Fortuna reports record production and financial results for the third quarter of 2023
4 Attributable to Fortuna Shareholders
5 Excluding letters of credit
6 Au Eq includes gold, silver, lead and zinc and is calculated using the following metal prices: $1,924/oz Au, $23.70/oz Ag, $2,136/t Pb and $2,428/t Zn or Au:Ag = 1:81.19, Au:Pb = 1:0.90,
Au:Zn = 0.79 for Q3 2023, and the following metal prices: $1,975/oz Au, $24.10/oz Ag, $0.96/t Pb and $1.23/t Zn or Au:Ag = 1:81.96, Au:Pb = 1:0.93, Au:Zn = 1:0.73 for Q2 2023.
Fortuna reports record production and financial results for the third quarter of 2023
(All amounts are expressed in US dollars, tabular amounts in millions, unless otherwise stated)
Vancouver, November 8, 2023: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (“Fortuna” or the “Company”) today
reported its financial and operating results for the third quarter of 2023.
Third Quarter 2023 highlights
Financial
• Net income4 of $27.5 million or $0.09 per share, compared to $3.1 million or $0.01 per share in Q2 2023
• Adjusted net income4,1 of $29.6 million or $0.10 per share, compared to $2.5 million or $0.01 per share in Q2 2023
• Adjusted EBITDA1 of $104.6 million, compared to $44.4 million in Q2 2023
• Net cash provided by operating activities of $106.5 million and free cash flow from ongoing operations 1 of $70.0
million, compared to $44.2 million and $9.5 million, respectively, in Q2 2023
• Company paid down $40.0 million of its revolving credit facility. At the close of the quarter total net debt was
$133.4 million and the total net debt to adjusted EBITDA ratio1 was 0.5
• Liquidity as of September 30, 2023 was $162.3 million5, compared to $97.9 million at the end of Q2 2023
Operational
• Gold production of 94,821 ounces, compared to 64,348 ounces in Q2 2023
• Silver production of 1,680,751 ounces, compared to 1,262,561 ounces in Q2 2023
• Gold equivalent6 production of 128,671 ounces, compared to 93,454 ounces in Q2 2023
• Consolidated cash costs1 per ounce of gold equivalent sold of $814, compared to $968 in Q2 2023
• Consolidated all-in sustaining costs (AISC)1 per ounce of gold equivalent sold of $1,312, compared to $1,799 in Q2
2023
• Year to date Lost Time Injury Frequency Rate (LTIFR) of 0.38 and Total Recordable Injury Frequency Rate (TRIFR)
of 0.86.
Growth and Development
• The third quarter was the first full reporting period for the Séguéla Mine
• The acquisition of Chesser Resources Limited and its Diamba Sud project was completed on September 20, 2023
(Refer to the News Release dated September 20, 2023).
Jorge A. Ganoza, President and CEO, commented, “Fortuna has delivered record production and financial results for all its
key metrics driven by the first full quarter contribution of our flagship Séguéla gold mine.” Mr. Ganoza continued,
“Compared to the first half of the year, the reduction in our con solidated all-in sustaining cost to $1,312 is primarily the
result of Séguéla’s industry leading AISC of $788 per ounce, abating inflation, optimization initiatives across the business,
and higher gold production at the Yaramoko mine driven by new high grade zones.” Mr. Ganoza concluded, “As we shift
from a two-year capital-intensive phase to strong free cash flow generation, we will prioritize strengthening our balance
sheet through debt reduction and advancing high value opportunities in our exploration portfolio. We currently maintain
eleven drill rigs turning across our properties including three at our newly acquired Diamba Sud gold project in Senegal.”
NEWS RELEASE
Fortuna | 2
Third Quarter 2023 Consolidated Results
Three months ended September 30, Nine months ended September 30,
(Expressed in millions) 2023 2022 % Change 2023 2022 % Change
Sales 243.1 166.6 46% 577.1 516.8 12%
Mine operating income 65.9 24.7 167% 138.2 120.8 14%
Operating income 45.4 5.7 696% 77.0 59.6 29%
Attributable net income (loss) 27.5 (3.7) 843% 41.5 24.6 69%
Attributable Earnings per share - basic 0.09 (0.01) 1,000% 0.14 0.08 75%
Attributable Adjusted net income1 29.6 2.9 921% 44.3 35.0 27%
Adjusted EBITDA1 104.6 54.4 92% 214.0 189.7 13%
Net cash provided by operating activities 106.5 64.7 65% 191.8 144.6 33%
Free cash flow from ongoing operations1 70.0 34.0 106% 87.3 64.8 35%
Production cash cost ($/oz Au Eq) 814 881 (8%) 887 841 5%
All-in sustaining cash cost ($/oz Au Eq) 1,312 1,431 (8%) 1,507 1,383 9%
Capital expenditures2
Sustaining 27.2 23.2 17% 89.3 64.3 39%
Non-sustaining3 1.3 4.0 (68%) 3.4 10.4 (67%)
Séguéla construction 1.9 23.5 (92%) 50.0 87.6 (43%)
Brownfields 3.3 9.6 (66%) 10.7 17.1 (37%)
As at September 30, 2023 December 31, 2022 % Change
Cash and cash equivalents 117.8 80.5 46%
Net liquidity position (excluding letters of credit) 162.3 150.5 8%
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
Third Quarter 2023 Results
Net income attributable to Fortuna for the quarter was $ 27.5 million compared to an attributable net loss of $3. 7 million
in Q3 2022. After adjusting for non -cash and non-recurring items, adjusted attributable net income for the quarter was
$29.6 million compared to $2. 9 million in Q3 2022. The increase in net income and adjusted net income is explained
mainly by increased gold sales volume, higher realized gold and silver prices and lower cost of sales per gold equivalent
ounce. Higher gold sales volume was primarily due to the contributio n from the first quarter of com mercial production
at Séguéla and higher grades at Yaramoko. This was partially offset by lower gold sales volume at Lindero related to lower
grades, in line with the mine plan. The realized gold and silver prices were $1,925 and $23.7 per ounce, respectively, in Q3
2023 compared to $1,718 and $19.2 per ounce, respectively, in the prior year. The lower cash cost of sales per gold
equivalent ounce was mainly due to the contribution of low -cost production from Séguéla and lower cost of sales per
ounce of gold at Yaramoko related to higher grades. This was partially offset by higher costs of sales per ounce at Lindero
and San Jose. Other items impacting net income in the quarter were higher interest expense s of $5.7 million as a result
of interest costs no longer being capitalized in the quarter, higher outstanding debt and increased interest rates; lower
depletion at Séguéla which is expected to increase in the coming quarters from depletion of the purchase price; and a low
effective income tax rate in the quarter of 17.6% as no income taxes were recorded at Séguéla.
General and administrative expenses for the quarter of $14.6 million were higher than the same period in 2022 as Séguéla
transitioned to operations and costs are no longer being capitalized. G&A is comprised of the following items:
Fortuna | 3
Three months ended September 30, Nine months ended September 30,
(Expressed in millions) 2023 2022 % Change 2023 2022 % Change
Mine G&A 8.4 5.4 56% 20.5 15.8 30%
Corporate G&A 5.5 5.4 2% 19.7 22.3 (12%)
Share-based payments 0.5 1.9 (74%) 3.8 5.9 (36%)
Workers' participation 0.2 0.3 (33%) 0.2 0.7 (71%)
Total 14.6 13.0 12% 44.2 44.7 (1%)
Net cash generated by operations for the quarter increased $41.6 to $ 106.5 million. The increase reflects higher EBITDA
of $51.2 million offset by lower changes in working capital in Q3 2023 of $0.2 million compared to a change in Q3 2022 of
$11.5 million. Income tax paid in the quarter of $3.2 million was $5.6 million lower than in Q3 2022 as no income tax was
paid at Séguéla in Q3 2023. It is expected Séguéla will start incurring current income taxes in Q4 2023 and paying income
taxes in 2024.
In the third quarter of 2023 capital expenditures on a cash basis was $37.0 million consisting primarily of $30.6 million in
sustaining capital, including brownfields exploration, and $4.0 million of non-sustaining exploration.
Free cash flow from ongoing operations for the quarter was $70.0 million, compared to $34.0 million in Q3 2022. The
increase of $36.0 million is the result of higher net cash generated by operations of $41.8 million partially offset by higher
sustaining capex and brownfields exploration at our operating mines of $5.8 million in Q3 2023.
Consolidated All-in Sustaining Cost
Consolidated AISC per gold equivalent ounce (GEO) sold for the third quarter of 2023 was $1,312 per ounce compared to
$1,431 per ounce for the comparable quarter in 2022. The lower AISC was driven by a decrease of $67 in cash cost of sales
per gold equivalent ounce to $814 and lower capital costs per ounce driven by higher volume.
Liquidity
The Company’s total liquidity available as of September 30, 2023 was $162.3 million comprised of $117.8 million in cash
and cash equivalents, and $44.5 million undrawn on the $250.0 million revolving credit facility (excluding letters of credit).
Fortuna | 4
Lindero Mine, Argentina
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Mine Production
Tonnes placed on the leach pad 1,467,578 1,365,726 4,449,049 4,163,555
Gold
Grade (g/t) 0.62 0.83 0.65 0.83
Production (oz) 20,933 30,032 71,647 89,116
Metal sold (oz) 22,242 30,064 74,194 89,229
Realized price ($/oz) 1,910 1,719 1,923 1,825
Unit Costs
Cash cost ($/oz Au)1 988 772 916 717
All-in sustaining cash cost ($/oz Au)1 1,611 1,159 1,569 1,117
Capital Expenditures ($000's) 2
Sustaining 7,669 4,814 28,751 14,062
Non-sustaining 353 – 676 169
Brownfields – 314 – 1,104
1 Cash cost and All-in sustaining cash cost 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.
Quarterly Operating and Financial Highlights
In the third quarter of 2023, a total of 1,467,578 tonnes of ore were placed on the heap leach pad, with an average gold
grade of 0.62 g/t, containing an estimated 29,068 ounces of gold. Gold production for Q3 2023 totaled 20,933 ounces.
This represents a 30% decrease in total ounces to the comparable quarter of 2022. This decline in gold production can be
primarily explained by the lower head grade of ore placed on the leach pad, in accordance with the mining sequence and
the Mineral Reserves. Ore mined wa s 1.9 million tonnes, with a stripping ratio of 1.1:1. The stripping ratio in the third
quarter is 59 percent lower than the second quarter and is expected to continue declining through to the end of the year.
Higher stripping of waste in the first nine months of the year will allow improved access to higher grade material scheduled
in the mine plan for the fourth quarter. As a result, Lindero anticipates placing approximately 1.6 million tonnes of ore on
the leach pad in Q4 2023 at a higher average grade of 0.67 g/t Au.
Cash cost per ounce of gold for the quarter ended September 30, 2023, was $988 compared to $772 in the same period
in 2022. Cash cost per ounce of gold was higher due to lower head grades in line with the mine plan, partially offset by
lower processing costs.
All-in sustaining cash cost per gold ounce sold was $1,611 during Q3 2023 compared with $1,159 in the same period of
2022. All-in sustaining cash cost for the third quarter of 2023 was impacted by lower production described above and
higher sustaining capital expenditures.
During the quarter, increased sustaining capital expenditures were primarily driven by the development of Phase 2 of the
leach pad and capitalized stripping. As of September 30, 2023, the leach pad expansion project (Project) is approximately
13 percent complete. The procurement construction and management (PCM) service has been awarded to Knight Piésold,
the accommodation camp expansion and PCM offices for the Project have been finalized, and PCM personnel are already
onsite. Mobilization of the contractor’s personnel and equipment has commenced. The first shipments of geomembrane
and geosynthetic clay liner are in transit, and the Project remains on schedule for completion during the second half of
2024.
Fortuna | 5
Yaramoko Mine Complex, Burkina Faso
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Mine Production
Tonnes milled 137,281 137,202 421,133 403,957
Gold
Grade (g/t) 7.72 6.21 6.52 6.34
Recovery (%) 99 97 98 97
Production (oz) 34,036 27,130 89,476 79,918
Metal sold (oz) 33,971 27,055 89,448 81,183
Realized price ($/oz) 1,932 1,716 1,932 1,821
Unit Costs
Cash cost ($/oz Au)1 752 934 764 847
All-in sustaining cash cost ($/oz Au)1 1,211 1,630 1,429 1,433
Capital Expenditures ($000's) 2
Sustaining 9,451 10,225 37,318 26,671
Brownfields 1,447 2,530 3,656 3,018
1 Cash cost and All-in sustaining cash cost 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 34,036 ounces of gold in the third quarter of 2023 with an average gold head grade of
7.72g/t, 25% and 24% increases when compared to the same period in 2022. Increased production resulted from higher
average grades and greater w idths of mineralization encountered in development headings, which contributed 42% of
total mill feed.
As a result of the aforementioned higher grades in development and production zones within the mine plan, the Company
has revised Yaramoko’s annual gold production guidance upwards to 110 to 120 thousand ounces from the original
guidance of 92 to 102 thousand ounces, an increase of approximately 14 percent. Gold production for the first nine months
of 2023 totaled 89,476 ounces.
Cash cost per ounce of gold sold for the quarter ended September 30, 2023, was $752 compared to $934 in the same
period in 2022. Cash cost per ounce decreased due to higher production, improved head grades of ore processed, reduced
mining costs related to ore development and decreased transportation costs.
All-in sustaining cash cost per gold ounce sold was $1,211 for Q3 2023, compared to $1,630 for the same period in 2022.
This decrease was as a result of higher production, and cash cost savings described above.
Sustaining capital for Q3 2023 was higher due to more intensive mine development. Brownfields expenditure was
primarily related to diamond drilling. Drilling focused on infill grade control and exploring for extensions beyond the
mineralized resource envelope in the deeper eastern portion of Zone 55. During the fourth quarter, drilling will continue
on the western portion of Zone 55, testing for up and down -dip continuity of the recently discovered extensions to the
resource boundary.
Fortuna | 6
Séguéla Mine, Côte d’Ivoire
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Mine Production
Tonnes milled 310,387 - 419,992 -
Gold
Grade (g/t) 3.83 - 3.28 -
Recovery (%) 93 - 94 -
Production (oz) 31,498 - 35,521 -
Metal sold (oz) 35,503 — 35,503 —
Realized price ($/oz) 1,927 — 1,927 —
Unit Costs
Cash cost ($/oz Au)1 397 - 397 -
All-in sustaining cash cost ($/oz Au)1 788 - 788 -
Capital Expenditures ($000's) 2
Sustaining 3,147 – 3,147 –
Brownfields – – – –
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
From Séguéla’s first gold pour on May 24th to the successful completion of the processing plant performance test in
August, the operation is now exceeding nameplate capacity. Séguéla is well positioned to achieve the mid-point of its gold
production guidance of 60 to 75 thousand ounces for the second half of 2023.
In the third quarter of 2023, mine production totaled 502,326 tonnes of ore, averaging 3.48 g/t Au, and containing an
estimated 56,136 ounces of gold from the Antenna Pit. Movement of waste during the quarter totaled 1,156,540 tonnes,
for a strip ratio of 2.3:1.
Cash cost per gold ounce sold was $397 for Q3 2023, which was below plan, primarily higher due to head grades and lower
energy and diesel consumption.
All-in sustaining cash cost per gold ounce sold was $788 for Q3 2023, which was below plan, primarily due to lower cash
cost, lower capital expenditures, and higher sale volume.
Sustaining capital for Q3 202 3 consisted primarily of mine development. The first stage of grade control drilling was
completed at the Ancien deposit during the third quarter, with results currently being processed. Construction of the
access road continued as planned, with stripping and initial mining of oxide material scheduled to begin this quarter.
At the Koula deposit, initial grade control drilling started and should be completed early this quarter.
Fortuna | 7
San Jose Mine, Mexico
Three months ended September 30, Nine months ended September 30,
2023 2022 2023 2022
Mine Production
Tonnes milled 247,542 267,198 689,165 770,090
Average tonnes milled per day 2,845 3,071 2,790 2,939
Silver
Grade (g/t) 189 196 180 189
Recovery (%) 91 92 91 91
Production (oz) 1,372,530 1,545,410 3,633,107 4,288,936
Metal sold (oz) 1,347,719 1,539,382 3,618,723 4,272,878
Realized price ($/oz) 23.65 19.14 23.37 21.86
Gold
Grade (g/t) 1.14 1.16 1.11 1.14
Recovery (%) 91 91 90 91
Production (oz) 8,205 9,091 22,215 25,624
Metal sold (oz) 8,068 9,064 22,118 25,580
Realized price ($/oz) 1,932 1,722 1,930 1,825
Unit Costs
Production cash cost ($/t)2 103.47 79.37 97.26 79.66
Production cash cost ($/oz Ag Eq)1,2 13.84 9.70 13.48 10.35
All-in sustaining cash cost ($/oz Ag Eq)1,2 18.04 14.23 18.65 14.95
Capital Expenditures ($000's) 3
Sustaining 3,462 4,410 10,828 12,036
Non-sustaining 385 – 1,178 869
Brownfields 1,082 1,548 2,958 4,645
1 Production cash cost per ounce of silver equivalent and All-in sustaining cash cost per ounce of silver equivalent are calculated using realized metal prices for each
period respectively.
2 Production cash cost per tonne, production cash cost per ounce of silver equivalent, and all-in sustaining cash cost per ounce of silver equivalent 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.
3 Capital expenditures are presented on a cash basis
In the third quarter of 2023, the San Jose Mine produced 1,372,530 ounces of silver at an average head grade of 189 g/t
Ag and 8,205 ounces of gold at an average head grade of 1.14 g/t Au, 11% and 10% lower, respectively, when compared
to the same period in 2022. The decrease in silver and gold production for the third quarter of 2023, when compared to
the third quarter of 2022, is explained by the declining grade profile of Mineral Reserves in the mine plan. The processing
plant milled 247,542 tonnes at an average of 2,845 tonnes per day during the third quarter, in line with the plan for the
period.
Gold production is expected to fall slightly below the annual guidance range of 34 to 37 thousand ounces, resulting from
lost production days in the second quarter due to the illegal union blockade, and gold head grade reconciliation to reserves
in the low end of range. The San Jose Mine remains positioned to deliver annual silver production within the guidance
range of between 5.3 to 5.8 million ounces.
The cash cost per tonne for the three months ended September 30, 2023, was $103.4 7 compared to $79.37 in the same
period in 2022. The increase was primarily due to higher use of contractors to make up for lost production in the second
quarter of 2023 related to the illegal blockade, higher maintenance and indirect costs and the appreciation of the Mexican
Peso.
All-in sustaining cash cost of payable silver equivalent for the three months ended September 30, 2023, increased 26% to
$18.04 per ounce, compared to $14.23 per ounce for the same period in 2022. The increase was driven by higher cash
Fortuna | 8
cost, lower production, and lower equivalent silver ounces per gold ounce. This was offset slightly by lower capital
expenditures and lower workers’ participation costs.
In the third quarter of 2023, sustaining capital expenditures were higher than the same period in 2022. This increase was
primarily due to the execution of development meters, which had been postponed from Q2 2023 because of the blockade.
Brownfields expenditures were in line with the plan. Expenditures are however expected to increase, due to the emergent
drilling campaign at the Yessi vein.
Infill drilling at the San Jose Mine during the quarter led to the discovery of the Yessi vein, a blind structure, located 20 0
horizontal meters from existing underground infrastructure. The discovery hole SJOM -1387 intersected 1,299 g/t Ag Eq
over 9.9 meters, and drill hole SJOM -1391 intersected 621 g/t Ag Eq over 5 meters (Refer to the News Release filled on
SEDAR+ on September 5, 2023 titled “Fortuna intersects 1,299 g/t Ag Eq over a true width of 9.9 meters at the San Jose
Mine, Mexico” for full details of the drilling program ). Additional drilling is currently underway from both surface and
underground to define the extent and geometry of this discovery. Mineralization remains open along strike to the north
and south, and at depth.