Fortuna Mining Corp

Greetings and welcome to the Fortuna Silver Mines first quarter 2023 financial and operational results call. At this time, all participants are in a listen-only mode and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note, this conference is being recorded. I will now turn the conference over to your host, Carlos Vaca, Director of Investor Relations. Sir, you may begin.

Thank you, Ali. Good morning, ladies and gentlemen. I would like to welcome you to the Fortuna Silvermine's first quarter 2023 financial and operational results conference call. 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, David Whittle, Chief Operating Officer, West Africa, and Paul Whedon, Senior Vice President, Exploration. Today's earnings call presentation will be available on our website, fortunasilver.com. As a reminder, statements made during this call are subject to the reader's 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 MD&A, 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, President, Chief Executive Officer, and co-founder of Fortuna.

Thank you, Carlos. Good morning to all. Our business performed well during the first quarter. We recorded net income of $0.04 per share. achieved production of 94,110 gold equivalent ounces on track to meet annual guidance, and our costs were all in line with our guidance projections for the period. The sustained worldwide inflation and corresponding cost creep that we all experienced over the past couple of years has been compressing business margins across the precious metals mining industry This despite initiatives to optimize our operations and streamline the business. Gold and silver prices did not provide any significant relief on margins as of Q1 2023, but going into the second quarter, metal prices and margins for the business are looking much stronger. For average realized gold price for Q1 was $1,893. which is essentially flat against what we realized in the comparable quarter for 2022, and only 7% higher against a realized price two years ago in Q1 2021. For silver, the story is even a bit more difficult. For 2023, we realized, for this Q1, we realized $22.52, which is 14% lower against the $26.20 we realized in Q1 2021. Over the last year, quarter against comparable quarter or consolidated cash cost per ounce went from $772 per ounce to $923 per ounce, up 20%. Despite all this, Evita came in at a healthy $65 million, and the business generated net cash from operating activities of $41.8 million. After meeting all our sustaining capital demands, funding corporate expenses, and paying $12.9 million in taxes, the business generated free cash flow of $8.7 million. Luis will expand on our management discussion of financial results later in this presentation. Subsequent to the end of the quarter, we have had a few relevant events of importance that I want to mention. During April at the San Jose mine in Mexico, we had to contend with a 15-day stoppage derived from a union claim demanding increasing profit sharing. Beyond what's stipulated by law, this dispute has been resolved and operations resumed. In early May as well, the Mexican government approved a new mining reform, which we view as negative for investment in the country, unfortunately. For starters, mineral exploration in open ground becomes an activity reserved for the government. And existing mineral concessions and mine operations will be subject to many questionable articles in the law, which provide for higher costs and uncertainties to investment. we expect there will be many constitutional appeals filed with the Supreme Court of Justice in Mexico against the new law coming from mining companies and other interest groups. Another item to be aware of is our first gold pour at the newly built Seguela mine, which is imminent, and we expect the pour in this second half of May. And on May 8th, we announced we reached an agreement with Chesser Resources to acquire 100% of the company for an all-share consideration, representing approximately 5.1% of the pro forma fortuna. We expect this transaction to close in late August. Chesser is of great strategic fit to fortuna. Geographically, the Chesser properties are located in Senegal, a near-neighboring country to our existing operations in Côte d'Ivoire and Burkina Faso, a mining-friendly jurisdiction, Senegal, and a place where we can leverage our West African management infrastructure and expertise. The Diambasut project is a high-value advanced exploration opportunity with multiple targets still to be drill tested. Located in the heart of the Senegal-Mali shear zone, within a few kilometers of Tier 1 mines in the portafolio of gold majors. And the preliminary economic assessment carried by Chesser on the AMBA suit outlined a conventional open pit and CIL process that even with a sub-million ounce gold resource as it stands today can deliver robust internal rates of return above our minimum investment threshold. Paul Whedon, our Senior Vice President of Exploration, is with us. Paul, can you please share our views on the exploration opportunities that CHSAR presents to us?