Q4 2023 Fortuna Silver Mines Inc Earnings Call

[music].

Operator: Good morning everyone, and welcome to the Fortuna Silvermines Q4 and full year 2023 Financial and Operational Results Call. At this time, all participants have been placed in a listen-only mode, and we will open the floor for questions following the call.

Good morning, everyone and welcome to the Fortuna Silver Mines' Q4, and full year 2023 financial and operational results call.

At this time, all participants have been placed in a listen only mode and we will open the floor for questions. Following the presentation. If anyone should require operator assistance. During this conference. Please press star zero on your phone keypad. Please note. This conference is being recorded I will now turn the conference over to your host Carlos Baca Investor Relations.

Operator: If anyone should require operator assistance during this conference, please press star zero on your phone. Please note this conference is being recorded. I will now turn the conference over to your host, Carlos Baca, Investor Relations. Carlos, over to you. Thank you, Jenny. Good morning, ladies and gentlemen.

Over to you.

Thank you Jenny good morning, ladies and gentlemen, I would like to welcome you to Fortuna Silver mines fourth quarter and full year 2023 financial and operational results conference call hosting the call today on behalf of Fortuna will be horrified at Alcoa and also <unk>, Chief Executive Officer, and co founder Rudy.

Carlos Baca: I would like to welcome you to Fortuna Silvermine's fourth quarter and full year 2023 Financial and Operational Results Conference call. Hosting the call today on behalf of Fortuna will be Jorge Alberto Ganoza, President, Chief Executive Officer, and Co-Founder, Luis Dario Ganoza, Chief Financial Officer, Cesar Velasco, Chief Operating Officer, Latin America, and David Whittle, Chief Operating Officer, West Africa. Today's earnings call presentation will be available on our website at FortunaSilver.com. As a reminder, statements made during this call are subject to the reader advisories included in yesterday's news release and in the earnings call presentation.

And also our Chief financial Officer.

On the last call Chief operating Officer in Latin America, and David Whittle, Chief operating Officer, and West Africa.

Today's earnings call presentation that will be available on our website at <unk>.

Fortuna Silver Dot com.

Minder statements made during this call are subject to the reader advisory as included in Yesterdays News release and in the earnings call presentation financial figures contained in the presentation and discussed in today's call are presented in U S dollars unless otherwise stated.

Carlos Baca: Financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars unless otherwise stated. Before I turn over the call to Jorge, I would like to indicate that this earnings call contains forward-looking information that is based on the company's current expectations, estimates, and beliefs and is subject to a number of risks, uncertainties, and other factors that could cause actual results to differ materially from a conclusion, forecast, or projection made in the forward-looking information. A description of these risks, uncertainties, and other factors is set out in the company's annual information form for the financial year.

Before I turn over the call to Jorge.

I would like to indicate that this earnings call contains forward looking information that is based on the company's current expectations estimates and believes it is subject to a number of risks uncertainties and other factors that could cause actual results to differ materially from a conclusion forecast or projection made in the forward looking inform.

Asia.

Description of these risks uncertainties and other factors is set out in the company's annual information form for the financial year.

And then December.

Carlos Baca: Ended December 31, 2022. The annual MD&A for the financial year ended December 31, 2022 and the interim MD&A for the third quarter 2023, which are all publicly available on the Cedar website. Certain material factors or assumptions were applied by the company in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information made in this call. These material factors or assumptions are also described in the company's annual information form for the financial year ended December 31, 2023. The annual MD&A for the financial year ended December 31st, 2023, and the corresponding MD&A for the third quarter of 2023. The company assumes no obligation to update such forward-looking information in the future, except as required by law. I would now like to turn the call over to Jorge Alberto Ganoza, President, Chief Executive Officer, and Co-Founder of Fortuna. Thank you, Carlos.

31, 2022, the annual MD&A for the financial year ended December 31 2022.

Interim MD&A for the.

Yes.

Third quarter, 2023, which are all publicly available on the SEDAR website sort of a material factor for a summer shows were applied by our company and are drawing a conclusion or making a forecast or projection as reflected in the forward looking information made in this call.

Material factors or assumptions are also described in the company's I don't know information form for the financial year ended December 31, 2023, the annual MD&A for the financial year ended December 31, 2023, and entering MBNA for that.

<unk> third quarter 2023.

The company assumes no obligation to update such forward looking information in the future except as required by law I would now like to turn the call over to Jorge Alberto and also our President and Chief Executive Officer, and co founder of our tuna.

Yeah.

Okay.

Thank you Carlos.

We're doing it had a strong close to 2023 in the fourth quarter, we recorded 66 million and free cash flow from ongoing operations, which is consistent with the 70 million recorded.

Jorge A. Ganoza Durant: Fortuna had a strong close to 2023 in the fourth quarter. We recorded $66 million in free cash flow from ongoing operations, which is consistent with the $70 million recorded in the third quarter. We achieved a record 136,000 gold equivalent ounces in the period as well and realized an average gold price of $1,990 per ounce, yielding record sales of $265 million or consolidated ASIC for the period was $1,509 per gold equivalent ounce. We're using the strong proceeds of the business to advance payments on our corporate trades facility, paying $40 million in the third quarter, $41 million in the fourth quarter, and subsequent to year-end, we paid an additional $25 million between the end of February and early March. We have a favorable debt to EBITDA ratio of under 0.3 and a total net debt of approximately $83 million. Providing enhanced flexibility to our balance sheets through debt reduction is one of our capital allocation priorities for 2024, and we expect to achieve zero net debt during this year.

The third quarter.

We achieved a record 136000 gold equivalent ounces in the period as well and realized an average gold price of $1990 per ounce.

Yielding record sales of $265 million or consolidated AC for the period.

<unk> $1509 per gold equivalent ounce.

Yeah.

We are using the strong proceeds of the business to advance payments on our corporate grades facility.

<unk> 40 million in the third quarter $41 million in the fourth quarter and subsequent to year end, we paid an additional $25 million between the end of February early March.

We have a favorable debt to EBITDA ratio of <unk> three.

<unk>.

And the total net debt.

Some of the 83 million.

Writing enhanced flexibility to our balance sheet through debt reduction is one of our capital allocation priorities in 2024.

We expect to achieve zero net debt during this year.

Jorge A. Ganoza Durant: Another capital allocation priority is funding high-value organic growth opportunities in the portfolio and attractive acquisitions in the regions where we are already stalled. A $38 million exploration program this year includes 200,000 meters of drilling with a focus on the Ambassad in Senegal and Segella in Cote d'Ivoire. For reserve replacement, our priorities continue to focus on the San Jose and Yeramoco mines. In the short to medium term, both the Dianda Sud project in Senegal and the Seguela mine in Côte d'Ivoire are our strongest drivers of growth and value, and David Whittle, our Chief Operating Officer for West Africa, will explain this further at CEGELA at the end of December. We are processing ore at a rate which is 26% higher than nameplate capacity and Encountering Positive Great Reconciliation at their Starter Antenna Pit.

Another capital allocation priority is funding high value organic growth opportunities in the portfolio.

And the attractive acquisitions in the regions, where we are already established for.

For $38 million exploration program. This year includes 200 200000 meters of drilling.

The focus on the embassy suite San Diego.

So <unk> got the one.

For our reserve replacement or priorities continue to focus on this let's say and you know multiple mines.

In the short to medium term both the embassy suite.

San Diego and the figure that mining could you walk.

Or strongest drivers for growth and value.

And David Whittle, our Chief operating Officer for West Africa will explain later at <unk> at the end of December.

We are processing or at a rate, which is 26% higher than nameplate capacity.

Encountering positive grade reconciliation at Theres third or has been.

In the fourth quarter, we obtained 24% more gold ounces and predicted by the reserve model.

Jorge A. Ganoza Durant: In the fourth quarter, we obtained 24% more gold ounces than predicted by the reserve model, and the property continues to offer tremendous discovery opportunities, which we are diligently pursuing with our exploration at DiabloSuit. We currently hold an 850,000 ounce resource, which we cataloged as historical and has not been incorporated into our consolidated resources. We expect to enhance our knowledge of the mineral deposit and expand it with our ongoing 45,000 meter drill program and be in a position by year to deliver a preliminary economic assessment. At both the San Jose and Yaramoco mines, we continue pursuing reserve replacement with well-funded drill programs. At San Jose, we are targeting the YES event, a high-grade silver and gold discovery made in 2023, and at Aramoku, we have achieved a lot of success expanding reserves on the fringes of the zone 55 deep ore body. We will be reporting on results from our exploration program in West Africa and Latin America later in March. And another capital allocation consideration is the share buyback program, which was under a temporary restriction placed by the great facility bank syndicate.

And the priority continues in the brokerage continues to offer tremendous discovery opportunities.

Which we are diligently pursuing with our exploration.

At <unk>, we currently hold.

And 850000 homes.

Gold resource.

Which we've got that logged as historical and has not been incorporated to our consolidated resources.

We expect to enhance our knowledge of the narrow that positive and expanded with our ongoing 45000 meter drill program and being in a position by year end to the year a preliminary economic assessment.

At both San Jose and there are multiple mines, we continue pursuing reserve replacement with wealth funded drill programs.

At San Jose, we are targeting the U S high grade silver gold discovery made in 2023.

And yet local we have achieved a lot of success expanding reserves on the fringes of the sold 55 deep ore body.

We will be reporting on results from our exploration programs in West Africa, and Latin America later in March.

And then the other capital allocation considerations of our share buyback program, which was under a temporary restriction placed by the great facility Bank Syndicate.

These restrictions were lifted by asking there in January.

Jorge A. Ganoza Durant: This restriction was lifted by us in early January, and with the financial results blackout behind us, we may now participate again in the market. And considering available liquidity, capital allocation opportunities, and the state of the company valuation, the market, we may be participating again in the market, as I said. So with that, I will now let our chief operating officers provide some further detail on our operations in the region. So we can start with West Africa. David, do you wanna go ahead?

With the financial.

Results blackout behind us.

We may now participate again in the market and considering our available liquidity capital allocation opportunities in the state.

The company valuation in the market, we may be participating in.

In the market as they say.

So with that I will now that are.

Our chief operating officers provide some further detail on our operations through the regions. So we can start with West Africa, David you want to go ahead.

Thanks, Hello, guys.

David Whittle: Thanks, Jorge. So Gaylor and Yaramoko had a successful fourth quarter from both a safety and production perspective. Both mines recorded zero LPIs, and Yaramoko reached an exceptional milestone of three years LPI 3 in 2023 and attained ISO 14001 and ISO 45001 certification. In the fourth quarter, Cigala produced 43,096 ounces of gold, a 37% improvement compared to the previous quarter, and delivered 78,617 ounces of gold in 2023, outperforming annual production yardage by 5%. Yaramoko's strong production performance delivered 28,235 ounces of gold, sorry, 28,235 ounces of gold, leading to 117,711 ounces of gold per year, achieving the higher end of the revised annual production guide in the fourth quarter of 2020. Together, they mine 409,293 tonnes of ore. That's an average gold grade of 3.4 grams per tonne and 2,214,681 tonnes of waste for a strip ratio of 5.4.

<unk> had a successful fourth quarter from bypass ICL production perspective.

Pipelines recorded zero LTE is in euro monetize sectional milestone of three years LTI fleet in 2023 and obtained Ias Slide 41, and <unk> 45001 certifications.

In the fourth quarter gallons produced 43096 ounces of gold while 30.

37% improvement compared to the previous quarter.

We delivered 78617 ounces of gold to 2023.

Outperforming annual production guidance by 5%.

Yes, Hi, Mike Hi, strong production performance 228, adding 235000 ounces and Paul I'm sorry.

Joined AIG 235 Council result, leading to 117711 <unk> to be here, achieving the higher end of the revised production guidance.

In the fourth quarter of 2020.

So again in line 409293 tons of ore with an average grade of three equal cramps with Paul.

And $2 million 240000.

691 tons of waste reshaped by ACI will apply.

<unk>.

David Whittle: All processed 387,267 tonnes at 3.62 grams per tonne of gold. Mining operations focused mainly on the Antenna Pit to provide oil feed to the processing plant. At the Antheum Pit, all road and other development was completed, and topsoil and waste stripping commenced, with 104,472 tonnes of waste stripping being achieved. Preparations for the mining of the Kula Pit commenced during the quarter, with grade control drilling and haul road construction being undertaken.

Oil prices for three <unk> 397 to <unk> 67 tonnes at three.

Three seats two grams per tonne gold.

Mining operations focus might be on the China piece.

To put all volume or <unk> to the pricing plans.

<unk> pit all round another development was completed and top soil on waste stripping commenced with a 104472 tons of waste stripping being achieved.

Preparations for the mining of the pit commenced during the quarter with great control drilling and Hawaiian punch function being undertaken.

David Whittle: Processing plant operations continued to ramp up beyond the main plant capacity of 154 tonnes an hour during the quarter, achieving an average throughput of 186 tonnes per hour. In December, an average throughput of 194 tonnes per hour was obtained, 26% higher than designed. A partial mill reline was undertaken in February, and we are now successfully further testing throughput constraints. The overall recovery for the quarter was 94.9%, slightly ahead of the 94.5% design recovery, benefiting from the higher head growth. The second lift of the tailing storage facility is currently under construction and is expected to be completed by the end of this quarter.

Price has seen plant operations continue to ramp up beyond the nine Pike has to be about 154 tons an hour during the quarter.

Even an average throughput of 186 tons per hour.

In December and averaged 394 tons per hour was obtained 26% higher than design.

A partial no re line was undertaken in February.

We are now successfully clear the testing three.

Right.

While the recovery for the quarter was 94, 9% slightly ahead of the 94, 5% design recovery benefits from the higher head grade.

The second lift of the tightening storage facilities currently under construction and is expected to be completed by the end of this quarter.

David Whittle: This will assure adequate tailing storage for another two years of production at the increased throughput rate. Togaila's strong performance resulted in both a cash cost of $341 and an ASIC of $737 per ounce of gold, both below guide, at Yaramoko. Mine production in the fourth quarter of 2023 was 112,906 tonnes, which is an average grade of 7.33 grams per tonne gold. Mining operations were primarily sourced from the 55 Zone underground mine; development and stoping operations of the Bagasy South mine contributed 10,162 tonnes at 6.05 grams per tonne gold to the above output, with batch treatment of bagasse oil showing a very close correlation to the mine cork. In the processing plant, 110,445 tonnes were treated at an average grade of 7.16 grams per tonne gold, with a recovery of 98.3% The decreased processing tunnels are attributed to a planned shutdown for 11 days, December 23.

This will ensure adequate tiny storage for another two years of production at the increased throughput rates.

And Gatland strong performance results for the bulk of the cash cost of 341, and an <unk> of $737 per ounce will go below.

Below your guidance.

At <unk> mine production in the fourth quarter of 2020 rate was 112906 tonnes at an average grade of 733 grams per tonne gold.

Mining operations were primarily sourced from the 50 <unk> underground mine.

Development and stoping operations of the bankruptcy sales mine contributed 10000, Walgreens system, <unk>, <unk> and 6.0 to five.

<unk> five grams per tonne gold to the above.

With batch treatment in bankruptcy, all sharing a very close correlation to the mine cool.

And the processing plant and 110445 pounds with treatment. That's an average grade of seven six grams per tonne gold.

<unk> at 98, 3%.

A decrease price 13 tons are attributed to our planned shut down for you.

11 days in December 'twenty three.

The enhanced production resulted in cash plus an AC at Gara and <unk> realized a lower end of that guidance for the year at 871000.

David Whittle: The enhanced production resulted in the cash costs and ASIC at Yaramoko being below the lower end of annual guidance for the year at $817 and $1,499 per ounce of gold, respectively. Development operations and diamond drilling success enabled further strike extensions of the 55 zone ore body to the east of the expected mining boundaries, as well as strike extensions and mineable splays of the QV prime ore body at the Bugassie South mine. Back to you, Jorge. Thank you, David.

$199 per ounce of gold respectively.

Development operations and Diamond drilling success, enabling further spike extensions is that 55 side core body to the east.

Of the expected mining bandwidth as well as a strike extensions and minable supplies of the key the primary ore body and the <unk> SaaS mine.

By Teu Colgate.

Okay.

Thanks, David.

Cesar Velasco: Cesar, do you want to provide your report? Yes, thank you, Jorge. And good afternoon to everyone.

So you want to.

<unk> provides your report please.

Yes, Thank you Jorge and good afternoon to everyone.

Cesar Velasco: In 2023, our Latin American operations successfully delivered 130,310 ounces of gold, 5.9 million ounces of silver, 40.9 million pounds of lead, and 55.1 million pounds of zinc.

In 2023, our Latin American operations successfully delivered 130310 ounces of gold.

$5 9 million ounces of silver.

49 million pounds of lead and 50, $155 1 million pounds of zinc.

Cesar Velasco: Consolidated Gold Production Achieved Guidance, enabled mainly by Lindero producing 100 and 1,238 ounces. The consolidated silver production was 7% below guidance due to San Jose's lower tonnage extracted from the mine as it had to deal with a 15-day stoppage at the beginning of the year, operational difficulties thereafter, and a reduced grade profile as we are operating at the tail end of reserves. Base metals, with exceptional lead and zinc production, were 28 and 15 percent above guidance, respectively. Starting in Argentina, Linderos Gold's production for the fourth quarter was 29,591 ounces, a significant increase of 41% when compared to the previous quarter. This increase was enabled by higher gold production and the extraction of 4,600 ounces of gold contained in a fine carbon and copper precipitate.

Consolidated gold production achieved guidance enable mainly by being dead are producing 101238 ounces.

The consolidated silver production was 7% below guidance due to San Jose is lower tonnage extracted from the mine.

Has to deal with 15 days stoppage at the beginning of the year operational difficulties thereafter, and reduced grade profile as we are operating at the tail end of research.

Base metals with its exceptional lead and zinc production was 28 and 15% above guidance respectively.

Starting in Argentina lien debt rose gold production for the fourth quarter. It was 29591 ounces a significant increase of 41% when compared to the previous quarter.

This increase was enabled by a higher gold production and the extraction of 4600 ounces contained in fine carbon and corporate precipitate.

Cesar Velasco: Gold production for the year totaled 101,238 ounces, achieving the midpoint of annual production by. In the fourth quarter, a total of 2.1 million tons of ore were mined at a stripping ratio of 0.6 to 1, leading to a stripping ratio of 1.14 to 1 for the year, aligned with the mining plan. During the same period, a total of 1.6 million tons of ore were placed on the leach pad at an average gold grade of 0.63 grams per ton, containing an estimated 31,665 ounces of gold.

Gold production for the year totaled 101000 to 138 ounces achieving midpoint of annual production guidance.

In the fourth quarter at all or a total of $2 1 million tonnes of ore were mined at a stripping ratio of 0.6% to one leading to a stripping ratio of 114 to one for the year aligned with the mining plan.

During the same period, a total of $1 6 million tonnes. So far were placed on the leach pad at an average gold grade of <unk> 63 grams per ton containing an estimated 31665 ounces of gold.

Cesar Velasco: Linderos' annual cash cost of $920 and ASIC of $1,565 per ounce of gold were both within guidance. However, cash costs and ASIC have been affected by adverse in-country microeconomic conditions during 2023, compounded by an increase in sustaining capital expenditures mainly related to the heap leach expansion project. These costs were partially offset by improved copper by-product sales totaling $7.7 million at the end of February.

Lynn <unk> annual cash cost of 920, and <unk> of 1565 per ounce of gold were both within guidance.

To note cash cost in ASIC have been affected by adverse in country microeconomic conditions. During 2023 compounded by an increase in sustaining capital expenditures mainly related to the heap Leach expansion project.

These costs were partially offset by improved copper byproduct sales totaling $7 7 million.

As of the end of February.

Cesar Velasco: 2024, the $41 million leach pad expansion project, is at approximately 28% progress, with completion planned by the end of 2024. Those $41 million equates roughly to $410 on the ASIC for 2024. While this investment weighs heavily on the company's ASIC for this year, it will greatly benefit Lindero by allowing the placement of reserves over the next decade. In Mexico, San Jose produced 1 million ounces of silver and 6,341 ounces of gold in the fourth quarter of 2023, with average head grades of 145 grams per ton and 0.91 grams per ton, respectively.

In 2020 for the 41 million Leach pad expansion project is approximately 28% progressed.

With completion planned by the end of 2024.

It was $41 million equates roughly to $410 on the <unk> for 2024, while this investment weight heavily on the company's hesik for this year.

Greg will greatly benefit <unk> by allowing the placement of research over the next decade.

In Mexico, San Jose produced 1 million ounces of silver and 6341 ounces of gold in the fourth quarter of 2023.

With average head grades of 145 grams per tonne.

And zero point 91 grams per ton respectively.

Cesar Velasco: Total production for 2023 was 4.7 million ounces of silver and 28,559 ounces of gold, 12% and 16% below annual guidance, respectively. The decrease in production, as I mentioned before, is attributed primarily to the 15-day illegal union blockade in the second quarter, the associated disruption to operations thereafter, a silver and gold head grade reconciliation to reserves at the lower end of the guidance range, and a mine that offers less operational flexibility as it is working on the tail end of reserves. We continue to experience significant inflationary pressures in Mexico beyond what we see in other countries where Fortuna operates.

Total production for 2023 was $4 7 million ounces of silver and 28559 ounces of gold 12.

12% and 16% below annual guidance respectively.

The decrease in production as I mentioned before is attributed primarily to the 15 day illegal union blockade in the second quarter.

The associated disruption to operations thereafter.

Silver and gold head grade reconciliation to reserves at the lower end of guidance range and the mind that offers last operational flexibility. This is us is working on the tail end of reserves.

We continue to experience.

Significant inflationary pressures in Mexico beyond what we see in other countries, where <unk> operates.

Cesar Velasco: The 2023 cash cost of $14.40 and ASIC of $19.40 per silver equivalent ounce were above guidance. Higher costs are mainly explained by a significant appreciation of the Mexican peso, which affects approximately 50% of our total cost, in addition to higher labor, contractor material, and consumable costs, lower answers produced, and lower head grades, all of which are also carried into 2024. Based on exploration outcomes and the remaining life of reserves, the company is preparing to execute a multi-year progressive mine closure and monitoring plan, in strict compliance with government regulations and adhering to high international standards. In Peru, the Cayoma mine produced 330,478 ounces of silver at an average head weight of 88 grams per ton in the fourth quarter. Silver production for 2023 totaled 1,227,060 ounces, surpassing the upper end of guidance by 10%. Lead and zinc production for the quarter were 10.8 and 14 million pounds, with head grades averaging 3.84% and 5%, respectively.

In 2023 cash cost of $14 40, and seek of $19 40 per silver equivalent ounce were above guidance.

Higher costs are mainly explained by a significant appreciation of the Mexican peso, which affects approximately 50% of our total cost.

<unk> to higher labor contractor material in consumable costs lower ounces produced and lower head grades all of which are also carried into 2024 estimates.

Based on exploration outcomes and the remaining life of reserves.

Company is preparing to execute our multi year progressive mine closure and monitoring plan.

In strict compliance with government regulations and adhering to high International standards.

In Peru, Zika Yamana mine produced 330478 ounces of silver at an average head grade of 88 grams per tonne in the fourth quarter silver production for 2023 totaled $1 million to 127060 ounces.

Surpassing the upper end of guidance by 10%.

Lead and zinc production for the quarter was 10, eight and 14 million pounds with head grades, averaging 384% and 5% respectively.

Cesar Velasco: Kayoma delivered strong base metal production in 2023, totaling 40.9 million pounds of lead and 55.1 million pounds of strength, surpassing guidance by 28% and 15% respectively. Enhanced production was the result of positive, great reconciliation to the RESEARCH model in levels 16 and 18 of the ANIMA as well. Back to you, Jorge. Thank you. We'll now proceed with a review of our financial results. Luis, please.

<unk> delivered strong base metal production in 2023, totaling $40 9 million pounds of lead and $55 1 million pounds of zinc.

Surpassing guidance by 28 and 15% respectively.

Enhanced production was the result of positive grade reconciliation to the research model in level 16, and 18 of the Animas vein.

Back to you Jorge.

We will now proceed with a review of our financial results.

<unk>.

Yes. Thank you.

Luis Dario Ganoza Durant: Yes, thank you. So for Q4 2023, we have recorded a net loss attributable to Fortuna shareholders of 92.3 million dollars, explained by an impermanent charge of 90.6 million dollars related to the anticipated closure of the San Jose mine in late 2024. As had been previously disclosed, the updated mine plan is scheduled to exhaust mineral reserves by the end of this year compared to mid-2025 as previously planned. Adjusted Net Income for the period was $20.6 million or $0.07 per share compared to $6.4 million or $0.02 per share in the prior year. In the quarter, we have adjusted for several non-recurring items. All of them, except one, are non-cash charges.

So for Q4.

2023, we have recorded a net loss attributable to referred to and our shareholders.

Of $92 $3 million explained by an impairment charge of $96 million related to the anticipated closure of our San Jose mine in late 2024.

As has been previously disclosed the updated mine plan is scheduled to <unk> mineral reserves by the end of.

Awesome.

This year compared to mid 2025 as previously planned.

Adjusted net income.

In the period was $26 million or <unk> <unk> per share.

<unk> to $6 4 million or <unk> <unk> per share in the prior year.

In the quarter, we have adjusted for several non recurring items all of them, except one are noncash charges.

Luis Dario Ganoza Durant: I will briefly describe them on a pre-tax basis. The main one is the impairment at San Jose, as I just mentioned. Under cost of sales, we have adjusted $15.4 million of write-downs comprised of $9.5 million of materials inventory at various sites and $5.9 million of low-grade stockpiles at Lindero. The materials inventory write-downs are related to a reassessment of consumption plans at San Jose in the face of a shortened life of mine for $4.4 million, with a balance corresponding to Yaramoco and Linder The write-down of low-grade stockpiles at the Lindero mine was triggered by anticipated higher costs to completion over the life of the mine.

I will briefly describe them on a pre tax basis.

One is the impairment at San Jose as I just mentioned.

Under cost of sales, we have adjusted $15 $4 million of write downs comprised of $95 million of materials inventory.

At various sites and $5 $9 million of low grade stockpiles at Linda the materials inventory write downs are related to a reassessment of consumption plant at San Jose in the face of a shortened life of mine for $4 $4 million with a balance <unk>.

Funding to yet a multiple and in their own.

The write down of low grade stockpiles at <unk> mine was triggered by anticipated higher costs to completion over the life of mine.

Luis Dario Ganoza Durant: It is worth pointing out that this write-down doesn't necessarily bring into question the economic viability of the stockpiles, as the decision to stockpile low-grade ore follows an incremental cost logic, while the accounting allocates costs based on an average cost method. For example, under the line item labeled Write-off of Mineral Properties, we have adjusted for the full $5.3 million amount, which is related to the Greenfields Exploration Project Under other expenses, we have adjusted for a $6.4 million severance provision at San Jose related to the scheduled mine closure, and $1.2 million of customs penalties at Ceguela related to the construction phase. So back to adjusted net income, the main drivers of the increase over Q4 2022 were the contribution of the Ceguela mine, which explains the 71% higher volume of gold sold and higher gold price of 15%, which resulted in an average of Our cash cost of sales per gold equivalent ounce sold was $840, compared to $873 in the prior year. As David mentioned, cash costs at Ceguela were $323 per ounce.

It is worth pointing out that this write down doesn't necessarily bring into question the economic viability of their stockpiles as the decision to stockpile low grade ore follows an incremental cost logic, while the accounting allocates costs based on an average cost method.

Under the line item labeled the write off of mineral properties, we have adjusted for the full $5 3 million dollar amount, which is related to Greenfields exploration project.

In Mexico and Argentina.

Under other expenses, we have adjusted for a $6 4 million severance provision at San Jose related to the scheduled mine closure.

And $1 $2 million of customs penalties at save a lot related to the construction phase.

So back to adjusted net income the main drivers of the increase over Q4 2022 were the contribution of a singular mine, which explains the 71% higher volume of gold sold.

And higher gold price of 15%, which resulted in an average of $1990 per ounce for the quarter.

Our cash cost of sales per gold equivalent ounce sold was $840 compared to $873 in the prior year.

As David mentioned cash cost at <unk> was $323 per ounce.

That would be $376 per ounce is fair. We included capital leases related to the mining contractor, which are reported as part of ASIC, but excluded from our cash cost per ounce.

Luis Dario Ganoza Durant: That would be $376 per ounce if we included capital leases related to the mining contractor, which are reported as part of ASIC but excluded from cash costs per ounce. The contribution of low-cost ounces from Ceguela was partially offset by higher cash costs per gold equivalent ounce at Yaramoco, Lindero, and San Jose in the quarter. For Yaramoco, this was primarily due to higher operating costs in Q4, partially offset by higher head rates. In the case of Lindero, the higher cost per ounce was mostly aligned with the expected reductions in head rates consistent with the mine plan. And for San Jose, this was mainly due to a shortfall in production in the quarter compared to the mine plant and lower head rates and the effect of the peso appreciation, as noted by Cesar. Depreciation and depletion for the quarter was $71.6 million compared to $44.5 million in the prior year.

The contribution of low cost ounces from <unk>, partially offset by higher cash cost per gold equivalent ounce at euro mothballing thereof, and San Jose in the quarter for Euro more growth there.

This was primarily due to higher operating costs in Q4, partially offset by higher head grades.

Okay. So really narrow the higher cost per ounce was mostly aligned with the expected reductions in head rates consistent with the mine plan.

And for San Jose This was mainly due to a shortfall of production in the quarter compared to the mine plan and lower head rates and the effect of the peso depreciation as noted by SASSA.

Depreciation.

Asian, and depletion for the quarter was $71 $6 million compared to $44 5 million in the prior year.

The increase of $27 million is explained by the higher gold equivalent ounces sold and higher depletion.

Luis Dario Ganoza Durant: The increase of $27 million is explained by the higher gold equivalent ounces sold and higher depletion, per consolidated gold equivalent ounce of $67. This higher depletion on a per ounce basis is related primarily to Ceguela, where total depletion and depreciation was $26 million, including $17 million corresponding to the purchase price allocation from the Roxwell acquisition. On income taxes, we have recorded $27 million in current income tax compared to $7.8 million in Q4 2022. The increase is mostly explained by Seguela. We note that taxes paid in the quarter were $6.3 million, as we will be paying taxes for the first time at Ceguela in 2024.

Consolidated gold equivalent ounce of $67.

This higher depletion on a per ounce basis related primarily to singular.

Our total depreciation depletion and depreciation was $26 million, including $17 million corresponding to the purchase price allocation from the <unk> acquisition.

On income taxes, we have reported $27 million of current income tax compared to seven $8 million in Q4 2022.

The increase is mostly explained by singular.

Note that tax paid in the quarter was $6 $3 million as we will be paying taxes for the first time at scale in 2024.

Moving on to our free cash flow and liquidity, we reported $66 million of free cash flow for ammonia growing operations. This is after sustaining capex and corporate expenses.

Luis Dario Ganoza Durant: Moving on to free cash flow and liquidity, we reported $66 million of free cash flow from ongoing operations. This is after sustaining CapEx and corporate expenses. Our total liquidity at the end of the quarter was $213 million, up $51 million from the end of September 2023, reflecting the strong free cash flow generation in the quarter. We paid down $40.5 million of debt in Q4 2023 and have made, as Jorge pointed out, subsequent payments of $25 million up to the beginning of March. Finally, at the end of 2023, our total net debt was $83 million, down from $134 million in September of 2023.

Our total liquidity at the end of the quarter was $213 million up $51 million from the end of September 2023, reflecting the strong free cash flow generation in the quarter, we paid down $45 million of debt in Q4, 2023 and have made.

As <unk> pointed out subsequent payments of $25 million up to the beginning of March.

Finally at the end of 2023, our total net debt was $83 million down from $134 million in September of 2023.

Jorge A. Ganoza Durant: Back to you, Jorge. Thank you, operator. We can open the room for Q&A. Perfect. Thank you very much.

Back to you Jorge.

Okay.

Thank you operator.

Got.

The room for Q&A.

Perfect. Thank you very much we are now opening the floor for questions. If you would like to ask a question. Please press star one on your signing key pad now.

Operator: We are now opening the floor for questions. If you would like to ask a question, please press star 1 on your phone keypad now. A confirmation tone will indicate that your line is in the queue.

You indicate that your line is sticky.

Operator: You may press star 2 if you would like to remove your question from. For anyone using speaker equipment, it may be necessary to pick up your handset before you begin. Please hold a moment whilst we pull for, Thank you. Our first question is coming from Don DeMarco of National Bank Financial. Don, your line is now open. Thank you, operator. And good morning, Jorge and team. First question: a couple questions on SQLA.

Press Star two if you would like to remove your question from Nicky So anyone using speaker equipment. It may be necessary to pick up your handset before pressing the keys.

Please hold amendment wealthy poll for questions.

Thank you. Our first question is coming from Don Demarco of National Bank Financial Dan Your line is live.

Thank you operator, and good morning, Jorge and team first question a couple of questions on Squilla.

Don DeMarco: First off, looking at your guidance, I mean, what drove Seguella's AFIT guidance higher than 24? Because we see that in Q4, you're still running at 737 an ounce. But then the midpoint next year is 1170. Yes. As you can see, Don, in the second half of the year, our average strip ratio has been around 5.4, and that is set to increase, no, in accordance with a plan to around 8 to 9. The life of nine strip ratio of Ceguela is around 13.

First off looking at your guidance I mean, what drove sequela ASIC guidance higher than 24, because we see that Q4 or are you still running at 737 an ounce.

Then the midpoint next year is 11 70.

Yes.

As you can see in the second half of the year or average.

The strip ratio has been around five four.

That is set to increase.

In accordance to our plan.

To around eight to nine the life of mine strip ratio of <unk>.

Our own <unk>.

Jorge A. Ganoza Durant: We have initiatives to optimize that with underground trade-off studies that are ongoing right now, but that's what's currently in the process. So in the second half of the year, in the first two quarters of production, we have benefited from low strip ratios and a shorter haulage piece. Moving onward into 2024, our strip ratios will increase in accordance with plan, and our haulage distances will increase, and So, yeah, that's basically where the explanation is. Okay, thank you. Also, at Saguaro, we've seen three quarters in a row now where recoveries have increased. Q4 was 95%.

We have initiatives to optimize that with the underground trade off studies that are ongoing right now, but that's what square in the plan.

So in the first in the second half of the year in the first two quarters of production we have benefited from.

Low strip ratios.

And shorter haulage distance.

Moving onward into 2024, our strip ratios will increase according to plan or under a haulage distances will increases.

So.

Yes, that's basically were okay.

The nation of usage.

Okay. Thank you all sorts of guar, we've seen three quarters in a row now where recoveries have increased Q4 was 95%.

David Whittle: Should we plot line 95 from here on, or do you expect it to increase further? David, do you want to tackle that question? I can respond to that. Obviously, in the first couple of quarters, we were mining predominantly antenna stage one ore, which was probably higher grade than the life of mine grade. So we were expecting to still retain around that 94 and a half to 95% in terms of the life and mind recovery. Okay, good to know.

Should we Plotline 95 from here on or do you expect it to increase further.

David you want to tackle that question.

I can respond to that.

Obviously, the first couple of quarters.

Predominantly the antenna on cannot slate con call.

We have probably higher grade than the life of mine life.

Life of mine grade.

So we were expecting so till we tighten our ramp at 94.5% to 95% in terms of the in terms of the life of mine recovery.

Okay good to know.

Don DeMarco: Shifting over to San Jose, you're spending $5 million on drilling this year at San Jose State University at Yassi. What do you need to find here to be able to keep the mind open? Or is that even an option?

Shifting over to San Jose Youre spending 5 million on drilling this.

This year at San Jose at USC.

What do you need to find here to be able to keep the mine open.

Or is that even in auctions.

Jorge A. Ganoza Durant: It's certainly an opportunity that we value, so we currently have three drill rigs advancing on the SE. I have to say that it took us a while to understand the geology and the geometry of this structure.

Certainly.

An opportunity that we find you.

Yes.

So we currently have three drill rigs advancing on ESG I'd have to say that took us a while.

To understand the.

<unk>.

And the geometry of the structure.

It has.

Jorge A. Ganoza Durant: It has a, uh, an orientation, a strike orientation that is different from what we're used to seeing, and that made it difficult at the beginning, but we find it as an exciting feature of this new, new vein. Now we have a well-defined plane and that we are hitting hard with drilling. Before, it was a bit difficult to understand, and now we're drilling for volume. So I would expect that by mid-year, As I always say, here at YETI, we had an exciting discovery. Now we need to see it through to become an exciting resource. We are currently working on that second component of this.

And the orientation that strike orientation that is different to what we're used to seeing that he has made it difficult at the beginning but we find it as an exciting feature.

Feature of these new UV.

But now we have a well defined lane.

That we are hitting hard with drilling.

Before it was a bit.

<unk> drilled to understand.

We're drilling for volume.

So I would expect that.

By mid year, we have a better grasp on.

How meaningful these discoveries.

I always say, we had at the ATM exciting discovery.

We need to see it through into an exciting resource right.

And the working for that segment.

A component of this.

And then.

Jorge A. Ganoza Durant: And as I say, we're hitting it hard. All of our drilling, the $5 million is our funding drilling that is concentrated in this area. And we don't know the limits of it yet, and the expectation is that we can define volumes and resources, tonnages, and start getting a grasp on that by mid-year. So that will dictate, that outcome will dictate our view on how to treat the mine plan moving forward. As it sits today, we're exhausting reserves by the year end. We have other resources in the mine, and the team is currently working on optimization opportunities, from the Victoria Resource, for example, to see if we can extract some more, while waiting at the same time for outcomes of the Yes! Event exploration

We are hitting it hard.

All of our drilling.

Million learners.

Funding really that are concentrated in this area.

We don't know the limits of it yet.

And the expectation is that we can define volumes in resources.

It does.

Starts getting a grasp on that by mid year, so that will dictate that outcome will dictate.

Or view.

How to treat the mine plan.

Moving forward.

As it sits today, where it's sourcing reserves.

By year end.

We have other resources in the mine and the team is currently working on optimization opportunities.

From the Victoria Resource for example.

See if we can instruct Sam Moore and waiting at the same time for <unk>. So the ese vein exploration on those so I think we'll have a better idea.

Jorge A. Ganoza Durant: Also, I think we'll have a better idea of how the potential winding down of mining will look closer to mid-year. But parallel to all of this, we are moving forward, updating our plans, and keeping flexible. Okay, sounds great.

So the.

The winding down of potential winding down.

Mining.

Ed.

We'll look closer to midyear, but.

In parallel to all of these we are advancing updating our plans.

Im keeping flexible.

Okay. It sounds great. We'll look forward to an update on the FTE around mid year then thank.

Don DeMarco: We'll look forward to an update on the SE around mid-year. Thank you, Jorge. That's all for me. Just a reminder, if anyone does have any remaining questions, please press star 1 on your phone to join us today. Okay, we don't appear to have any further questions in the queue at the moment. I will now hand back over to Jorge for any further questions. I just want to stress that our business continues to show strength from the perspective of free cash flow generation. It has been a good end to the year, and we look forward to an exciting 2024. So with that, Carlos, you want to...

Thank you that's all for me.

Thank you very much just a reminder, if anyone does have any remaining questions. Please press star one on your phone keypad now to join the key star one on your keypad.

Okay. We didn't appear to have any further questions in the queue at the moment I will now hand back over to Jorge for any closing comments.

I just want to stress that.

Our business continues to show strength from the perspective of the cash flow generation.

It has been removed.

End of the year, and we will look to an exciting 2024, so with that Carlos.

Thank you very much Jorge I would like to thank everyone for listening to today's earnings call have a great day.

Jorge A. Ganoza Durant: Thank you very much, Jorge. I would like to thank everyone for listening to today's earnings call. Have a great day. Thank you very much. That does conclude the conference call for today. You may disconnect your phone lines at this time and have a wonderful rest of the day. Thank you for your participation. Here, everyone.

Thank you very much that does conclude the conference call for today you may disconnect. Your phone lines at this time and have a wonderful rest of the day. Thank you for your participation.

Anyone.