Click here to close now.




















Welcome!

News Feed Item

Fortuna Reports Consolidated Financial Results for the Second Quarter 2014

(All amounts expressed in US dollars, unless otherwise stated)

VANCOUVER, BRITISH COLUMBIA -- (Marketwired) -- 08/12/14 -- Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (BVLAC: FVI) (FRANKFURT: F4S) today reported revenue of $44.3 million, cash generated from operations, before changes in working capital of $15.1 million and net income of $2.9 million in the second quarter of 2014.

Jorge A. Ganoza, President and CEO, commented, "Financial results for the second quarter reflect our continued emphasis on free cash flow generation through organic growth and cost control. We have delivered a consolidated all-in sustaining cash cost of $17.41 per ounce of silver, a reduction of twenty one percent compared to the previous year, and year to date our treasury plus trade receivables have increased by over $20 million." Mr. Ganoza continued, "At San Jose, our attention remains centered on laying out the next phase of organic growth as our step-out drilling campaign at Trinidad North continues to expand the new high-grade mineralized zone."

Second quarter financial highlights:


--  Sales of $44.3 million
--  Cash flow from operations before changes in non-cash working capital of
    $15.1 million and cash flow per share of $0.12
--  Net income of $2.9 million and earnings per share of $0.02
--  Treasury (cash position, including short term investments) and working
    capital as at June 30, 2014 were $60.2 million and $73.3 million,
    respectively
--  Silver and gold production of 1,630,422 ounces and 8,519 ounces,
    respectively
--  Cash cost per ounce of payable silver was $5.15
--  All-in sustaining cash cost(i) per ounce of payable silver was $17.41

(i) All-in sustaining cash cost is net of by-product credits for gold, lead and zinc

Second quarter financial results

Net income amounted to $2.9 million (Q2 2013: loss $10.6 million(ii)), resulting in earnings per share of $0.02 (Q2 2013: loss $0.08). Silver sold increased 44% to 1,610,805 ounces, while the realized silver price per ounce decreased 15% to $19.63 from the same period in the prior year. Net income was further affected by a $2.4 million mark-to-market effect on share-based compensation related to the rise in the share price during the period.

(ii) In the second quarter of 2013, the company recorded a $15.0 million non-cash impairment charge, offset by a $4.8 million deferred tax provision, related to Caylloma, and a non-cash write-off of mineral properties, plant, and equipment of $0.4 million related to the San Luisito concessions.

Adjusted net income rose to $2.9 million compared to an adjusted net loss of $0.1 million in Q2 2013 after adjusting for the write-off and impairment of mineral properties, property, plant and equipment (refer to non-GAAP financial measures).

Mine operating earnings increased 151% over the second quarter 2013, while gross margins (mine operating earnings over sales) increased to 37% from 22%. The impact of lower metal prices on gross margins was offset to a large extent by significantly lower unit cash costs at our San Jose Mine (down 17%) as well as higher head grades and metal recovery for silver and gold. Also explaining the increase in mine operating income quarter over quarter are $5.2 million negative sales adjustments in the second quarter 2013 compared to a positive $1.1 million adjustments in the second quarter 2014. These were mostly end of period adjustments related to mark-to-market of provisional metal pricing and final settlement.

Compared to the first quarter 2014 silver and gold production rose 6% and 5% respectively, however silver and gold sold was lower by 2% and 4% respectively due to timing issues of concentrate delivery.

Cash flow from operations, before changes in working capital, increased 157% to $15.1 million (Q2 2013: $5.9 million).

Basic earnings per share were $0.02 (Q2 2013: loss $0.08). Operating cash flow per share, before changes in working capital items, increased to $0.12 (Q2 2013: $0.05); refer to non-GAAP financial measures.

Cash and short term investments at the end of Q2 2014 was $60.2 million, an increase of $11.1 million over year end 2013. In addition trade accounts receivable increased by $9.5 million most of which was credited to our treasury in July 2014.

Operating Results


                                             QUARTERLY RESULTS
                               ---------------------------------------------
                                        Three months ended June 30,
                               ---------------------------------------------
                                                   2014
                               ---------------------------------------------
Consolidated Metal Production        Caylloma       San Jose   Consolidated
----------------------------------------------------------------------------

Silver (oz)                           529,011      1,101,411      1,630,422
Gold (oz)                                 562          7,957          8,519
Lead (000's lbs)                        3,962              -          3,962
Zinc (000's lbs)                        6,697              -          6,697
Production cash cost (US$/oz
 Ag)(i)                                  7.72           3.93           5.15

All-in sustaining cash cost
 (US$/oz Ag)(i)                         15.48          15.77          17.41
(i) Net of by-product credits

                                             QUARTERLY RESULTS
                               ---------------------------------------------
                                        Three months ended June 30,
                               ---------------------------------------------
                                                   2013
                               ---------------------------------------------
Consolidated Metal Production        Caylloma       San Jose   Consolidated
----------------------------------------------------------------------------

Silver (oz)                           493,438        580,570      1,074,007
Gold (oz)                                 502          4,681          5,183
Lead (000's lbs)                        4,666              -          4,666
Zinc (000's lbs)                        6,131              -          6,131
Production cash cost (US$/oz
 Ag)(i)                                  8.78           6.56           7.58

All-in sustaining cash cost
 (US$/oz Ag)(i)                         24.53          15.58          21.98
(i) Net of by-product credits

                                            YEAR TO DATE RESULTS
                               ---------------------------------------------
                                         Six months ended June 30,
                               ---------------------------------------------
                                                   2014
                               ---------------------------------------------
Consolidated Metal Production        Caylloma       San Jose   Consolidated
----------------------------------------------------------------------------

Silver (oz)                         1,068,835      2,098,446      3,167,282
Gold (oz)                               1,085         15,583         16,669
Lead (000's lbs)                        7,855              -          7,855
Zinc (000's lbs)                       13,226              -         13,226
Production cash cost (US$/oz
 Ag)(i)                                  7.32           3.77           4.96

All-in sustaining cash cost
 (US$/oz Ag)(i)                         14.32          15.12          16.98
(i) Net of by-product credits

                                           YEAR TO DATE RESULTS
                               ---------------------------------------------
                                         Six months ended June 30,
                               ---------------------------------------------
                                                   2013
                               ---------------------------------------------
Consolidated Metal Production        Caylloma       San Jose   Consolidated
----------------------------------------------------------------------------

Silver (oz)                           992,882      1,073,343      2,066,225
Gold (oz)                               1,035          8,641          9,675
Lead (000's lbs)                        9,280              -          9,280
Zinc (000's lbs)                       12,067              -         12,067
Production cash cost (US$/oz
 Ag)(i)                                  7.84           6.44           7.11

All-in sustaining cash cost
 (US$/oz Ag)(i)                         24.09          19.68          24.58
(i) Net of by-product credits

Silver and gold production for the second quarter and the first six months of 2014 increased over the same period in the prior year by 52% and 64%, and 53% and 72%, respectively, explained largely by the commissioning of the San Jose Mine mill expansion from 1,150 to 1,800 tpd in September 2013, and to 2,000 tpd in April 2014. The company is on track to meet its guidance of 6.0 million ounces of silver and 32,300 ounces of gold or 7.9 million Ag Eq(iii) ounces for 2014.

(iii) Ag Eq is calculated using metal prices of $1,260/oz for gold and $21/oz for silver

All-in sustaining cash cost per payable ounce of silver for the second quarter 2014, net of by-product credits, decreased 21% to $17.41 (Q2 2013: $21.98) as a result of lower sustaining capital and brownfields exploration expenditures, higher payable ounces of silver and higher by-product credits; refer to non-GAAP financial measures.


San Jose Mine, Mexico

                                                             YEAR TO DATE
                                      QUARTERLY RESULTS        RESULTS
                                     ---------------------------------------
                                      Three months ended   Six months ended
                                           June 30,            June 30,
                                     ---------------------------------------
                                          2014      2013      2014      2013
                                     ---------------------------------------
Mine Production                       San Jose  San Jose  San Jose  San Jose
----------------------------------------------------------------------------
Tonnes milled                          167,437   102,264   318,145   195,741
Average tonnes milled per day            1,925     1,147     1,837     1,112

Silver
  Grade (g/t)                              229       199       229       192
  Recovery (%)                              90        89        90        89
  Production (oz)                    1,101,411   580,570 2,098,446 1,073,343
Gold
  Grade (g/t)                             1.65      1.61      1.70      1.55
  Recovery (%)                              89        88        90        89
  Production (oz)                        7,957     4,681    15,583     8,641
Unit Costs
  Production cash cost (US$/oz Ag)(i)     3.93      6.56      3.77      6.44
  Production cash cost (US$/tonne)       64.08     77.18     65.28     77.55
  Unit Net Smelter Return (US$/tonne)   162.48    166.04    167.43    181.54
  All-in sustaining cash cost (US$/oz
   Ag)(i)                                15.77     15.58     15.12     19.68
(i) Net of by-product credits

San Jose was successfully expanded to 2,000 tpd in April 2014 (see Fortuna news release dated April 14, 2014) and studies are currently underway to assess the economic robustness of a potential mine and mill expansion to 3,000 tpd. Production for the first half of 2014 was 2,098,446 ounces of silver and 15,583 ounces of gold, 96% and 80% above the first half of 2013, respectively. San Jose is on track to meet annual production guidance of 4.0 million ounces of silver and 30,400 ounces of gold.

Silver and gold production for the second quarter 2014 was 90% and 70% above second quarter 2013, respectively. The increase is the result of higher throughput of 64%, and higher head grade for silver and gold of 15% and 3%, respectively.

Cash cost per tonne of processed ore for the second quarter 2014 was $64.08/t or 17% below the cost in the second quarter 2013 and is below guidance of $67.10/t. All-in sustaining cash cost per payable ounce of silver, net of by-product credits, was $15.77 in the second quarter 2014 and $15.12 for the first half of the year; refer to non-GAAP financial measures. Management expects all-in sustaining cash cost per ounce of silver to be in-line with annual guidance of $14.43.

In light of the growth of resources over the last year the company has made the decision to advance with engineering studies to address long term tailings management. The project calls for the implementation of filtered tailings and dry-stack disposal. The project is in the engineering phase with a construction decision expected before year end.


Caylloma Mine, Peru

                                                             YEAR TO DATE
                                      QUARTERLY RESULTS        RESULTS
                                     ---------------------------------------
                                      Three months ended   Six months ended
                                           June 30,            June 30,
                                     ---------------------------------------
                                          2014      2013      2014      2013
                                     ---------------------------------------
Mine Production                       Caylloma  Caylloma  Caylloma  Caylloma
----------------------------------------------------------------------------
Tonnes milled                          115,920   113,906   230,035   225,322
Average tonnes milled per day            1,302     1,280     1,300     1,273

Silver
  Grade (g/t)                              170       167       172       170
  Recovery (%)                              84        81        84        81
  Production (oz)                      529,011   493,438 1,068,835   992,882
Gold
  Grade (g/t)                             0.35      0.34      0.34      0.36
  Recovery (%)                              43        40        44        40
  Production (oz)                          562       502     1,085     1,035
Lead
  Grade (%)                               1.68      2.05      1.67      2.07
  Recovery (%)                              92        91        92        90
  Production (000's lbs)                 3,962     4,666     7,855     9,280
Zinc
  Grade (%)                               2.92      2.81      2.89      2.80
  Recovery (%)                              90        87        90        87
  Production (000's lbs)                 6,697     6,131    13,226    12,067
Unit Costs
  Production cash cost (US$/oz Ag)(i)     7.72      8.78      7.32      7.84
  Production cash cost (US$/tonne)       91.70     93.34     89.79     93.76
  Unit Net Smelter Return (US$/tonne)   143.14    150.00    145.81    172.50
  All-in sustaining cash cost (US$/oz
   Ag)(i)                                15.48     24.53     14.32     24.09
(i) Net of by-product credits

Silver production for the second quarter 2014 was 7% above the same period in the prior year as a result of higher metallurgical recovery and slightly higher head grade. Zinc production increased 9% as a result of higher head grade and metallurgical recoveries. Lead production decreased 15% due to reduced head grade. Caylloma is on track to meet annual production guidance of 2.0 million ounces of silver and 1,900 ounces of gold.

Cash cost per tonne at Caylloma for the second quarter 2014 was $91.70 per tonne of processed ore, a decrease of 2% from second quarter 2013 and 4% above annual guidance. All-in sustaining cash cost per payable ounce of silver, net of by-product credits, at Caylloma in the second quarter 2014 was $15.48, and $14.32 for the first half of 2014; refer to non-GAAP financial measures. Management expects all-in sustaining cash cost per ounce of silver to be in-line with annual guidance of $17.01.

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 second quarter financial and operations results

Date: Wednesday, August 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: 13587139

Playback of the webcast will be available until November 13th, 2014. Playback of the conference call will be available until August 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 / BVL: FVI / Frankfurt: F4S.F

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 actions, including estimates of future production assumed set of economic conditions and courses of 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.

Contacts:
Fortuna Silver Mines Inc.
Investor Relations:
Carlos Baca- T (Peru):
+51.1.616.6060, ext. 0
www.fortunasilver.com

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
Container technology is sending shock waves through the world of cloud computing. Heralded as the 'next big thing,' containers provide software owners a consistent way to package their software and dependencies while infrastructure operators benefit from a standard way to deploy and run them. Containers present new challenges for tracking usage due to their dynamic nature. They can also be deployed to bare metal, virtual machines and various cloud platforms. How do software owners track the usag...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at @ThingsExpo, James Kirkland, Red Hat's Chief Arch...
For IoT to grow as quickly as analyst firms’ project, a lot is going to fall on developers to quickly bring applications to market. But the lack of a standard development platform threatens to slow growth and make application development more time consuming and costly, much like we’ve seen in the mobile space. In his session at @ThingsExpo, Mike Weiner, Product Manager of the Omega DevCloud with KORE Telematics Inc., discussed the evolving requirements for developers as IoT matures and conducte...
Providing the needed data for application development and testing is a huge headache for most organizations. The problems are often the same across companies - speed, quality, cost, and control. Provisioning data can take days or weeks, every time a refresh is required. Using dummy data leads to quality problems. Creating physical copies of large data sets and sending them to distributed teams of developers eats up expensive storage and bandwidth resources. And, all of these copies proliferating...
Malicious agents are moving faster than the speed of business. Even more worrisome, most companies are relying on legacy approaches to security that are no longer capable of meeting current threats. In the modern cloud, threat diversity is rapidly expanding, necessitating more sophisticated security protocols than those used in the past or in desktop environments. Yet companies are falling for cloud security myths that were truths at one time but have evolved out of existence.
Digital Transformation is the ultimate goal of cloud computing and related initiatives. The phrase is certainly not a precise one, and as subject to hand-waving and distortion as any high-falutin' terminology in the world of information technology. Yet it is an excellent choice of words to describe what enterprise IT—and by extension, organizations in general—should be working to achieve. Digital Transformation means: handling all the data types being found and created in the organizat...
Public Cloud IaaS started its life in the developer and startup communities and has grown rapidly to a $20B+ industry, but it still pales in comparison to how much is spent worldwide on IT: $3.6 trillion. In fact, there are 8.6 million data centers worldwide, the reality is many small and medium sized business have server closets and colocation footprints filled with servers and storage gear. While on-premise environment virtualization may have peaked at 75%, the Public Cloud has lagged in adop...
SYS-CON Events announced today that HPM Networks will exhibit at the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. For 20 years, HPM Networks has been integrating technology solutions that solve complex business challenges. HPM Networks has designed solutions for both SMB and enterprise customers throughout the San Francisco Bay Area.
The time is ripe for high speed resilient software defined storage solutions with unlimited scalability. ISS has been working with the leading open source projects and developed a commercial high performance solution that is able to grow forever without performance limitations. In his session at Cloud Expo, Alex Gorbachev, President of Intelligent Systems Services Inc., shared foundation principles of Ceph architecture, as well as the design to deliver this storage to traditional SAN storage co...
The Software Defined Data Center (SDDC), which enables organizations to seamlessly run in a hybrid cloud model (public + private cloud), is here to stay. IDC estimates that the software-defined networking market will be valued at $3.7 billion by 2016. Security is a key component and benefit of the SDDC, and offers an opportunity to build security 'from the ground up' and weave it into the environment from day one. In his session at 16th Cloud Expo, Reuven Harrison, CTO and Co-Founder of Tufin,...
MuleSoft has announced the findings of its 2015 Connectivity Benchmark Report on the adoption and business impact of APIs. The findings suggest traditional businesses are quickly evolving into "composable enterprises" built out of hundreds of connected software services, applications and devices. Most are embracing the Internet of Things (IoT) and microservices technologies like Docker. A majority are integrating wearables, like smart watches, and more than half plan to generate revenue with ...
The Internet of Everything (IoE) brings together people, process, data and things to make networked connections more relevant and valuable than ever before – transforming information into knowledge and knowledge into wisdom. IoE creates new capabilities, richer experiences, and unprecedented opportunities to improve business and government operations, decision making and mission support capabilities.
The Cloud industry has moved from being more than just being able to provide infrastructure and management services on the Cloud. Enter a new era of Cloud computing where monetization’s services through the Cloud are an essential piece of strategy to feed your organizations bottom-line, your revenue and Profitability. In their session at 16th Cloud Expo, Ermanno Bonifazi, CEO & Founder of Solgenia, and Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia, discussed how to easily o...
In their session at 17th Cloud Expo, Hal Schwartz, CEO of Secure Infrastructure & Services (SIAS), and Chuck Paolillo, CTO of Secure Infrastructure & Services (SIAS), provide a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. In his role as CEO of Secure Infrastructure & Services (SIAS), Hal Schwartz provides leadership and direction for the company.
Rapid innovation, changing business landscapes, and new IT demands force businesses to make changes quickly. The DevOps approach is a way to increase business agility through collaboration, communication, and integration across different teams in the IT organization. In his session at DevOps Summit, Chris Van Tuin, Chief Technologist for the Western US at Red Hat, will discuss: The acceleration of application delivery for the business with DevOps