(All amounts expressed in US dollars, tabular amounts in millions, unless otherwise stated)
VANCOUVER, British Columbia, March 06, 2024 (GLOBE NEWSWIRE) — Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI) (“Fortuna” or the “Company”) today reported its financial and operating results for the fourth quarter and full year 2023.
Fourth Quarter and Full Year 2023 highlights
Financial
Attributable net loss for the quarter of $92.3 million or $0.30 per share after non-cash impairment charges of $90.6 million in Q4 2023, totaling an attributable net loss of $50.8 million for the full year 2023
Attributable adjusted net income1 of $20.6 million or $0.07 per share in Q4 2023, totaling $64.9 million, or $0.22 per share for the full year 2023
Net cash generated by operations for the quarter was $105.1 million or $0.36 per share in Q4 2023, totaling $296.3 million or $ 1.0 per share for the full year 2023
Free cash flow from ongoing operations1 of $66.2 million in Q4 2023; totaling $153.5 million for the full year 2023
The Company repaid $41.0 million of its corporate credit facility in the fourth quarter and the total net debt1 at year end stands at $83.0 million. An additional payment of $25.0 million was made subsequent to year end.
Liquidity as at December 31, 2023 was $213.1 million
Operational
Record gold equivalent production of 136,154 ounces3 in Q4 2023 and record annual gold equivalent production of 452,389 ounces3; representing increases of 6 and 13 percent compared to the respective periods in 2022
Record gold production of 107,376 ounces in Q4 2023 and 326,638 ounces for the full year 2023
Silver production of 1,354,003 ounces in Q4 2023 and 5,883,691 ounces for the full year 2023
Consolidated cash cost per gold equivalent ounce1 of $840 in Q4 2023 and $874 for the full year 2023
Consolidated AISC per gold equivalent ounce1 of $1,509 for Q4 2023 and $1,508 for the full year 2023
Continuous trend of improvement in annual safety performance across the business with a Total Recordable Injury Frequency Rate (TRIFR) of 1.22, and a Lost Time Injury Frequency Rate (LTIFR) of 0.36, compared to 2.32 and 0.39 in 2022
Growth and Development
During the fourth quarter of 2023 the Company initiated a 45,000-meter drill program at its newly acquired Diamba Sud project in Senegal. Subject to results the Company plans to produce a Preliminary Economic Assessment by the end of 2024
At the end of December 2023, the Séguéla Mine processing facility was performing 26% above name plate capacity. For 2024 management has identified opportunities to further optimize and debottleneck throughput.
1 Refer to Non-IFRS financial measures
2 AISC/oz Ag Eq calculated at realized metal prices, refer to mine site results for realized prices and Non-IFRS Financial Measures for silver equivalent ratio
3 Gold equivalent production includes gold, silver, lead and zinc and is calculated using the following metal prices: $1,802/oz Au, $21.75/oz Ag, $2,161/t Pb and $3,468/t Zn or Au:Ag = 1:82.89, Au:Pb = 1:0.83, Au:Zn = 1:0.52
Jorge A. Ganoza, President and CEO, commented, “In the fourth quarter Fortuna delivered strong free cash-flow from ongoing operations of $65 million compared to $70 million in the third quarter. The Company also achieved record gold equivalent production of 136,154 ounces and record sales of $265.3 million, representing increases of 6% and 9% respectively compared to Q3.” Mr. Ganoza added, “Fourth quarter net earnings were impacted by non-cash write-downs and the remaining short life of reserves at San Jose, where we have recorded a non-cash impairment charge of $90.6 million. At San Jose our exploration continues pursuing the discovery of new resources with the aim of extending production beyond 2024.”
Mr. Ganoza continued, “Fortuna had a strong close to 2023, with record annual gold production exceeding guidance and silver falling short by 7%. Gold equivalent production increased 13% to a record 452,389 gold equivalent ounces compared to 2022, and we have guided further growth in 2024. Record annual sales of $842.4 million were 24% above 2022. All our mines met or improved site AISC guidance for the year with the only exception being the San Jose Mine, which is operating on the tail end of reserves and had to contest with an illegal blockade at the beginning of the year.
Mr. Ganoza concluded, “For 2024 our capital allocation priorities continue to be centered on providing maximum balance sheet flexibility through further debt reduction, and funding of aggressive organic growth programs with approximately 200,000 meters of exploration drilling planned across the portfolio. The Diamba Sud project in Senegal and the Séguéla Mine in Côte d´Ivoire are priorities for our exploration programs during the year.”
Fourth Quarter 2023 and Full Year 2023 Consolidated Results
Three months ended December 31,
Years ended December 31,
(Expressed in millions)
2023
2022
% Change
2023
2022
% Change
Sales
265.3
164.7
61
%
842.4
681.5
24
%
Mine operating income
51.9
26.0
100
%
190.0
146.8
29
%
Operating loss
(77.4
)
(173.1
)
55
%
(0.4
)
(113.6
)
100
%
Attributable net loss
(92.3
)
(152.8
)
40
%
(50.8
)
(128.1
)
60
%
Attributable loss per share – basic
(0.30
)
(0.52
)
43
%
(0.17
)
(0.44
)
61
%
Adjusted attributable net income1
20.6
6.4
222
%
64.9
41.4
57
%
Adjusted EBITDA1
120.3
55.8
116
%
335.1
245.5
36
%
Net cash provided by operating activities
105.1
49.6
112
%
296.9
194.2
53
%
Free cash flow from ongoing operations1
66.2
4.4
1,405
%
153.5
69.2
122
%
Production cash cost ($/oz Au Eq)
840
873
(4
%)
874
849
3
%
All-in sustaining cash cost ($/oz Au Eq)
1,509
1,579
(4
%)
1,508
1,431
5
%
Capital expenditures2
Sustaining
46.8
33.9
38
%
136.1
98.1
39
%
Non-sustaining3
1.8
(2.3
)
178
%
5.2
8.2
(37
%)
Séguéla construction
–
23.5
(100
%)
50.0
107.7
(54
%)
Brownfields
5.5
6.5
(15
%)
16.1
23.3
(31
%)
As at
December 31, 2023
December 31, 2022
% Change
Cash and cash equivalents
128.1
80.5
59
%
Net liquidity position (excluding letters of credit)
213.1
150.5
42
%
Shareholder’s equity attributable to Fortuna shareholders
1,238.4
1,244.8
(1
%)
1 Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis
3 Non-sustaining expenditures include greenfields exploration
Figures may not add due to rounding
Fourth Quarter 2023 Results
Attributable Net Loss and Adjusted Net Income
Attributable net loss for the period was $92.3 million compared to an attributable net loss of $152.8 million in Q4 2022 The loss in the quarter is explained by the following items:
An impairment charge of $90.6 million related to the anticipated closure of the San Jose Mine in late 2024, as the updated mine plan is scheduled to exhaust Mineral Reserves by the end of the year compared to mid-2025 as previously planned
A write-down of materials inventory of $10.1 million at the San Jose, Yaramoko and Lindero Mines
A write-down of low-grade ore stockpiles of $5.4 million at the Lindero Mine
A $6.4 million severance provision associated with the scheduled closure of the San Jose Mine
A write-down of $5.9 million related to greenfield exploration projects in Mexico and Argentina
After adjusting for impairment charges and other non-recurring items, adjusted attributable net income was $20.6 million or $0.07 per share compared to $6.4 million or $0.02 per share in Q4 2022. The increase was primarily due to higher gold sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla in its second full quarter of production. This was combined with 7% higher sales at Yaramoko from higher processed head grade. This was partially offset by lower sales at San Jose related to lower head grades consistent with the Mineral Reserve and a reduction in mined tonnage related to operational challenges in backfilling and blasting activities. The realized gold price was $1,990 per ounce in Q4 2023 compared to $1,737 per ounce in Q4 2022.
Other items impacting the adjusted net income for the quarter compared to Q4 2022 were higher G&A of $3.3 million, mostly related to the addition of Séguéla G&A and timing of execution on certain corporate G&A items; higher foreign exchange loss of $2.4 million primarily related to 118% devaluation of the official exchange rate in Argentina as part of the measures taken by the new elected government to achieve a more sustainable real exchange rate in the short term; Other expenses of $2.7 million related to administrative penalties at Yaramoko, and a higher interest expense of $4.0 million as a result of higher interest rates and $1.4 million of interest charges capitalized in Q4 2022 vs nil in Q4 2023. This was partially offset by $12.4 million of investment income related to cross-border, Argentine pesos denominated bond trades.
Depreciation and Depletion
Depreciation and depletion increased $27.1 million to $71.6 million in the fourth quarter of 2023 compared to $44.5 million in the comparable period of 2022. The increase was primarily due to an increase in ounces sold as well as higher depletion per ounce at Séguéla due to the depletion of the purchase price allocation from the Roxgold acquisition of $17.1 million.
Adjusted EBITDA and Cash Flow
Adjusted EBITDA for the quarter was $120.3 million, a margin of 45% over sales, compared to $55.8 million and margin over sales of 34%, reported in the same period in 2022. The main driver for the increase in EBITDA was the contribution from Séguéla with EBITDA margin of 73% in Q4 2023, combined with higher EBITDA from Yaramoko related to higher gold output. In addition, adjusted EBITDA reflects the positive impact from the inclusion of $12.4 million of investment income at our Argentine operations. The trade associated with the investment income was a one-off event executed under a time limited waiver granted by the government of Argentina in Q4 to allow exporters a partial recovery of economic losses incurred from the accumulated lag of the nominal exchange rate with respect to inflation.
Net cash generated by operations for the quarter was $105.1 million or $0.34 per share compared to $49.6 million or $0.17 per share in Q4 2022. The increase of $54.8 million reflects higher EBITDA of $61.8 million.
Free cash flow from ongoing operations for the quarter was $66.2 million compared to $4.4 million in Q4 2022. The increase reflects higher net cash generated by operations.
Cash cost per ounce and AISC
Cash cost per gold equivalent ounce was $840, a decrease from the $873 reported in Q4 2022 as the contribution of lower cost ounces from Séguéla in Q4 2023 was offset by partially offset by higher cost per ounce at San Jose, which increased by over 64% due to lower production and higher costs year over year. This combined with higher cost per gold ounce at Lindero and Yaramoko of $120 and $131 respectively associated with lower head grades at Lindero and higher costs in Q4 2023 at Yaramoko. AISC per gold equivalent ounce was $1,509 in Q4, slightly below the $1,579 recorded the prior year due to lower capex on a per ounce basis, partially offset by higher royalties related to the higher realized gold price.
Full Year 2023 Results
Attributable Net Loss and Adjusted Net Income
Attributable net loss for the year was $50.8 million, compared to an attributable net loss of $128.1 million in 2022. The loss in 2023 is explained by impairment charges of $90.6 million at the San Jose Mine explained above.
After adjusting for impairment charges and other non-recurring items, attributable adjusted net income for 2023 was $64.9 million or $0.22 per share, compared to $41.4 million or $0.14 per share in 2022. The increase was primarily due to higher gold sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla in the second half of the year upon successful commissioning and ramp-up in Q2 2023, and higher sales volume at Yaramoko explained by higher processed head grades in 2023. This was partially offset by lower production at Lindero, aligned with the grade profile in the mine plan, and lower head grades and processed ore at San Jose, explained by declining head grades in reserves and the impact of the 15 day mine stoppage in Q2 and related lingering operational challenges during the year. The realized gold price was $1,948 per ounce in 2023 compared to $1,802 per ounce in 2022.
Other items impacting the adjusted net income compared to 2022 were higher G&A of $2.7 million, mostly related to the addition of Séguéla G&A; higher foreign exchange loss of $4.6 million mostly related to the devaluation of the Argentine peso as described above; higher other expenses of $9.7 million related to $3.5 million of stand-by charges at San Jose and Yaramoko in Q2 2023, $2.8 million related to a new agreement with the worker´s union at San Jose in Q2 2023, and $3.7 million of administrative penalties at Yaramoko payable to the Ministry of Mines recorded in Q2 and Q4 2023, and a higher interest expense of $7.5 million as a result of an increased debt balance outstanding, higher interest rates and discontinued capitalized interest charges in the second half of the year. This was partially offset by $12.4 million of investment income related to cross-border, Argentine pesos denominated bond trades.
Depreciation and Depletion
Depreciation and depletion for 2023 increased $46.8 million to $219.7 million compared to $172.8 million in 2022. The increase was primarily due an increase in ounces sold, the start of depletion at Séguéla, including $25.3 million related to the purchase price allocation from Roxgold, and higher depletion at Yaramoko due to declining reserves which increased the depletion rate of new capital additions underground.
Adjusted EBITDA and Free Cash Flow
Adjusted EBITDA for the year was $335.1 million, a margin of 40% over sales, compared to $245.5 million reported in 2022, representing a margin of 36% over sales. The main drivers for the increase were the contribution of Séguéla with EBITDA margin of 69%, and higher production and improved margins at Yaramoko. In addition, adjusted EBITDA reflects the positive impact from the inclusion of $12.4 million of investment income at our Argentine operations as described above.
Net cash generated by operations for 2023 was $296.9 million or $1.00 per share compared to $194.2 million or $0.67 per share in 2022. The increase of $102.7 million is explained by higher EBITDA of $89.6 million combined with lower income tax paid of $16.3 million in 2023 primarily due to lower taxes paid at the San Jose Mine, no taxes paid at the Séguéla Mine in 2023 and higher repatriation withholding taxes incurred in 2022.
Free cash flow from ongoing operations for 2023 was $153.5 million compared to $69.2 million in 2022. The increase of $84.3 million reflects higher net cash generated by operations, partially offset by higher sustaining capital expenditures, including brownfields explorations. Sustaining capital expenditures on a cash basis increased by $27.6 million to $143.6 million explained by higher CAPEX at Lindero related to the leach-pad expansion and capex incurred at Séguéla in the second half of 2023.
Cash cost per ounce and AISC
Cash cost per equivalent gold ounce was $874, slightly above the $849 reported in 2022 as the contribution of lower cost ounces from Séguéla in the second half of 2023 was offset by higher cost per gold ounce at Lindero of $182 related mainly to lower planned head grades in 2023, and higher cost per equivalent gold ounce at San Jose of $379 explained primarily by lower processed ore and lower head grades.
AISC per ounce of gold equivalent of $1,508 in 2023 was $77 above the $1,431 recorded the prior year due mainly to higher cash cost per gold equivalent ounce and higher capex at Lindero related to the leach pad expansion.
Liquidity
Total liquidity available to the Company as at December 31, 2023 was $213.1 million, comprised of $128.1 million of cash and cash equivalents and $85.0 million undrawn (excluding letters of credit) on the Company’s revolving $250.0 million credit facility. Total net debt as of the end of the quarter was $83.2 million.
Subsequent to the year end the Company paid down an additional $25.0 million on its corporate credit facility, taking the outstanding debt amount to $140.0 million.
Lindero Mine, Argentina
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Mine Production
Tonnes placed on the leach pad
1,556,000
1,334,509
6,005,049
5,498,064
Gold
Grade (g/t)
0.63
0.80
0.64
0.81
Production (oz)
29,591
29,301
101,238
118,418
Metal sold (oz)
29,308
27,847
103,503
117,076
Realized price ($/oz)
1,993
1,732
1,942
1,803
Unit Costs
Cash cost ($/oz Au)1
934
814
920
739
All-in sustaining cash cost ($/oz Au)1
1,557
1,219
1,565
1,140
Capital Expenditures ($000’s) 2
Sustaining
10,607
3,973
39,358
18,035
Sustaining leases
598
567
2,393
2,398
Non-sustaining
1,302
–
1,978
169
Brownfields
–
184
–
1,288
1 Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.
In the fourth quarter of 2023, a total of 1,556,000 tonnes of ore were placed on the heap leach pad, with an average gold grade of 0.63 g/t, containing an estimated 31,665 ounces of gold. Gold production for Q4 2023 totaled 29,591 ounces. This represents a 1% increase in total ounces, from the previous quarter. Gold production was comprised of 24,977 ounces in doré bars, 4,443 ounces of gold contained in fine carbon, and 171 ounces contained in copper concentrate. Ore mined was 2.1 million tonnes, with a stripping ratio of 0.6:1. The stripping ratio in the fourth quarter was 45 percent lower than the third quarter of 2023.
For the full year 2023 gold production totaled 101,238 ounces, achieving midpoint of annual production guidance. Gold production comprised of 94,905 ounces in doré bars, 6,015 ounces in gold contained in fine carbon, and 319 ounces contained in copper concentrate. The stripping ratio for 2023 was 1.14:1, aligned with the mining plan for the year.
The cash cost per ounce of gold for the quarter ending December 31, 2023, was $934 compared to $814 in the same period of 2022. For the year ending December 31, 2023, the cash cost per ounce was $920, an increase from $739 in 2022. The increase in cash cost per ounce of gold for both the quarter and for the full year was primarily due to lower processed gold grades in accordance with the mine plan.
The all-in sustaining cash cost per gold ounce sold during Q4 2023 was $1,557, up from $1,219 in the fourth quarter of 2022. For the full year of 2023, the all-in sustaining cash cost was $1,565, compared to $1,140 in 2022. The increase both for the quarter and the year was driven by higher cash costs, along with increased sustaining capital expenditures related to the leach pad expansion. This was partially mitigated by higher copper by-product credits.
As of December 31, 2023, the leach pad expansion project is approximately 23% complete. Mobilization of the civil contractor’s personnel and equipment has advanced with earth moving activities having commenced in January. Deliveries of geomembrane and geosynthetic clay liner are on-track, with the remaining materials expected to arrive on site in the first quarter of 2024. The leach pad expansion remains on schedule for completion during the second half of 2024.
Yaramoko Mine, Burkina Faso
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Mine Production
Tonnes milled
110,445
142,694
531,579
546,651
Gold
Grade (g/t)
7.16
6.45
6.81
6.37
Recovery (%)
98
98
98
98
Production (oz)
28,235
26,190
117,711
106,108
Metal sold (oz)
28,229
26,250
117,676
107,433
Realized price ($/oz)
1,984
1,742
1,945
1,802
Unit Costs
Cash cost ($/oz Au)1
949
818
809
840
All-in sustaining cash cost ($/oz Au)1
1,720
1,829
1,499
1,529
Capital Expenditures ($000’s) 2
Sustaining
12,620
18,994
49,938
45,665
Sustaining leases
1,077
1,419
4,758
5,692
Brownfields
1,261
2,855
4,917
5,873
1 Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
2 Capital expenditures are presented on a cash basis.
The Yaramoko Mine produced 28,235 ounces of gold in the fourth quarter of 2023 with an average gold head grade of 7.16 g/t, 8% and 11% increases when compared to the same period in 2022. Higher production was due to higher grades partially offset by lower mill throughput in the fourth quarter and a planned maintenance shutdown in December.
Gold production in 2023 totaled 117,711 ounces, achieving the higher end of the annual guidance range.
The cash cost per ounce of gold sold for the quarter ended December 31, 2023, was $949 compared to $818 in the same period in 2022. The increase for the quarter is mainly attributed to higher mining costs, particularly due to equipment, energy, and overhead expenses, but was partially offset by higher gold production. For the year ending December 31, 2023, the cash cost per ounce of gold sold was $809, a decrease from $840 in 2022. The full year decrease is mainly due to increased production and lower mining costs during prior quarters.
The all-in sustaining cash cost per gold ounce sold was $1,720 for the quarter ended December 31, 2023, compared to $1,829 in the same period of 2022. The change in the quarter was primarily due to the increased cash cost described above, increased royalties and an administrative penalty in Q4, offset by reduced capital expenditures. For the full year, the all-in sustaining cash cost per gold ounces sold was $1,499 in 2023, compared to $1,529 in 2022. The increased royalties and administrative penalty costs in Q4 2023 were offset by increased production and decreased costs earlier in the year.
Exploration and grade control drilling success in conjunction with underground development extended mineralization on the western side of the Zone 55 mineralized structure. This provided additional mining areas which demonstrated wider and higher-grade extensions of mineralization within and beyond the existing resource boundary.
Séguéla Mine, Côte d’Ivoire
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Mine Production
Tonnes milled
387,624
–
807,617
–
Average tonnes crushed per day
4,123
–
3,282
–
Gold
Grade (g/t)
3.62
–
3.42
–
Recovery (%)
95
–
94
–
Production (oz)
43,096
–
78,617
–
Metal sold (oz)
43,018
–
78,521
–
Realized price ($/oz)
1,994
–
1,963
–
Unit Costs
Cash cost ($/oz Au)1
323
–
357
–
All-in sustaining cash cost ($/oz Au)1
737
–
760
–
Capital Expenditures ($000’s) 2
Sustaining
7,765
–
10,912
–
Sustaining leases
2,285
–
5,329
–
1 Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
2 Capital expenditures are presented on a cash basis
In the fourth quarter of 2023, mined material totaled 387,624 tonnes of ore, averaging 3.62 g/t Au, and containing an estimated 43,096 ounces of gold from the Antenna Pit. Movement of waste during the quarter totaled 2,110,209 tonnes, for a strip ratio of 5.4:1. Séguéla produced 43,096 ounces of gold, a 37% increase and a 5% decrease, respectively, compared to the third quarter of 2023. The increase in gold production is directly related to the mill achieving consistently higher throughput, processing 387,624 tonnes, a 25% increase over the previous quarter.
Gold production in 2023 totaled 78,617 ounces, exceeding the higher end of the annual guidance range.
Reconciliation of tonnes, grade, and gold ounces mined for the fourth quarter from Antenna show a positive correlation when compared to the long-term reserve model with 6% higher ore tonnes mined at 16% higher grades resulting in 24% more gold ounces extracted than predicted in the model.
Process plant performance continued to improve as feed characteristics were stabilized and initial bottlenecks addressed. Recovery in the fourth quarter increased to 94.9%, ahead of feasibility study assumptions. Plant productivity also continued to improve with throughput in the fourth quarter being 186 tonnes/hour, a 20% increase on the 154 tonnes/hour nameplate capacity.
Cash cost per gold ounce sold was $323 for Q4 2023 and $357 for the full year, which was below plan and guidance, primarily due to higher production, higher head grades, lower consumable consumption, and lower service costs.
All-in sustaining cash cost per gold ounce sold was $737 for Q4 2023 and $760 for the full year, which was below plan and guidance, primarily due to lower cash cost and higher sales volume, partially offset by higher capital expenditures.
San Jose Mine, Mexico
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Mine Production
Tonnes milled
241,035
259,500
930,200
1,029,590
Average tonnes milled per day
2,678
2,883
2,643
2,925
Silver
Grade (g/t)
145
194
171
191
Recovery (%)
91
91
91
91
Production (oz)
1,023,525
1,473,627
4,656,631
5,762,563
Metal sold (oz)
1,040,888
1,482,452
4,659,611
5,755,330
Realized price ($/oz)
23.35
21.37
23.36
21.73
Gold
Grade (g/t)
0.91
1.13
1.06
1.14
Recovery (%)
90
90
90
90
Production (oz)
6,345
8,499
28,559
34,124
Metal sold (oz)
6,406
8,621
28,524
34,201
Realized price ($/oz)
1,983
1,734
1,942
1,802
Unit Costs
Production cash cost ($/t)2
103.89
86.26
98.98
81.33
Production cash cost ($/oz Ag Eq)1,2
17.57
11.16
14.40
10.56
All-in sustaining cash cost ($/oz Ag Eq)1,2
21.98
15.53
19.40
15.11
Capital Expenditures ($000’s) 3
Sustaining
3,190
3,695
14,018
15,731
Sustaining leases
246
169
878
658
Non-sustaining
505
–
1,682
869
Brownfields
1,257
961
4,215
5,606
1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively.
2 Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
3 Capital expenditures are presented on a cash basis.
In the fourth quarter of 2023, San Jose produced 1,023,525 ounces of silver and 6,345 ounces of gold, 31% and 25% decreases respectively, at average head grades for silver and gold of 145 g/t and 0.91 g/t, 25% and 20% decreases respectively, when compared to the same period in 2022. The decrease in silver and gold production for the quarter is explained by the declining grade profile of Mineral Reserves in the mine plan, as well as lower tonnage extracted from the mine. The reduction in tonnage is due to operational challenges leading to delays in backfilling and blasting operations in stopes P and Q during December 2023. During the fourth quarter, the processing plant milled 241,035 tonnes at an average of 2,678 tonnes per day.
Production in 2023 totaled 4,656,631 ounces of silver and 28,559 ounces of gold, 12% and 16% below annual guidance range, respectively. The decrease in production is attributed primarily to the 15-day illegal union blockade in the second quarter, the associated disruption to operations thereafter, and a silver and gold head grade reconciliation to reserves at the lower end of guidance range.
The cash cost per silver equivalent ounce for the three months ending December 31, 2023, was $17.57, an increase from $11.16 in the same period of 2022. This increase was primarily attributed to lower head grades, as discussed above, and higher cash costs per tonne primarily related to the appreciation of the Mexican peso, higher mining contractor tariffs, and a 7% decrease in processed ore. For the year ending December 31, 2023 the cash cost per silver equivalent ounce sold was $14.40 compared to $10.56. The full year increase was driven by lower head grades, and higher cash cost per tonne, which was similarly influenced by the appreciation of the Mexican Peso and 10% lower tonnes processed.
The all-in sustaining cash cost of payable silver equivalent for the three months ended December 31, 2023 increased by 42% to $21.98 per ounce, and full year 2023 increased by 28% to $19.40 per ounce. This compares to $15.53 per ounce and $15.11 per ounce for the same periods in 2022. These increases were mainly driven by higher cash costs and lower production, slightly mitigated by lower workers’ participation costs.
The decrease in Brownfields expenditures is primarily attributable to reduced drilling activity in 2023. Drilling in 2023 was however higher than initially anticipated, owing to the emergent drilling campaign at the Yessi vein, discovered in the third quarter of the year. Exploration at the Yessi vein continues.
Caylloma Mine, Peru
Three months ended December 31,
Years ended December 31,
2023
2022
2023
2022
Mine Production
Tonnes milled
140,800
138,491
543,876
546,186
Average tonnes milled per day
1,564
1,556
1,528
1,539
Silver
Grade (g/t)
88
75
85
80
Recovery (%)
83
81
83
81
Production (oz)
330,478
273,119
1,227,060
1,144,714
Metal sold (oz)
353,935
289,870
1,229,298
1,156,381
Realized price ($/oz)
23.06
21.28
23.37
21.81
Gold
Grade (g/t)
0.11
0.12
0.13
0.14
Recovery (%)
21
22
22
32
Production (oz)
109
122
513
777
Metal sold (oz)
—
—
40
603
Realized price ($/oz)
—
—
1,902
1,864
Lead
Grade (%)
3.84
3.22
3.74
3.27
Recovery (%)
91
89
91
88
Production (000’s lbs)
10,798
8,735
40,852
34,588
Metal sold (000’s lbs)
11,641
9,118
41,074
34,869
Realized price ($/lb)
0.97
0.96
0.98
0.98
Zinc
Grade (%)
5.00
4.63
5.11
4.32
Recovery (%)
90
89
90
89
Production (000’s lbs)
13,933
12,575
55,060
46,176
Metal sold (000’s lbs)
14,407
11,027
56,166
44,770
Realized price ($/lb)
1.13
1.35
1.23
1.57
Unit Costs
Production cash cost ($/t)2
100.71
95.70
100.40
92.96
Production cash cost ($/oz Ag Eq)1,2
13.67
12.46
14.28
12.34
All-in sustaining cash cost ($/oz Ag Eq)1,2
22.34
20.30
19.90
17.97
Capital Expenditures ($000’s) 3
Sustaining
8,635
7,188
17,903
18,694
Sustaining leases
912
845
3,538
3,350
Brownfields
966
473
2,302
1,202
1 Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively.
2 Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.
3 Capital expenditures are presented on a cash basis.
In the fourth quarter, the Caylloma Mine produced 330,478 ounces of silver at an average head grade of 88 g/t, a 21% and 17% increase, respectively, when compared to the previous quarter. Silver production for 2023 totaled 1,227,060 ounces, exceeding the upper end of annual guidance range by 10%.
Lead and zinc production for the quarter was 10.8 million pounds of lead, and 13.9 million pounds of zinc. Lead and zinc production rose by 24% and 11%, respectively, compared to the same period in 2022. Head grades averaged 3.84%, and 5.00%, a 19% and 8% increase, respectively, when compared to the previous quarter. Record lead and zinc production for 2023 totaled 40.9 and 55.1 million pounds, respectively. Increased production is the result of positive grade reconciliation to the reserve model in levels 16 and 18 of the Animas vein. Gold production for the quarter totaled 109 ounces with an average head grade of 0.11 g/t.
The cash cost per silver equivalent ounce sold for the quarter ended December 31, 2023, was $13.67 compared to $12.46 in the same period in 2022. The increase for the quarter is attributed primarily due to higher cash cost per tonne, higher treatment charges and the impact of higher silver prices on the calculation of silver equivalent ounces . For the year ended December 31, 2023, the cash cost per ounce of gold sold was $14.3, compared to $12.3 in 2022. The full year increase was driven mainly by the same factors explained above for the quarter.
The all-in sustaining cash cost per ounce of payable silver equivalent for the three months ended December 31, 2023, increased 10% to $22.34, compared to $20.30 for the same period in 2022. The all-in sustaining cash cost per ounce of payable silver equivalent for the full year 2023 increased 11% to $19.90, compared to $17.97 in 2022. The increases were mainly driven by the impact of higher silver prices on the calculation of silver equivalent ounces, higher cash costs per ounce and higher capital costs.
Underground development for the quarter was mainly focused on mine levels 15, 16, and 18. The increase in Brownfields expenditures is primarily attributable to greater meterage and additional diamond drilling.
Qualified Person
Eric Chapman, Senior Vice President of Technical Services, is a Professional Geoscientist of the Association of Professional Engineers and Geoscientists of the Province of British Columbia (Registration Number 36328), and is the Company’s Qualified Person (as defined by National Instrument 43-101). Mr. Chapman has reviewed and approved the scientific and technical information contained in this news release and has verified the underlying data.
Fourth Quarter Unaudited and Annual Audited Income Statement and Cash Flow
Income Statement
Three months ended December 31,
Years ended December 31,
Note
2023
2022
2023
2022
Sales
20
$
265,314
$
164,723
$
842,428
$
681,491
Cost of sales
21
213,462
138,683
652,403
534,695
Mine operating income
51,852
26,040
190,025
146,796
General and administration
22
19,909
16,676
64,073
61,456
Foreign exchange loss
2,430
442
10,885
8,866
Impairment of mineral properties, plant and equipment
32
90,615
182,842
90,615
182,842
Write-off of mineral properties
5,263
372
5,985
5,874
Other (income) expenses
23
11,009
(1,186
)
18,874
1,310
129,226
199,146
190,432
260,348
Operating loss
(77,374
)
(173,106
)
(407
)
(113,552
)
Investment gains
5
12,395
—
12,395
–
Interest and finance costs, net
24
(7,535
)
(3,111
)
(21,790
)
(12,057
)
(Loss) gain on derivatives
20
(301
)
453
(1,249
)
500
4,559
(2,658
)
(10,644
)
(11,557
)
Loss before income taxes
(72,815
)
(175,764
)
(11,051
)
(125,109
)
Income taxes
Current income tax expense
25
27,057
7,756
42,636
35,783
Deferred income tax expense (recovery)
25
(10,033
)
(23,086
)
(10,057
)
(24,986
)
17,024
(15,330
)
32,579
10,797