Fortuna reports consolidated financial results for the first quarter 2017
Fortuna reports consolidated financial results for the first quarter 2017
(All amounts expressed in US dollars, unless otherwise stated)
Vancouver, May 24, 2017 : Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) today reported net
income of $13.0 million, EPS of $0.08, and revenue of $64.8 million in the first quarter of 2017.
Jorge A. Ganoza, President, CEO and Director, commented, “First quarter cash flow from operations and
earnings per share reflect our strong production growth in hand with industry leading costs and margins .”
Mr. Ganoza continued, “The Company ’s financial strength and robust cash position will provide the
necessary flexibility to meet funding requirements upon a construction decision at Lindero in the third
quarter of 2017.”
First quarter consolidated financial highlights:
• Sales of $64.8 million, compared to $42.7 million in Q1 2016
• Net income of $13.0 million, compared to $2.6 million in Q1 2016
• EPS of $0.08, compared to $0.02 in Q1 2016
• Cash flow from operations before changes in non-cash working capital of $19.4 million and
adjusted EBITDA of $30.4 million, compared to $6.1 million and $12.4 million in Q1 2016
• Cash position, including short term investments, as at March 30, 2017 was $191.2 million
• Silver and gold production of 2,033,191 and 13,200 ounces
• AISC* per ounce of payable silver was $6.08
* All-in sustaining cash cost (“AISC”) is net of by-product credits for gold, lead and zinc (Non-GAAP
Financial Measure)
-2-
First quarter consolidated financial results
Consolidated Metrics Q1 2017 Q1 2016 % Change
Financial (Expressed in $ millions except per share information)
Sales $ 64.8 $ 42.7 52%
Mine operating earnings 27.2 15.6 74%
Operating income 19.6 6.1 221%
Net income 13.0 2.6 400%
Earnings per share (basic) 0.08 0.02 300%
Earnings per share (diluted) 0.08 0.02 300%
Adjusted net income** 14.1 2.6 442%
Adjusted EBITDA** 30.4 12.4 145%
Cash provided by operating activities 8.9 (0.3) -
Cash provided by operating activities (before changes in
working capital)** 19.4 6.1 218%
Capex (sustaining) 5.1 4.2 21%
Capex (non-sustaining) 1.9 11.4 -83%
Capex (Brownfields) 2.7 1.8 50%
Cash, cash equivalents and short-term investments, end of
period* 191.2 123.6 55%
Total assets* 638.3 562.9 13%
Non-current bank loan* 39.8 39.8 0%
Non-current other liabilities* 0.8 3.5 -77%
*The comparative figures are as at December 31, 2016
** Non-GAAP financial measures
Net income for the first quarter of 2017 was $13.0 million or $0.08 earnings per share compared to a net
income of $2.6 million or $0.02 earnings per share in the first quarter of 2016. The higher net income
was driven mostly by higher realized metal prices and increased production from the San Jose Mine as a
result of the plant expansion from 2,000 tpd to 3,000 tpd completed at the end of the second quarter of
2016. Selling general and administrative expenses were lower compared to the same period in 2016 by
$4.4 million due mostly to mark-to-market effects in share based instruments in 2016. This was partially
offset by $2.1 million in foreign exchange losses and $1.6 million in derivative losses.
Silver and gold metal sales increased 22% and 41% whi le realized metal prices increased 17% for silver
to $17.45 per ounce, 2% for gold to $1,220 per ounce, and 65% and 31% for zinc and lead, respectively.
-3-
Adjusted EBITDA in the first quarter of 2017 increased $18.0 million over the prior year to $30.4 million
as a result of higher sales and operating leverage. Cash provided by operating activities was $8.9 million
compared to cash consumed of $0.3 million in the first quarter of 2016, while cash provided by operating
activities before changes in working capital increased $13.3 million to $19.4 million.
At March 31, 2017, the Company had cash and short-term investments totaling $191.2 million (December
31, 2016: $123.6 million). On February 9, 2017, the Company completed a $74.8 million bought deal
financing for 11,873,750 common shares at $6.30 per share for net proceeds of $70.9 million.
San Jose Mine, Mexico
Three months ended
San Jose March 31,
Mine Production 2017 2016
Tonnes milled 267,268 179,110
Average tonnes milled per day 3,108 2,059
Silver
Grade (g/t) 226 240
Recovery (%) 92 93
Production (oz) 1,792,967 1,280,311
Metal sold (oz) 1,779,203 1,292,634
Realized price ($/oz) 17.46 15.00
-4-
Gold
Grade (g/t) 1.67 1.73
Recovery (%) 91 92
Production (oz) 13,116 9,161
Metal sold (oz) 13,040 9,241
Realized price ($/oz) 1,219.59 1,199.77
Unit Costs
Production cash cost ($/oz Ag)* 1.35 2.36
Production cash cost ($/tonne) 56.91 59.08
Unit Net Smelter Return ($/tonne) 161.75 146.75
All-in sustaining cash cost ($/oz Ag)* 6.61 8.71
* Net of by-product credits from gold
Silver and gold annual production for the first quarter increased 40% and 43%, respectively, over the first
quarter of 2016 to 1,792,967 ounces and 13,116 ounces. The increase was the result of higher throughput
of 49% offset by lower head grades of 6% for silver and 3% for gold.
Cash cost per tonne of processed ore was $56.91 or 4% below the cost in the first quarter of 2016.
All-in sustaining cash cost per payable ounce of silver, net of by- product credits, was $6.61 for first
quarter of 2017 and was below the annual guidance of $8.40 as a result of lower execution on sustaining
capital and improvement in commercial terms.
Caylloma Mine, Peru
Three months ended
Caylloma March 31,
Mine Production 2017 2016
Tonnes milled 129,369 117,192
Average tonnes milled per day 1,470 1,317
Silver
Grade (g/t) 68 103
Recovery (%) 85 87
Production (oz) 240,224 337,085
Metal sold (oz) 236,068 357,595
Realized price ($/oz) 17.33 14.78
Lead
Grade (%) 2.76 3.73
Recovery (%) 92 94
Production (000's lbs) 7,211 9,107
Metal sold (000's lbs) 7,037 9,620
Realized price ($/lb) 1.03 0.79
-5-
Zinc
Grade (%) 4.17 4.49
Recovery (%) 91 90
Production (000's lbs) 10,816 10,390
Metal sold (000's lbs) 10,702 10,528
Realized price ($/lb) 1.26 0.76
Unit Costs
Production cash cost ($/oz Ag)* (31.63) (2.10)
Production cash cost ($/tonne) 73.30 73.80
Unit Net Smelter Return ($/tonne) 158.92 119.93
All-in sustaining cash cost ($/oz Ag)* (12.01) 5.11
* Net of by-product credits from gold, lead and zinc
In the first quarter, z inc production increased 4% to 10.8 million pounds as a result of higher throughput
of 12% and lower head grade of 7%. Lead production decreased 21% to 7.2 million pounds as a result of
lower head grade of 26% partially offset by higher throughput. Silver production decreased 29% as a
result of lower head grade of 34%.
Cash cost per tonne of processed ore was $73.30 and was in line with the cash cost for the comparable
quarter in 2016.
All-in sustaining cash cost per payable ounce of silver, net of by -product credits, was negative $12.01 for
the first quarter 2017 which was significantly below the annual guidance of $10.80 as a result of higher
by-product credits.
The financial statements and MD&A are available on SEDAR and have also been posted on the
company's website at https://www.fortunasilver.com/investors/financials/2017/.
Conference call to review first quarter 2017 financial and operational results
A conference call to discuss first quarter 2017 financial and operational results will be held on Thursday,
May 25, 2017 at 9:00 a.m. Pacific | 12:00 p.m. Eastern. Hosting the call will be Jorge A. Ganoza,
President and CEO, and Luis D. Ganoza, Chief Financial Officer.
Shareholders, analysts, media and interested investors are invited to listen to the live confere nce call by
logging onto the webcast at: http://www.investorcalendar.com/IC/CEPage.asp?ID=175946 or over the
phone by dialing just prior to the starting time.
Conference call details:
Date: Thursday, May 25, 2017
Time: 9:00 a.m. Pacific | 12:00 p.m. Eastern
Dial in number (Toll Free): +1.866.682.6100
Dial in number (International): +1.862.255.5401
-6-
Replay number (Toll Free): +1.877.481.4010
Replay number (International): +1.919.882.2331
Replay Passcode: 10389
Playback of the conference call will be available until June 8, 2017 at 11:59 p.m. Eastern. Playback of the
webcast will be available until August 25, 2017. In addition, a transcript of the call will be archived in the
company’s website: https://www.fortunasilver.com/investors/financials/2017/.
About Fortuna Silver Mines Inc.
Fortuna is a growth oriented, precious metal producer focused on mining opportunities in Latin America.
The Company’s primary assets are 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.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Trading symbols: NYSE: FSM | TSX: FVI
Investor Relations:
Carlos Baca- T (Peru): +51.1.616.6060, ext. 0
Forward Looking Statements
This news release contains forward looking statements which constitute “forward looking information” within the
meaning of applicable Canadian securities legislation and “forward looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (collectively, “Forward looking
Statements”). All statements included herein, other than statements of historical fact, are Forward L ooking
Statements and are subject to a variety of known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those reflected in the Forward L ooking Statements. The Forward L ooking
Statements in this news release include, without limitation, statements about the Company’s plans for its mines and
mineral properties; the Company’s business strategy, plans and outlook; the merit of the Company’s mines and
mineral properties; the future financial or operating performance of the Company; and proposed expenditures.
Often, but not always, these Forward L ooking Statements can be identified by the use of words such as “estimated”,
“potential”, “open”, “future”, “assumed”, “projected”, “used”, “detailed”, “has been”, “gain”, “planned”,
“reflecting”, “will”, “containing”, “remaining”, “to be”, or statements that events, “could” or “should” occur or
be achieved and similar expressions, including negative variations.
Forward looking Statements involve known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially different from any results,
performance or achievements expressed or implied by the Forward L ooking Statements. Such uncertainties and
factors include, among others, changes in general economic conditions and financial markets; changes in prices for
silver and other metals; technological and operational hazards in Fortuna’s mining and mine development
activities; risks inherent in mineral exploration; uncertainties inherent in the estimation of mineral reserves, mineral
resources, and metal recoveries; governmental and other approvals; political unrest or instability in countries
where Fortuna is active; labor relations issues; as well as those factors discussed under “Ri sk Factors” in the
-7-
Company’s Annual Information Form. Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those described in Forward L ooking Statements,
there may be other factors that cause actions, events or results to differ from those anticipated, estimated or
intended.
Forward looking Statements contained herein are based on the assumptions, beliefs, expectations and opinions of
management, including but not limi ted to expectations regarding the Company’s plans for its mines and mineral
properties; mine production costs; expected trends in mineral prices and currency exchange rates; the accuracy of
the Company’s current mineral resource and reserve estimates; that the Company’s activities will be in accordance
with the Company’s public statements and stated goals; that there will be no material adverse change affecting the
Company or its properties; that all required approvals will be obtained; that there will be no significant disruptions
affecting operations and such other assumptions as set out herein. Forward looking Statements are made as of the
date hereof and the Company disclaims any obligation to update any Forward L ooking Statements, whether as a
result of new information, future events or results or otherwise, except as required by law. There can be no
assurance that Forward Looking Statements will prove to be accurate, as actual results and future events could
differ materially from those anticipated in s uch statements. Accordingly, investors should not place undue reliance
on Forward Looking Statements.
This news release also refers to non -GAAP financial measures, such as cash cost per tonne of processed ore; cash
cost per payable ounce of silver; total production cost per tonne; all -in sustaining cash cost; all -in cash cost;
adjusted net (loss) income; operating cash flow per share before changes in working capital, income taxes, and
interest income; and adjusted EBITDA. These measures do not have a standardized meaning or method of
calculation, even though the descriptions of such measures may be similar. These performance measures have no
meaning under International Financial Reporting Standards (IFRS) and therefore, amounts presented may not be
comparable to similar data presented by other mining companies.