Release Date: August 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fortuna Mining Corp (FSM, Financial) reported significant operational and financial results in Q2 2024, with a production of 116,000 gold equivalent ounces.
- The company achieved a robust adjusted EBITDA of $113 million, reflecting a strong margin of 43%.
- Fortuna successfully placed $172 million in convertible notes, which were three times oversubscribed, increasing liquidity to $350 million and lowering the cost of capital.
- The Seguela mine's processing plant exceeded expectations, operating at 36% above its design capacity, which helped mitigate power outages.
- The emerging Kingfisher discovery at the Seguela mine shows promising potential, with continuous mineralization identified over a two-kilometer strike length.
Negative Points
- The Lindero mine experienced a slight 2% decrease in gold production due to longer-than-expected maintenance pauses.
- San Jose mine faces potential closure or transition to care and maintenance due to the exhaustion of mineral reserves by year-end.
- Power supply limitations affected operations at Seguela and Yaramoko mines, although mitigated by optimization efforts.
- The company faces increasing costs due to the appreciation of the Mexican peso, impacting operations at the San Jose mine.
- Yaramoko mine experienced a seismic event causing a temporary halt in mining operations, which may affect production in the third quarter.
Q & A Highlights
Q: What proportion of revenue comes from base metals, and how do you see this changing over the next 6 to 12 months?
A: Base metals currently account for about two-thirds of revenue at the mine. Historically, silver and base metals were evenly split in terms of revenue contribution, but this has shifted. We expect the current revenue split between silver and base metals to remain consistent through 2024 and 2025.
Q: Can you expand on the current thinking regarding the San Jose mine for next year?
A: We have three options for San Jose: a progressive closure by year-end, placing the mine on care and maintenance while continuing exploration, or continuing mining depending on the success of ongoing work. We are short on reserves but are optimizing resources to potentially convert them into reserves. A decision is expected by the third quarter.
Q: Could you provide an update on the share repurchase program and any potential participation in a Zoom call with Water Tower Research?
A: We have a share repurchase program in place but have not been active recently. We constantly revisit this based on market conditions and valuation. Regarding the Zoom call, we are open to engaging with new research entities and can arrange a conversation through our Investor Relations.
Q: What are the next steps for the Kingfisher discovery, and is there potential to incorporate it into the mine plan soon?
A: We have drilled about 14,000 meters at Kingfisher, outlining mineralization over a two-kilometer strike. We plan to continue drilling to produce a first resource estimate by year-end. Most of the resource will be inferred initially, with infill drilling planned for early 2025. It's too early to incorporate it into the mine plan, but we are excited about its potential.
Q: How is the company managing power outages at the Seguela mine, and what impact does this have on production?
A: We mitigated power outages by running the mill at a higher rate and sourcing higher-grade ore. In July, we received almost full power from the grid, allowing us to revert to our normal mining schedule. You should expect to see grades decline from Q2 levels, but we aim to maintain higher throughput.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
