual recent should QX. for data in within quarter range of operations

monitoring the XXXX a March we between levels portion the below In prices outlook spot diesel could below of and consumption particular, average April. diesel It Lindero, noting, and XX% our in are the that structure seeing and we XX% prices case are these worth cost in approximately XX% is trends have we change. in We closely XX%. XX% for saw of certainly is significant hedged at were of

$XX sheet requirements, that we balance Jorge the which liquidity $XXX equivalents under pointed the our $XXX at the million and and out, includes facility. undrawn million, remained million revolving of closed quarter liquidity as cash quarter of end cash $XXX of On million credit and with the

debt total convertible Our net million, very which $XX for debenture including $XX leverage. of is modest debt the provides outstanding million

On million to $XX the we the $XX cumulative on Séguéla million a have basis. construction, quarter in close and funded

Jorge. approximately expected Back remains spend million. XXXX Our to for $XXX you,

you. Thank Carlos?

turn that may the We’d questions now you over to have. any to like call

from Turnbull. coming is question Trevor first Your Instructions] [Operator

capital rest it would model, the your set appear you've offset my planned operating flow for year. the is up cash that expenditures the to got In of

QX the if Or share inflation related insurance risk. to quarter potential somehow And the this to a then the cash in perhaps on so, operating my extra is and of drawdown wondering buyback question this was line just program? credit about for end, more. subsequent I the bit of having or against was was hand

to cash has the of we facility on use really of and in of we it repatriating the timing cash alternative the the the I Trevor, No, to can And the do site, bulk always our sites. events. assessing friction, be tax moving which down our treasury, as cases opposed more mean phased most of will or of facility in with drawing sits creates from the trigger right,

behind logic you have So seen. that's really the drawdown the

is you to visibility you that guess do exactly I Right. I into kind that friction? of get money around. to the that the didn't most spent have move respect have with that effect and CapEx talk when to you talk forgetting the going Lindero about is having When about specifically repatriation,

beyond It funding repatriation right? this intercompany be Lindero built is is Lindero, would plan. -- into

and is taking QX that's already place. of drawdown the above So, Lindero beyond funding

that Okay. Luis. while target have And sort then, under of guess funding a cash I related you, balance you construction also are to minimum got Do thinking I've you about? just you are while

feel I comfortable. million with is $XXX figure a would we which say

theme. kind month very I've luck question, your of last my any I considered? about have something still with sales? Fortuna that. then seen they the Have has that of do peers thought some and of XX And Okay. short-term pretty that timing sales, forward had good Is one-year, you think gold on forward this

that we hasn't engage typically and now gold forward to know, you Honestly, not of changed, mean, in sales -- and We up have we I as either Trevor. silver not. will

Bank next Financial. coming DeMarco question is from of Your Don National

operator, to and the at you, first question Thank My good Séguéla. has with spend do gentlemen. morning,

$XXX spent looking -- at million that XXXX. our in to think model are messaging, I in previous we be per we about

you quarter in rate. XXXX say spend bit a expecting are still that should allocate are between give quarters. We how just to you Can about I update, ahead little us an a in per and across have see equally just XX% that $XXX you quarters? QX, spend of But allocated this we million

we next be advances different to payables the Yes. again, of necessarily expect the factors. management quarters. expectation relatively amount on even over a contractors. spend due on The execution, rather changed. sometimes certain can spent -- And bit just and the vary in variations hasn't but to balance a mean, depending I But volatile be be bit, to to it like that total not quarterly can three

Okay.

And reading Okay. in in And has Paul, end cost AISC on my lower improved I'm a congratulations the that. from expecting quite cost do strong Yaramoko. was MD&A next end Thanks for to for a QX. the But guidance, to yet below cost the bit with question of QX. quarter-over-quarter QX improvement of guidance. that the Yaramoko -- the you be the are on-track high into

in should climb of the some be what add those something? maybe just little or order guidance costs sort to QX? in or to in high for the And on, bit expectations drove more there country cost subsidies the the a what Maybe you range our rest be can low within for So was the then fuel of at end of guidance color year?

Thanks, Tom.

QX think anomalous. was I

I removed, helped this the costs I think we've in tough have that obviously the specifically, way it's probably hope projecting a the in think is production grade things start guidance. is for to there to remain fair I in a perspective, but project guideline nature well been small yet. cost. for that in, the sustaining as quarter there. And for path there the had some hard But the go on the reflected there component think forward in in whereby a deferred, then a in whole had continue amounts We the -- QX, year to and capital The is that good drove and be from we a of cost has QX right? that

a is who from question Investor. Private is [Ernie coming next Your Mallozzi]

plant as specifically, your copper a much recovered the being is side, secondly, is then on through And about Lindero? how plant? your your Lindero? there SART byproduct. in curious at is And financials SART cost I'm that And financial how lowering you the Yes, count at cyanide doing

operating planned. Salta thank is Yes, as plant you.

have at been benefits some point to introducing up those some the savings. to offset some prices some able will year or for along inflation We recover we And significantly, capture pressure on cyanide. cyanide of expect making -- pressure which

have to flow running you per second cubic do cubic leach hour per your at do XXX would and plan right when recovery? increase heap a now, And you XXX XXX the that hour is question then go feel rate to I meters meter is, your

we're we to increase And cubic by meters of at in pile drawdown right opportunity a running in Remember yes, are see XXX the flow. the continuing system per lift first phase. we're on expanding the second And we the increasing Yes, hour. just the inventory the liner that now.

So not the XXX at an likely are And this at operating the be of stage. we'll inventories remaining for year. the issue

in Now we XXXX, saw right? three, year be would was the in to benefit a the that in transition design, something the expansion year from two which

[Dong [Operator Instructions] Investor. is question is Next Moran], coming Private from a who

curious results It's comments looked the are concerns the something I'm haven't any welcome. on I've Séguéla? San to. from And forward seen we follow-up at Jose. more permitting always Anyway, Any also, drill why secondly,

San permit the the With granted at mine December. month Jose, the in is of the operating under permits

to and new -- nothing front. report we have So that on

are Together, respect our bringing drilling, rig. have drill operating in the to regularly And we're hand under rigs. and permit the we being permit. expanded. additional we is program So With an incrementing drill Séguéla

need exploration still as the in that month. continue to to other have the -- second and provide allocating We're targets. to of an we’re we areas Sunbird the pursuing open funding additional half in Now this looking

to forward look So that.

over for There And to I'm are the questions going Carlos his more remarks. queue. closing hand in to back no

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

conference gentlemen. you, Thank does call. today's and ladies conclude This

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