Q1 2024 Fortuna Silver Mines Inc Earnings Call
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Operator: Greetings and welcome to the first quarter 2024 financial and operational results call for Fortuna. At this time, all participants are in a listen only mode, and a question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your hosts. Mr. Carlos Baca, Vice President of Investor Relations, Sir, you may begin. Thank you, Ali.
Greetings.
Welcome to the first quarter 2024 financial and operational results call for Fortuna Silver.
Carlos Baca: At this time all participants are on a listen only mode on a question and answer session will follow the formal presentation.
Carlos Baca: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad.
Operator: Please note this conference is being recorded.
Operator: I will now turn the conference over to your host Mr. Carlos Baca, Vice President of Investor Relations. Sir you May begin thank you Ali.
Carlos Baca: Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silvermines' first quarter 2024 financial and operational results conference call. Hosting the call today on behalf of the company will be Jorge Alberto Ganoza, President and Chief Executive Officer, 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 is available on our website. As a reminder, statements made during this call are subject to the reader advisories included in yesterday's news release, the earnings call presentation, MD&A, and the risk factors in our annual information form.
Carlos Baca: Thank you Anthony good morning, ladies and gentlemen, I would like to welcome you to Fortuna Silver mines first quarter 2024 financial and operational results conference call hosting the call today on behalf of the company will be Jorge was that all in all.
Carlos Baca: <unk>, President and Chief Executive Officer, Lisa and also Chief Financial Officer, <unk>, <unk>, Chief Operating Officer, and Latin America, and David Whittle, Chief operating officer of West Africa.
Carlos Baca: Today's earnings call presentation is available on our website as a reminder statements made during this call are subject to the reader advisory as included in Yesterdays News release, the earnings call presentation, MD&A and the risk factors in our annual information form financial figures contained in the presentation and discussed in today's.
Carlos Baca: Call are presented in U S dollars unless otherwise stated.
Carlos Baca: The only information in the presentation has been reviewed and approved by Eric <unk> Senior Vice President of technical services and.
Carlos Baca: Qualified person.
Carlos Baca: Financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars unless otherwise stated. Technical information in the presentation has been reviewed and approved by Eric Chapman Fortuna, Senior Vice President of Technical Services, and a qualified person. I would now like to turn the call over to Jorge Alberto Ganoza, President, Chief Executive Officer, and Co-Founder of Fortuna. Good morning, everyone.
Speaker Change: I would now like to turn the call over to Jorge.
Speaker Change: Our president and Chief Executive Officer, and co founder of working with Us.
Jorge A. Ganoza Durant: We continue to report strong operational and financial performance and, according to our plans and guidance, expect an even stronger second half of the year for production and cost, over 225 million in sales. Gold contributed 81% and silver 10% with the balance being byproducts in Canleta. We realized an average gold price in the quarter of $2,087 per ounce compared to $1,990 in the fourth quarter of 2023. Silver stayed flat at $23.25 over the quarter. Attributable net income and adjusted net income for the quarter were both $26 million, or 9 cents per share. Cash flow from operations before changes in working capital was $84 million, or $0.28 per share. Both earnings and cash flow were well ahead of analyst consensus figures, of $0.06 and $0.25 per share, respectively.
Speaker Change: Good morning to dwarfs, we continue to report strong operational and financial performance and according to our plans from guidance expect an even stronger second half of the year for production and costs.
Jorge A. Ganoza Durant: Over $225 million in sales.
Jorge A. Ganoza Durant: <unk> contributed 81% and silver, 10% with the dilemma seeing thereby probe St.
Jorge A. Ganoza Durant: We realized an average gold price in the quarter of $2087 per ounce compared to 1990 in the fourth quarter of 2023.
Jorge A. Ganoza Durant: Silver stayed flat at $23 quarter over quarter.
Jorge A. Ganoza Durant: Or achieve little net income and adjusted net income for the quarter were both a $26 million or nine cents per share.
Jorge A. Ganoza Durant: Cash flow from operations before changes in working capital was $84 million or 28 cents per share.
Jorge A. Ganoza Durant: Both earnings and cash flow were well ahead of analyst consensus figures.
Jorge A. Ganoza Durant: <unk>, six <unk> and 25 cents per share respectively.
Jorge A. Ganoza Durant: All our mines deliver gold and silver production in line with our plans and within guidance range projections for the year. At 112,000 gold equivalent ounces, production was softer when compared to the previous two quarters, where we had consecutive record production of 129,000 and 136,000 thousand gold equivalent ounces in Q3 and Q4 of 2023, respectively. The reduction against previous quarters is largely explained by lower grades and ounces produced at Ceguela, but all went well according to plan.
Jorge A. Ganoza Durant: All of our mines delivered gold and silver production in line with our plans and within guidance range predictions for the year.
Jorge A. Ganoza Durant: At 112000 gold equivalent ounces production with softer when compared to the previous two quarters, where we had to go to sacred to record production of 129936.
Jorge A. Ganoza Durant: Thousand gold equivalent ounces in Q3, and Q4 of 2023, respectively.
Jorge A. Ganoza Durant: The reduction against previous quarters is largely explained by lower grade and ounces produced at singular, but well according to plan.
Jorge A. Ganoza Durant: Worldwide production during 2024 is planned to pick up throughout the year with Q1 having the lowest planned production. All our mines reported consistent ASIC tracking well to be within our annual guidance range. Consolidated cash costs per gold equivalent ounce were $879, and if we adjust for San Jose mine, which is mining on its last year of reserves, the cash cost is a low $744 per hour.
Jorge A. Ganoza Durant: Quarterly production during 'twenty 'twenty four is plan to pick up throughout the year with Q1, having the lowest fraud paradox.
Jorge A. Ganoza Durant: All of our mines reported consistent AC tracking well to be within our annual guidance range consolidated cash cost per gold equivalent ounce was $879.
Jorge A. Ganoza Durant: If we adjust for San Jose mine, which is mining on their last year of reserves. The cash cost is a low $744 per ounce.
Jorge A. Ganoza Durant: Consolidated ASIC at $1,495 for an equivalent gold ounce. It's on the very low end of our guidance range for the year, which is between $1,495 and $1,640 and slightly lower than the 1,509 we reported in Q4 2020. The low ASIC is largely explained by Ceguela's higher gold production, a lower cost per ton against your budget, and timing of capital expenses at the Lindero Mine leach fat expansion. The largest short-term opportunity in the portfolio today is the throughput optimization at the Seguela mine, which continues to bear fruit.
Jorge A. Ganoza Durant: Consolidated AC at $1495 per gold equivalent ounce is on the very low end of our guidance range for the year, which is between 1485.
Jorge A. Ganoza Durant: And $1640.
Jorge A. Ganoza Durant: And slightly lower than this 1500 <unk>, we reported in Q4 2023.
Jorge A. Ganoza Durant: So AC is largely explained by singular higher gold production and lower cost per ton against their budgets and timing of capital expenditures are building their own mine leach pad expansion.
Jorge A. Ganoza Durant: The largest short term opportunity thing that Bert for you today is it throughput optimization of the mine, which continues to render fruit.
Jorge A. Ganoza Durant: After the relining of the mill and other minor works in April, the plant is expected to reach a process rate of 220 dry metric tons per hour, or 42% above nameplate capacity and 25% above, or in 2024, but... Looking forward, there is an emerging situation in April in Cote d'Ivoire. Technical failures at two gas plants sourcing power into the national grid have resulted in outages at the national level.
Jorge A. Ganoza Durant: After realigning over the meal and other minor works. They may from the plant is expected to reach a process rate of two <unk>.
Jorge A. Ganoza Durant: Wondered 20 dry.
Jorge A. Ganoza Durant: Metrics darts per hour or 42% above nameplate capacity.
Jorge A. Ganoza Durant: And 25% of all our 2024.
Jorge A. Ganoza Durant: Budgets.
Speaker Change: Looking forward I'm very sad.
Jorge A. Ganoza Durant: The emerging situation in April in Cote d'ivoire, technical Savior said, two gas plant sourcing power into the National grid has resulted in outages at national level Netease expected power will be restored to normal levels in July.
Jorge A. Ganoza Durant: It is expected that power will be restored at normal levels in July. With the information available at this moment, we believe guidance for the year of Seguela is still achievable with no corresponding impact on consolidated guidance. With respect to capital allocation, management continued during the quarter to focus on three priorities. One, provide maximum flexibility to our balance sheet. During the period, we paid an additional $40 million on our revolving credit facility, totaling $123 million since we started repayment in the third quarter of 2023.
Jorge A. Ganoza Durant: With information available at this moment, we believe guidance for the year at cigar Lake still achievable with no corresponding impacts on consolidated guidance.
Jorge A. Ganoza Durant: With respect to capital allocation management continued during the quarter to focus on three priorities one provide maximum flexibility to our balance sheet. During the period, we paid an additional 40 million on our revolving credit facility totaling 123 million.
Jorge A. Ganoza Durant: It seems when we started the repayments in the third quarter of 2023.
Jorge A. Ganoza Durant: We brought net debt down to $83 million, and our total net debt to EBITDA ratio stands at a low 0.221. Our liquidity position stood at $212 million at the end of the quarter, essentially flat with respect to the previous quarter.
Jorge A. Ganoza Durant: We brought net debt down to $83 million and our total net debt to EBITDA ratio stands at a low 0.221.
Jorge A. Ganoza Durant: Our liquidity position stands at $212 million at the end of the quarter essentially flat with respect to the previous quarter.
Jorge A. Ganoza Durant: Second, an opportunistic return to shareholders. Management re-initiated its normal course-issue bid program in the quarter with the repurchase of one million shares for cancellation at an average price of $3.42 on the New York Stock Exchange. The normal course-issue bid has been renewed in April for an additional year for up to 5% of the issued and outstanding shares of the company. I'm certain, Funding organic growth opportunities in our portfolio, our priority exploration programs at Ceguela, Tiamba Sud, San Jose, and Yaramoco continue to yield positive results.
Jorge A. Ganoza Durant: Second is the opportunistic return to shareholders management or initiated its normal course issuer bid program in the quarter with the repurchase of 1 million shares for cancellation at an average price of $3.42 in the New York stock exchange.
Jorge A. Ganoza Durant: The normal course issuer bid has been renewed in April for our Navy show a year for up to 5% of the issued and outstanding shares of the company.
Jorge A. Ganoza Durant: And third.
Jorge A. Ganoza Durant: <unk> funding organic growth opportunities in our portfolio, our priority exploration program subscale at the embassy suite, San Jose and yet our local continue to yield positive results.
Jorge A. Ganoza Durant: At the Ceguela mine in Cotijua, the exploration team is planning to have new resources this year at the deposits of Badior, Kestrel, Gabbro North, and Kingfisher. Of note is a newly discovered Kingfisher deposit where drilling continues to return consistent results over the two-kilometer strike length of the identified mineralization. A fourth drill rig has now been mobilized to Segella to further capitalize on these opportunities, as well as to examine the underground potential at deposits where we currently hold reserves in Kula, Sien, and San Bernardino.
Jorge A. Ganoza Durant: They figure that mining, partly why the exploration team is planning to have new resources each year.
Jorge A. Ganoza Durant: The deposits of Baidu your guests through Gabriel North in Kingfisher of note is a newly discovered kingfisher that lawsuit where drilling continues to return consistent results or is it two kilometer strike length of the identified in their organization.
Jorge A. Ganoza Durant: A fourth drill rig has now being mobilized to say hey, led to further capitalize on these opportunities as well as accelerating the underground potential.
Jorge A. Ganoza Durant: Deposits were weaker in the hold reserves and cooler and CMO sundberg.
Jorge A. Ganoza Durant: At Yeramoco in Burkina Faso, we continue to make marginal gains of high-grade mineralization at the immediate boundaries of resources in Zone 55. These gains are potentially helping to reduce the rate of depletion in the life of the mine by providing opportunities to sustain 2025 at above 100,000 ounces of gold production. At San Jose, in Mexico, we continue advancing the Yesi vein exploration with three dedicated drill rigs and plan to add a fourth one in May.
Jorge A. Ganoza Durant: And yet our multiple and Burkina Faso, we continued to make marginal gains some of high grade mineralization at the immediate boundaries of resources on solid 55 <unk>.
Jorge A. Ganoza Durant: These gains are potentially helping to reduce the rate of depletion in the life of mine by providing opportunity to sustained 2025 and have over 100000 ounces of gold production.
Jorge A. Ganoza Durant: At San Jose, Mexico, We continue advancing the <unk> exploration with three dedicated drill rigs and planning to add a fourth one in may.
Jorge A. Ganoza Durant: Results to date have defined potential economic mineralization within a 350 by 450 meter area, which remains open to the South. Step-out drilling holes are being prioritized currently. For the second quarter, management is planning to drive a 150-meter drift to reach the core of the identified higher-grade zone. And at the Embassy in Senegal, exploration and geotechnical drilling continue to advance according to plan, along with environmental studies. Hydrological drilling is set to begin in the second quarter.
Jorge A. Ganoza Durant: Results to date have defined potentially economic mineralization within that 350 by 450 meter area.
Jorge A. Ganoza Durant: Which remains open to the South east.
Jorge A. Ganoza Durant: Step out drilling holes are being prioritized horribly.
Jorge A. Ganoza Durant: For the second quarter management is planning to drive a 150 meter drift to reach the GOR over identified higher grade so.
Jorge A. Ganoza Durant: And beyond the soothing Senegal exploration of your technical drilling continues to advance. According to plan along with environmental studies Hydro allergic drilling is set to begin in the second quarter.
Jorge A. Ganoza Durant: And last but not least, we had a difficult start of the year on safety indicators, for total recordable loss time and loss time injury rates were impacted by four loss time accidents in the court. We have now been operating for 50 days without any recordable accidents and are doubling down on active leadership and multiple other initiatives that Cesar and David will touch on with the objective of still achieving a third year of continued improvement on key safety measures. I'll now ask David to provide an update on West African operations.
Jorge A. Ganoza Durant: And last but not least we had a difficult start of the year on safety indicators or total recordable and lost time and lost time injury rates have been impacted by for lost time accidents in the quarter.
David: We have now been operating for 15 days without any recordable accidents, and they're doubling down on active leadership on multiple other initiatives.
Jorge A. Ganoza Durant: But assessor in and David will start shortly with the objective of our steel achieving a third year of continued improvement on key safety metrics.
David: I'll now ask Oh.
Jorge A. Ganoza Durant: David to provide an update on our West African operations David.
David Whittle: Thanks, Jorge, and good morning, everyone. Sagela and Yaramoko had a successful first quarter with regard to production, and at Sagela, we unfortunately reported one LTI, whilst Yaramoko continued its good safety performance with no LTIs reported. In the first quarter, both Sugela and Yaramoko outperformed the mine plant, producing 34,556 and 27,177 ounces of gold, respectively. However, together, production was 20% lower compared to the fourth quarter of 2023. The average head grade for the period became more reflective of the life of my grade.
David: Thanks, Jorge and good.
David: Good morning, everyone.
David Whittle: So again <unk> had a successful first quarter with regards to production.
David Whittle: We Unfortunately reported one LTI <unk> continued its good safety performance with no LTI as reported.
David Whittle: In the first quarter, IC Gayla and Dr. Michael at the mine plan, reducing 34556, and 27177 ounces of gold respectively.
Jorge: Thank you Gayla production was 20% lower compared to the fourth quarter of 2020 right. The average head grade for the period became more reflect keeping the license line right.
David Whittle: In the quarter, Sigelei mined 421,000 tons of ore with an average gold grade of 2.23 grams per ton, and 2.54 million tons of waste with a strip ratio of six to one. The processing plant treated 395,000 tons at an average gold grade of 2.79 grams per tonne. Whilst mining operations were centred on the Antenna Pit, 700,000 and 18,000 tonnes of waste stripping were conducted at the Ancien and Kula Pits respectively, processing plant operations continued to progress beyond the nameplate capacity of 154 tons an hour, achieving an average throughput of 195 tons per hour. Goal recovery for the quarter was 94.4%, in line with design.
David Whittle: In the quarter to <unk> 421000 tonnes of ore at an average.
David Whittle: Coal price of $3 three three grams per tonne.
David Whittle: And to slide 4 million tonnes of waste strip ratio of six to one.
David Whittle: The processing plant at <unk> 395000 tons at an average gold grade of 279.
David Whittle: Yes.
David Whittle: Whilst funding operations was centered on the antenna T 700000 to 90000 tonnes of waste stripping was conducted at the CRM tool of phase III.
David Whittle: Processing plant operations continued to progress beyond the nameplate capacity of 154 tons in L. A.
David Whittle: Television and that reached 395 tons per hour.
David Whittle: Recoveries for the quarter was 94, 4% in line with design.
David Whittle: The second lift of the tailings storage facility was successfully completed in April, benefiting the operation with an additional two years of tailings storage at the enhanced throughput rate. Cigala's strong performance resulted in a cash cost of $459 and an ASIC of $948 per ounce of gold. At Yaramoko, mine production in the first quarter was 124,000 tonnes at an average gold grade of 8.3 grams per tonne, with all primarily sourced from the 55 Zone underground mine.
David Whittle: The second lift in the diary storage facility was successfully completed in April benefiting the operation with an additional two years of detainees for each of the year.
David Whittle: The rights.
David Whittle: So again strong performance resulted in a cash cost of $469.
David Whittle: Now you see in $948 per ounce of gold.
David Whittle: At <unk> mine production in the first quarter was 124000 tonnes at an average gold grade of eight three grams per ton with.
David Whittle: With oil primarily source from the <unk> underground mine.
David Whittle: Development and stoking operations of the Bagasy South mine improved, continuing to contribute 16,000 tonnes and an average gold grade of 6.16 grams per tonne. At the processing plant, 108,000 tons of ore were treated, and an average gold grade of 8.79 grams per ton, with recovery at 98.2%. The lower processing tunnels are attributed to a planned plant maintenance shutdown for the first two weeks of January 24. Yaramoko's steady production resulted in a cash cost of $752 and an ASIC of $1,373 per ounce of gold.
David Whittle: Development in cycling operations of the legacy SaaS model.
David Whittle: Continuing contributing 16, CASM tunnels and.
David Whittle: The installed grinding of seats one seats.
David Whittle: On the processing plant.
David Whittle: 190000 tonnes of ore were treated in an average gold grade of 879 grams per tonne and recovery at 98, 2%.
David Whittle: The lower processing tons are attributed to a planned plant shutdown for the first two weeks of January 'twenty pool.
Speaker Change: Yeah on monetize steady production resulted in a cash cost of seven.
David Whittle: Through Q2.
David Whittle: And then AUC of 1001.
David Whittle: <unk> thousand $373 per ounce of gold.
David Whittle: Development of the main decline, another major capital development of the 55 zone mine, was completed during the quarter. Waste development is now limited to the striped footwall drives, while haul development continues to intersect wider areas and encounters better grades than planned, as well as further extending the mining boundaries to the east and the west of the ore body along the Stripes.
David Whittle: Development of the 90 climbed another major capital development has a 55 zone mine was completed during the quarter.
David Whittle: While development now is limited to the strike will drugs walls, whilst the whole development continues to intersect wider areas and encounters grades and plant.
David Whittle: As well as further extending the mining boundaries to the east and the west of the ore body along strike.
Jorge A. Ganoza Durant: Vote for you, Jorge.
David Whittle: <unk>.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: Thank you, David. Cesar, please.
Jorge: Thank you David.
Jorge A. Ganoza Durant: Please.
Cesar Velasco: Thank you, Jorge. So starting in Argentina, Linderos Gold's production in the quarter was 23,262 ounces. This is a 21% decrease compared to the fourth quarter of 2023 due to the lower head grade of foreplay from the leech pack and a reduction in the gold-rich carbon inventories. However... Gold production remains aligned with the mine plan and mineral reserves estimates for the year. During the quarter, 2 million tons of ore were mined at a stripy ratio of 0.54 to 1.
Jorge A. Ganoza Durant: Yes.
Cesar Velasco: So starting in Argentina.
Cesar Velasco: <unk> gold production in the quarter was 23262 ounces.
Cesar Velasco: 21% decrease compared to the fourth quarter of 2023 due.
Cesar Velasco: Due to the lower head grades for placed on the Leach pads.
Cesar Velasco: And a reduction in the gold reached Carbone inventory.
Cesar Velasco: However, gold.
Cesar Velasco: Gold production remains aligned with the mine plan and mineral reserve estimates for the year.
Cesar Velasco: During the quarter 2 million tons of Florida, where mine had a <unk> ratio of <unk> 64 to one.
Cesar Velasco: A total of 1.55 million tons of ore were placed on the leach fat at an average gold grade of 0.60 grams per ton, containing an estimated 29,670 ounces. The operation experienced lower mechanical loader availability, which mainly impacted the waste mining plant for the period.
Cesar Velasco: A total of 155 million tons of forward placed on the Leach pad at an average gold grade of <unk> 60 grams per tonne.
Cesar Velasco: I'm painting, an estimated 29000 to 106 hundred 70 ounces.
Cesar Velasco: The operation experienced lowered mechanical loader availability.
Cesar Velasco: Which mainly impacted the waste mining plan for the period.
Cesar Velasco: The mine plan has been adjusted to reflect enhanced waste mining during the next quarters and remains in alignment with the mine plan for the year. As of April 30, 2024, the LeachPad expansion project is approximately 44% complete, with air works and construction of the impulsion line at 33% risk. Procurement is 95% complete. Complementing current works, liner installation also commenced in April.
Cesar Velasco: The mine plan has been adjusted to reflect enhanced waste mining during the next quarters and remains in alignment with the mine plan for the year.
Cesar Velasco: As of April 32024.
Cesar Velasco: That expansion project is approximately 44% complete.
Cesar Velasco: <unk> works.
Cesar Velasco: Construction of the emulsion line at 33% respectively.
Cesar Velasco: Procurement is 90, 595% complete.
Cesar Velasco: Complementing current Forex liner installation also commenced in April.
Cesar Velasco: The project is advancing on schedule with operations expected to begin or placement by the end of 2024. Lindero had a cash flow of $1,008, and an ASIC of 1,634 per ounce of gold for a quarter. The costs reflect timing of sales, as 1,700 ounces of gold remained in inventory at the end of the period. In addition to timing of sales, the operation experienced higher costs for rental equipment and intensive CAPEX execution related to the LeachPad expansion project.
Cesar Velasco: The project is advancing on schedule with operations expected to be in or placements by the end of 'twenty 'twenty four.
Cesar Velasco: <unk> had a cash cost of 1008.
Cesar Velasco: And then AC co 1634 per ounce of gold for the quarter.
Cesar Velasco: The costs reflect timing of sales of 1700 ounces of gold remained in inventory at the end of the period.
Cesar Velasco: In addition to timing of sales the operation experienced higher cost for rental equipment and intensive capex execution related to the leach pad expansion project.
Cesar Velasco: On a general note, in-country macroeconomic conditions have improved from what we saw in 2023 and have allowed Indero to operate more efficiently as a result. In Mexico, at San Jose, unfortunately, we reported two LTIs during the quarter. Both incidents were related to employees working at height. We continue to proactively reinforce our leadership initiatives to improve safety performance throughout all of our operations.
Cesar Velasco: On a general note in country macroeconomic conditions have improved from what we saw in 2023 and.
Cesar Velasco: And have allowed <unk> to operate more efficiently as a result.
Cesar Velasco: In Mexico at San Jose. Unfortunately, we reported two LTI during the quarter, both incidents were related to employees working at height.
Cesar Velasco: We continue to proactively reinforce our leadership initiatives to improve safety performance throughout all of our operations.
Cesar Velasco: San Jose produced 759,111 ounces of silver at an average head rate of 147 grams per ton, and 4,533 ounces of gold at an average head weight of 0.90 grams per ton of gold. The processing plant milled 181,103 tons of ore at an average throughput of 2,182 tons per day, in line with the plan for the period. The mine has less operational flexibility in 2024 when compared to 2023 due to the reduced and more dispersed mineral research in the Trinidad deposit. Production stoves in the upper levels contained lower head grades and a higher presence of ferrous oxides, which impacted recoveries by approximately 2% in the quarter.
Cesar Velasco: San Jose produced 759111 ounces of silver.
Cesar Velasco: On an average head grade of 147 grams per tonne.
Cesar Velasco: And 4533 ounces of gold at <unk>.
Cesar Velasco: Average head grade of <unk> 90 grams per tonne of gold.
Cesar Velasco: The processing plant milled 181103 tonnes of ore at an average throughput of 2182 tonnes per day in line with the plan for the period.
Cesar Velasco: The mine has less operational flexibility in 2024, when compared to 2023.
Cesar Velasco: The reduced and more dispersed mineral reserves in the Trinidad deposit.
Cesar Velasco: Production stopes in the upper levels contained lower head grades and higher presence of perils oxides, which impacted recovery by approximately 2% in the quarter.
Cesar Velasco: San Jose had a cash cost of $21.98 and an ASIC of $24.23, for a silver equivalent ounce for the quarter. The increase is explained by lower head grades, lower production, and, as 50% of our costs are peso denominated, also a stronger Mexican peso impact. The company continues preparations to execute a multi-year progressive mine closure and monitoring plan while conducting regular assessments on trade-offs between maintaining operations and care and maintenance operations. As Jorge mentioned before, exploration work continues to advance in the GSU game.
Cesar Velasco: A thorough Jose.
Cesar Velasco: Cash cost of $21 98, and the lasik of $24 20.
Cesar Velasco: Four per silver equivalent ounce for the quarter.
Cesar Velasco: The increase is explained by the lower head grades lower production and.
Cesar Velasco: US 50% of our costs are peso denominated also a stronger Mexican peso impacting.
Cesar Velasco: The company continues preparations to execute our multiyear progressive mine closure and monetary plan well.
Cesar Velasco: <unk> is conducting regular assessments on trade offs between maintaining operations and care and maintenance option as Jorge mentioned before exploration work continues to advance in the year to date.
Cesar Velasco: In Peru, the Cayoma Mine produced 315,000 tons of sand per year and 1460 ounces of silver at an average head rate of 87 grams per ton. Zinc and lead production was 12.2 and 9.5 million pounds, respectively. Metal production was in line with the Mineral Reserve's estimates, and production for the period. Underground development for a quarter was mainly focused on the lower levels of the animals' veins.
Cesar Velasco: In Peru.
Cesar Velasco: I think our Yamana mine produced 330.
Cesar Velasco: 315.
Cesar Velasco: 460 ounces of silver at an average head grade of 87 grams per tonne zinc and lead production was $12, two and $9 5 million pounds respectively.
Cesar Velasco: Production is in line with our mineral reserves estimates.
Cesar Velasco: <unk> for the period.
Cesar Velasco: Underground development for the quarter was mainly focused on the lower levels of the Animas vein.
Cesar Velasco: Cash cost for silver equivalent for a quarter was $11.61, driven primarily by lower treatment and refining charges. All in Sustaining Cash Flows for Unsustainable Silver Equivalent was $17.18. Back to you, Fortuna. Cesar, Luis will now provide a... a review of the financial results. Thank you.
Cesar Velasco: Cash cost per silver equivalent for the quarter was 11, 61, driven primarily by lower treatment and refining charges.
Cesar Velasco: The all in sustaining cash cost per ounce of payable silver equivalent was $17 $18.
Speaker Change: Back to you.
Cesar Velasco: Luis will now provide a.
Speaker Change: A review of our financial results.
Luis Dario Ganoza Durant: So, we have recorded net attributable income to Fortuna shareholders for the period of $26.5 million, or $0.09 per share, compared to $10.9 million and $0.04 per share in Q1 of 2023. The main driver for this 143% increase in net income was our contribution from the Ceguela mine, which had its first full quarter of operations in Q3 of 2023. Ceguelas has been stressed contributes low-cost ounces, which help lower consolidated costs per gold equivalent ounce sold from $916 in the prior period to $879 in Q1 of 2024.
Luis: Thank you.
Luis Dario Ganoza Durant: We we have recorded Landa attributable income through for two nine shareholders for the period of $26 $5 million or <unk> nine per share compared to $10 9 million and <unk> <unk> per share in Q1 of 2023.
Luis Dario Ganoza Durant: Main driver for this 143% increase in net income was a contribution from the <unk> mine, which had its first full quarter of operations in Q3 of 2023.
Luis Dario Ganoza Durant: So you get less has been stressed.
Luis Dario Ganoza Durant: <unk> low cost ounces, which helped lower our consolidated cost per gold equivalent ounce sold from $916 in the prior period to $879.
Luis Dario Ganoza Durant: In Q1 of 2024.
Luis Dario Ganoza Durant: A few comments on the income statement; depreciation in the quarter was $50 million, which includes close to $16 million in depletion of the purchase price related to the acquisition of Roxwell in 2021. On general and administration expenses, we recorded $18.2 million, and as shown in the breakdown we provide of this line item in our NDNA, this was comprised of $7.5 million of in-country DNA at our mining operation. $8.4 million in corporate DNA and $2.2 million in share-based compensation.
Luis Dario Ganoza Durant: A few comments on the income statement depreciation in the quarter was $50 million, which includes.
Luis Dario Ganoza Durant: Close to $16 million in depletion of the purchase price related to the acquisition of <unk> in 2021.
Luis Dario Ganoza Durant: On General and administration expenses, we recorded $18 $2 million and as shown in the breakdown. We provide of this line item in our MD&A.
Luis Dario Ganoza Durant: Comprised of $10 $5 million of in country G&A at our mining operations.
Luis Dario Ganoza Durant: $8 $4 million of corporate G&A, and $2 $2 million of share based compensation.
Luis Dario Ganoza Durant: Our total general administration expenses were $3.3 million above the comparative period due to the added GNA from the Ceguela mine and higher corporate GNA related to timing of expenses. On foreign exchange, we recorded a loss of $4.1 million, which is primarily related to cash balances held in West Africa in the context of a 2.2% devaluation of the euro versus the U.S. dollar and costs of foreign exchange trades associated with repatriations of funds from West Africa.
Luis Dario Ganoza Durant: Our total general and administration expenses were $3 $3 million above the comparative period.
Luis Dario Ganoza Durant: Due to the added G&A from the tubular mined and higher corporate G&A related to timing of expenses.
Luis Dario Ganoza Durant: On fragrance change, we recorded a loss of $4 $1 million, which is primarily related to cash balances held in West Africa in the context of two 2% devaluation of the euro.
Luis Dario Ganoza Durant: Versus the U S dollar and.
Luis Dario Ganoza Durant: Cost of foreign exchange rates associated to repatriation of funds from West Africa.
Luis Dario Ganoza Durant: On interest and finance costs, we recorded $6.2 million in the quarter, of which $4.8 million is interest expense, the balance being acquisition of right-of-use liabilities and asset retirement obligations. The increase of $3.6 million over 2023 is explained by $2.8 billion of interest capitalized in Q1 of the prior year as part of the Ceguela construction and higher accretion charges related to Ceguela in the current quarter. Moving on to our cash flow statement, our net cash provided by operating activities was $48.9 million after $35.3 million of negative changes in working capital.
Luis Dario Ganoza Durant: On interest and finance costs.
Luis Dario Ganoza Durant: We recorded $6 $2 million in the quarter of which $4 8 million is interest expense the balance beam accretion of right of use liabilities and asset retirement obligations.
Luis Dario Ganoza Durant: The increase of three 6 million over 'twenty to 'twenty. Three is explained by $2 $8 million of interest capitalized in Q1 of the prior year as fired with a singular construction.
Luis Dario Ganoza Durant: And higher accretion charges related to say again in the current quarter.
Luis Dario Ganoza Durant: A significant portion of this was related to the timing of accounts payable. I do want to note we have been experiencing challenges in the collection of VAT at our operations in Burkina Faso and anticipate this might continue to be a challenge moving forward. In the investing section of the cash flow statement, we recorded $41.3 million in additions to property, plants, and equipment, which includes $4.2 million spent on the Diambasat project in Senegal.
Luis Dario Ganoza Durant: Moving onto our cash flow statement, our net cash provided by operating activities was $488 $9 million after $35 $3 million of negative changes in working capital.
Luis Dario Ganoza Durant: A significant portion of this was related to timing of payroll.
Luis Dario Ganoza Durant: I do want to note we have been experiencing challenges in their collection of BNP at our operations in Burkina Faso, and anticipate this may continue to be a challenge moving forward.
Luis Dario Ganoza Durant: In the investing section of our cash flow statement, we recorded $41 $3 million in additions to property plant and equipment, which includes $4 $2 million spent the <unk> project in Senegal.
Luis Dario Ganoza Durant: Over the next two quarters, we expect higher capital expenditure levels, mostly due to the progression of the leach fat expansion at Lindero. As a reminder, 2024 is a heavy capex year at Lindero with a total budget, including capitalized stripping, of $64 million, comprising around 50% of our consolidated capital expenditure budget, for 2024, excluding Exploration Activity. And moving on to the balance sheet, as Jorge mentioned, we have been paying down debt aggressively with $40 million paid in the quarter and $123 million paid since the first full quarter of production at Ceguela in Q3 of 2023. Thank you and back to you, Jorge. Operator, we can open the floor for questions.
Luis Dario Ganoza Durant: Over the next two quarters, we expect higher capital expenditure levels, mostly due to the progression of the leach pad expansion at Lynn Liddle.
Luis Dario Ganoza Durant: As a remainder as a reminder, sorry 'twenty 'twenty four is a heavy capex year admin manner with a total budget, including capitalized stripping of $64 million comprising.
Luis Dario Ganoza Durant: Comprising around 60% of our consolidated capital expenditure budget.
Luis Dario Ganoza Durant: For 2024, excluding exploration activity.
Luis Dario Ganoza Durant: And moving onto our balance sheet is healthier has mentioned we have been paying down debt aggressively with $40 million paid in the quarter and $123 million paid since the first full quarter of production in Q3 of 'twenty two.
Luis Dario Ganoza Durant: 93.
Speaker Change: Thank you and back to your quarter.
Speaker Change: Operator, we can open the floor.
Luis Dario Ganoza Durant: Questions.
Speaker Change: Thank you Sir.
Operator: At this time, we will be conducting our question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue, and you may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the start key.
Speaker Change: At this time, we will be conducting our question and answer session.
Operator: If you would like to ask a question. Please press star one on your telephone keypad.
Operator: A confirmation tone will indicate your line is in the question queue.
Operator: You May press Star two if you would like to remove your question from the queue.
Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Operator: One moment, please, while we poll for questions. Thank you. Our first question is coming from Adrian Day with Adrian Day Asset Management. Your line is live. Yes.
Operator: One moment, please while we poll for questions.
Adrian Day: Thank you.
Operator: Our first question is coming from Adrian day, with Adrian Day asset management. Your line is now.
Adrian Day: Yes, good afternoon.
Adrian Day: Everybody I.
Adrian Day: I wanted to ask about San Jose the closure Yo Yo scheduled to close at the end of the year, but obviously you are spending money and having success with yeti what will they drink why are what is required for you to extend.
Adrian Day: Mining operations, there and when will that decision be made.
Jorge A. Ganoza Durant: Adrian, you know, we will have a better idea of how the situation in San Jose will evolve. There are potentially different scenarios we are looking at right now. So one is, of course, based on exploration success; we can continue mining. But it's not just exploration success but also resources that could not get converted in late 2023, benefiting from higher prices as we reassess our mine plans, right? So there is one scenario where we just continue mining.
Operator: Yeah.
Operator: <unk>.
Jorge A. Ganoza Durant: You know, we will have a better.
Jorge A. Ganoza Durant: A year.
Jorge A. Ganoza Durant: How this situation at San Jose will evolve.
Jorge A. Ganoza Durant: There is a second scenario where we decide to put the mine on care and maintenance while we continue with exploration at Yesi. And the last one is we exhaust reserves in 2023 and make the decision to just go into, sorry, 2024 and roll into a progressive closure plan, right? The San Jose mine has a small footprint. We are currently updating our mine closure plans, and you know, but we really will have a better idea of which of the three avenues, three options we have will take.
Jorge A. Ganoza Durant: They are potentially different scenarios, we're looking at it right now.
Jorge A. Ganoza Durant: So one is of course.
Jorge A. Ganoza Durant: You know based on exploration success, we can continue mining.
Jorge A. Ganoza Durant: It's not just exploration success, but also all resources that could not get converted in late 2023.
Jorge A. Ganoza Durant: Benefiting from higher prices as we get fits our mine plans right.
Jorge A. Ganoza Durant: So.
Jorge A. Ganoza Durant: There is one scenario, where we just continues.
Jorge A. Ganoza Durant: Our mining there.
Jorge A. Ganoza Durant: There is a second scenario, where we decided to play the mine on care and maintenance.
Jorge A. Ganoza Durant: While we continue with exploration.
Jorge A. Ganoza Durant: Yes.
Jorge A. Ganoza Durant: And the last one is we exhaust reserves.
Jorge A. Ganoza Durant: In 2023 and make the decision to just go into sort of in 2024 and roll into <unk>.
Jorge A. Ganoza Durant: Richard closure plan right.
Jorge A. Ganoza Durant: The San Jose mine has a small footprint.
Jorge A. Ganoza Durant: We are currently updating or mine closure plans.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: And but we really will have a better better idea of which of the three avenues three options, we have well Dave.
Jorge A. Ganoza Durant: And we need a bit more time, and we are, you know, you always have to be hopeful in this business, and we remain hopeful that YESI will provide opportunities, but that still needs to be proven. YESI has been an exciting discovery at the San Jose mine, but it needs to graduate from an exciting discovery to an exciting resource reserve we can plug into mine plants, and we're not there yet. That's why we continue drilling aggressively, and as discussed in the call, management is planning to extend a drift to the core of the high-grade area to get closer to mineralization and a better handle on... mineralization as well.
Jorge A. Ganoza Durant: And we need a bit more time and we are you always have to be hopeful in this business and we remain hopeful that yes, you will provide opportunities, but that still needs to be prove it.
Jorge A. Ganoza Durant: Yes. He has been an exciting discovery at the San Jose mine, but it needs to graduate from an exciting discovery to an exciting resource reserve, we can plug into mice rats, and we're not there yet.
Jorge A. Ganoza Durant: Why we continue drilling aggressively and as discussed in the goal.
Jorge A. Ganoza Durant: Management is planning to expand a drift.
Jorge A. Ganoza Durant: To the core of a high grade area.
Jorge A. Ganoza Durant: To get a.
Jorge A. Ganoza Durant: Closer to mineralization and a better handle on.
Jorge A. Ganoza Durant: <unk>.
Jorge A. Ganoza Durant: And on mineralization as well.
Speaker Change: Okay. Thank you. Thank you that's helpful.
Jorge A. Ganoza Durant: Okay.
Speaker Change: Thank you.
Operator: Our next question is coming from Don DeMarco with National Bank Financial. Your line is live.
Jorge A. Ganoza Durant: Our next question is coming from Don Demarco with National Bank Financial your line is life.
Jorge A. Ganoza Durant: Thank you, operator. Good morning, Jorge and team. Maybe just continuing on the last caller's question, Jorge. I saw that there was a response filed in the appeals court in February with a decision expected in 12 months. Could you add more color to this? factor into any decision to extend the mine like that in San Jose.
Don Demarco: Thank you operator, good morning, Jorge and team.
Jorge A. Ganoza Durant: Maybe just continuing on the last caller's question Jorge.
Jorge: No I saw that there was a response filed an appeals court in February with the decision expected in 12 months, but you add more color to this and could this be.
Jorge A. Ganoza Durant: Factor into any decision to extend the mine life at San Jose.
Jorge A. Ganoza Durant: With respect to the court ruling, as you know, we had a favorable court ruling on the first instance in the administrative court in Mexico. That was appealed, and we expect the appeal to be resolved by year-end, late 2024. Uh, you know, we feel even more stronger or stronger in our legal position based on the ruling that basically discarded all the nonsensical arguments that were presented in front of us. And, uh, we are, right now, not, uh..., you know, positive that we'll get a...
Jorge A. Ganoza Durant: With respect to the to a court ruling as you know we had a favorable court.
Jorge A. Ganoza Durant: Court ruling on the first instant on the administrative court in Mexico.
Jorge A. Ganoza Durant: That was appealed.
Jorge A. Ganoza Durant: We expect the deal to be resolved by year end.
Jorge A. Ganoza Durant: Are you know late 2024.
Jorge A. Ganoza Durant: Uh huh.
Jorge A. Ganoza Durant: We feel even more stronger.
Jorge A. Ganoza Durant: Or or stronger on our legal position based on the ruling that basically discarded all the nonsensical argument that were presented in front of us.
Jorge A. Ganoza Durant: The.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: We are right now.
Jorge A. Ganoza Durant: Not not.
Jorge A. Ganoza Durant: Positive that we'll get a.
Jorge A. Ganoza Durant: This appeal will not progress, and that is the last recourse the Semarnat has against our permit right now. We are also cognizant that there is a government change coming in June. There are elections, and we are in dialogue with, you know, the two leading candidates and are hopeful that the investment climate in Mexico for mining will improve as a result of this coming election.
Jorge A. Ganoza Durant: This appeal will will will not progress and that is the last week versus the sum of our net half against our burn rate right now.
Jorge A. Ganoza Durant: We are also cognizant that there is a government change coming in in June.
Jorge A. Ganoza Durant: Elections.
Jorge A. Ganoza Durant: And we are in dialogue with a with a you know.
Jorge A. Ganoza Durant: The two leading candidates.
Jorge A. Ganoza Durant: And are hopeful that a the investment climate in Mexico for mining.
Jorge A. Ganoza Durant: It will improve.
Jorge A. Ganoza Durant: As an outcome of this coming election.
Jorge A. Ganoza Durant: Okay.
Jorge A. Ganoza Durant: Fair enough. You know, face value, you've got good drill results at Yessie, you've got a higher gold price, so both of those, and a higher silver price, so both of those seem to be in your favor. You know, if you do make a decision to go ahead, would it be kind of, oh, we'll extend it one more quarter at a time type thing, or would you think, oh, we might extend it an entire year? I mean, what are your preliminary thoughts at this point on a potential extension?
Speaker Change: Fair enough and.
Jorge A. Ganoza Durant: You know at face value you got good drill results that yes, you've got a higher gold price.
Jorge A. Ganoza Durant: So both of those higher silver prices of both of those seem to be in your favor.
Jorge A. Ganoza Durant: You know if you can make a decision to go ahead would it be kind of all works then it one more quarter at a time type thing or would you would you think oh, we might extend it an entire year I mean, what is your preliminary thoughts at this point on a potential extension.
Jorge A. Ganoza Durant: You see, I'll tell you how we're viewing this, as I said previously, yes, it has been an exciting discovery because it has very high grades over, you know, a substantial width for Mechanized Mining. But we still need to learn and define the type of volumes and tonnages that we have available. Today we have defined mineralization over a panel area that stretches for 350 meters by 450 meters. This is a mine that can take as much as a million tons of ore a year, and, you know... At Yesi, doing the work in the napkin, you probably are getting closer to half a million. So that's why it's relevant to step out.
Speaker Change: I'll tell you how we're viewing this as I said previously yes. He has been an exciting discovery because it has.
Jorge A. Ganoza Durant: <unk> has a very high grade silver substantial wins.
Jorge A. Ganoza Durant: For mechanized mining, so, but we still need to learn.
Jorge A. Ganoza Durant: And define.
Jorge A. Ganoza Durant: The type of volumes and advantages that we have available there.
Jorge A. Ganoza Durant: Today, we have defined mineralization or panel area that stretches for 350 meters by 450 meters.
Jorge A. Ganoza Durant: You know this is a mine that can take as much as a million tonnes of ore.
Jorge A. Ganoza Durant: A year.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: At ESC.
Jorge A. Ganoza Durant: Napkins.
Jorge A. Ganoza Durant: They're working them asking you currently probably were getting closer to half a million.
Jorge A. Ganoza Durant: Alright.
Jorge A. Ganoza Durant: Okay, well, that's why it's relevant to step out.
Jorge A. Ganoza Durant: It's taken us a while to understand Yesi because it has a strike that's different from what we are used to at the San Jose mine. The strike of this vein is odd with respect to what we've been mining here for over a decade. So it took us a while to figure that one out, and now we're drilling for volume. And that's why I say that it's probably going to be into the third quarter when we have a better handle on how big this is and how meaningful it can be to mind plants, you know.
Jorge A. Ganoza Durant: It's taken us a while to understand yes, because he has.
Jorge A. Ganoza Durant: A strike.
Jorge A. Ganoza Durant: That's a different to what we are used to this acquisition.
Jorge A. Ganoza Durant: Fine.
Jorge A. Ganoza Durant: The strike of this vein is hard with respect to when we were in Miami here for for over a decade.
Jorge A. Ganoza Durant: So it took us a while to figure that one out.
Jorge A. Ganoza Durant: Now we are drilling for volume.
Jorge A. Ganoza Durant: And that's why I say that it's going to be probably into the third quarter. When we have a better handle on how big the CS and how meaningful it can be two nine plants. You know again, one thing as an exciting discovery and another one is a resource that you can grow meaningfully into a mine plan, but right now we.
Jorge A. Ganoza Durant: Again, one thing is an exciting discovery, and another one is a resource that can flow meaningfully into a mind plant. But right now, we do not have anything that can go meaningfully into a mind plant. We're working for that.
Jorge A. Ganoza Durant: Do not have something that can go meaningfully into a mine plan, we were working for them.
Jorge A. Ganoza Durant: Okay, sounds good. So we'll look forward to that update maybe in Q3. Across the rest of your portfolio, we see in Cote d'Ivoire, there's been some shortage of electricity due to the national grid, out of your control, but is this, you're looking at different options to work around this, does this pose any risk to guidance or Q2 or Q3?
Speaker Change: Okay sounds good so we'll look forward to that update maybe in Q3.
Jorge A. Ganoza Durant:
Jorge A. Ganoza Durant: Across the rest of your portfolio. It was seen in Cote d'ivoire, theres been some shortage of electricity due to national grid.
Jorge A. Ganoza Durant: Out of your control, but is this you are looking at different options to.
Jorge A. Ganoza Durant: Two our work around this.
Jorge A. Ganoza Durant: Does this pose any risk to guidance or our.
Jorge A. Ganoza Durant: For Q2 or Q3.
Jorge A. Ganoza Durant: Based on the information we have at this time, our guidance is intact, right? So, uh... We are benefiting from having a mill that can do up to 25% higher throughput than what we budgeted for 2024. We're benefiting from the fact that, as David stated, the West African region in the first quarter produced almost 7,000 ounces ahead of budget, and uh... The problem, that is, the portion of the problem that is out of our control, appears to be improving.
Jorge A. Ganoza Durant: Basically the only information we have at this time.
Jorge A. Ganoza Durant: Our guidance is intact.
Jorge A. Ganoza Durant: Right so.
Jorge A. Ganoza Durant: We are benefiting from.
Jorge A. Ganoza Durant: Having a meal that can do up to 25% higher throughput than what we budgeted for 2024.
Jorge A. Ganoza Durant: We're benefiting from the fact that David stated.
Jorge A. Ganoza Durant: The West African region in the first quarter has produced almost 7000 ounces ahead of budget.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: The problem that is the portion of a problem that is out of our control appears to be.
Jorge A. Ganoza Durant: Moving.
Jorge A. Ganoza Durant: One of the power generators that came out of line.
Jorge A. Ganoza Durant: One of the power generators that came out of line is back online. This was a freak situation where two unrelated power plants came together out of line. Our generators came out of line at the same time, so, you know, we are seeing one already back in line, and the other one is expected to be back in July. So we do not see an impact on our second quarter production right now, and it's a situation that we monitor closely.
Jorge A. Ganoza Durant: He is back on line. This was a freak a situation where two.
Jorge A. Ganoza Durant: Related power plants came.
Jorge A. Ganoza Durant: Out of line.
Jorge A. Ganoza Durant: Power generators came out of line at the same time.
Jorge A. Ganoza Durant: So.
Jorge A. Ganoza Durant: We are seeing one already back in line and the other one is expected to be barking.
Jorge A. Ganoza Durant: In July so we right now do not see an impact or or second quarter production.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: It's a situation that we monitor closely.
Jorge A. Ganoza Durant: Okay, and you know what was behind this electricity shortage these two incidents that you speak of at the private power generation plants, and is there any read-through here about the stability of power in Cote d'Ivoire once these are fixed?
Speaker Change: Okay and.
Jorge A. Ganoza Durant: You know what was behind this electricity shortage you. These two incidents that you speak of it the private power generation plants and is there any read through here about the stability of power.
Jorge A. Ganoza Durant: In Cote d'ivoire. Once these are fixed.
Jorge A. Ganoza Durant: We did a thorough assessment of the power availability and stability of the grid when making the construction decision for Ceguela, and the assessment was that there was ample power generation capacity and the grid was stable. Then this accident happened, right? So we are sourcing a longer-term solution for us, which is a full backup for the entire operation. We expect we can have that... power generators and diesel generators on site by July. So, even if this problem drags on with the national grid, we should be autonomous by July. So, that's why we say that, you know... And that we can control, so we're bringing the problem into our hands rather than relying on others.
Jorge A. Ganoza Durant: We need a thorough assessment of.
Jorge A. Ganoza Durant: The power availability the stability of agreed.
Jorge A. Ganoza Durant: When when making the construction decision for circular under assessment was that there was ample power generation capacity and degree to a stable.
Jorge A. Ganoza Durant: And then this accident happened right.
Jorge A. Ganoza Durant: So.
Jorge A. Ganoza Durant: We are sourcing a longer term solution for us, which is a full backup for the entire operation.
Jorge A. Ganoza Durant: We expect we can have that Oh.
Speaker Change: Yeah. It does.
Jorge A. Ganoza Durant: Power generators are diesel generators onsite by July.
Jorge A. Ganoza Durant: So even if these growth related problems dragged Sean.
Jorge A. Ganoza Durant: With the national grid.
Jorge A. Ganoza Durant: We should be all done on those by July So that's why we say that.
Jorge A. Ganoza Durant: And that we can control so we're bringing the problem indoor hands rather than relying on them.
Speaker Change: It sounds like that's out of our control.
Don Demarco: Okay, thanks for all that. Congratulations again on a strong start to the year and good luck with Q2. That's all for me. Thank you.
Speaker Change: Okay. Thanks for all of that congratulations on again, the strong start to the year and good luck with Q2.
Operator: That's all from me. Thank you, Don.
Speaker Change: It's all for me Thank you Don.
Operator: Thank you. Our next question is coming from Eric Winmill with Scotiabank. Your line is live.
Operator: Thank you. Our next question is coming from Eric Windmill with Scotiabank. Your line is life.
Eric Winmill: Great, thank you. Hi Jorge and team, appreciate you taking my question. On Argentina, we are seeing some positive headlines there after the election. Any comments about what you're seeing on the ground and does this change your view in terms of deploying more CAPEX within Argentina? Thanks.
Eric Winmill: Great. Thank you Hi, Jorge and team I appreciate you taking my question.
Eric Winmill: On Argentina, we're seeing some positive headlines there after the election any comments about what youre seeing on the ground and does this change your view in terms of deploying more capex so within Argentina.
Jorge A. Ganoza Durant: I think, as Cesar pointed out, we're seeing positive signs all across. But I think there are two important things that we look at here, Eric.
Eric Winmill: I think for us.
Eric Winmill: <unk> pointed out we're seeing positive signs all across.
Jorge A. Ganoza Durant: Okay.
Jorge A. Ganoza Durant: But I think the there are two important things that we look at here Eric that Ah.
Jorge A. Ganoza Durant: I think the positive signs we're seeing are building up to, one, liberalizing exchange controls, FX controls. I think what we're seeing is a lot of positive steps from these governments toward that. And the second one that relates to this is country risk, right? Having lenders, you know, looking at Argentina as a place where they will take collateral, right? They'll lend money to Argentina, an Argentinian capital project.
Jorge A. Ganoza Durant: I think the positive signs, we're seeing are building up too.
Jorge A. Ganoza Durant: Liberating.
Jorge A. Ganoza Durant: Exchange controls FX controls.
Jorge A. Ganoza Durant: And you know I think what we're seeing is a lot of positive steps from these governments towards that.
Jorge A. Ganoza Durant: And the second one England that relates to this is country risk right, having our lenders.
Jorge A. Ganoza Durant: You know looking at the Argentina, as a place to where they will take collateral right. They will lend money to Argentina, and Argentina and the capital projects.
Jorge A. Ganoza Durant: So, we're seeing a lot of positive messages followed by positive actions. Country risk has come down from, you know, 2,400 points to around 1,200. To give you a sense, the average for Latin America on country risk is around 400, right? So there's still a long way to go in terms of country risk perception. But it's trending in the right direction; we are hearing the right messages from governments, followed by the right actions. With respect to our view on investment in new, large capital projects, greenfield projects, I think we're still in a watch-and-see mode.
Jorge A. Ganoza Durant: So we're seeing a lot of positive.
Jorge A. Ganoza Durant: Messages are followed by a positive actions.
Eric Winmill: All right, thank you. I appreciate that. That's helpful.
Jorge A. Ganoza Durant: Country risk has come down from you know 2400 points to around 1200.
Eric Winmill: To give you a sense of the average for Latin American country risk is our own 400, right. So there's still a long way to go in terms of further country risk perception.
Eric Winmill: But it is trending in the right direction we are.
Eric Winmill: Hearing the right messages from from government, followed by the right actions, but.
Eric Winmill: With respect to our view on investment on new large capital projects Greenfield projects I think we're still in a watch and see mode.
Eric Winmill: Maybe just one more question on the financial side. Obviously, you did see some more capital payments in the quarter. Any sort of view here in terms of an optimal level? Should we expect, you know, additional working capital payments throughout the balance of this year?
Speaker Change: Alright. Thank you I appreciate that that's helpful. Maybe just one more for me on the financial side obviously.
Eric Winmill: Obviously, you did see some working capital payments in the quarter any sort of view here in terms of an optimal level should we expect.
Eric Winmill: Additional working capital payments throughout the balance of this year.
Jorge A. Ganoza Durant: Copy those payments, you mean, uh, you mean that, um... Yes, we, I mean, we intend to continue using our liquidity over the next few quarters to pay down bank debt. The pace at which we do that will be a function of what we decide to do with the convertibles, which are due around October of this year, and any other competing uses of cash. But overall, the pace we've seen so far is what we expect to maintain over the next few quarters.
Eric Winmill: Capital payments you mean.
Jorge A. Ganoza Durant: You mean that.
Jorge A. Ganoza Durant: Yes, we I mean, we intend to continue using our liquidity over the next few quarters.
Jorge A. Ganoza Durant: To pay down.
Jorge A. Ganoza Durant: Bank debt.
Jorge A. Ganoza Durant: He said, which we do it will be.
Jorge A. Ganoza Durant: I mean a function of.
Jorge A. Ganoza Durant: What we decided to do with the convertibles, which as new around October of this year.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: Any other competing uses of cash rents overall the pace. We've seen so far is what we expect to maintain over the next few quarters.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: Yes.
Eric Winmill: Okay, great. That's helpful. Appreciate that. I'll hop back in the queue. Cheers. Thank you.
Speaker Change: Okay, Great. That's helpful. I appreciate that I'll hop back in queue.
Speaker Change: Thank you. Thank you.
Operator: Thank you. Once again, if we have any remaining questions or comments, please indicate so now by pressing star 1 on your telephone keypad. We have a question on the line from Tony Christ with Odyssey Investments. Your line is now
Speaker Change: Thank you once again, if we have any remaining questions or comments. Please indicate so now by pressing star one on your telephone keypad.
Operator: Oh, we have a question on the line from Tony Christ with Odyssey investments Your line is nice.
Tony Christ: Thank you, thank you for taking my question. I want to congratulate you, first of all, on your team for a great quarter. And we're looking forward to the future. I wanted to know any color you could give additional comments on your African mind and what your hopes are for the next year. The realistic hopes for the mind are at a level now that, uh, should be consistent this year. Are there chances it could increase? Any comment, any more color you could give on it? Thank you so much, and again, congratulations.
Tony Christ: Thank you. Thank you for taking my question I wanted to congratulate you first of all your team.
Tony Christ: For a great quarter.
Tony Christ: And we're looking forward to the future.
Tony Christ: I wanted to know.
Tony Christ: Color you could give additional comments.
Tony Christ: On your African born and what your hopes are over the next year.
Tony Christ: Realistic hopes for.
Tony Christ: For the mine.
Tony Christ: Is that a level now but.
Tony Christ: Should it be consistent this year are there chances equity increase.
Tony Christ: And then any comment any more color you could give on it. Thank you so much and again congratulations.
Jorge A. Ganoza Durant: Thank you, sir. With respect to our African operations... I can stress that we see short-term opportunities at Ceguela; as stated during the call, we are in a position to run our mill and mine at approximately 25% above the throughput rate that we budgeted in 2024. And that is an outcome of the good work done by the site team on the bottle making and squeezing the lemon, if you will, on the facility, and equating the mine plants to source for the race. So that is a low-hanging fruit that we can capture throughout the year.
Speaker Change: Thank you Sir.
Tony Christ: With respect to our African operations.
Jorge A. Ganoza Durant: I can stress that.
Jorge A. Ganoza Durant: We see short term opportunity set say gayla.
Jorge A. Ganoza Durant: As stated during the call.
Jorge A. Ganoza Durant: We are in a position to run our ore mill and the mine.
Jorge A. Ganoza Durant: Approximately 25% above the throughput rate that we budgeted in 'twenty 'twenty four.
Jorge A. Ganoza Durant: And that is an outcome of the good work done by the team on Debottlenecking and squeezing the lemon if you will.
Jorge A. Ganoza Durant: On the facility and are waiting in the mine plans to source.
Speaker Change: For the right. So that is a low hanging fruit that we can we can capture throughout the year.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: Now, a bit longer term, we continue enjoying exploration success at Ceguela. I cannot stress that enough, as we are able to not only replace what we deplete but expand beyond that. We can also consider opportunities for further expansion, and at Aramoco, in Burkina Faso, the team. The mining is operating at a steady rate.
Jorge A. Ganoza Durant: No.
Jorge A. Ganoza Durant: A bit more longer term.
Jorge A. Ganoza Durant: We continue enjoying the exploration success at singular.
Jorge A. Ganoza Durant: Ah I cannot stress that enough.
Jorge A. Ganoza Durant: We are able to not only replace what we the fleet, but they expand beyond that we also can see there.
Jorge A. Ganoza Durant: Opportunities for further expansion.
Speaker Change: Yeah, there are multiple.
Jorge A. Ganoza Durant: In working out hustle the team.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: And the minus operating at a steady rate.
Jorge A. Ganoza Durant: But the team continues to capture opportunities on the expansion of the resources. And, as I said during the call, we continue to see opportunities on the fringes of the deposit in zone 55, on the deeper portion of the mine. And as we extend our underground infrastructure drift. At the deep end of Psalm 55, we continue to find the structure with grace, which leads us to think that we have an opportunity, ameliorating the rate of depletion of the mine, and supporting the loan, right?
Jorge A. Ganoza Durant: But the team continues to capture opportunities on the expansion of the resources and as I said during the call. We continue to see opportunities from the fringes of the deposit on the <unk> 55 from the deeper portion of the mine.
Jorge A. Ganoza Durant: Yeah.
Jorge A. Ganoza Durant: As we extend or underground infrastructure drift.
Jorge A. Ganoza Durant: The deep end of some 55, we continue to finding structure with great, which leads us to think that we have an opportunity to to continue.
Jorge A. Ganoza Durant: Ameliorating the rate of depletion in the mine and and.
Jorge A. Ganoza Durant: Supporting the loan right so.
Jorge A. Ganoza Durant: So... Those are the big ones, and of course, the Embasood in Senegal, which is a big lever for medium and long-term growth in the company. We are exploring there. We have close to a 50,000-meter drill program budgeted that we are well advanced on. We're moving forward with engineering studies, and environmental studies parallel to the exploration. And if successful with the program this year, we believe we are in a position to deliver a PEA also by year-end, you know, an updated preliminary economic assessment of the project by year-end.
Jorge A. Ganoza Durant: Those are the big ones and of course, the embassy suite in Senegal, which is.
Jorge A. Ganoza Durant: A big lever for medium and long term growth in the company. We are exploring there and we have a close to a 50000 meter drill program budget that are that we are well advanced we are advancing with engineering studies environmental studies in parallel to the exploration.
Jorge A. Ganoza Durant: And.
Jorge A. Ganoza Durant: If successful with the program. This year, we believe we are in a position to deliver a pea also by year end.
Jorge A. Ganoza Durant: And updated preliminary economic assessment on the project by year end.
Tony Christ: Very good, thank you. Continue the good work. Thank you.
Speaker Change: Very good thank you.
Tony Christ: Continue the good work thank you.
Speaker Change: Thank you Sir.
Carlos Baca: Thank you. As we have no further questions in queue at this time, I would like to hand the microphone back to Mr. Carlos Baca for closing remarks.
Tony Christ: Some key as we have no further questions in queue. At this time I would like to hand, it back to Mr. Carlos Blackout for closing remarks.
Carlos Baca: Thank you, Ali. If there are no further questions, I would like to thank everyone for listening to today's earnings call. Have a great day.
Carlos Baca: Thank you as there are no further questions I would like to thank everyone for listening to today's earnings call have a great day.
Operator: Thank you. This concludes today's conference call, and you may disconnect your lines at this time. We thank you for your participation.
Carlos Baca: Thank you. This concludes today's conference call and you may disconnect. Your lines at this time, we thank you for your participation.
Speaker Change: Thank you everyone.
Operator: Alright.