Fortuna Mining Corp

Good morning, ladies and gentlemen, and welcome to the Fortuna Silver Mines fourth quarter and full year 2020 financial and operational results. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Carlos Baca. Sir, the floor is yours.

Thank you, Matthew. Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silver Minds and to our financial and operations results call for the fourth quarter and full year 2020. Today, we'll 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 on the Financial sub-tab, and under Q4 2020, click on the Earnings Call Presentation link. Jorge Alberto Ganosa, President, CEO, and Director, and Luis Darío Ganosa, CFO, will be hosting the call. Before I turn over the call to Jorge, I would like to indicate that this earnings call contains overlooking information that is based on the company's current expectations, estimates, and beliefs. This overlooking 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, co-founder of Fortuna.

Thank you, Carlos, and good morning to all. We will take you through our results for the quarter and year end with the aid of the slide presentation Carlos mentioned before. So we can go on, Carlos, to slide five for the presentation. Through our work over the last three years, we have come to place ourselves in the most exciting position today as we are delivering significant growth in gold production in a rising precious metals market. Our production guidance from our three mines is in the range of 260,000 to 300,000 gold equivalent ounces, an increase of 80 to 100% over 2020. Next slide, please. Under highlights for the quarter, we have reported record-breaking free cash flow of 34.5 million. and our business operates with a robust adjusted EBITDA margin of 43%. We have strong liquidity of $132 million with net debt of $34 million and a debt to EBITDA ratio of 0.4. We expect to be net cash positive again this year. Lindero produced first gold in October 2020 and delivered 13,000 435 ounces in the fourth quarter as part of commissioning and ramp-up activities. During this ramp-up quarter, Pindero was cash positive generating approximately $5 million in free cash with an all-in sustaining cost under $1,100. Ramp-up to design capacity continues during Q1 of this year. During this unprecedented year, our operations suffered temporary suspensions of production. The San Jose mine in Mexico was down for 54 days. The Cayoma mine in Peru was down for 21 days. And Vindero construction activities were suspended for almost three months, considering remobilization. The company was quick to implement containment measures for COVID across all sites, mitigating risks to our people, neighbors, while complying Applying with rapidly changing government regulations and guidelines and ensuring business continuity. For direct costs attributable to managing the COVID risks across all sites amounted to $4 million in the year. Moving on to slide seven. We're listening to our shareholders and stakeholders in general. We're not only improving or reporting on ESG, but undergoing a cultural change of the way we incorporate sustainability in our strategy and business planning. Through rigorous materiality assessments, we're prioritizing our efforts. This is a journey of continuous improvement. We have strength in governance, as evidenced by the rating agencies, and areas of improvement in taking longer-term views on environment and social. We're committed to show Fortuna as a strong ESG performer. Next slide, please. On slide eight of the presentation, we share our key safety performance indicators. We present KPIs as a 12-month rolling average to better represent trends. Our trend of improvement over the last years was truncated by the challenges imposed by COVID, particularly on the second half of 2020. In the last months of the year, we experienced a spike in total recordable incidents and lost time injuries. COVID restrictions, particularly at the San Jose mine and startup of operations at Lindero, explained the poor performance, high rotation of personnel, due to COVID contact tracing and incidents of suspect cases and inability to mobilize experienced operators and supervisors for Argentina due to the closing of the borders to foreigners weighted heavily on these results. I can share. that for the start of 2021, we're seeing material improvements in performance at the Lindero mine, while some challenges remain at San Jose. With respect to production for the quarter, silver production went down against the comparable quarter as a result of lower grades at the San Jose mine, 17% lower grades. And gold was up 100% due to the contribution of first gold production from Lindero. Next slide, please. For the year, silver production was down 19%, mainly driven by the 54 days of suspension of production at San Jose. and the impact of lower grades. Gold was up 10% of the back of Lindero contribution to production, as I mentioned in the fourth quarter. Next slide, please. Sales in the fourth quarter. Silver and gold had an almost equal contribution to sales of 40 to 45%, and we captured in our sales and margins the benefit of increased prices for both silver and gold. We sold silver in the quarter at a price of $24.40 per ounce and gold at a price of $1,864. Sales in the quarter jumped 50% to $103 million. For EBITDA jumped 48% to $45 million. And our adjusted net income jumped 111% to $23 million or 12 cents per share. Next slide, please. For the year. We reported sales of 280 million and a very healthy EBITDA of 112 million with a margin of 40%. Our costs were impacted from the all-in sustaining perspective from the lower production. of silver at the San Jose mine, again, as a result of the shutdown and lower grades. And at or costs were impacted also by the equivalency ratios with base metals. Next slide, please. We have concluded. In 2020, a capital-intensive phase that we had embarked on for the last three years. The construction of Lindero is over, and we are in the commissioning and ramp-up phase. CAPEX budgets are trending now in or within the bounds of sustainability investment at all three sites. We are re-energizing also exploration, looking forward and we provided this, we shared this in our guidance. We are re-energizing our budgets on exploration. We have traditionally been investing up until 2017, approximately 4% of sales on exploration and having budget drilling meterage of always in excess of 30,000 meters. In 2020, our exploration budget was a low $8 million. we drilled 8,000, sorry, drilling meters was a low 8,000 meters. And as a percentage of sales or investment and exploration was under 2% of sales. For 2021, we are taking our exploration budgets back again to a level of around 4, 4.5% of sales and drilling meterage is being expanded to in excess of 40,000 meters a year. That is the kind of meterage and exploration investment we need to not only replenish reserves, resources, but also expand them. So in 2021, exploration is a topical issue. for us and you are going to see expanded investment on exploration now that the capital intensive phase of lindero construction is behind. Next slide, please. With respect to our Activities in Lindero, as by way of update, as at the end of February, our mining unit operations at Lindero are operating and delivering according to design capacity. Our ADR plant has been now for several months operating at design capacity taking the full 400 cubic meters per hour of pregnant solution and achieving cold extractions in the range of 90%. The primary and secondary crushing circuits as of the end of February are operating at 67% of design capacity. And this month of March, we're already seeing solid days at within 85% of design capacity. At the HPR agglomeration and stacking, we are at 23% of design capacity. Here, the limiting factor has been the stacking system. We have been dealing with operating and dealing issues at the packing system. But I can advance that already in these early days of March, we're seeing performance, you know, improving and closer, solid days closer to 30, 40% of design capacity, no? So, all in all, we're seeing a strong trend in the right direction. And we are expect, continue to expect material advances on the ramp up this month of March as we implement several measures and corrective measurements, measures on a lot of the components of the process, right? But most importantly, all of these things are issues we can address and correct. But our models, our reserve models are conciliating extremely well against production. And our leaching kinetics, cold leaching kinetics are performing according to our design parameters and expectations. So those are two things I want to highlight. And also the fact that, as I mentioned before, we're trending in the right direction with respect to our expectations on ramp up. We're still slightly behind, somewhat behind on the stacking, but we're seeing solid improvement in March. Next slide, please. I think this is the end of my update on the presentation. Now I'll pass it on to Luis, who will give you the highlights of the financial results.