Nord Precious Metals Mining Inc. press release
Fortuna reports record earnings for the third quarter of 2024
TSXV - TSX Venture Exchange · Silver · Cobalt · Nickel · Gold · Copper · Rare Earth Elements · Platinum · Lithium · Cesium · Tantalum · Canada
(All amounts are expressed in US dollars, tabular amounts in millions, unless otherwise stated)
VANCOUVER, British Columbia, Nov. 06, 2024 (GLOBE NEWSWIRE) -- Fortuna Mining Corp. (NYSE: FSM | TSX: FVI) (“Fortuna” or the “Company”) today reported its financial and operating results for the third quarter of 2024.
“In the third quarter, a focus on cost discipline and safe operations allowed Fortuna to capture the benefit of rising metal prices and achieve record attributable earnings of $50.5 million and record operating cash flow before working capital changes of $119.3 million.” said Jorge Ganoza, Fortuna’s President and CEO. Mr. Ganoza continued, “Our mines delivered 110,820 ounces of gold equivalent production at a cash cost per ounce of $1,059 as we remain well positioned to finish the year within our cost and production guidance.” Mr. Ganoza added, “The Company also achieved a key milestone with a positive net cash position at the end of the quarter and we recently renegotiated our credit facility reducing financial costs and providing additional financial flexibility.”
Third Quarter 2024 highlights
Financial
Attributable net income of $50.5 million or $0.16 per share, compared to $40.6 million or $0.13 per share in Q2 2024 Adjusted attributable net income 1 of $49.9 million or $0.16 per share, compared to $30.4 million or $0.10 per share in Q2 2024 Generated $119.3 million (or $0.38 per share) of cash flow from operations before working capital changes, and free cash flow from ongoing operations 1 of $56.6 million, compared to $93.0 million (or $0.30 per share) and $38.6 million, respectively, in Q2 2024 As at the end of the quarter, the Company had a cash position of $180.6 million and achieved a positive net cash 1 position of $8.0 million. Liquidity increased to $430.6 million from $355.6 million at the end of Q2 2024 Subsequent to the end of the quarter, the Company resized its revolving credit facility from $250.0 million to $150.0 million and increased the uncommitted accordion to $75.0 million from $50.0 million reducing its reliance on bank debt. The revolving debt facility remains fully undrawn 2
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 Excluding letters of credit 3 Au Eq includes gold, silver, lead and zinc and is calculated using the following metal prices: $2,490/oz Au, $29.4/oz Ag, $2,040/t Pb, and $2,782/t Zn for Q3 2024; $2,334/oz Au, $29.1/oz Ag, $2,157/t Pb and $2,835/t Zn or Au:Ag = 1:80.19, Au:Pb = 1:1.08, Au:Zn = 1:0.82 for Q2 2024. And the following metal prices for YTD Q3-2024 $2,307/oz Au, $27.1/oz Ag, $2,091/t Pb, and $2,692/t Zn
Operational
Gold equivalent 3 production of 110,820 ounces, compared to 116,570 ounces in Q2 2024. Nine month gold equivalent production of 339,933 ounces, aligned to meet annual guidance of 457 to 497 koz. For full details refer to our News Release titled “ Fortuna reports solid production of 110,820 gold equivalent ounces for the third quarter of 2024 ” dated October 10, 2024 Consolidated cash costs 1 per ounce of gold equivalent sold of $1,059 for the quarter and $977 year to date remain largely aligned with annual guidance of $935 to $1,055; adjusting for San Jose, which is mining its last year of Mineral Reserves, consolidated cash costs were $935 for the quarter Consolidated all-in sustaining cash costs (AISC) 1 per ounce of gold equivalent sold of $1,696 for the quarter and $1,618 year to date, are tracking at the upper end of annual guidance of $1,485 to $1,640; adjusting for San Jose, consolidated AISC was $1,594. The leach-pad expansion for Lindero is a one-time $42 million capital project in 2024 set for completion in Q4 and weighs approximately $90 per ounce on our annual consolidated AISC The Company recorded one lost time injury in the quarter and a year-to-date total recordable injury frequency rate of 1.37
Growth and Development
At the newly discovered Kingfisher prospect at the Séguéla Mine the Company intersected 14.2 g/t gold over 16.8 meters. For full details refer to our News Release titled “Fortuna intersects 14.2g/t Au over 16.8 meter at the Kingfisher prospects, Séguéla Mine, Côte d’Ivoire” dated September 10, 2024 Exploration continued at the Diamba Sud exploration project with an intersect of 6.9 g/t gold over 33.3 meters at the Western Splay prospect. For full details refer to our News Release titled “Fortuna intersects 6.9g/t Au over 33.3. meters at the Diamba Sud Project, Senegal” dated September 12, 2024
Third Quarter 2024 Consolidated Results
| | | | | | | | | | | | | | | | | | Three months ended September 30, | | Nine months ended September 30, | | | | | | | | | | | | | (Expressed in millions) | 2024 | | | 2023 | | % Change | | 2024 | | 2023 | | % Change | | | | Sales | 274.9 | | | 243.1 | | 13 | % | | 759.8 | | 577.1 | | 32 | % | | Mine operating income | 86.9 | | | 65.9 | | 32 | % | | 236.8 | | 138.2 | | 71 | % | | Operating income | 72.7 | | | 45.4 | | 60 | % | | 175.2 | | 77.0 | | 128 | % | | Attributable net income | 50.5 | | | 27.5 | | 84 | % | | 117.4 | | 41.5 | | 183 | % | | Attributable income per share - basic | 0.16 | | | 0.09 | | 78 | % | | 0.38 | | 0.14 | | 171 | % | | Adjusted attributable net income 1 | 49.9 | | | 29.6 | | 69 | % | | 107.3 | | 44.3 | | 142 | % | | Adjusted EBITDA 1 | 131.3 | | | 104.6 | | 26 | % | | 339.1 | | 214.0 | | 58 | % | | Net cash provided by operating activities | 92.9 | | | 106.5 | | (13 | %) | | 215.4 | | 191.8 | | 12 | % | | Free cash flow from ongoing operations 1 | 56.6 | | | 70.0 | | (19 | %) | | 107.3 | | 87.3 | | 23 | % | | Cash cost ($/oz Au Eq) 1 | 1,059 | | | 814 | | 30 | % | | 977 | | 887 | | 10 | % | | All-in sustaining cash cost ($/oz Au Eq) 1 | 1,696 | | | 1,313 | | 29 | % | | 1,618 | | 1,508 | | 7 | % | | Capital expenditures 2 | | | | | | | | | | | | | | | | Sustaining | 38.4 | | | 27.2 | | 41 | % | | 94.1 | | 89.3 | | 5 | % | | Non-sustaining 3 | 12.3 | | | 1.3 | | 846 | % | | 38.8 | | 3.4 | | 1,041 | % | | Séguéla construction | - | | | 1.9 | | (100 | %) | | - | | 50.0 | | (100 | %) | | Brownfields | (0.5 | ) | | 3.3 | | (115 | %) | | 9.0 | | 10.7 | | (16 | %) | | As at | | | | | | | September 30, 2024 | | December 31, 2023 | | % Change | | | | | Cash and cash equivalents | | | | 180.6 | | 128.1 | | 41 | % | | | | | | | Net liquidity position (excluding letters of credit) | | | | | | | 430.6 | | 213.1 | | 102 | % | | | | Shareholder's equity attributable to Fortuna shareholders | | | | | | | 1,420.4 | | 1,238.4 | | 15 | % | | | | 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 2024 Results
Cash Costs and AISC Consolidated cash cost per equivalent gold ounce was $1,059, compared to $814 in the third quarter of 2023. The increase in cash cost is explained mainly by lower stripping and mining costs during Séguéla’s first quarter of operations in Q3 2023; lower head grades and throughput at San Jose in its last year of Mineral Reserves; higher cash costs per ounce at Yaramoko related to lower head grades and higher mining and indirect costs. Cash cost per ounce for the quarter and for the year remain largely aligned with annual guidance.
All-in sustaining costs per gold equivalent ounce was $1,696 for the third quarter of 2024 compared to $1,313 for the third quarter of 2023. The increase was primarily the result of higher sustaining capital at Lindero related to the expansion of the leach-pad, and higher cash cost per ounce as described above.
AISC Performance vs 2024 Guidance All-in sustaining costs per gold equivalent ounce sold for the nine months ending September 30, 2024 was $1,618 and is expected to be at the higher end of guidance for the year as a result of the following:
Real currency appreciation of the Argentine Peso increasing Lindero’s cash costs by 9% Increased sustaining capital costs to accelerate 2025 development at Yaramoko to access newly identified mineral resources Lower production compared to plan at San Jose due to operational challenges in its last year of reserves
The Company has several continuous improvement initiatives in place. Some of the key ongoing projects are:
Séguéla process optimization: In Q3 2024 Séguéla achieved 35% higher throughput than nameplate capacity, and 20% higher than our 2024 mine plan. This increase already exceeds the capacity expansion scheduled in the technical report for 2026. The expansion has been achieved with minimal capex. Lindero: Several productivity and cost reduction projects representing annual incremental profit of $16 million (pre-tax) consisting mainly of the following: increased gold recovery from grind size optimization, ADR plant incremental flow, haulage fleet optimization, and conversion from diesel power generation to solar.
Attributable Net Income and Adjusted Attributable Net Income Net income attributable to Fortuna for the quarter was $50.5 million compared to $27.5 million in Q3 2023. After adjusting for non-cash and non-recurring items, adjusted attributable net income for the quarter was $49.9 million compared to $29.6 million in Q3 2023.
The increase in net income and adjusted net income was explained mainly by higher realized gold and silver prices partially offset by lower gold sales volume and higher costs per ounce. The realized gold and silver prices were $2,490 and $29.4 per ounce respectively compared to $1,925 and $23.7 per ounce, respectively, for the comparable period in the prior year. The decrease in gold sales volume was primarily due to lower production at Yaramoko and San Jose as per the mine plans. The higher cost per ounce was primarily at Séguéla, San Jose and Yaramoko as described above.
Adjusted net income for the quarter also benefited from $3.4 million of foreign exchange gains related to the appreciation of the Euro during the quarter, $3.2 million of investment income related to cross-border, Argentine pesos denominated bond trades, and lower interest expenses.
_Depreciation and Depletion _Depreciation and depletion for the third quarter of 2024 was $59.3 million compared to $63.4 million in the comparable period. The decrease in depreciation and depletion was primarily the result of lower depreciation and depletion at San Jose due to an impairment charge in the fourth quarter of 2023 and lower depletion per ounce in the 55 Zone at Yaramoko, partially offset by higher depletion at Séguéla. Depletion at Séguéla in the quarter includes $16.8 million of the purchase price related to the acquisition of Roxgold Inc in 2021.
Cash Flow Net cash generated by operations for the quarter was $92.9 million compared to $106.5 million in Q3 2023. Excluding changes in working capital, net cash from operations was $119.3 million compared to $106.2 million in the comparative period. The increase of $13.1 million reflects higher adjusted EBITDA of $25.8 million offset mainly by higher taxes paid of $8.9 million mostly at Séguéla.
Negative working capital for the quarter of $26.4 million was due to an increase of $24.5 million in receivables primarily due to the timing of trade receivables and VAT collection. At the end of the quarter the balance of VAT receivables at Yaramoko was $45.0 million.
In the third quarter of 2024 capital expenditures on a cash basis amounted to $50.2 million consisting of $37.9 million of sustaining capital, including brownfields exploration, and $12.3 million of non-sustaining capital. Year to date capital expenditures were $141.9 million consisting of $103.1 million of sustaining capital and $38.8 million non-sustaining capital.
Free cash flow from ongoing operations for the quarter was $56.6 million, compared to $70.0 million in the comparable period. The decrease in free cash flow, despite higher metal prices in the quarter, is explained mainly by negative working capital of $26.4 million compared to $nil in the third quarter of 2023, capital expenditures for the Lindero leach pad expansion and higher taxes paid due to the third and final tax installment at Séguéla for 2023 taxes. The comparable period also had a number of one-time benefits that lowered the cost of production at Séguéla.
General and Administrative Expenses General and administrative expenses for the current quarter of $16.0 million were 10% higher than the same period in 2023 due mainly to higher share-based compensation expenses. G&A comprises the following items:
| | Three months ended September 30, | | Nine months ended September 30, | | | | | | | | | | | | | | | | (Expressed in millions) | 2024 | | 2023 | | % Change | | 2024 | | 2023 | | % Change | | | | | | | | Mine G&A | | 9.9 | | | 8.4 | | 18 | % | | | 26.6 | | | 20.5 | | 30 | % | | Corporate G&A | | 3.9 | | | 5.5 | | (29 | %) | | | 19.8 | | | 19.7 | | 1 | % | | Share-based payments | | 2.1 | | | 0.5 | | 320 | % | | | 10.1 | | | 3.8 | | 166 | % | | Workers' participation | | 0.1 | | | 0.2 | | (50 | %) | | | 0.2 | | | 0.2 | | 0 | % | | Total | | 16.0 | | | 14.6 | | 10 | % | | | 56.7 | | | 44.2 | | 28 | % |
Liquidity
The Company’s total liquidity available as of September 30, 2024 was $430.6 million comprised of $180.6 million in cash and cash equivalents, and the fully undrawn $250.0 million revolving credit facility (excluding letters of credit). Effective October 31, 2024, the Company amended its credit facility reducing the amount of the facility to $150 million from $250 million (the facility would have stepped down to $175 million in November 2024), and increased the uncommitted accordion option from $50 million to $75 million. An improved pricing grid and covenant flexibility was negotiated under the amended facility.
Séguéla Mine, Côte d’Ivoire
| | | Three months ended September 30, | | | Nine months ended September 30, | | | | | | | | | | 2024 | | | 2023 | | | 2024 | | | 2023 | | Mine Production | | | | | | | | | | | | | Tonnes milled | | 418,390 | | | 310,387 | | | 1,131,684 | | | 419,992 | | Average tonnes crushed per day | | 4,548 | | | 3,695 | | | 4,115 | | | 2,762 | | | | | | | | | | | | | | | Gold | | | | | | | | | | | | | Grade (g/t) | | 2.69 | | | 3.83 | | | 2.94 | | | 3.28 | | Recovery (%) | | 92 | | | 93 | | | 93 | | | 94 | | Production (oz) | | 34,998 | | | 31,498 | | | 102,537 | | | 35,521 | | Metal sold (oz) | | 33,816 | | | 35,503 | | | 101,369 | | | 35,503 | | Realized price ($/oz) | | 2,494 | | | 1,927 | | | 2,305 | | | 1,927 | | | | | | | | | | | | | | | Unit Costs | | | | | | | | | | | | | Cash cost ($/oz Au) 1 | | 655 | | | 397 | | | 559 | | | 397 | | All-in sustaining cash cost ($/oz Au) 1 | | 1,176 | | | 788 | | | 1,073 | | | 788 | | | | | | | | | | | | | | | Capital Expenditures ($000's) 2 | | | | | | | | | | | | | Sustaining | | 5,992 | | | 3,147 | | | 14,827 | | | 3,147 | | Sustaining leases | | 2,332 | | | 3,044 | | | 7,034 | | | 3,044 | | Non-sustaining | | 4,797 | | | - | | | 14,437 | | | - | | Brownfields | | 187 | | | - | | | 6,273 | | | - | | 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 | | | | | | | | | | | | | | | | | | | | | | | | |
During the third quarter of 2024, mine production totaled 484,050 tonnes of ore, averaging 2.48 g/t Au, and containing an estimated 38,661 ounces of gold from the Antenna, Ancien and Koula pits. Movement of waste during the quarter totaled 2,935,335 tonnes, for a strip ratio of 6:1. Production was mainly focused from the Antenna pit which produced 412,063 tonnes of ore, with the balance of production sourced from the Koula and Ancien pits.
In the third quarter of 2024, Séguéla processed 418,390 tonnes, producing 34,998 ounces of gold, at an average head grade of 2.69 g/t Au, an 11% increase and 30% decrease, respectively, compared to the third quarter in 2023. The decrease in gold grade is in line with the planned mining sequence. Plant throughput for the quarter averaged 208 tonnes per hour (tph), 35% higher than name plate design capacity of 154 tph. The power outages that were experienced in the second quarter did not affect processing plant operations in the third quarter and enabled an increase in the tonnes processed. However, a failure of the drive shaft of the main apron feeder in early July required a repair which reduced throughput rates while the repairs were completed. Throughput rates were subsequently increased, averaging 216 tph in September.
The cash cost per gold ounce sold was $655 for the quarter ended September 30, 2024, compared to $397 in the same period of 2023. The increase is explained by the higher head grade and low-cost production associated with Séguéla´s first quarter of operations in the comparative period. The lower cost of production was mostly related to low-strip mining, shorter haulage, and lower maintenance costs.
The all-in sustaining cash cost per gold ounce sold was $1,176 for the quarter ending September 30, 2024, an increase from $788 for the same period in 2023. This increase is due to increased cash costs and increased sustaining capital expenditures in 2024 for stripping activities.
Looking forward into 2025, the Séguéla mine plans to operate at approximately 35 percent higher throughput rate compared to nameplate design, and at a stripping ratio closer to the Mineral Reserve average of 13:1 compared to 6:1 year to date. The higher throughput achieved through optimization initiatives in 2024 has not required any material capital expenditures. As a result of sustained higher production rates, the mine will correspondingly face an acceleration of infrastructure requirements in the approximate amount of $10 million above 2024 infrastructure capex figures. These capital projects are primarily related to the early expansion of the tailings storage facility, relocation of the Sunbird communications tower for development of the Sunbird pit, and land access to new mineral deposits and related compensation payments. Management anticipates that advancing these infrastructure projects will unlock annual target production rates of between 140k to 200k ounces in our life of mine plans.
Yaramoko Mine, Burkina Faso
| | | | | | | | | | | | | | | | | Three months ended September 30, | | | Nine months ended September 30, | | | | | | | | | | | 2024 | | | | 2023 | | | 2024 | | | 2023 | | Mine Production | | | | | | | | | | | | | | Tonnes milled | | 123,754 | | | | 137,281 | | | 352,864 | | | 421,133 | | | | | | | | | | | | | | | | Gold | | | | | | | | | | | | | | Grade (g/t) | | 6.71 | | | | 7.72 | | | 7.92 | | | 6.52 | | Recovery (%) | | 98 | | | | 99 | | | 98 | | | 98 | | Production (oz) | | 28,006 | | | | 34,036 | | | 86,630 | | | 89,476 | | Metal sold (oz) | | 27,995 | | | | 33,971 | | | 86,621 | | | 89,448 | | Realized price ($/oz) | | 2,474 | | | | 1,932 | | | 2,304 | | | 1,932 | | | | | | | | | | | | | | | | Unit Costs | | | | | | | | | | | | | | Cash cost ($/oz Au) 1 | | 974 | | | | 753 | | | 876 | | | 764 | | All-in sustaining cash cost ($/oz Au) 1 | | 1,373 | | | | 1,213 | | | 1,379 | | | 1,429 | | | | | | | | | | | | | | | | Capital Expenditures ($000's) 2 | | | | | | | | | | | | | | Sustaining | | 5,381 | | | | 9,451 | | | 20,112 | | | 37,318 | | Sustaining leases | | 1,002 | | | | 1,161 | | | 3,069 | | | 3,681 | | Non-sustaining | | 2,463 | | | | – | | | 4,005 | | | – | | Brownfields | | (1,217 | ) | | | 1,447 | | | 1,543 | | | 3,656 |