Fortuna Reports Results for the Fourth Quarter and Full Year 2023
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
3 Gold equivalent production includes gold, silver, lead and zinc and is calculated using the following metal prices: $1,802/oz Au, $21.75/oz Ag, $2,161/t Pb and $3,468/t Zn or Au:Ag = 1:82.89, Au:Pb = 1:0.83, Au:Zn =
1:0.52
Fortuna | 1
Fortuna Reports Results for the Fourth Quarter and Full Year 2023
(All amounts expressed in US dollars, tabular amounts in millions, unless otherwise stated)
Vancouver, March 6, 202 4: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (“Fortuna” or the “Company”) today
reported its financial and operating results for the fourth quarter and full year 2023.
Fourth Quarter and Full Year 2023 highlights
Financial
• Attributable net loss for the quarter of $92.3 million or $0.30 per share after non -cash impairment charges of
$90.6 million in Q4 2023, totaling an attributable net loss of $50.8 million for the full year 2023
• Attributable adjusted net income1 of $20.6 million or $0.07 per share in Q4 2023, totaling $64.9 million, or $0.22
per share for the full year 2023
• Net cash generated by operations for the quarter was $105.1 million or $0.36 per share in Q4 2023, totaling
$296.3 million or $ 1.0 per share for the full year 2023
• Free cash flow from ongoing operations1 of $66.2 million in Q4 2023; totaling $153.5 million for the full year 2023
• The Company repaid $41.0 million of its corporate credit facility in the fourth quarter and the total net debt 1 at
year end stands at $83.0 million. An additional payment of $25.0 million was made subsequent to year end.
• Liquidity as at December 31, 2023 was $213.1 million
Operational
• Record gold equivalent production of 136,154 ounces3 in Q4 2023 and record annual gold equivalent production
of 452,389 ounces3; representing increases of 6 and 13 percent compared to the respective periods in 2022
• Record gold production of 107,376 ounces in Q4 2023 and 326,638 ounces for the full year 2023
• Silver production of 1,354,003 ounces in Q4 2023 and 5,883,691 ounces for the full year 2023
• Consolidated cash cost per gold equivalent ounce1 of $840 in Q4 2023 and $874 for the full year 2023
• Consolidated AISC per gold equivalent ounce1 of $1,509 for Q4 2023 and $1,508 for the full year 2023
• Continuous trend of improvement in annual safety performance across the business with a Total Recordable Injury
Frequency Rate (TRIFR) of 1.22, and a Lost Time Injury Frequency Rate (LTIFR) of 0.36, compared to 2.32 and 0.39
in 2022
Growth and Development
• During the fourth quarter of 2023 the Company initiated a 45,000 -meter drill program at its newly acquired
Diamba Sud project in Senegal. Subject to results the Company plans to produce a Preliminary Economic
Assessment by the end of 2024
• At the end of December 2023, the Séguéla Mine processing facility was performing 2 6% above name plate
capacity. For 2024 management has identified opportunities to further optimize and debottleneck throughput.
Jorge A. Ganoza, President and CEO, commented, “In the fourth quarter Fortuna delivered strong free cash -flow from
ongoing operations of $65 million compared to $70 million in the third quarter. The Company also achieved record gold
equivalent production of 136,154 ounces and record sales of $265.3 million, representing increases of 6% and 9%
respectively compared to Q3.” Mr. Ganoza added, “Fourth quarter net earnings were impacted by non-cash write-downs
and the remaining short life of reserves at San Jos e, where we have recorded a non -cash impairment charge of $90.6
NEWS RELEASE
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million. At San Jos e our exploration continues pursuing the discovery of new resources with the aim of extending
production beyond 2024.”
Mr. Ganoza continued, “Fortuna had a strong close to 2023, with record annual gold production exceeding guidance and
silver falling short by 7%. Gold equivalent production increased 13% to a record 452,389 gold equivalent ounces compared
to 2022, and we have guided further growth in 2024. Record annual sales of $842.4 million were 24% above 2022. All our
mines met or improved site AISC guidance for the year with the only exception being the San Jose Mine, which is operating
on the tail end of reserves and had to contest with an illegal blockade at the beginning of the year.
Mr. Ganoza concluded, “For 2024 our capital allocation priorities continue to be centered on providing maximum balance
sheet flexibility through further debt reduction, and funding of aggressive organic growth programs with approximately
200,000 meters of exploration drilling planned across the portfolio. The Diamba Sud project in Senegal and the Séguéla
Mine in Côte d´Ivoire are priorities for our exploration programs during the year.”
Fourth Quarter 2023 and Full Year 2023 Consolidated Results
Three months ended December 31, Years ended December 31,
(Expressed in millions) 2023 2022 % Change 2023 2022 % Change
Sales 265.3 164.7 61% 842.4 681.5 24%
Mine operating income 51.9 26.0 100% 190.0 146.8 29%
Operating loss (77.4) (173.1) 55% (0.4) (113.6) 100%
Attributable net loss (92.3) (152.8) 40% (50.8) (128.1) 60%
Attributable loss per share - basic (0.30) (0.52) 43% (0.17) (0.44) 61%
Adjusted attributable net income1 20.6 6.4 222% 64.9 41.4 57%
Adjusted EBITDA1 120.3 55.8 116% 335.1 245.5 36%
Net cash provided by operating activities 105.1 49.6 112% 296.9 194.2 53%
Free cash flow from ongoing operations1 66.2 4.4 1,405% 153.5 69.2 122%
Production cash cost ($/oz Au Eq) 840 873 (4%) 874 849 3%
All-in sustaining cash cost ($/oz Au Eq) 1,509 1,579 (4%) 1,508 1,431 5%
Capital expenditures2
Sustaining 46.8 33.9 38% 136.1 98.1 39%
Non-sustaining3 1.8 (2.3) 178% 5.2 8.2 (37%)
Séguéla construction - 23.5 (100%) 50.0 107.7 (54%)
Brownfields 5.5 6.5 (15%) 16.1 23.3 (31%)
As at December 31, 2023 December 31, 2022 % Change
Cash and cash equivalents 128.1 80.5 59%
Net liquidity position (excluding letters of credit) 213.1 150.5 42%
Shareholder's equity attributable to Fortuna shareholders 1,238.4 1,244.8 (1%)
1 Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at
www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis
3 Non-sustaining expenditures include greenfields exploration
Figures may not add due to rounding
Fourth Quarter 2023 Results
Attributable Net Loss and Adjusted Net Income
Attributable net loss for the period was $92.3 million compared to an attributable net loss of $152.8 million in Q4 2022
The loss in the quarter is explained by the following items:
• An impairment charge of $90.6 million related to the anticipated closure of the San Jose Mine in late 2024, as the
updated mine plan is scheduled to exhaust Mineral Reserves by the end of the year compared to mid -2025 as
previously planned
• A write-down of materials inventory of $10.1 million at the San Jose, Yaramoko and Lindero Mines
• A write-down of low-grade ore stockpiles of $5.4 million at the Lindero Mine
• A $6.4 million severance provision associated with the scheduled closure of the San Jose Mine
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• A write-down of $5.9 million related to greenfield exploration projects in Mexico and Argentina
After adjusting for impairment charges and other non-recurring items, adjusted attributable net income was $20.6 million
or $0.07 per share compared to $6.4 million or $0.02 per share in Q4 2022. The increase was primarily due to higher gold
sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla in its second
full quarter of production. This was combined with 7% higher sales at Yaramoko from higher processed head grade. This
was partially offset by lower sales at San Jose related to lower head grades consistent with the Mineral Reserve and a
reduction in mined tonnage related to operational challenges in backfilling and blasting activities. The realized gold price
was $1,990 per ounce in Q4 2023 compared to $1,737 per ounce in Q4 2022.
Other items impacting the adjusted net income for the quarter compared to Q4 2022 were higher G&A of $3.3 million,
mostly related to the addition of Séguéla G&A and timing of execution on certain corporate G&A items; higher foreign
exchange loss of $ 2.4 million primarily related to 118% devaluation of the official exchange rate in Argentina as part of
the measures taken by the new elected government to achieve a more sustainable real exchange rate in the short term;
Other expenses of $2.7 million related to administrative penalties at Yaramoko, and a higher interest expense of $4.0
million as a result of higher interest rates and $1.4 million of interest charges capitalized in Q4 2022 vs nil in Q4 2023. This
was partially offset by $12.4 million of investment income related to cross -border, Argentine pesos denominated bond
trades.
Depreciation and Depletion
Depreciation and depletion increased $27.1 million to $71.6 million in the fourth quarter of 2023 compared to $44.5
million in the comparable period of 2022. The increase was primarily due to an increase in ounces sold as well as higher
depletion per ounce at Séguéla due to the depletion of the purchase price allocation from the Roxgold acquisition of $17.1
million.
Adjusted EBITDA and Cash Flow
Adjusted EBITDA for the quarter was $120.3 million, a margin of 45% over sales, compared to $55.8 million and margin
over sales of 34%, reported in the same period in 2022. The main driver for the increase in EBITDA was the contribution
from Séguéla with EBITDA margin of 73% in Q4 2023, combined with higher EBITDA from Yaramoko related to higher gold
output. In addition, adjusted EBITDA reflects the positive impact from the inclusion of $12.4 million of investment income
at our Argentine operations. The trade associated with the investment income was a one-off event executed under a time
limited waiver granted by the government of Argentina in Q4 to allow exporters a partial recovery of economic losses
incurred from the accumulated lag of the nominal exchange rate with respect to inflation.
Net cash generated by operations for the quarter was $105.1 million or $0. 34 per share compared to $49.6 million or
$0.17 per share in Q4 2022. The increase of $54.8 million reflects higher EBITDA of $61.8 million.
Free cash flow from ongoing operations for the quarter was $66.2 million compared to $4.4 million in Q4 202 2. The
increase reflects higher net cash generated by operations.
Cash cost per ounce and AISC
Cash cost per gold equivalent ounce was $840, a decrease from the $873 reported in Q4 2022 as the contribution of lower
cost ounces from Séguéla in Q4 2023 was offset by partially offset by higher cost per ounce at San Jose, which increased
by over 64% due to lower production and higher costs year over year. This combined with higher cost per gold o unce at
Lindero and Yaramoko of $120 and $131 respectively associated with lower head grades at Lindero and higher costs in Q4
2023 at Yaramoko. AISC per gold equivalent ounce wa s $1,509 in Q4, slightly below the $1,579 recorded the prior year
due to lower capex on a per ounce basis, partially offset by higher royalties related to the higher realized gold price.
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Full Year 2023 Results
Attributable Net Loss and Adjusted Net Income
Attributable net loss for the year was $50.8 million, compared to an attributable net loss of $128.1 million in 2022. The
loss in 2023 is explained by impairment charges of $90.6 million at the San Jose Mine explained above.
After adjusting for impairment charges and other non -recurring items, attributable adjusted net income for 2023 was
$64.9 million or $0.22 per share, compared to $41.4 million or $0.14 per share in 2022. The increase was primarily due to
higher gold sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla
in the second half of the year upon successful commissioning and ramp -up in Q2 2023, and higher sal es volume at
Yaramoko explained by higher processed he ad grades in 2023. This was partially offset by lower production at Lindero,
aligned with the grade profile in the mine plan, and lower head grades and processed ore at San Jose, explained by
declining head grades in reserves and the impact of the 15 day m ine stoppage in Q2 and related lingering operational
challenges during the year. The realized gold price was $1,948 per ounce in 2023 compared to $1,802 per ounce in 2022.
Other items impacting the adjusted net income compared to 2022 were higher G&A of $2.7 million, mostly related to the
addition of Séguéla G&A; higher foreign exchange loss of $4.6 million mostly related to the devaluation of the Argentine
peso as described above; higher other expenses of $9.7 million related to $3.5 million of stand-by charges at San Jose and
Yaramoko in Q2 2023, $2.8 million related to a new agreement with the worker´s union at San Jose in Q2 2023, and $3.7
million of administrative penalties at Yaramoko payable to the Ministry of Mines recorded in Q2 and Q4 2023, and a higher
interest expense of $ 7.5 million as a result of an increased debt balance outstanding, higher interest rates and
discontinued capitalized interest charges in the second half of the year . This was partially offset by $12.4 million of
investment income related to cross-border, Argentine pesos denominated bond trades.
Depreciation and Depletion
Depreciation and depletion for 2023 increased $46.8 million to $219.7 million compared to $172.8 million in 2022. The
increase was primarily due an increase in ounces sold, the start of depletion at Séguéla, including $25.3 million related to
the purchase price allocation from Roxgold, and higher depletion at Yaramoko due to declining reserves which increased
the depletion rate of new capital additions underground.
Adjusted EBITDA and Free Cash Flow
Adjusted EBITDA for the year was $335.1 million, a margin of 40% over sales, compared to $245.5 million reported in 2022,
representing a margin of 36% over sales. The main drivers for the increase were the contribution of Séguéla with EBITDA
margin of 69%, and higher production and improved margins at Yaramoko. In addition, adjusted EBITDA reflects the
positive impact from the inclusion of $12.4 million of investment income at our Argentine operations as described above.
Net cash generated by operations for 2023 was $296.9 million or $1.00 per share compared to $194.2 million or $0.67 per
share in 2022. The increase of $102.7 million is explained by higher EBITDA of $89.6 million combined with lower income
tax paid of $16.3 million in 2023 primarily due to lower taxes paid at the San Jose Mine, no taxes paid at the Séguéla Mine
in 2023 and higher repatriation withholding taxes incurred in 2022.
Free cash flow from ongoing operations for 2023 was $153.5 million compared to $69.2 million in 2022. The increase of
$84.3 million reflects higher net cash generated by operations, partially offset by higher sustaining capital expenditures,
including brownfields explorations. Sustaining capital expenditures on a cash basis increased by $27.6 million to $143.6
million explained by higher CAPEX at Lindero related to the leach -pad expansion and capex incurred at Séguéla in the
second half of 2023.
Cash cost per ounce and AISC
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Cash cost per equivalent gold ounce was $874, slightly above the $849 reported in 2022 as the contribution of lower cost
ounces from Séguéla in the second half of 2023 was offset by higher cost per gold ounce at Lindero of $182 related mainly
to lower planned head grades in 2023, and higher cost per equivalent gold ounce at San Jose of $379 explained primarily
by lower processed ore and lower head grades.
AISC per ounce of gold equivalent of $1 ,508 in 2023 was $77 above the $ 1,431 recorded the prior year due mainly to
higher cash cost per gold equivalent ounce and higher capex at Lindero related to the leach pad expansion.
Liquidity
Total liquidity available to the Company as at December 31, 2023 was $213.1 million, comprised of $128.1 million of cash
and cash equivalents and $85.0 million undrawn (excluding letters of credit) on the Company’s revolving $2 50.0 million
credit facility. Total net debt as of the end of the quarter was $83.2 million.
Subsequent to the year end the Company paid down an additional $25.0 million on its corporate credit facility, taking the
outstanding debt amount to $140.0 million.
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Lindero Mine, Argentina
Three months ended December 31, Years ended December 31,
2023 2022 2023 2022
Mine Production
Tonnes placed on the leach pad 1,556,000 1,334,509 6,005,049 5,498,064
Gold
Grade (g/t) 0.63 0.80 0.64 0.81
Production (oz) 29,591 29,301 101,238 118,418
Metal sold (oz) 29,308 27,847 103,503 117,076
Realized price ($/oz) 1,993 1,732 1,942 1,803
Unit Costs
Cash cost ($/oz Au)1 934 814 920 739
All-in sustaining cash cost ($/oz Au)1 1,557 1,219 1,565 1,140
Capital Expenditures ($000's) 2
Sustaining 10,607 3,973 39,358 18,035
Sustaining leases 598 567 2,393 2,398
Non-sustaining 1,302 – 1,978 169
Brownfields – 184 – 1,288
1 Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying
the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.
In the fourth quarter of 2023, a total of 1,556,000 tonnes of ore were placed on the heap leach pad, with an average gold
grade of 0.63 g/t, containing an estimated 31,665 ounces of gold. Gold production for Q4 2023 totaled 29,591 ounces.
This represents a 1% increase in total ounces, from the previous quarter. Gold production was comprised of 24,977 ounces
in doré bars, 4,443 ounces of gold contained in fine carbon, and 171 ounces contained in copper concentrate. Ore mined
was 2.1 million tonnes, with a stripping ratio of 0.6:1. The stripping ratio in the fourth quarter was 45 percent lower than
the third quarter of 2023.
For the full year 2023 gold production totaled 101,238 ounces, achieving midpoint of annual production guidance. Gold
production comprised of 94,905 ounces in doré bars, 6,015 ounces in gold contained in fine carbon, and 319 ounces
contained in copper concentrate. The stripping ratio for 2023 was 1.14:1, aligned with the mining plan for the year.
The cash cost per ounce of gold for the quarter ending December 31, 2023, was $93 4 compared to $81 4 in the same
period of 2022. For the year ending December 31, 2023, the cash cost per ounce was $920, an increase from $739 in 2022.
The increase in cash cost per ounce of gold for both the quarter and for the full year was primarily due to lower processed
gold grades in accordance with the mine plan.
The all-in sustaining cash cost per gold ounce sold during Q4 2023 was $1,5 57, up from $1,219 in the fourth quarter of
2022. For the full year of 2023, the all-in sustaining cash cost was $1,565, compared to $1,140 in 2022. The increase both
for the quarter and the year was driven by higher cash costs, along with increased sustaining capital expenditures related
to the leach pad expansion. This was partially mitigated by higher copper by-product credits.
As of December 31, 2023, the leach pad expansion project is approximately 23 % complete. Mobilization of the civil
contractor’s personnel and equipment has advanced with earth moving activities having commenced in January. Deliveries
of geomembrane and geosynthetic clay liner are on -track, with the remaining materials expected to ar rive on site in the
first quarter of 2024. The leach pad expansion remains on schedule for completion during the second half of 2024.
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Yaramoko Mine, Burkina Faso
Three months ended December 31, Years ended December 31,
2023 2022 2023 2022
Mine Production
Tonnes milled 110,445 142,694 531,579 546,651
Gold
Grade (g/t) 7.16 6.45 6.81 6.37
Recovery (%) 98 98 98 98
Production (oz) 28,235 26,190 117,711 106,108
Metal sold (oz) 28,229 26,250 117,676 107,433
Realized price ($/oz) 1,984 1,742 1,945 1,802
Unit Costs
Cash cost ($/oz Au)1 949 818 809 840
All-in sustaining cash cost ($/oz Au)1 1,720 1,829 1,499 1,529
Capital Expenditures ($000's) 2
Sustaining 12,620 18,994 49,938 45,665
Sustaining leases 1,077 1,419 4,758 5,692
Brownfields 1,261 2,855 4,917 5,873
1 Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the
Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.
The Yaramoko Mine produced 28,235 ounces of gold in the fourth quarter of 2023 with an average gold head grade of
7.16 g/t, 8% and 11% increases when compared to the same period in 2022. Higher production was due to higher grades
partially offset by lower mill throughput in the fourth quarter and a planned maintenance shutdown in December.
Gold production in 2023 totaled 117,711 ounces, achieving the higher end of the annual guidance range.
The cash cost per ounce of gold sold for the quarter ended December 31, 2023, was $949 compared to $818 in the same
period in 2022. The increase for the quarter is mainly attributed to higher mining costs, particularly due to equipment,
energy, and overhea d expenses, but was partially offset by higher gold production. For the year ending December 31,
2023, the cash cost per ounce of gold sold was $809, a decrease from $840 in 2022. The full year decrease is mainly due
to increased production and lower mining costs during prior quarters.
The all-in sustaining cash cost per gold ounce sold was $1,720 for the quarter ended December 31, 2023, compared to
$1,829 in the same period of 2022. The change in the quarter was primarily due to the increased cash cost described
above, increased royalties and an administrative penalty in Q4, offset by reduced capital expenditures. For the full year,
the all -in sustaining cash cost per gold ounces sold was $1,499 in 2023, compared to $1,529 in 2022. The increased
royalties and administrative penalty costs in Q4 2023 were offset by increased production and decreased costs earlier in
the year.
Exploration and grade control drilling success in conjunction with underground development extended mineralization on
the western side of the Zone 55 mineralized structure. This provided additional mining areas which demonstrated wider
and higher-grade extensions of mineralization within and beyond the existing resource boundary.
Fortuna | 8
Séguéla Mine, Côte d'Ivoire
Three months ended December 31, Years ended December 31,
2023 2022 2023 2022
Mine Production
Tonnes milled 387,624 - 807,617 -
Average tonnes crushed per day 4,123 - 3,282 -
Gold
Grade (g/t) 3.62 - 3.42 -
Recovery (%) 95 - 94 -
Production (oz) 43,096 - 78,617 -
Metal sold (oz) 43,018 - 78,521 -
Realized price ($/oz) 1,994 - 1,963 -
Unit Costs
Cash cost ($/oz Au)1 323 - 357 -
All-in sustaining cash cost ($/oz Au)1 737 - 760 -
Capital Expenditures ($000's) 2
Sustaining 7,765 - 10,912 -
Sustaining leases 2,285 - 5,329 -
1 Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
2 Capital expenditures are presented on a cash basis
In the fourth quarter of 2023, mined material totaled 387,624 tonnes of ore, averaging 3.62 g/t Au, and containing an
estimated 43,096 ounces of gold from the Antenna Pit. Movement of waste during the quarter totaled 2,110,209 tonnes,
for a strip ratio of 5.4:1. Séguéla produced 43,096 ounces of gold, a 37 % increase and a 5 % decrease, respectively,
compared to the third quarter of 2023. The increase in gold production is directly related to the mill achieving consistently
higher throughput, processing 387,624 tonnes, a 25% increase over the previous quarter.
Gold production in 2023 totaled 78,617 ounces, exceeding the higher end of the annual guidance range.
Reconciliation of tonnes, grade, and gold ounces mined for the fourth quarter from Antenna show a positive correlation
when compared to the long-term reserve model with 6% higher ore tonnes mined at 16% higher grades resulting in 24%
more gold ounces extracted than predicted in the model.
Process plant performance continued to improve as feed characteristics were stabilized and initial bottlenecks addressed.
Recovery in the fourth quarter increased to 94.9 %, ahead of feasibility study assumptions. Plant productivity also
continued to improve with throughput in the fourth quarter being 186 t onnes/hour, a 20 % increase on the 154
tonnes/hour nameplate capacity.
Cash cost per gold ounce sold was $3 23 for Q4 2023 and $35 7 for the full year, which was below plan and guidance,
primarily due to higher production, higher head grades, lower consumable consumption, and lower service costs.
All-in sustaining cash cost per gold ounce sold was $737 for Q4 2023 and $760 for the full year, which was below plan and
guidance, primarily due to lower cash cost and higher sales volume, partially offset by higher capital expenditures.