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
SYS-CON Events announced today that WineSOFT will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY. Based in Seoul and Irvine, WineSOFT is an innovative software house focusing on internet infrastructure solutions. The venture started as a bootstrap start-up in 2010 by focusing on making the internet faster and more powerful. WineSOFT’s knowledge is based on the expertise of TCP/IP, VPN, SSL, peer-to-peer, mob...
The Internet of Things can drive efficiency for airlines and airports. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Sudip Majumder, senior director of development at Oracle, discussed the technical details of the connected airline baggage and related social media solutions. These IoT applications will enhance travelers' journey experience and drive efficiency for the airlines and the airports.
DevOps is being widely accepted (if not fully adopted) as essential in enterprise IT. But as Enterprise DevOps gains maturity, expands scope, and increases velocity, the need for data-driven decisions across teams becomes more acute. DevOps teams in any modern business must wrangle the ‘digital exhaust’ from the delivery toolchain, "pervasive" and "cognitive" computing, APIs and services, mobile devices and applications, the Internet of Things, and now even blockchain.
A strange thing is happening along the way to the Internet of Things, namely far too many devices to work with and manage. It has become clear that we'll need much higher efficiency user experiences that can allow us to more easily and scalably work with the thousands of devices that will soon be in each of our lives. Enter the conversational interface revolution, combining bots we can literally talk with, gesture to, and even direct with our thoughts, with embedded artificial intelligence, whic...
Have you ever noticed how some IT people seem to lead successful, rewarding, and satisfying lives and careers, while others struggle? IT author and speaker Don Crawley uncovered the five principles that successful IT people use to build satisfying lives and careers and he shares them in this fast-paced, thought-provoking webinar. You'll learn the importance of striking a balance with technical skills and people skills, challenge your pre-existing ideas about IT customer service, and gain new in...
WebRTC sits at the intersection between VoIP and the Web. As such, it poses some interesting challenges for those developing services on top of it, but also for those who need to test and monitor these services. In his session at WebRTC Summit, Tsahi Levent-Levi, co-founder of testRTC, reviewed the various challenges posed by WebRTC when it comes to testing and monitoring and on ways to overcome them.
SYS-CON Events announced today that Catchpoint Systems, Inc., a provider of innovative web and infrastructure monitoring solutions, has been named “Silver Sponsor” of SYS-CON's DevOps Summit at 18th Cloud Expo New York, which will take place June 7-9, 2016, at the Javits Center in New York City, NY. Catchpoint is a leading Digital Performance Analytics company that provides unparalleled insight into customer-critical services to help consistently deliver an amazing customer experience. Designed ...
Tintri VM-aware storage is the simplest for virtualized applications and cloud. Organizations including GE, Toyota, United Healthcare, NASA and 6 of the Fortune 15 have said "No to LUNs." With Tintri they manage only virtual machines, in a fraction of the footprint and at far lower cost than conventional storage. Tintri offers the choice of all-flash or hybrid-flash platform, converged or stand-alone structure and any hypervisor. Rather than obsess with storage, leaders focus on the business app...
SYS-CON Events announced today that CA Technologies has been named “Platinum Sponsor” of SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. CA Technologies helps customers succeed in a future where every business – from apparel to energy – is being rewritten by software. From ...
The financial services market is one of the most data-driven industries in the world, yet it’s bogged down by legacy CPU technologies that simply can’t keep up with the task of querying and visualizing billions of records. In his session at 20th Cloud Expo, Jared Parker, Director of Financial Services at Kinetica, will discuss how the advent of advanced in-database analytics on the GPU makes it possible to run sophisticated data science workloads on the same database that is housing the rich inf...
DevOps is often described as a combination of technology and culture. Without both, DevOps isn't complete. However, applying the culture to outdated technology is a recipe for disaster; as response times grow and connections between teams are delayed by technology, the culture will die. A Nutanix Enterprise Cloud has many benefits that provide the needed base for a true DevOps paradigm.
Ayehu provides IT Process Automation & Orchestration solutions for IT and Security professionals to identify and resolve critical incidents and enable rapid containment, eradication, and recovery from cyber security breaches. Ayehu provides customers greater control over IT infrastructure through automation. Ayehu solutions have been deployed by major enterprises worldwide, and currently, support thousands of IT processes across the globe. The company has offices in New York, California, and Isr...
LogMeIn has completed its previously disclosed merger with Citrix Systems, Inc.’s GetGo, Inc. subsidiary, a wholly owned subsidiary consisting of Citrix’s GoTo family of service offerings. The merger officially closed after market hours on January 31, 2017. Effected through a Reverse Morris Trust transaction, the merger brings together two of the preeminent players in cloud connectivity to instantly create one of the world’s top 10 public SaaS companies, and a market leader with the scale, resou...
In his session at @ThingsExpo, Steve Wilkes, CTO and founder of Striim, will delve into four enterprise-scale, business-critical case studies where streaming analytics serves as the key to enabling real-time data integration and right-time insights in hybrid cloud, IoT, and fog computing environments. As part of this discussion, he will also present a demo based on its partnership with Fujitsu, highlighting their technologies in a healthcare IoT use-case. The demo showcases the tracking of patie...
In his keynote at 18th Cloud Expo, Andrew Keys, Co-Founder of ConsenSys Enterprise, provided an overview of the evolution of the Internet and the Database and the future of their combination – the Blockchain. Andrew Keys is Co-Founder of ConsenSys Enterprise. He comes to ConsenSys Enterprise with capital markets, technology and entrepreneurial experience. Previously, he worked for UBS investment bank in equities analysis. Later, he was responsible for the creation and distribution of life settle...