Fortuna Mining Corp

minds q3 2023 financial and operational results call at this time all participants are in a listen only mode and the floor will be open for questions after the presentation if anyone should require operator assistance during the conference please press star zero on your phone keypad please note this conference is being recorded i will now turn the conference over to your host Jorge Roberto Ganosa, CEO of Fortuna Silver Mines. Jorge, over to you.

Thank you, Jenny, and good morning to all and welcome again. In addition to myself, we have on the line Luis Darío Ganosa, Chief Financial Officer, Cesar Velasco, Chief Operating Officer of Latin America, and David Whittle, our Chief Operating Officer for West Africa. For your reference, during the conference call, we have provided a third quarter results presentation available on the landing page of our website under feature presentations. As we will be making forward looking statements during the call, please refer to our cautionary statements included in the presentation, news release, MD&A, and the risk factors in our annual information form. Technical information in the presentation has been reviewed and approved by Eric Chapman, our Senior Vice President, Technical Services and qualified person. Financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars unless otherwise stated. Yesterday before market opened, we reported record production and financial results. Our noteworthy results are the successful outcome of two years of hard work and focused execution on our strategic plan. We have placed ourselves in a strong position to deliver shareholder value today and into the future. Since the ROX Gold acquisition in mid-2021, we have successfully expanded and consolidated our presence in two of the most exciting mining regions in the world, West Africa and Latin America. We have a balanced mine asset portfolio that offers multiple value enhancing opportunities. Now let me tell you why the achievements of this quarter are so important. I see this as an inaugural quarter due to the start of contribution of our fifth and flagship mine, Seguela. So I'll be comparing performance versus the previous second quarter, which I believe helps better see the impact and the change in the business. Production and financial results are highlighted by record figures across all relevant metrics of the business. Gold equivalent production of 128,671 ounces, an increase of 38% compared to the second quarter of this year. Sales of $243 million, an increase of 53% compared to the second quarter. Net earnings of 27 and a half million or $0.09 per share, adjusted net earnings of $0.10 per share, beating analyst consensus, and a notably large free cash flow from operations amounting to $70 million compared to $9.5 million in the second quarter. Our consolidated cash cost was well below $900. and ASIC was $1,312 per gold equivalent ounce. We continued tracking well to meet the upper end of guidance range for the year, powered by the Yaramoku, Seguela, and Cayoma mine contributions. The record financial performance was mainly driven by Seguela, our flagship mine, contributing full quarter production for the first time. In addition, We also benefited from higher gold production at Yaramoco related to higher grades in new extensions of Zone 55, as well as an overall steady performance across the mine's portfolio, where we observed abating inflation in consumables and recorded gains from continued optimization initiatives. In terms of the Seguela mine, we were still ramping up production during the third quarter, By the end of September, the process plant was exceeding main plate capacity of 154 tons per hour by 13%. Looking forward, in the fourth quarter, we expect to benefit from steadier production at higher throughput rate. The mine recorded goal production of 31,498 ounces at a cash cost of $395 per ounce. and ASIC of $788 per ounce, industry-leading cost. Over the coming months, we expect cash cost and ASIC to gradually gravitate towards our guidance projections in the range of $500 for cash cost and $1,000 for ASIC. This is explained by higher projected stripping in our plants and longer haulage distances as pit operations advance. David will provide further insights into our operations at Seguel and Yaramoco later on. As we transition out of two years of intensive investment and enter a cash harvest phase, capital allocation becomes a topical issue for us. Our priorities are to continue strengthening the balance sheet through debt reduction. Our debt leverage ratio currently stands at a low 0.5 times net debt to EBITDA. However, we want to see that ratio well below 0.5 under different conservative scenarios. Another priority is ensuring exploration programs remain well funded with a focus on high value opportunities in the portfolio and reserve replacement at our mines. Currently, we have 11 drill rigs turning across our property. and we remain open to other avenues to continue enhancing shareholder value. For example, with our bank lenders, we're in discussions to lift certain covenants to become active again on our share repurchase program. In September, we completed the acquisition of Chesser Resources and the Diambasut GO project in Senegal. Diambasut is an exciting advanced stage exploration opportunity and a very strategic fit for us. It complements our advanced project pipeline and Senegal is a near neighbor country to our existing operations. We're making best use of time here and are already drilling with three rigs, exploring for additional ounces. Also during September and October, we had good news at our San Jose mine in Mexico. We announced receipt of a positive Mexican court ruling reinstating our 12-year environmental impact authorization. The court did not give any credit to the surprising January resolution issued by the Mexican environmental agency Semarnat. Our mine has operated normally throughout this saga with Semarnat, and we hope this noise is behind us now. In September, we announced the discovery of a new high grade mineralized structure at San Jose named Yesi. The discovery hole intersected 9.9 meters at 1.2 kilogram silver equivalent per ton within a broader halo of mineralization. Yesi is located east of the main Trinidad Victoria system where production takes place currently. and some 200 meters from existing underground infrastructure. ESE is a blind discovery, meaning it does not have any recognizable surface expression, and we're currently drilling with two core rigs, working to gain better geologic understanding of this new zone. On health and safety, across the business, we recorded one LTI. As of the end of the quarter, Our year-to-date LTI frequency rate stands at 0.38 and the total recordable frequency rate at 0.86. This compares to 0.22 and 2.37 a year ago, respectively. Worth noting is the achievement of our Yaramoko mine team, which in the quarter recorded three years free of lost time injuries. Year to date, we have no reportable events on the environment. I will now let David and Cesar provide a high-level overview of our business and performance in West Africa and Latin America. We can start with you, David.

Yes, thanks, Jorge. Operations in West Africa performed strongly during the third quarter of 2023. All sites demonstrated excellent safety performance with no significant incidents. and zero LTIs. At Sagala, the mine's first full quarter of production resulted in 31,498 ounces of gold, which followed the successful completion of the processing plant performance test in August. The operation is now exceeding nameplate capacity. At Yaramoko, guidance was increased by approximately 40% to 110,000 to 120,000 ounces, and the mine also achieved a milestone of operating three years without an LTI. In the third quarter, Sagala mined 502,326 tonnes of ore at an average grade of 3.48 grams per tonne and 1,156,540 tonnes of waste for a strip ratio of 2.3. All processed was 310,387 tonnes at 3.83 grams per tonne. Mining operations focused on the antenna pit in order to access the higher grade areas and to source sufficient fresh rock for the completion of the processing plant's performance test. At the Ancien pit, the first programme of grade control drilling took place. Topsoil stripping and storage commenced and the haul road construction continued as planned. At the cooler pit, Initial grade controlling started and should be completed in the fourth quarter of this year. Process plant operations ramped up beyond the nape plate capacity of 154 tonnes per hour during the quarter, achieving an average rate of throughput of 162 tonnes per hour. In September, an average throughput of 174 tonnes per hour was reached. Process plant improvements are currently allowing for a feed blend of approximately 40% transitional and oxide ore, which enables the processing of additional quantities of some of the higher-grade oxide ore mined earlier in the year. Long-term oxide transitional feed will be in the order of 10% to 15%. Segala's strong performance resulted in both cash cost per ounce and ASIC being below guidance range at $395 and $788 an ounce, respectively. Following the operation's strong performance in the quarter, we continue to see improvements in throughput and a continuation of good grades and positive reconciliation into the processing plan. As a result, we expect gold production to achieve the upper end of guidance. At Yaramoto, strong production and performance delivered 34,036 ounces of gold. Mine production at Yaramoto was 127,060 tonnes and an average grade of 8.12 grams per tonne. Mining operations were chiefly from the 55-zone underground mine. Development continued at the QV ore body at the Bagasi mine, with the first doping operations commencing during the end towards the end of her quarter. At the processing plant, 137,281 tonnes were treated at an average grade of 7.72 grams per tonne with coverage at 98.5% enabled by the increased feed grade. The increase in production resulted in the year to date ASIC at Karamoko being below the lower end of annual guidance at $1,429 per ounce. In the third quarter, Roxgold, in cooperation with other mining groups and stakeholders, engaged with the government of Burkina Faso with regards to the government's proposed variation to metal royalties. This collaborative approach has seen a small increase in royalties of 1.5% at current gold prices, with a maximum increase of 2% once coal prices exceed $2,000 an ounce. Mining development operations continue to encounter high-grade areas with ore body widths generally greater than previously experienced. Stoping activities are starting to progress in some of these higher-grade areas, and as a result, we expect 2023 production to be within the revised diamonds range of 110,000 to 120,000 ounces. The company anticipates having a similar gold production range in 2024. Diamond drilling during the third quarter was focused on the lower eastern side of the 55 zone ore body. Drill results have seen an extension on strike to expected mining boundaries, as well as the inclusion into the mine plan of an additional eastern ore drive at the lowest part of the 55 zone ore body. Drilling in the fourth quarter and throughout 2024 will focus again on testing further western strike extensions of 55 zone as well as testing for potential deeper extensions. Back to you Jorge.