Fortuna Mining Corp

Good day, ladies and gentlemen, and welcome to your Fortuna Silver Mines second quarter 2020 financial and operational results call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Carlos Balcapaca, Investor Relations Manager. Sir, the floor is yours.

Thank you, Taryn. Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silver Mines and to our financial and operational results call for the second quarter of 2020. Today, we will be using a webcast presentation, which will be controlled by us. To download the presentation, please go to our website at fortunasilver.com, click on the Investors tab, then click on the Financials sub-tab, and under Q2 2020, click on the Earnings Call webcast link. Jorge Alberto Ganosa, President, CEO, and Director, and Luis Darío Ganosa, CFO, will be hosting the call from their home offices in Lima, Peru. Before I turn over the call to Jorge, I would like to indicate that this earnings call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs. This forward-looking information is subject to a number of risks, uncertainties, and other factors. actual results could differ materially from a conclusion, forecast, or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast, or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information is contained in the company's annual information form and MD&A, which are publicly available on CEDAR. The company assumes no obligation to update such forward-looking information in the future, except as required by law. I would now like to turn The call over to Jorge Alberto Ganosa, President, CEO, and co-founder of Fortuna.

Thank you, Carlos, and good morning to all. I'll be presenting an introduction to our second quarter results and discuss the status of our operations and development project in this unprecedented COVID environment we're all living in, and then turn the call over to Luis, who will take you through the financial statements. If we move on to slide six of the webcast presentation. In slide six of the presentation, the operational financial results of the company for the quarter are marked by the industry-wide suspension of activities dictated by the governments in Mexico, Argentina, and Peru. During the quarter, the suspension in Mexico impacted our San Jose mine for a total of 53 days, and in Argentina, construction of the Lindero project was halted for approximately 60 days. In Peru, we managed to continue carrying with mill processing at Orcayoma mine, taking advantage of surface ore stockpiles and produce that capacity. In spite of all of this, we reported neutral free cash from ongoing operations. On May 20th, we closed a successful 69 million bond deal equity financing. As at the end of June, we have a total liquidity available of 132 million. The company is adequately funded to meet its capital demands and maintain financial flexibility during these uncertain times. As of the end of June, our Lindero construction is 97% complete. The project is largely now in the pre-production and commissioning phase with relative minor construction activity ongoing on ADR and SART plants. In March, we withdrew or consolidated metal production guidance for the year. The uncertain operational environment we faced in the three countries which hosts our operation does not support reinstating guidance at this time. We have implemented strict sanitary protocols and COVID screening processes at all our operations. Up to this date, we have conducted over 9,000 serological and over 3,000 molecular tests. We have detected close to 200 confirmed COVID cases and had to report the sad passing of one confirmed case and one suspect case. As of today, all our operations are operating at capacity. Moving on to slide seven. In slide seven, we share with you our key safety performance indicators. We present the KPIs as a 12-month rolling average to better represent trends. And as you can appreciate, we are delivering solid and consistent improvement year over year. Slide eight. As you can appreciate in slide eight, our Q2 production for both gold and silver was dramatically impacted by the COVID industry-wide suspension in Mexico in particular. Both silver and gold production is down 47% compared to a year ago. By-product lead and zinc production remains stable at as the Cayoma mine operated the mill at capacity during the quarter. Slide nine. Silver accounted for 49% of sales and gold for 28% for a combined 77% precious metals contribution. Quarter over quarter, we continue to realize higher silver and gold prices with $17 and 1,727 per ounce, respectively. We observe with expectation the consolidation of what is configuring into a historic bull market for precious metals and mining equities. Moving on to slide 10. For sales, EBITDA and net income were all negatively impacted by the shortfalls in production. For Q3, we expect a significantly improved quarter with a limited impact of three weeks of suspension of production at the Cayoma Mine during the month of July. Moving on to slide 11, please. San Jose oil in sustaining cost was driven higher by lower metal production during the suspension period. And at Cayoma, higher oil in sustaining cost was driven by significant drops in zinc and lead prices of 29% and 12% respectively. Moving on to slide 12. Following on with the same theme of suspended activities or rate of capital investment execution was also impacted by the suspension during the period. More notorious is a small figure of $5 million executed at Lindero, which again was suspended for almost a little over two months during the quarter. Moving on to slide 13. Slide 13 shows a glance of our project pipeline. And here I can highlight once again the relevance of our Lindero project as it will add to our low-cost gold production growth. Slide 14. Slide 14 shows a simplified schedule for our Lindero project. The industry-wide suspension in Argentina took effect on March 19th, and our mobilization back to the project for the resumption of construction initiated during the second half of May, effectively over two months of suspended construction. On July 16th, we announced the successful commissioning of the primary and secondary crushing circuits and the start of ore stacking on the heap leach pad. We're currently on the early stages of the ramp-up phase of mine production, crushing, and leach pad operations. Our next milestone is the start of irrigation, which is planned for later in this month of August or early September at the latest. We plan to be in commercial operations in Q1 2020. For 2020, we expect gold ore production in the range of 25 to 28,000 ounces of gold. Slide 15. From slide 15 and onwards, we're going to share with you some updated photos of the Lindero construction and pre-production activities. Here I can add that as of the end of June, our remaining project funding requirements for CAPEX, pre-production, working capital and VAT stand at around 55 to 60 million dollars. Slide 16. In the coming slides, we show, you know, pre-production activities. We have the initial mine benches prepared and in production. Our mine has already achieved the 40,000 ton per day mining capacity prior to the suspension in March. Today, operating only under one shift More than today, since the resumption, operating only under one shift with five trucks, we have already achieved 20,000 tons per day. So we're pretty satisfied with the performance of the mining team fleet, and that is advancing well. Next slide. These are views of the leach pad and ponds area. We started pre-commissioning of the pumping and solution management systems at the ponds in preparation for irrigation. So all of the pre-commissioning activities at the pumping are taking place and the leach pad is receiving crushed ore every day, still under one shift up to now. Next slide, please. These are some photos showing crushing operations. Next slide, please. Primary and secondary crushers. Next slide, please. I might have a delay on my end, slide 15, slide 14. These are views in slide 14 of the tertiary and agglomeration circuits. We have some distortion of the webcast on our end. On the process area and solution funds, that's a view of the area that's under pre-commissioning currently. Next slide, please. Slide 21. Here we have a view of the ADR plant. ADR is in the final stages of piping and electrical. Some pre-commissioning activities have initiated already on certain tanks and portions of the solution handling circuit. But there is still some finishes on piping and electrical that we expect to conclude this month of August. Next slide. This is a view of the SART plant. The SART plant is not a critical path for initial goal production, which is scheduled for September. We believe it needs to come into the circuit early, but it's not essential or critical path, as I said, for initial goal production. So we expect to be concluding with piping and electrical activities here as well in the month of September or if it stretches in October at the latest. So with that, we are concluding with the photos we share on the webcast. And I will now let Luis take you through it. financial results. Thank you.