Fortuna Mining Corp

Good day, ladies and gentlemen, and welcome to the Fortuna Silvermine's third quarter financial and operational results call. At this time, all participants have been placed on a listen-only mode, and the floor will be opened for questions and comments after the presentation. If you would like to join the queue for questions, please press star 1 at any time. To leave the queue, please press star 2. It is now my pleasure to turn the floor over to your host, Carlos Baca, Director of Investor Relations. Sir, the floor is yours.

Thank you, Kate. Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silver Mines and to our financial and operations results call for the third quarter of 2021. Hosting the call today on behalf of Fortuna will be Jorge Alberto Ganosa, President and Chief Executive Officer, Luis Darío Ganosa, Chief Financial Officer, Cesar Velasco, Chief Operating Officer, Latin America, and Paul Criddle, Chief Operating Officer, West Africa. Today's earnings call presentation is available on the featured presentation box on our homepage at fortunasilver.com. As a reminder, statements made during this call are subject to the reader advisories included in yesterday's news release and in the earnings call presentation. Financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars unless otherwise stated. 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 MDNA, which are publicly available on CDER. 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. In the quarter, we delivered record sales of 163 million, adjusted net income of 22.5 million, EBITDA of 75 million, with a strong consolidated EBITDA margin of 46%. This solid financial performance is on the back of record gold production driven by the Lindero mine, and this being the first quarter where we incorporate results from our West Africa business. As of the end of the quarter, We have liquidity available of $136 million and run the business with a conservative debt to EBITDA ratio of 0.2. Also, during the quarter, we announced the start of construction of our Seguela mine in Cote d'Ivoire. We plan for Seguela to start production and continue driving growth for the company by mid-2023. We concluded successfully our 100-day integration plan with Roxwood. Integration of our combined business has been a smooth process, and the main reason, of course, is the quality of people and shared values. We always said that in combining our business, we were not only acquiring quality assets, but a team of seasoned professionals with whom we shared a similar view of how you create value in our business. After the end of the quarter, on November 5th, we renewed our credit facility and expanded it to $200 million, Out of this amount, 120 million is currently available, with the full amount to become available upon the San Jose permit issue being resolved. In the quarter, we also managed to successfully settle for 9.6 million the disputed royalty claim with the Geological Survey and Secretary of Economics of Mexico on one of our main concessions at the San Jose mine. This has been a protracted, complex negotiation, where we achieved an arrangement to the satisfaction of the company and the said authorities. Now, what has tainted a good quarter is this new issue where the Mexican Ministry of Environment, Semarnat, has, on November 10th, denied our request for a 10-year extension of the environmental permit of our San Jose mine. This renewal process is something we started on May of this year, Semarnat is citing two main reasons for the denial. One, not receiving requested information from us, and second, that we have an open evaluation for the regularization of 73 ancillary facilities not declared in the original 2009 Environmental Impact Statement. With respect to the first point, we have already provided proof that dating back to 2019, we have been submitting and complied with the said information. And second, we are of the strong view that the regularization of ancillary infrastructure, which is a process that we initiated in 2019 and is currently in the hands of Semarnat, and evaluates the mitigation of impacts for a greenhouse a soccer field, a weather station, a core shack, and drill core storage facilities, an office, a 40,000-liter fuel trunk, a power transformer, and other infrastructure of similar nature cannot provide grounds for a denial. Additionally, our legal team is also of the strong view that the regularization of 73 works does not form part of the request for the extension. The deadline for Semarnat to provide a response to our 10-year extension application expired on Saturday, October 23rd. This was informed on a press release dated October 25th. Before the October 23rd date, and as a precautionary measure, the company, we initiated legal actions in Mexican courts and obtained preliminary protection to continue operations considering a potential delay in obtaining the extension or a questionable denial. Or San Jose Mine is currently operating under the protection of these court actions. And we seek to strengthen this protection from the courts with the recent notification received from Semarnat. Our legal team is evaluating and working on this. Our credit agreement on our senior bank facility requires that we obtain a permanent injunction or similar protection before November 20th. We have engaged with our lenders to provide for the flexibility and time that this circumstance requires. Additionally, we have not exhausted the avenue of dialogue with Semarnat and Mexican authorities. We have the right to and will file an appeal to this negative resolution and have scheduled meetings with high-ranking Semarnat officials trying to untangle this unfortunate situation. Semarnat has also informed that they favor a consultation procedure on the environmental impact assessment under evaluation covering the 73 ancillary facilities. The company is not opposed to any consultation procedure that adheres to the mechanisms provided in the environmental impact assessment, which are very clear and supported by jurisprudence in Mexico. Mexico is a country with a long and proud mining tradition, and we view this position for Semarnat as unprecedented. We are pursuing all avenues available to solve this as soon as we can. Under ESG, our prioritized KPIs show improvement for greenhouse gas emissions, water, and energy efficiency over the last year, comparable quarter. Our figures are benefiting from the inclusion of measurements from our Lindero mine starting this year. We reported two lost time hand accidents of minor consequence in the quarter, one at the San Jose mine and one at the Lindero mine. Our figures for women in the labor force were impacted by the migration from a contractor-operated underground mine at San Jose to an owner operation where we incorporated approximately 265 workers to our payroll. At our Cayoma mine in Peru, we successfully closed a six-year agreement with the community of Cayoma, which provides a solid framework for the relationship with all relevant stakeholders under our area of influence for the coming years. With respect to production, compared to last year's quarter, our gold production has expanded by 400% to 65,500 ounces. Our largest contributor for gold was the Yaramoco mine in Burkina Faso with 28,750 ounces, followed by Lindero with 26,000 ounces of gold. Of note is our Cayoma mine, which since last year is contributing small but consistent gold that we estimate to be around 5,000 ounces a year. A small amount, perhaps, on the bigger picture, but a welcome and meaningful contribution to the economy of that mine. Silver production from our San Jose and Cayoma mines stood at 1.7 million ounces in the quarter. The shortfall with respect to the comparable quarter is explained by lower silver production at San Jose impacted by downtimes as the mine transitioned from contractor to owner operations at the underground mine and the lower grades compared to Q3 of last year. Precious metals accounted for 88% of our $162 million in sales. Silver accounted for 22% of sales. Our costs tracked in line with our guidance range for the year at all our operations san jose exceeded cost inflation against the comparable quarter driven by lower silver and gold production stemming from lower grades and slightly higher optics of about seven percent i will now have a cesar velasco or chief operating officer for latam and paul creedle or chief operating officer for west africa provide some highlights from from their respective regions. So Cesar, you want to go ahead?