Fortuna Silver Mines Inc. (NYSE:FSM)(TSX:FVI)(BVLAC:FVI)(FRANKFURT:F4S) today
reported record revenue of $45.5 million, cash generated from operations, before
changes in working capital of $16.9 million and net income of $4.9 million in
the first quarter of 2014.
Jorge A. Ganoza, President and CEO, commented, "We have reported record
quarterly revenue and strong operating margins underpinned by excellent
production results and cost performance. We are pleased with our results for the
first quarter of 2014 and look forward to a second quarter that reflects the
ramp-up at San Jose delivered in April from 1,800 to 2,000 tonnes per day."
First quarter financial highlights:
-- Sales of $45.5 million
-- Cash flow from operations before changes in non-cash working capital of
$16.9 million or cash flow per share of $0.13
-- Net income of $4.9 million or earnings per share of $0.04
-- Cash position, including short term investments, and working capital as
at March 31, 2014 were $62.1 million and $70.4 million, respectively
-- Silver and gold production of 1,536,859 and 8,150 ounces, respectively
-- Cash cost per ounce of payable silver, net of by-product credits was
$4.75(i)
-- All-in sustaining cash cost(ii) per ounce of payable silver was $16.52
(i)Cash cost per ounce of payable silver, net of by-product credits for
gold, lead, and zinc
(ii)All-in sustaining cash cost is net of by-product credits for gold, lead,
and zinc
First quarter financial results
Net income was $4.9 million (Q1 2013: $6.7 million) and earnings per share were
$0.04 (Q1 2013: $0.05). The decrease in net income in the face of a significant
increase in silver and gold production is attributable to a significantly lower
metal price environment.
Sales increased 12% in the context of significantly lower realized silver and
gold prices (33% and 21%, respectively) as a result of higher silver and gold
metal sold (57% and 87%, respectively). Mine operating earnings improved 3% over
the first quarter of 2013 while gross margins (mine operating earnings over
sales) decreased from 41% to 38%. The impact of lower metal prices on gross
margins was offset to a large extent by significantly lower unit cash costs (15%
and 7% lower at San Jose and Caylloma, respectively) as well as higher head
grades and metal recovery. Net income was further affected by higher share-based
compensation charges of $1.7 million mainly related to mark-to-market effects.
Cash flow from operations, before changes in working capital, increased 4% to
$16.9 million (2013: $16.3 million). The increase reflects the higher sales of
12% over the prior-year period.
Operating Results
QUARTERLY RESULTS
-------------------------------------------------------------
Three months ended March 31,
-------------------------------------------------------------
2014 2013
-------------------------------------------------------------
Consolidated
Metal
Production Caylloma San Jose Consolidated Caylloma San Jose Consolidated
----------------------------------------------------------------------------
Silver (oz) 539,824 997,035 1,536,859 499,445 492,773 992,218
Gold (oz) 524 7,627 8,150 532 3,960 4,492
Lead (000's
lbs) 3,893 - 3,893 4,614 - 4,614
Zinc (000's
lbs) 6,529 - 6,529 5,936 - 5,936
Production
cash cost
(US$/oz
Ag)(i) 6.92 3.59 4.75 6.91 6.30 6.60
All-in
sustaining
cash cost
(US$/oz
Ag)(i) 13.18 14.41 16.52 23.65 24.53 27.39
(i) Net of by-
product
credits
Silver and gold production totaled 1,536,859 and 8,150 ounces, respectively,
exceeding by 12% and 13%, respectively, the Company's budget for the
first-quarter of 2014. Compared with the prior-year period, silver and gold
production increased 55% and 81%, respectively, explained largely by the
commissioning of San Jose's plant expansion, to 1,800 tpd, on September 2013.
The company is on schedule to produce 6 million ounces of silver and 32,300
ounces of gold or 7.9 million Ag Eq(i) ounces in 2014.
All-in sustaining cash cost per payable ounce of silver decreased to $16.52 (Q1
2013: $27.39) as a result of lower sustaining capital and brownfields
exploration expenditures and higher payable ounces of silver (refer to non-GAAP
financial measures). All-in sustaining cash cost per payable ounce of silver was
in line with guidance.
(i)Ag Eq estimated based on gold price of $1,260/oz and silver price of
$21/oz.
San Jose Mine, Mexico
QUARTERLY RESULTS
----------------------------
Three months ended March 31,
----------------------------
2014 2013
----------------------------
Mine Production San Jose San Jose
----------------------------------------------------------------------------
Tonnes milled 150,708 93,478
Average tonnes milled per day 1,748 1,076
Silver
Grade (g/t) 229 184
Recovery (%) 90 89
Production (oz) 997,035 492,773
Gold
Grade (g/t) 1.74 1.48
Recovery (%) 90 89
Production (oz) 7,627 3,960
Unit Costs
Production cash cost (US$/oz Ag)(i) 3.59 6.30
Production cash cost (US$/tonne) 66.61 77.96
Unit Net Smelter Return (US$/tonne) 172.52 199.48
All-in sustaining cash cost (US$/oz Ag)(i) 14.41 24.53
(i) Net of by-product credits
Silver and gold production was 12% and 13% above budget, respectively. Average
head grades for silver and gold were 229 g/t and 1.74 g/t, respectively, or 13%
above plan for both. Compared to the first quarter of 2013, silver and gold
production rose 102% and 93% on the back of 61% higher processed ore and higher
head grades of 24% and 17%, respectively.
Cash cost per tonne of processed ore was $66.61/t, or 15% below the first
quarter of 2013, and in line with guidance of $67.10/t. All-in sustaining cash
cost per payable ounce of silver at San Jose was $14.41 (refer to non-GAAP
financial measures), in line with guidance for the year.
The expansion of the San Jose Mine's processing plant capacity from 1,800 tpd to
2,000 tpd was successfully completed and commissioned in the first week of April
2014. Due to the continuing exploration success at Trinidad North, the company
is assessing the economic robustness of a potential expansion of the operation
to 3,000 tpd.
Caylloma Mine, Peru
QUARTERLY RESULTS
----------------------------
Three months ended March 31,
----------------------------
2014 2013
----------------------------
Mine Production Caylloma Caylloma
----------------------------------------------------------------------------
Tonnes milled 114,115 111,416
Average tonnes milled per day 1,297 1,266
Silver
Grade (g/t) 174 173
Recovery (%) 85 81
Production (oz) 539,824 499,445
Gold
Grade (g/t) 0.32 0.38
Recovery (%) 44 40
Production (oz) 524 532
Lead
Grade (%) 1.66 2.10
Recovery (%) 93 89
Production (000's lbs) 3,893 4,614
Zinc
Grade (%) 2.87 2.79
Recovery (%) 90 86
Production (000's lbs) 6,529 5,936
Unit Costs
Production cash cost (US$/oz Ag)(i) 6.92 6.91
Production cash cost (US$/tonne) 87.85 94.20
Unit Net Smelter Return (US$/tonne) 148.59 194.30
All-in sustaining cash cost (US$/oz Ag)(i) 13.18 23.65
(i) Net of by-product credits
Silver production was 10% above budget, mainly due to an improvement in silver
metallurgical recovery from 81% to 85%. Silver's average head grade was 174 g/t,
or 7% above plan and metallurgical recovery was 85%, or 3% above budget.
When compared with the prior-year period, silver production increased 8% due to
a 5% increase in metallurgical recoveries. Zinc production increased 10% as a
result of higher head grade. Lead production decreased 16% when compared with
the prior-year period.
Cash cost per tonne at Caylloma was $87.85/t of processed ore, 7% lower than the
first quarter of 2013, and 1% below guidance. This decrease is the result of
cost-reducing measures undertaken at the beginning of the third quarter of 2013
which consisted mainly of an optimization in mine preparation activities and
reductions in related personnel expenses and technical services. All-in
sustaining cash cost per payable ounce of silver at Caylloma was $13.18 (refer
to non-GAAP financial measures), below our annual guidance due to lower
sustaining capital expenditures in the period.
The financial statements and MD&A are available on SEDAR and have also been
posted on the company's website at
http://www.fortunasilver.com/s/financial_reports.asp.
Conference call to review 2014 first quarter financial and operations results
Date: Tuesday, May 13th, 2014
Time: 9:00 a.m. Pacific / 12:00 p.m. Eastern / 11:00 a.m. Lima
Dial in number (Toll Free): +1.877.407.8035
Dial in number (International): +1.201.689.8035
Replay number (Toll Free): +1.877.660.6853
Replay number (International): +1.201.612.7415
Replay Passcode: 13581678
Playback of the webcast will be available until August 13th, 2014. Playback of
the conference call will be available until May 27th, 2014 at 11:59 p.m.
Eastern. In addition, a transcript of the call will be archived in the company's
website: http://www.fortunasilver.com/s/financial_reports.asp.
About Fortuna Silver Mines Inc.
Fortuna is a growth oriented, silver and base metal producer focused on mining
opportunities in Latin America. Our primary assets are the Caylloma silver Mine
in southern Peru and the San Jose silver-gold Mine in Mexico. The company is
selectively pursuing additional acquisition opportunities throughout the
Americas. For more information, please visit our website at
www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza, President, CEO and Director
Fortuna Silver Mines Inc.
Trading symbols: (NYSE:FSM) / (TSX:FVI) / (BVLAC:FVI) / (FRANKFURT:F4S)
Forward-Looking Statements
This news release contains forward-looking statements which constitute
"forward-looking information" within the meaning of applicable Canadian
securities legislation and "forward-looking statements" within the meaning of
the "safe harbor" provisions of the Private Securities Litigation Reform Act of
1995. Forward-looking statements are statements that are not historical facts
and that are subject to a variety of risks and uncertainties which could cause
actual events or results to differ materially from those reflected in the
forward-looking statements. When used in this document, the words such as
"anticipates", "believes", "plans", "estimates", "expects", "forecasts",
"targets", "intends", "advance", "projects", "calculates" and similar
expressions are forward-looking statements.
The forward-looking statements are based on an assumed set of economic
conditions and courses of actions, including estimates of future production
levels, expectations regarding mine production costs, expected trends in mineral
prices and statements that describe Fortuna's future plans, objectives or goals.
There is a significant risk that actual results will vary, perhaps materially,
from results projected depending on such factors as changes in general economic
conditions and financial markets, changes in prices for silver and other metals,
technological and operational hazards in Fortuna's mining and mine development
activities, risks inherent in mineral exploration, uncertainties inherent in the
estimation of mineral reserves, mineral resources, and metal recoveries, the
timing and availability of financing, governmental and other approvals,
political unrest or instability in countries where Fortuna is active, labor
relations and other risk factors.
Although Fortuna has attempted to identify important factors that could cause
actual results to differ materially from those contained in forward-looking
statements or information, there may be other factors that cause results to be
materially different from those anticipated, described, estimated, assessed or
intended. There can be no assurance that any forward-looking statements or
information will prove to be accurate as actual results and future events could
differ materially from those anticipated in such statements or information.
Accordingly, readers should not place undue reliance on forward-looking
statements or information.
FOR FURTHER INFORMATION PLEASE CONTACT:
Fortuna Silver Mines Inc.
Investor Relations:
Carlos Baca- T (Peru):
+51.1.616.6060, ext. 0
www.fortunasilver.com
Fortuna Silver Mines (TSX:FVI)
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