Q2 2024 Fortuna Mining Corp Earnings Call
Greetings. Welcome to the Fortuna Mining Corp Q2 2024 Financial and Operational Results Call. At this time, all participants are in a listen-only mode. 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.
Operator: 2024 Financial and Operational Results Call. At this time, all participants are in a listen-only mode. 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 this conference is being recorded. I will now hand the conference over to your host, Carlos Baca, Vice President of Investor Relations. Sir, the floor is yours.
Please note this conference is being recorded. I will now hand the conference over to your host, Carlos Baca, Vice President of Investor Relations. Sir, the floor is yours.
Carlos Baca: Thank you, Jenny. Good morning to all. I would like to welcome you to Fortuna Mining's second 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 webcast presentation, MD&A, and the risk factors in our annual information form.
Carlos Baca: Thank you, Jamie.
Speaker Change: Good morning to all. I would like to welcome you to Fortuna Mining's second quarter 2024 financial and operational results conference call. Hosting the call today on behalf of the company will be
Speaker Change: Jorge Alberto Ganoza, President and Chief Executive Officer, Luis Dario Ganoza, Chief Financial Officer, Cesar Velasco, Chief Operating Officer, Latin America, David Whittle, Chief Operating Officer, West Africa.
Speaker Change: 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 webcast presentation, MD&A,
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's Senior Vice President of Technical Services and qualified person. I would now like to turn the call over to Jorge Alberto Ganoza, President, Chief Executive Officer, and Co-Founder of Fortuna.
Speaker Change: and the risk factors in our annual information form. Financial figures contained in the presentation and discussed in today's call are presented in U.S. dollars unless otherwise stated.
Speaker Change: Technical information in the presentation has been reviewed and approved by Eric Chapman, Fortuna's Senior Vice President of Technical Services and qualified person. I would now like to turn the call over to Jorge Alberto Ganoza, President, Chief Executive Officer, and Co-Founder of Fortuna.
Jorge Alberto Ganoza: Thank you, Carlos, and good day to all. I'm pleased to report that Fortuna remains well positioned to continue capitalizing on the rising prices of gold and silver while strategically maintaining a business capable of performing across varying market cycles. Q2 was marked by significant operational and financial results. Specifically, we made strides in three relevant areas. Advancement of Key Capital Projects, capturing high-value exploration opportunities, and consolidating a fortress balance for Mines, produced 116,000 gold equivalent ounces, benefiting from the upward trend in precious metal prices. The average realized gold price increased to $2,334 per ounce from $2,087 in Q1. Hello, Hello?
Speaker Change: Thank you, Carlos, and good day to all. I'm pleased to report that Fortuna remains well positioned to continue capitalizing on the rising prices of gold and silver, while strategically maintaining a business capable of performing across varying market cycles.
Jorge Alberto Ganoza: The average real-life price increased to 2,030, so I thought I lost the line for a second here, 2,334 dollars per ounce from 870 Q1. This led to total sales of 260 million, with goal contributing 81% silver 10% and byproducts sink and lead making up their image. The business generated $93 million in cash flow before working capital adjustment, equivalent to 30 cents per share, and a cheap $39 million in flow from operations, I want to highlight two major capital projects.
Speaker Change: Q2 was marked by significant operational and financial results.
Speaker Change: Specifically, we made strides in three relevant areas.
Speaker Change: Advancement of Key Capital Projects
Speaker Change: capturing high-value exploration opportunities and consolidating a fortress balance sheet.
For mines, produced 116,000 gold equivalent ounces.
benefiting from the upward trend in precious metal prices.
Speaker Change: The average realized gold price increased to $2,334 per ounce from $2,087 in Q1.
Speaker Change: and many more. Thank you for watching. I hope you enjoyed this video. If you did, please click the thumbs up button, subscribe, and click the bell icon to get notifications.
Speaker Change: Hello?
Hello?
The average realized price increased to $2,030. I thought I lost the line for a second here.
Speaker Change: $2,334 per ounce from $2,087 in Q1.
Speaker Change: This led to...
Total sales of $260,000,000
Speaker Change: with gold contributing 81%, silver 10%.
Speaker Change: and byproducts zinc and lead making up the remainder.
The business generated $93 million in cash flow before working capital adjustments.
Speaker Change: equivalent to $0.30 per share, and achieved $39 million in free cash flow from operations.
Speaker Change: Our adjusted EBITDA was $113 million, reflecting a robust margin of 43% over sales.
Jorge Alberto Ganoza: Firstly, the Lindelo Leachpad expansion has reached 60% completion. With a total 2024 construction budget of $42 million, this is our largest capital project. This significant project weighs approximately $400 on the Lindero All-In Sustaining Cost and $90 on our Consolidated All-In Sustaining Cost for this year. We anticipate the leach pad to be concluded and ready to receive ore by Q4, setting the stage for the next decade of reserves. Secondly, the Seguela Processing Plant exceeded expectations, operating at an average rate of 208 dry metric tons per hour, which is 36% above its designed capacity of 154.
Speaker Change: I want to highlight two major capital projects.
Speaker Change: Firstly, the Lindero Leach Pad expansion has reached 60% completion.
Speaker Change: With a total 2024 construction budget of 42 million dollars, this is our largest capital project.
Speaker Change: is the pro
Speaker Change: This significant project weighs approximately $400 on the Lindero All-In Sustaining Cost and $90 on our Consolidated All-In Sustaining Cost for this year.
Speaker Change: We anticipate the leach pad to be concluded and ready to receive ore by Q4, setting the stage for the next decade of reserves.
Speaker Change: And secondly, the Seguela Processing Plant exceeded expectations.
operating at an average rate of 208 dry metric tons per hour which is 36% above its design capacity of 154.
Jorge Alberto Ganoza: This optimization has delivered significant value and helped mitigate the power outages of the national grid in Cote d'Ivoire during the quarter, ensuring no material effect on our guided production for the year. On our high-value exploration opportunities, we are thrilled about the emerging Kingfisher discovery at the Seguela Mine. Through 14,000 meters of drilling, we have identified continuous mineralization over a 2-kilometer strike length. We plan to continue drilling with the aim of producing a first resource estimate by year-end. Kingfisher is a remarkable discovery, as it does not have a surface expression.
Speaker Change: This optimization has delivered significant value and helped mitigate the power outages of the national grid in Cote d'Ivoire during the quarter.
Speaker Change: ensuring no material effect on our guided production for the year.
Speaker Change: On our high-value exploration opportunities, we are thrilled about the emerging Kingfisher discovery at the Seguela Mine.
Speaker Change: Through 14,000 meters of drilling, we have identified continuous mineralization over a two-kilometer strike length.
Speaker Change: We plan to continue drilling with the aim of producing a first resource estimate by year-end.
Speaker Change: Kingfisher is a remarkable discovery as it does not have surface expression.
Jorge Alberto Ganoza: The prospect is located just 4 km from our processing plant and main antenna deposit. This discovery highlights the significant discovery potential within the 35-kilometer-long belt under our control, and on the strength of our balance sheet, the successful placement of $172 million in convertible notes in the quarter was 3 times over subscribed. This has increased our liquidity to $350 million and lowered our cost of capital from 7.7% down to $3.75 billion. We also maintain a low total net debt to eviteration of 0.2. The strong balance sheet allows us to pursue value-focused opportunities in our regions throughout the market site.
Speaker Change: The prospect is located just 4 km from our processing plant and main antenna deposit.
Speaker Change: This discovery highlights the significant discovery potential within the 35 kilometer long belt under our control.
Speaker Change: And on the strength of our balance sheet, the successful placement of $172 million in convertible notes in the quarter was three times over-subscribed.
Speaker Change: This has increased our liquidity to $350M and lowered our cost of capital from 7.7% down to $3.75M.
Speaker Change: We also maintain a low total net debt to EBITDA ratio of 0.2.
Speaker Change: The Strong Balance Sheet allows us
Speaker Change: to pursue value-focused opportunities in our regions throughout market cycles.
Jorge Alberto Ganoza: All in all, Q2 performance demonstrates the strength of our business. We remain focused on delivering value to our shareholders through strategic investments, operational excellence, unlocking the geologic potential of our properties, and responsible mining practices. Now, David Whittle will give you an overview of the performance of our business in West Africa.
Speaker Change: All in all, Q2 performance demonstrates the strength of our business.
Speaker Change: We remain focused on delivering value to our shareholders through strategic investments, operational excellence, unlocking the geologic potential of our properties, and responsible mining practices.
Speaker Change: Now, David Whittle will give you an overview of the performance of our business in West Africa. David.
David Whittle: Thanks, Jorge. I'm pleased to report on the strong operational performance and significant milestones achieved by our West African operations at Segala and Yaramoko during the second quarter of 2024. So Gator and Eara Mocao had a successful second quarter regarding production, combining for 64,430 ounces of gold in the quarter and 126,163 ounces for the first half of 2024. While both Sagela and Yaramoto had power supply limitations, they remained on target to achieve production targets.
David Whittle: Thanks, Jorge. I'm pleased to report on the strong operational performance and significant milestones achieved by our West African operations at Segala and Yaramoka during the second quarter of 2024.
David Whittle: Sagada and Yaramoko had a successful second quarter regarding production, combining for 64,430 ounces of gold for the quarter and 126,163 ounces for the first half of 2024.
David Whittle: While both Ceguela and Yaramoto had power supply limitations, they remained on target to achieve production targets. Both mines also maintained their excellent safety record.
David Whittle: Both mines also maintained their excellent safety record. In the second quarter, Cigala mined 420,000 tonnes of ore at an average grade of 3.03 grams per tonne and 2.5 million tons of waste, achieving a strip ratio of 5.9 to 1. The processing plant treated 318,000 tonnes at an average gold grade of 3.47 grams per tonne, producing 32,983 ounces of gold for the quarter, totalling 67,539 ounces in the first half of 2024. However, in his fight, power limited interruptions from the National Grid resulting in a reduction of 455 hours for 19 days processing time.
Speaker Change: In the second quarter, Cigala mined 420,000 tonnes of ore at an average grade of 3.03 grams per tonne and 2.5 million tonnes of waste, achieving a strep ratio of 5.9 to 1.
Speaker Change: The processing plant treated 318,000 tonnes at an average gold grade of 3.47 grams per tonne, producing 32,983 ounces of gold for the quarter.
Speaker Change: totalling 67,539 ounces in the first half of 2024.
Speaker Change: Despite power limit interruptions from the National Grid resulting in a reduction of 455 hours or 19 days of processing time
David Whittle: We were able to mitigate this by optimizing mining schedules to provide higher-grade ore to the plant and increasing plant throughputs, which reached 208 tonnes per hour for the quarter, with a high of 213 tonnes per hour reached in June. In the third quarter, Ceguela experienced full power availability from the national grid.
Speaker Change: We were able to mitigate this by optimising mining schedules to provide higher grade ore to the plant and increasing plant throughputs, which have reached 208 tonnes per hour for the quarter, with a high of 213 tonnes per hour averaged in June .
Speaker Change: In the third quarter, Segala experienced full power availability from the national grid.
David Whittle: Backup power generating capacity is being expanded on site to mitigate any future power supply issues, and construction of the on-site solar power plant is still scheduled to commence this year. As a result, Ceguela remains ahead of schedule year-to-date and is on track to achieve annual production guidance of between 126,000 and 138,000 mice.
Speaker Change: Backup power generating capacity is being expanded on-site to mitigate any future power supply issues and construction of the on-site solar power plant is still scheduled to commence this year.
Speaker Change: As a result, Ceguela remains ahead of schedule year-to-date and is on track to achieve annual production guidance of between 126,000 and 138,000 mouses.
David Whittle: Mining activities at Sigeala have been focused on the antenna pit to deliver high and great all to the process in plan. Additionally, over 75,000 tons of all have been mined at the ANC and in cool a bit to you today. So, passing the mind and planning to talk.
Speaker Change: Mining activities at Segella have been focused on the Antenna Pit to deliver higher grade ore to the processing plant. Additionally over 75,000 tons of ore have been mined at the Ancien and Cooler Pits year-to-date, surpassing the mine planned targets.
David Whittle: Continued exploration success at the Baddy Orchestral and Gabbro North Pits is providing further opportunities with the Life of Mine Plan and opens the potential for underground mining at the Sunbird and Ancien Deposits. These developments, along with the emerging Kingfisher Discovery, bode well for the future of the Ceguela mine. Despite the power supply issues, and the strong production performance, the gala resulted in a cash cost of $564 per ounce and an ICA of $1,097 per ounce of gold.
Speaker Change: Continued exploration success of the Baddie Orchestral and Gabbro North Pits is providing further opportunities with the Life of Mine Plan and opens the potential for underground mining of the Sunbird and Antion deposits.
Speaker Change: These developments, along with the emerging Kingfisher Discovery, bode well for the future of the Ceguela mine.
Speaker Change: Despite the power supply issues, the strong production performance at Ceguela resulted in a cash cost of $564 per ounce.
Speaker Change: and an ISECA $1,097 per ounce of gold.
David Whittle: At Yarimuco, 111,000 tons of ore were mined at an average grade of 8.0 grams per ton for 28,709 ounces of gold in the second quarter. The processing plant treated 121,000 tonnes at an average grade of 8.4 grams per tonne, producing 31,447 ounces of gold, outperforming the mine plan and totalling 58,624 ounces for the first half of 2024. During the quarter, mining operations were paused at the 55 zone ore body due to a fall of ground caused by a seismic event.
Speaker Change: At Yaramoko, 111,000 tons were mined at an average grade of 8.0 grams per ton for 28,709 ounces of gold in the second quarter.
Speaker Change: The processing plant treated 121,000 tonnes at an average grade of 8.4 grams per tonne.
Speaker Change: Producing 31,447 ounces of gold.
Speaker Change: outperforming the mine plan and totaling 58,624 ounces for the first half of 2024.
Speaker Change: During the quarter mining operations were paused at the 55 zone ore body due to a fall of ground caused by a seismic event.
David Whittle: Access to the working areas of the mine was reduced by 10 days whilst rehabilitation works were conducted. However, during this time, the QVP ore body continued to produce mill feed, which was supplemented by existing stockpiles. To mitigate future seismic risks, mining operations have been rescheduled, resulting in a revised production profile that will lower expected production in the third quarter but enhance output in the fourth quarter. Yaramoko was also affected by power availability in Burkina Faso resulting from power supply reductions in Ghana and Côte d'Ivoire.
Speaker Change: Access to the working areas of the mine was reduced by 10 days whilst rehabilitation works were conducted.
Speaker Change: During this time the QVP ore body continued to produce mill feed which was supplemented by existing stockpiles.
Speaker Change: To mitigate future seismic risks, mining operations have been rescheduled, resulting in a revised production profile that will lower expected production in the third quarter, but enhance output in the fourth quarter.
Speaker Change: Yaramoko was also affected by power availability in Burkina Faso, resulting from power supply reductions in Ghana and Côte d'Ivoire.
David Whittle: Yaramoco already has backup diesel generating capacity, which was complemented by the mobilization of an additional genset, thereby mitigating any significant effects on the mining and processing operation. As experienced at Segala, normal power supply is being provided from the national grid in the third quarter.
Speaker Change: Yaramoko already has backup diesel generating capacity, which was complemented by the mobilization of an additional genset, thereby mitigating any significant effects on the mining and processing operations.
Speaker Change: As experienced at Segala, normal power supply has been provided from the National Grid in the third quarter.
David Whittle: Mining and drilling operations at both the 50 Prime Zone and the QV ore bodies have revealed strike extensions beyond the initially anticipated mining boundaries. Consequently, 55 zone development operations are now projected to continue until the first quarter of 2025. Although this extension will likely elevate the forecasted oil sustaining cost per ounce in 2024, potentially reaching or exceeding the upper end of our current guidance, it will significantly enhance the production and cost profile for 2025.
Speaker Change: Mining and drilling operations of both the 50 Prime Zone and the QV ore bodies have revealed strike extensions beyond the initially anticipated mining boundaries.
Speaker Change: Consequently, 55 zone development operations are now projected to continue until the first quarter of 2025.
Speaker Change: Although this extension will likely elevate the forecasted oil sustaining cost per ounce in 2024, potentially reaching or exceeding the upper end of our current guidance, it will significantly enhance the production and cost profile for 2025.
David Whittle: Originally, the 55 zone development was scheduled to conclude in June 2024. However, exploration operations at Yaramoto have identified a promising satellite open pit opportunity at the 109 zone located just to the north of the processing plant. This opportunity has undergone all required studies and has been permitted by the Burkina Faso government. We're currently evaluating tender submissions, with mining expected to commence in the fourth quarter of 2024. Yaramoko's strong production during the quarter resulted in a cash cost of $953 and an ASIC of $1,389 per ounce of gold and remains on track to achieve its production guidance of 105,000 to 119,000 ounces of gold. Overall, our West African operations have demonstrated resilience and strong performance. We remain focused on optimizing production and advancing our exploration opportunities while maintaining our commitment to safety and operational excellence. Thank you. Back to you, Jorge.
Speaker Change: Originally the 55 zone development was scheduled to conclude in June 2024.
Speaker Change: Exploration operations at Yaramoko have identified a promising satellite open pit opportunity at the 109 zone, located just to the north of the processing plant.
Speaker Change: This opportunity has undergone all required studies and has been permitted by the Burkina Faso government. We are currently evaluating tender submissions with mining expected to commence in the fourth quarter of 2024.
Speaker Change: Yaramoko's strong production during the quarter resulted in a cash cost of $953.
Speaker Change: and an ASIC of $1,389 per ounce of gold and remains on track to achieve its production guidance of 105,000 to 119,000 ounces of gold.
Speaker Change: Overall our West African operations have demonstrated resilience and a strong performance.
Speaker Change: We remain focused on optimising production, advancing our exploration opportunities, while maintaining our commitment to safety and operational excellence.
Speaker Change: Thank you. Back to you, Jorge.
Jorge Alberto Ganoza: Thank you, David. Cesar, can you please share with us the highlights of the LATAM visit?
Jorge: Thank you, David. Cesar, can you please share with us the highlights of the LATAM business?
Cesar Velasco: Thank you, Jorge, and good morning to everyone. Lindero, San Jose, and Cayoma had a strong second quarter, collectively producing 28,286 ounces of gold, bringing our total to 56,231 ounces for the first half of 2020. Silver production was also robust, with a combined total of 990,574 ounces for the quarter and 2.1 million ounces for the first half of 2020. I am pleased to report that all our Latin American operations are on track to meet their production guidance for the year. Our safety performance across all operations this quarter has been exemplary. Management at CITE continues to effectively implement our active leadership philosophy program, yielding excellent results.
Cesar: Thank you, Jorge, and good morning to everyone.
Cesar: Lindero, San Jose, and Cayoma had a strong second quarter, collectively producing 28,286 ounces of gold.
Cesar: bringing our total to 56,231 ounces for the first half of 2024.
Cesar: Silver production was also robust.
Speaker Change: with a combined total of 990,574 ounces for the quarter and 2.1 million ounces for the first half of 2024.
Speaker Change: I am pleased to report that all our Latin American operations are on track to meet their production guidance for the year.
Speaker Change: Our safety performance across all operations this quarter has been exemplary.
Speaker Change: Management at CITE continues to effectively implement our active leadership philosophy program, yielding excellent results.
Cesar Velasco: Starting in Argentina, Lindero's gold production in the quarter was 22,874 ounces, a slight 2% decrease compared to the previous quarter. This was due to a longer-than-expected maintenance pause of the HPGR and agglomeration plant, which required more spare parts than originally anticipated. During the quarter, 1.8 million tons of ore were mined at a stripping ratio of 0.7 to 1. A total of 1.4 million tons of ore were placed on the leach bed at an average gold grade of 0.61 grams per ton, containing an estimated 27,663 ounces. The operation experienced lower front-end loader mechanical availability, which mainly impacted the waste mining plant during the period.
Speaker Change: So starting in Argentina, Linderos Gold production in the quarter was 22,874 ounces, a slight 2% decrease compared to the previous quarter.
Speaker Change: This was due to a longer-than-expected maintenance pause of the HPGR and agglomeration plant, which required more spare parts than originally anticipated.
Speaker Change: During the quarter, 1.8 million tons of ore were mined at a stripping ratio of 0.7 to 1.
Speaker Change: A total of 1.4 million tons of ore were placed on the leach bed at an average gold grade of 0.61 grams per ton, containing an estimated 27,663 ounces.
Speaker Change: The operation experienced lower front-end loader mechanical availability.
Speaker Change: which mainly impacted the waste mining plant for the period.
Cesar Velasco: The mine plan has been adjusted to reflect higher waste mining during the third and fourth quarters, with higher head grades and ore tonnage to be placed on the leach plate. This remains aligned with the annual guidance for the year. As of the end of July, the $51.8 million leach pad expansion project, of which $41.7 million is to be spent in 2024, is approximately 64% complete. The construction package of the project commenced in January 2024, with contractors on site undertaking earthworks, construction of the impulsion line, and liner deployment. Procurement is practically complete, with important items already on site.
Speaker Change: The mine plan has been adjusted to reflect higher waste mining during the third and fourth quarters with higher head grades and ore tonnage to be placed on the leach pad.
Speaker Change: This remains aligned with the annual guidance for the year.
Speaker Change: As of the end of July , the $51.8 million leach pad expansion project
Speaker Change: of which $41.7 million is to be spent in 2024, is approximately 64% complete.
Speaker Change: The construction package of the project commenced in January 2024, with contractors on site undertaking earthworks, construction of the impulsion line, and liner deployment.
Speaker Change: Procurement is practically complete with important items on site.
Cesar Velasco: The new Impulsion line pump arrived on site in July. Liner installation has progressed, and contracts for the major mechanical works have been executed. The company expects to start placing ore on the leach pad expansion in the fourth quarter of 2020. Gold production for the first six months of 2024 totaled 46,136 ounces. Lindero had a cash cost of $1,090 dollars and an ASIC of two thousand and thirty-three dollars per ounce of gold for a quarter. The ASIC reflects timing of sales as the company maintained higher inventories in the vault as of the end of July.
Speaker Change: The new Impulsion line pump arrived on site in July , liner installation has progressed, and contracts for the major mechanical works have been executed.
Speaker Change: The company expects to start placing ore on the leach pad expansion in the fourth quarter of 2024.
Speaker Change: The gold production for the first six months of 2024 totaled 46,136 ounces.
Speaker Change: Lindero had a cash cost of $1,092.
Speaker Change: and an ASIC of $2033 per ounce of gold for a quarter.
Speaker Change: The ASIC reflects timing of sales as the company maintained higher inventories in the vault as of the end of July .
Cesar Velasco: If we exclude the microeconomic effect related to inflation and devaluation for the second quarter, our cash cost remains in line with company expectations at approximately $1,000 per ounce. As anticipated in our guidance for the year, our AC carries a heavy component related to the leach pad expansion project. If we were to exclude the leach pad expansion and inflation devaluation effect, the acical vendetta would be between $1,400 to $1,500 per ounce.
Speaker Change: If we exclude the microeconomic effect related to inflation and devaluation for the second quarter.
Speaker Change: Our cash cost remains in line with company expectations at approximately $1,000 per ounce.
Speaker Change: As anticipated in our guidance for the year, our AC carries a heavy component related to the leach pad expansion project.
Operator: 224 Financial and Operational Results Call. At this time, all participants are in a listenly mode. A question and answer session will follow the formal presentation.
Speaker Change: If we were to exclude the leach pad expansion and inflation devaluation effect, the ASIC opening data would be between $1,400 to $1,500 per ounce.
Operator: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded.
Cesar Velasco: For the second half of the year, the company expects Tindero's Cash Cost and ASIC to remain aligned with annual guidance if Argentina's microeconomics do not worsen. Moving up to Mexico, San Jose produced 684,176 ounces of silver and 5,269 ounces of gold at an average rate of 140 grams per ton of silver and 1.09 grams per ton of gold, respectively, reflecting a 10% decrease and a 16% increase when compared to the first quarter of 2024.
Speaker Change: For the second half of the year, the company expects Inderos Cash Cost and ASIC to remain aligned with annual guidance if the Argentine microeconomics do not worsen.
Carlos Baca: I will now hand the conference over to your host, Carlos Baca, Vice President of Investor Relations. Sir, the floor is yours. Thank you, Jenny. Good morning to all. I would like to welcome you to Fortuna Mining, Second Quarter, 2024 Financial and Operational Results Conference Call.
Speaker Change: Moving up to Mexico, San Jose produced 684,176 ounces of silver.
Speaker Change: and 5,269 ounces of gold at an average heat rates of 140 grams per ton of silver and 1.09 grams per tons of gold, respectively.
Carlos Baca: Hosting the call today on behalf of the company will be Jorge Alberto Vanosa, President and Chief Executive Officer Luis Adillo Vanosa, Chief Financial Officer, Cesar Velasco, Chief Operating Officer Latin America, 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, webcast presentation, MDNA and the risk factors in our annual information form. Financial figures contained in the presentation and discussed in today's call are presented in US dollars unless otherwise stated.
Speaker Change: reflecting a 10% decrease and a 16% increase when compared to the first quarter of 2024.
Cesar Velasco: The processing plant milled 136,214 tons, averaging 1,980 tons per day, and the grade profile for the period was consistent with the geological model. Silver and gold production for the first six months of 2024 totaled 1,443,287 ounces and 9,802 ounces, respectively, on track to meet annual guidance. For the first half of 2024, in alignment with the mining sequence and production plan, the operation conducted an intensive preparation campaign to position the mine for higher silver and gold production in the second half of the year.
Speaker Change: The processing plant milled 136,214 tons, averaging 1,980 tons per day, and the grade profile for the period was consistent with the geological model.
Speaker Change: Silver and Gold production for the first six months of 2024 total 1,443,287 oz and 9,802 oz respectively on track to meet annual guidance.
Unknown Attendee: Technical information in the presentation has been reviewed and approved by Eric Chapman, Fortuna Senior Vice President of Clinical Services and Qualified Person.
Jorge Alberto Vanosa: I would now like to turn the call over to Jorge Alberto Vanosa, President, Chief Executive Officer and co-founder of Fortuna. Thank you Carlos and good day to all and please to report that Fortuna remains well positioned to continue capitalizing on the rising prices of gold and silver while strategically maintaining a business capable of performing across varying market cycles. Q2 was marked by significant operational and financial results.
Speaker Change: For the first half of 2024, in alignment with the mining sequence and production plan,
Speaker Change: The operation conducted an intensive preparation campaign to position the mine for higher silver and gold production in the second half of the year.
Cesar Velasco: As mineral reserves are scheduled to be exhausted by year-end, the company continues evaluating its options whether to execute a multi-year progressive mine transition and monetary plan or put the mine on current maintenance or maintain operations at the mine.
Speaker Change: As mineral reserves are scheduled to be exhausted by year-end,
Speaker Change: The company continues evaluating its options whether to execute a multi-year progressive mine transition and monetary plan.
Jorge Alberto Vanosa: Specifically, we made strides in three relevant areas, advancement of key capital projects, capturing high value exploration opportunities and consolidating a fortress balance sheet. For mines, produced 116,000 gold equivalent ounces, benefiting from the upward trend in precious metal prices. The average realized gold price increased to 2334 dollars per ounce from 2087 in Q1. The average realized price increased to 2334 dollars per ounce from 2087 in Q1. This led to total sales of 260 million with gold contributing 81% silver 10% and by product sink and lead making up their income.
Speaker Change: or putting the mine on care and maintenance or maintaining operations at the mine.
Cesar Velasco: San Jose had a cash cost of $24.91 and an ASIC of $27.55 per silver equivalent ounce for the quarter. When compared to the previous quarter, the increase in cost is mainly explained by lower head grades, lower production, and a stronger Mexican peso, as 50% of our costs are denominated in pesos, non-direct. As previously indicated, San Jose's mine plan for the second half of the year accounts for higher production, lower development, and lower preparation meters, which will reduce both cash costs and ASIC in alignment with our annual guidance for the Exploration drilling continues at the Yassie vein to provide a better understanding of the economic potential of the mineralized zone.
Speaker Change: San Jose had a cash cost of $24.91 and an ASIC of $27.55 per silver equivalent ounce for the quarter.
Speaker Change: When compared to the previous quarter, the increase in cost is mainly explained by lower head grades, lower production, and a stronger Mexican peso, as 50% of our costs are denominated in pesos.
Speaker Change: nonits
Speaker Change: as previously indicated.
Speaker Change: San Jose's mine plant for the second half of the year accounts for higher production, lower development, and lower preparation meters, which will reduce both cash costs and ASIC in alignment with our annual guidance for the year.
Speaker Change: Exploration drilling continues at the Yessie vein to provide better understanding of the economic potential of the mineralized zone.
Cesar Velasco: Moving to Peru, the Cayoma mine produced 306,398 ounces of silver at an average head rate of 83 grams per ton of silver in the second quarter of 2024, 3% and 5% lower, respectively, when compared to the previous quarter. Silver production for the first six months of 2024 totaled 621,858 ounces, in line to meet annual guidance. Zinc and lead production was 13.0 and 10.5 million pounds, at average grades of 4.80% and 3.83%, respectively.
Speaker Change: moving to peru
Speaker Change: The Cayoma mine produced 306,398 ounces of silver at an average head grade of 83 grams per ton of silver in the second quarter of 2024, 3% and 5% lower respectively when compared to the previous quarter.
Jorge Alberto Vanosa: Remain. The business generated $93 million in cash flow before working capital adjustments, equivalent to 30 cents per share, and achieved $39 million in free cash flow from operations. Where adjusted EBITDA was $113 million, reflecting a robust margin of 43% over sales.
Speaker Change: Silver production for the first six months of 2024 totaled 621,858 ounces, in line to meet annual guidance.
Speaker Change: ja led production was thirteen point zero and ten point five million pounds
Jorge Alberto Vanosa: I want to highlight two major capital projects. Firstly, the Lindeiro leech pad expansion has reached 60% completion, with a total of $20-24 construction budget of $42 million, this is our largest capital project. This significant project weighs approximately $400 on the Lindeiro all-in-sustaining cost, and $90 on our consolidated all-in-sustaining cost for this year. We anticipate the leech pad to be concluded and ready to receive or buy Q4, setting the stage for the next decade of reserves. And secondly, the Seguella processing plant exceeded expectations, operating at an average rate of 208 dry metric tons per hour, which is 36% above its design capacity of 154.
Speaker Change: At an average head grades of 4.80% and 3.83% respectively, a 7 and 10% increase when compared to the first quarter.
Cesar Velasco: 7% and 10% increase when compared to the first quarter. Increased production is the result of higher head grades sourced from the lower levels of the animal's veins. Think and Let Production for the first six months of 2024 totaled £25.2 million and £20.1 million, respectively, well on track to meet the upper end of guidance for the year. The cash cost per silver equivalent ounce for the quarter was $13.94, driven primarily by lower treatment and refining charges. The ASIC per ounce of payable silver equivalent was $19.87. Both cash costs and the ASIC are aligned with annual guidance for the year.
Speaker Change: increased production
Speaker Change: is the result of higher head grades sourced from the lower levels of the animal's vein.
Speaker Change: Think and Let's production for the first six months of 2024 totaled 25.2 million pounds and 20.1 million pounds respectively.
Speaker Change: well on track to meet the upper end of guidance for the year.
Speaker Change: The cash cost per silver equivalent ounce for the quarter was $13.94.
Speaker Change: driven primarily by lower treatment and refining charges. The ASIC per ounce of payable silver equivalent was $19.87.
Speaker Change: Both cash costs and ASIC are aligned with annual guidance for the year.
Jorge Alberto Vanosa: This optimization has delivered significant value and helped mitigate the power outages of the National Grid in Cotiva during the quarter, ensuring no material effect on our guided production for the year.
Jorge Alberto Ganoza: Back to you, Jorge.
Jorge: Talk to you, Jorge.
Jorge Alberto Ganoza: Cesar, Luis, briefing on the financial results.
Speaker Change: Thank you, Cesar. Luis, a briefing on the financial results.
Luis Dario Ganoza: Sure, thank you. So for Q2 2024, we have recorded net income attributable to Fortuna shareholders of $43.3 million, as previously stated by Jorge, or $0.13 per share. This is compared to $3.4 million and one cent per share in Q2 of 2023. Net income for the period includes a large deferred tax credit related to the issuance of our comparable notes. Adjusting for this and other non-cash, non-recurring items, adjusted attributable net income was $30.4 million, or $0.09 per share, compared to $2.5 million and $0.01 per share in Q2 of 2023.
Speaker Change: yeah
Luis: Sure, thank you.
Jorge Alberto Vanosa: On our high-value exploration opportunities, we are thrilled about the emerging Kingfisher Discovery at the Seguella mine. Through 14,000 meters of drilling, we have identified continuous mineralization over a two-kilometer strike length. We plan to continue drilling with the aim of producing a first research estimate by year end. Kingfisher is a remarkable discovery, as it does not have surface expression. The prospect is located just four kilometers from our processing plant and main antenna deposit. This discovery highlights the significant discovery potential within the 35 kilometer long belt under our control.
Luis: For Q2 2024, we have recorded net income attributable to Fortuna shareholders of $43.3 million as previously stated by Jorge, or $0.13 per share.
Luis: This is compared to $3.4 million and $0.01 per share in Q2 of 2023.
Speaker Change: Net income in the period includes a large deferred tax credit related to the issuance of our comparable notes.
Speaker Change: Just in for this another non-cash non-recurring items
Luis: adjusted attributable net income was 30.4 million dollars or 9 cents per share compared to 2.5 million and 1 cent per share in Q2 of 2023
Luis Dario Ganoza: The main drivers for the higher net income were an increase in gold volume sold of 66 percent, as well as higher gold prices of 17%. As has been noted, the increase in gold sold is explained by the Ceguela mine, which contributed 33,000 ounces in Q2, or 36% of total gold sold. Our consolidated cash cost per gold equivalent ounce was $988, slightly above our Q2 2023 cash cost of $968. Excluding San Jose, for which we are currently expensing all capital items, our consolidated cash cost in the quarter was $879.
Luis: for the higher net income were an increase in gold volumes sold of 66%.
Jorge Alberto Vanosa: And on the strength of our balance sheet, the successful placement of $172 million in convertible nodes in the quarter was three times over-subscribe. This has increased our liquidity to 350 million and lowered or cost of capital from 7.7% down to three and three quarters. We also maintain a low total net debt to eviteration of 0.2.
Luis: as well as higher gold prices of 17%.
Luis: As has been noted, the increase in gold sold is explained by the Ceguela mine, which contributed 33,000 ounces in Q2, or 36% of total gold sold.
Luis: Our consolidated cash cost per gold equivalent ounce was $988, slightly above our Q2 2023 cash cost of $968.
Jorge Alberto Vanosa: The strong balance sheet allows us to pursue value-focused opportunities in our regions throughout market All in all Q2 Performance demonstrates the strengths of our business. We remain focused on delivering value to shareholders, through strategic investments, operational excellence, unlocking the geologic potential of our properties and responsible mining practices.
Luis: excluding San Jose for which we are currently expensing all capital items. Our consolidated cash cost in the quarter was $879 per ounce.
Luis Dario Ganoza: Durant, representing a reduction of approximately $90 per ounce year over year. The reduction was due to the low-cost contribution of Ceguela, with $564 per ounce, partially offset by higher costs per ounce at Lindero and Yeramoco. As in the case of Rindero, as Cesar has mentioned, we expect we can remain for the year within the ASIC guidance range.
Luis: Representing a reduction of approximately $90 per ounce year over year.
David Whittle: Now David Whittle will give you an overview of the performance of our business in West Africa. Thanks, Jorge. I'm pleased to report on the strong operational performance and significant milestones achieved by our West African operations at Saguaro and Yaramoka during the second quarter of 2024. Saguaro and Yaramoka have had a successful second quarter regarding production, combining mining for 64,430 ounces of gold for the quarter and 126,163 ounces for the first half of 2024.
Luis: The reduction was due to the low-cost contribution of Ceguela with $564 per ounce partially offset by higher cost per ounce at Lindero and Yeramoco.
Cesar: As in the case of Lindero, as Cesar has mentioned, we expect we can remain for the year within the ASIC guidance range, however, it is worth noting.
Luis Dario Ganoza: However, it is worth noting that we have been seeing an increasing impact on our costs from the growing appreciation of the peso, as even though inflation is trending down, the pace of the appreciation has been lagging the inflation rate. We expect this trend to continue for the remainder of the year. A few comments on the financials. Depreciation in the quarter was $57 million, which includes $17.5 million in depletion of the purchase price related to the acquisition of Roxwell in 2021.
Cesar: that we have been seeing an increasing impact on our costs from the growing appreciation of the peso, as even though inflation is trending down, the pace of the evaluation has been lagging the inflation rate.
David Whittle: While both Saguaro and Yaramoka had power supply limitations, they remain on target to achieve production targets, both mines also maintain their excellent safety record. In the second quarter, Saguaro mine 420,000 tonnes of ore and an average grade of 3.03 grams per tonne and 2.5 million tonnes of waste achieving a strip ratio of 5.91. The processing plant treated 318,000 tonnes at an average gold grade of 3.47 grams per tonne, producing 32,900 P3 ounces of gold for the quarter, totaling 67,539 ounces in the first half of 2024.
Cesar: We expect this trend to continue for the remainder of the year.
Speaker Change: A few comments on the financials. Depreciation in the quarter was 57 million dollars, which includes 17.5 million dollars in depletion of the purchase price related to the acquisition of Roxwell in 2021.
Luis Dario Ganoza: On general and administration expenses, we recorded $22.4 million, and as shown in the breakdown we provide in the news release and on page 10 of our MV&A, This was comprised of close to $10 million of in-country G&A at our mining operations. $6.6 billion of corporate GNA and $5.8 million of shared base compensation. Compared to Q2 of 2023, we have higher mine DNA related to the addition of Ceguela and higher share base compensation, explained by the rise of our share price in the second quarter to a higher level.
Cesar: On general and administration expenses, we recorded $22.4 million, and as shown in the breakdown we provide in the news release and in page 10 of our MD&A.
Luis: This was comprised of close to $10 million of in-country G&A at our mining operations.
David Whittle: Despite power limit interruptions from the national grid resulting in a reduction of 455 hours for 19 days of processing time, we were able to mitigate this by optimizing mining schedules to provide higher grade ore to the plant and increasing plant 3 parts, which have these 208 tonnes per hour for the quarter with the higher 213 tonnes per hour of reached in June. In the third quarter, Saguaro experience full power availability from the national grid, backup power generating capacity has been expanded on site to mitigate any future power supply issues and construction of the onsite solar power plant is still scheduled to commence this year.
Luis: $6.6 million of corporate GNA and $5.8 million of shared base compensation.
Luis: Compared to Q2 of 2023, we have a higher mine G&A related to the addition of Ceguela and higher share base compensation explained by the rise of our share price in the second quarter to a large extent.
Luis Dario Ganoza: Our effective tax rate for the quarter is distorted by the $12 million deferred tax recovery I previously alluded to. Excluding this effect, our effective tax rate was 39%, which is in the high end of the range of what we expect on average, which is between 32 and 36. Moving on to cash flow and the cash flow statement, sorry, we generated $73.5 million of net cash provided by operating activities, which includes $20.6 million of taxes paid, the majority of which is related to the Seguela mine in Ivory Coast. There is a pronounced timing effect impact in the quarter as the bulk of taxes paid at Ceguela are concentrated in Q2.
Luis: Our effective tax rate for the quarter is distorted by the $12 million deferred tax recovery I previously alluded to.
Luis: Excluding this effect, our effective tax rate was 39%, which is in the high end of the range of what we expect on average, which is
Luis: between 32 and 36 percent.
David Whittle: As a result, Saguaro remains ahead of Saguaro's year to date and is on track to achieve annual production guidance between 126 and 138,000 ounces. Mining activities at Saguaro have been focused on the antenna pit to deliver high grade ore to the processing plant, additionally over 75,000 tonnes of ore have been mined at the Ancien and cooler pits year to date, surpassing the main plant tarleets. Continued exploration success of the Badiore Castle and Gabro North pits is providing further opportunities within the life of mine plants and opens the potential for underground mining of the Sunbird and Ancien deposit.
Luis Dario Ganoza: In the investing section of the cash flow statement, we recorded $50.4 million under additions to minerals, properties, land, and equipment, consisting of $32.8 million of sustaining capital, including Brownfields Exploration, and $17.6 million of non-sustaining capital expenses. This includes $6.5 million to acquire one half of the 1.2% NSR royalty held by Franco Nevada at Ceguela. $5 million spent at the embassy and $6.2 million in exploration. Our free cash flow from the going operations was $38.6 million, which considered corporate expenses and sustaining capital.
Luis: Moving on to cash flow and the cash flow statement, sorry we generated 73.5 million dollars of net cash provided by operating activities.
Luis: which includes $20.6 million of taxes paid, the majority of which is related to the Ceguela mine in Ivory Coast.
Luis: There is a pronounced timing effect impact in the quarter as the bulk of taxes paid at Ceguela are concentrated in Q2.
Luis: In the investing section of a cash flow statement, we recorded 50.4 million dollars under additions to mineral, properties, land, and equipment.
David Whittle: Thanks. These developments along with the emerging kingfish are discovery bowed well for the future of the segala mine. Despite the power supply issues, the strong production performance and segala resulted in a cash cost of $564 per ounce and an A-seeker $1,097 per ounce of gold. A year ago, 111,000 tonnes were mined at an average grade of 8.0 grams per tonne for 28,709 ounces of gold in the second quarter. The processing plant treated 121,000 tonnes at an average grade of 8.4 grams per tonne, reducing 31,447 ounces of gold, outperforming the mine plan and totally 58,624 ounces for the first half of 2024.
Luis: Consisting of $32.8 million of sustaining capital, including brownfields exploration,
Luis: and $17.6 million of non-sustaining capital expenses.
Luis: This includes $6.5 million to acquire one half of the 1.2% NSR royalty held by Franco Nevada at Ceguela.
Luis: Five million dollars spent at the Embasad.
Luis: and $6.2 million of exploration.
Luis: Our free cash flow from going operations was $38.6 million, which considers corporate expenses and sustaining capital.
Luis Dario Ganoza: And our net free cash flow after all capital expenditures was $21 million. We expect to see a peak in sustaining capital expenditure levels in Q3, mostly associated to the progression of the leach pad expansion at the Lindero mine.
Luis: And our net free cash flow after all capital expenditures was $21 million.
Luis: We expect to see a peak in sustaining capital expenditure levels in Q3, mostly associated to the progression of the leach pad expansion and the Lindero mine.
David Whittle: During the quarter, mining operations were paused at the 55-zone, all body due to a fall of ground caused by a seismic event. Access to the working areas of the mine was reduced by 10 days whilst rehabilitation works were conducted. During this time, the QVP all body continued to produce bill feed, which was supplemented by existing stockpiles. To mitigate future seismic risks, mining operations have been rescheduled, resulting in a revised production profile that will lower product expected production in the third quarter but can hands out put in the fourth quarter.
Luis Dario Ganoza: And as Jorge has emphasized and as we have communicated before, 2024 is a heavy capex year at Lindero with a total budget, including capitalized stripping, of 64 million dollars, comprising around 50% of our consolidated capital expenditures excluding exploration activities. Moving on to the balance sheet, we closed an offering of $172.5 million of convertible notes on June 10. The notes have a five-year maturity, they're a 3.75% coupon, and they have a conversion price of $6.59 per share.
Luis: And as Jorge has emphasized and as we have communicated before, 2024 is a heavy capex year at Lindero with a total budget.
Jorge: including capitalized stripping of 64 million dollars comprising around 50% of our consolidated capital expenditures excluding exploration activities.
Speaker Change: Moving on to the balance sheet, we closed the offering of $172.5 million of convertible notes on June 10. The notes have a five-year maturity, they're a 3.75% coupon.
David Whittle: Yaramoko was also affected by power availability in Bikina Faso, resulting from power supply reductions in Ghana and Kokiwa. Yaramoko already has backup diesel generating capacity, which was complemented by the mobilisation of an additional genocet, thereby mitigating any significant effects on the mining and processing operations. As experienced at Segala, normal power supply has been provided from the national grid in the third quarter. Mining and drilling operations at both the 55-zone and the QV all bodies have revealed strike extensions beyond the initially anticipated mining boundaries.
Luis: and have a conversion price of $6.59 per share.
Luis Dario Ganoza: At quarter end, the proceeds from the offering were partially used to fully repay the outstanding $125 million under our evolving credit facility. Subsequent to the end of the quarter, that $46 million of convertible notes issued in 2019 were settled with approximately $10 million redeemed in cash and $36 million converted into shares. Back to you, Jorge.
Luis: At quarter end, the proceeds from the offering were partially used to fully repay the outstanding $125 million under our evolving credit facility.
Luis: subsequent to the end of the quarter.
Luis: The $46 million of convertible notes issued in 2019 were settled with approximately
Luis: $10 million redeemed in cash and $36 million converted into shares.
David Whittle: Consequently, 55-zone development operations are now projected to continue until the first quarter of 2025. Although this extension will likely elevate the forecast that all in sustaining cost per ounce in 2024, potentially reaching or exceeding the upper end of our current guidance, it will significantly enhance the production and cost profile for 2025. Originally, the 55-zone development was scheduled to conclude in June 2024. Exploration operations at Yaramoko have identified a promising satellite-open fit opportunity at the 109-zone located just to the north of the processing plant.
Operator: Thank you. We can move on to the Q&A operator. Sure. At this time, we will be conducting a question-and-answer session. If you would like to ask a question, please press star 1 on your
Jorge: Back to you, Jorge.
Jorge: Thank you, we can move on to Q&A operator.
Operator: Certainly. At this time, we will be conducting a 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. 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 star keys. One moment, please, while we poll for questions. Your first question for today is from Adrian Pay with Adrian Pay Asset Management. Yes, hi, um, how are you?
Jorge: Certainly. At this time we will be conducting a question and answer session.
Speaker Change: If you would like to ask a question, please press star 1 on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue. 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 star keys. One moment please while we poll for questions.
David Whittle: This opportunity has undergone all required studies and has been permitted by the Bikina Faso Yemen, which currently evaluating tender submissions with mining expected to commence in the fourth quarter of 2024. DeMarco's strong production during the quarter resulted in a cash cost of $9503, and a basic of $1389 per ounce of gold, and remains on track to achieve its production guidance of 105 to 119,000 ounces of gold. Overall our West African operations have demonstrated resilience and a strong performance. We remain focused on optimizing production, advancing our exploration opportunities, while maintaining our commitment to safety and operation excellence.
Speaker Change: Thank you, everybody. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you. Thank you.
Speaker Change: Your first question for today is from Adrian Pay with Adrian Pay Asset Management.
Adrian Day: Yes, hi, how are you? I have two questions if I may. The first question is about the base metals, zinc, and lead. I should know. I could work this out, but what proportion of the revenue from the mine is that, and how do you see that going over the next 6-12 months? That's the first question.
Adrian Pay: Yes, hi, how are you? I have two questions if I may. The first question was on the...
Adrian Pay: Base Metals, Zinc, and Lead. What proportion, I should know, I could work this out, but what proportion of the Revenue from the mine is that and how do you see that going over the next, you know, six to twelve months? That's the first question.
Jorge Alberto Ganoza: Hello Adrian. Hi. I would say... Base metals. I can stand to be corrected here by Luis or Cesar, but if my math doesn't fail me, base metals account for two-thirds of revenue today at the mine.
Adrian: Hello, Adrian. Hi.
Speaker Change: Base metals, I can stand to be corrected here by Luis or Cesar, but if my math doesn't fail me, base metals account for two-thirds of...
David Whittle: Thank you, back to you Hogue.
Speaker Change: of revenue today at the mine.
Adrian Day: And how do you see that changing in the next, you know, 12 months or so?
Speaker Change: And how do you see that changing in the next, you know, 12 months or so?
Jorge Alberto Ganoza: You know, in the previous cycle, just as a quick reference... Talking about 2011, some years ago now, silver and base metals were pretty much 50-50 in terms of revenue contribution. That has shifted towards a more base metal-rich component, and we expect this break between silver and base metals will remain as what we have in our plans for 2024-2025. Can we adjust that? Yes, we could. We have some silver-rich veins, but those veins at these prices today are not in the mind.
Speaker Change: You know, in the previous cycle, just as a quick reference,
Speaker Change: Talking about 2011, some years ago now, silver and base metals were pretty much 50-50 in terms of revenue contribution.
Speaker Change: that has shifted towards a more base metal-rich component, and we expect this break.
Speaker Change: of silver and base metals will remain as what we have in our plans for 2024-2025. Can we adjust that? Yes, we could. We have some silver-rich veins, but those veins at these prices today are not in the mine plan.
Jorge Alberto Vanosa: Thank you David, Cesar, can you please share with us the highlights of the Latin business.
Adrian Day: Okay, okay. That's helpful, and then secondly, I don't know. I know you've talked a little bit about San Jose, but can you expand maybe a little bit on what your current thinking is about San Jose for next year?
Speaker Change: Okay, okay, that's helpful. And then secondly, I don't know, I know you've talked a little bit about San Jose, but can you expand maybe a little bit on what your current thinking is about San Jose for next year?
Jorge Alberto Ganoza: Yes, at San Jose, we currently have three options in front of us. We are set to exhaust reserves as they were the reserves we estimated early, late last year, and early this year, and we've been working on several fronts. One is exploration and the Jesse Vane, something that we have been talking about. Second is, you know, there are changing scenarios, higher prices. The peso, over the last week, has weakened against the dollar.
Cesar Velasco: Thank you Jorge, and good morning to everyone. Lindero, San Jose, and Cayoma had a strong second quarter, collectively producing 28,286 ounces of gold, bringing our total to 56,231 ounces for the first half of 2024. Silver production was also robust with a combined total of 990,534 ounces for the quarter, and 2.1 million ounces for the first half of 2024. I am pleased to report that all our Latin American operations are on track to meet their production guidance for the year.
Speaker Change: Yes, at San Jose we have currently three options.
Adrian: in front of us. We are set to exhaust reserves as they were the reserves we estimated early late last year early this year.
Cesar Velasco: Our safety performance across all operations this quarter has been exemplary. Management at site continues to effectively implement our active leadership philosophy program, yielding excellent results. To start in Argentina, Lindero's gold production in the quarter was 22,874 ounces, a slight 2% decrease compared to the previous quarter. This was due to a longer than expected maintenance costs of the HPGR and agglomeration plant, which required more spare parts than originally anticipated. During the quarter, 1.8 million tons of ore were mined at a stripping ratio of 0.7 to 1.
Speaker Change: and we've been working on several fronts.
Speaker Change: One is exploration and the Yessie Vane, something that we have been talking about. Second is, you know, there are changing scenarios, higher prices. The peso over the last weeks...
Speaker Change: has weakened against the dollar.
Cesar Velasco: A total of 1.4 million tons of ore were placed on the Lichpet at an average gold grade of 0.61 grams per ton, containing an estimated 27,663 ounces. The operation experienced lower front and a lower mechanical availability, which mainly impacted the waste mining plant for the period. The mine plan has been adjusted to reflect higher waste mining during the third and fourth quarters, with higher upgrades and ore tonnage to be placed on the Lichpet.
Jorge Alberto Ganoza: So all of those variables are being assessed as we continue optimizing the resources we have. We are short on reserves right now, but we have close to, I would say, around 20, 29,000, and 29 million ounces of silver in resources. And the work we are doing is trying to optimize our processes to see how many of those ounces we can bring into reserve. So we have three options in front of us. One, by year end, we call it a progressive closure.
Speaker Change: So, all of those variables are being assessed as we continue optimizing the resources we have. We are short on reserves right now, but we have close to, I would say around 20, 29 million ounces of silver in resources.
Speaker Change: And the work we are doing is trying to optimize our processes to see how many of those houses we can bring into reserve.
Speaker Change: So we have three options in front of us. One, by year end, we call a progressive closure.
Jorge Alberto Ganoza: Second, we go into a current maintenance mode while our exploration and evaluations continue. Or third, we have the opportunity to continue mining, depending on the success of the work we carry out in the coming weeks, months, before the end of the year. We certainly need to have clarity on which of those three avenues we will take in the third quarter. We are updating our mine closure plan, we are conducting exploration, and we are doing several iterations on the optimization of existing resources. All of that is taking place right now, but we certainly need to have a position, or we expect we can have a position, during this third quarter. Okay, that's super.
Adrian: Second, we go into a care and maintenance while our exploration and evaluations continue. Or third, we have the opportunity to continue mining depending on the success of the work we carry over the coming weeks, months.
Cesar Velasco: Page Bad. This remains aligned with the annual guidance for the year. As of the end of July, the $51.8 million leach-pad expansion project of which $41.7 million is to be spent in 2024 is approximately 64% complete. The construction package of the project commenced in January 2024 with contractors on-site undertaking airports construction of the impulsion line and liner deployment. Procurement is practically complete with important items on site. The new impulsion line pump arrived on site in July, the liner installation has progressed and contracts for the major mechanical works have been executed.
Speaker Change: before the end of the year, we certainly need to have clarity on which of those three avenues we will take in the third quarter.
Speaker Change: We are updating our mine closure plan. We are conducting exploration. We are doing several iterations on the optimization of existing resources.
Adrian: All of that is taking place right now, but we certainly need to have a position, or we expect we can have a position, during this third quarter.
Adrian Day: Okay, super. That's very helpful. Thank you. Thank you.
Speaker Change: Okay, super. That's very helpful. Thank you. Thank you.
Operator: Your next question is from Tony Christ with Odyssey Investments.
Speaker Change: Your next question is from Tony Christ with Odyssey Investments.
Tony Christ: Yeah, thank you, it's Christ, pronounced like Christ, anyway. Thank you for taking the question, Jorge. Congratulations on the quarter. You're experiencing dramatic growth. Uh, I, uh...
Tony Christ: Yeah, thank you, it's Christ, pronounced like Christ, anyway.
Cesar Velasco: The company expects to start placing ore on the leach-pad expansion in the fourth quarter of 2024. The gold production for the first six months of 2024 total 46,136 houses. Lindeiro had a cash cost of $1,092 and an ASIC of $2,033 per ounce of gold for a quarter. The ASIC reflects timing of sales as the company maintained higher inventories in the vault as of the end of July. If we exclude the microeconomy effect related to inflation and devaluation for the second quarter, our cash cost remains in line with company expectations at approximately $1,000 per ounce.
Tony Christ: Thank you for taking the question, Jorge, congratulations on the quarter, you're experiencing dramatic growth.
Tony Christ: I have a two-part question. I'm wondering if you can give an update on the share repurchase that you announced after the last quarter announcement and if the company is able to participate in any share repurchase and any guidance or color you can give on it. And secondly, I'd like to know if your team might consider coming on a Zoom call with Water Tower Research. They're English, and they deal with smaller companies. I was on a call with B2Gold, and I was impressed they had 12 research analysts. And they have, I think, more stability. Well, they have less variability in the price of their stock. And I think it helps get the word out through an entity that's not a vested interest group.
Tony Christ: I have actually a two-part question. I'm wondering if you can give an update.
Speaker Change: on the share repurchase that you announced after the last quarter announcement.
Speaker Change: And if the company is able to participate in any share repurchase and any guidance or color you can give on it. And then...
Speaker Change: And I...
Speaker Change: And secondly, I'd like to know if your team might consider...
Speaker Change: coming on a Zoom call with Water Tower Research. They're English and they handle smaller companies. I was on a call with B2Gold and I was impressed they had 12 research analysts.
Cesar Velasco: As anticipated in our guidance for a year, our ASIC carries a heavy component related to the leach-pad expansion project. If we were to exclude the leach-pad expansion and inflation devaluation effect, the ASIC of Lindeiro would be between $1,400 to $1,500 per ounce. For the second half of the year, the company expects in Deiro's cash cost an ASIC to remain aligned with annual guidance if the Argentine microeconomics do not worsen.
Adrian: and they have...
Speaker Change: I think more stability, well, they have less variability in the price of their stock.
Speaker Change: And I think it helps get the word out.
Speaker Change: to an entity, through an entity that's not a vested interest entity.
Jorge Alberto Ganoza: So I'd like to ask if you'd consider that, if I can call them and arrange it, having that. But thank you and congratulations again. Just an astronomical quarter. You're growing even if gold prices stay constant. So congratulations.
Speaker Change: So, I'd like to ask if you'd consider that, if I can call them and arrange it, having that. But thank you and congratulations again, just an astronomical quarter. You're growing even if gold prices stay constant.
Cesar Velasco: Moving up to Mexico, San Jose produced 684,176 ounces of silver and 5,269 ounces of gold at an average height of 140 grams per ton of silver and 1.09 grams per tons of gold respectively. Reflecting at 10% decrease and a 16% increase when compared to the first quarter of 2024. The processing plant ruled 136,214 tons, averaging 1,980 tons per day, and the great profile for the period was consistent with the geological model.
Tony Christ: Thank you for that. With respect to the share repurchase program, yes, we have a program in place. We have not been active on the program over the last month. But that is something that we are, you know.., constantly and, uh.., when we participate in the market, in response to our use of funds at the time, our view on valuation and movements in the market. So yeah, you can expect to see us active in the market anytime, with respect to meeting and learning about other, as I understand it, potential houses that could be interested in learning more about the company. Yes, absolutely. There is a channel through Carlos Baca at Info Fortuna, and we can certainly arrange a conversation at any time. Hey, I will...
Speaker Change: So congratulations.
Speaker Change: Thank you for that. With respect to the share repurchase program, yes, we have a program in place. We have not been active on the program over the last month.
Speaker Change: But that is something that we are, you know,
Speaker Change: revisiting
Speaker Change: constantly and when we participate in the market response to our use of funds at the time or view on valuation and movements in the market.
Speaker Change: So, yeah, you can expect to see us active in the market anytime.
Cesar Velasco: Silver Island Gold Production for the first six months of 2024, total 1,443,287 ounces, and 9,802 ounces respectively, on track to meet annual guidance. For the first half of 2024, in alignment with the mining sequence and production blend, the operation conducted an intensive preparation campaign to position the mine for higher silver and gold production in the second half of the year.
Speaker Change: with respect to needing and learning about other, as I understand, potential houses that can give...
Carlos Baca: Be interested in learning more about the company? Yes, absolutely. There is a channel through Carlos Baca at Info Fortuna and we can certainly arrange a conversation at any time.
Jorge Alberto Ganoza: Hey, I will contact Carlos. Thank you so much.
Speaker Change: Hey, I will contact Carlos. Thank you so much.
Operator: Your next question for today is from John Pereira, a private investor.
Speaker Change: Your next question for today is from John Pereira, a private investor.
Cesar Velasco: As mineral reserves are sketched to be exhausted by year end, the company continues evaluating its options whether to execute a multi-year progressive mine transition and monetary plan or put in the mine on care maintenance or maintaining operations at the mine. San Jose had a cash cost of $24.91 and an ASIC of $27.55 per silver equivalent ounce for the quarter. When compared to the previous quarter, the increasing cost is mainly explained by lower head grades, lower production, and a stronger Mexican vessel as 50% of our costs are denominated in vessels.
John Pereira: Yeah, good morning, gentlemen. Again, I got to iterate. Congratulations on the quarter.
John Pereira: Yeah, good morning, gentlemen. Again, I've got to iterate. Congratulations on the quarter. Just as a follow-up to the previous question on San Jose, I know there's exploration going on with the YETI.
John Pereira: Just as a follow-up to the previous question on San Jose, I know there's exploration going on with the Etsy. When do you expect that we're going to see an update on that exploration? I guess that is part, I guess ties into one of the three options for the San Jose mine. So the first question is, when do we expect to see an update on that exploration program?
John Pereira: When do you expect that we're going to see an update on that exploration? I guess that part ties into one of the three options.
Cesar Velasco: Nonetheless, as previously indicated, San Jose's mine planned for the second half of the year accounts for higher production, lower development, and lower preparation meters, which will reduce both cash costs and ASIC in alignment with our annual guidance for the year.
John Pereira: for the San Jose mine. So the first question is, when do we expect to see an update on that exploration program?
Jorge Alberto Ganoza: The bulk of our drilling is done, and we're currently assessing the results and running iterations with the results we have in place. As I said, it is in this third quarter that we must have clarity on the path forward, bringing into consideration these exploration results, the iterations of the optimization of existing resources for reserve, and the updating of the Mine Closure Plan. Yeah, it's work that's ongoing, and, hopefully, before the end of the quarter, we can be in a position to... make a decision and share it with the market.
Speaker Change: The bulk of our drilling is done. We're currently assessing the results and running iterations with the...
John Pereira: Right. Okay.
Speaker Change: the results we have in place. As I said, it is in this third quarter that we must have clarity on the path forward, bringing into consideration these exploration results, the iterations of the optimization of existing resources for reserves.
Speaker Change: and the updating of the Mine Closure Plan.
Cesar Velasco: Exploration drilling continues at the YSI vein to provide better understanding of the economic potential of the mineralized zone.
Speaker Change: Yeah, it's work that is ongoing and...
Speaker Change: Hopefully, before the end of the quarter, we can be in a position to...
Cesar Velasco: Moving to Peru, the Cayoma mine produced 306,398 ounces of silver at an average head grade of 83 grams per ton of silver in the second quarter of 2024, 3%, and 5% lower respectively when compared to the previous quarter. Silver production for the first six months of 2024 totaled 621,558 ounces in line to meet annual guidance. Zinc and let production was 13.0 and 10.5 million pounds at an average head grades of 4.80 percent and 3.83 percent respectively, a 7 and 10 percent increase when compared to the first quarter.
Speaker Change: to make a decision and, you know, share it with the market.
John Pereira: And then the second question is, thank you for that. And the second question is about the sustainable capital costs that the company is incurring. And it was indicated that Lundaro was a $64 million CAPEX plan for the leach pad and so on. I didn't, maybe I missed it, but I didn't get an understanding of how much is left to be spent on that $64 million. I did read that the remainder of that was going to be spent here in Q3.
Speaker Change: Bye.
Speaker Change: And then the second question is, thank you for that, and the second question is on the sustainable capital cost that the company is incurring. And it was indicated that Linderol
Speaker Change: was a $64 million CapEx plan for the leach pad and so on.
Speaker Change: I didn't, maybe I missed it, but I didn't get an understanding of how much is left to be spent of that $64 million. I did read that the remainder of that was going to be spent here in Q3. Maybe just give a little bit more clarity to...
John Pereira: Maybe just give a little bit more clarity on that component of CapEx. How much more is to be spent on the two leach pads and what additional capacity they're going to provide? and then maybe when that CapEx number drops, you know, if you can give some clarity on when that capex number drops and to what you expect it to drop to as a normalized quarterly on quarter capex rate for sustainable capital.
Speaker Change: That component of CapEx.
Speaker Change: how much more is to be spent on the two leach pads and what additional capacity they're going to provide and you know and then maybe when that that CapEx number drops
Cesar Velasco: Increased production is the result of higher head grades sourced from the lower levels of the animals vein. Zinc and let production for the first six months of 2024 totaled 25.2 million and 20.1 million pounds respectively, well on track to meet the upper end of guidance for the year. The cash cost per silver equivalent allowance for the quarter was $13.94, driven primarily by lower treatment and refining charges. The basic grounds of payable silver equivalent was $19.87. Both cash cost and a sec are aligned with annual guidance for the year.
Speaker Change: and you know if you can give some clarity on when that capex number drops and to what it's going to you expect it to drop to as a normalized quarter-on-quarter capex rate for sustainable capital.
Jorge Alberto Ganoza: Yes, just a clarification, the total sustaining capital for Lindero this year is the $60 million plus you mentioned. Out of that figure, the leach pad is $42 million this year, right? So, uh... We are, the six, the leech pad is, you know, over 60% complete, 60, 64% complete, by the end of the quarter. And, uh, we do expect to see continued capex execution in the third quarter, and that capex execution tails off in the fourth quarter. The Leach Pad expansion is a project that has always been in the technical report.
Speaker Change: Yes, just a clarification, the total sustaining capital for Lindero this year is the 60 plus million dollars you mentioned. Out of that figure, the leach pad is 42 million.
Speaker Change: This year.
Speaker Change: right
Speaker Change: So, uh...
Speaker Change: The leech pad is over 60% complete, 60-64% complete.
Cesar Velasco: Talk to you, Jorge.
Jorge Alberto Vanosa: Thank you, Cesar.
Speaker Change: by the end of the quarter and we do expect to see still CAPEX execution in the third quarter and that CAPEX execution tails off
Luis Adillo Vanosa: Luis, briefing on the financial results. Sure, thank you. So, for Q2 2024, we have recorded net income attribable to Fortuna shareholders of $43.3 million, as previously stated by Jorge or 13 cents per share. This is compared to $3.4 million and 1 cents per share in Q2 of 2023. Net income in the period includes a large deferred tax credit related to the issuance of our comparable notes. Adjusting for this another non-cash non-recurring items adjusted at treatable net income was $30.4 million or $9 cents per share compared to 2.5 million and 1 cents per share in Q2 of 2023.
Speaker Change: in the fourth quarter.
Speaker Change: The leach pad expansion is a project that was always in the technical report. It was a project scheduled to be executed on year three of operations.
Jorge Alberto Ganoza: It was a project scheduled to be executed in the year three of operation, and Irish. It sets up the mind to receive, or the PAD, to receive reserves for over a decade. There are also, throughout the next decade, other minor investments that will have to be done periodically, as would be expected, but the bulk of the investment is being executed now, and it sets the mind for the next decade. Perhaps Cesar or..., or Luis have details right now on our expected CAPEX for the fourth quarter, but the project is complete for the fourth quarter. So CAPEX, still heavy CAPEX in Q3 and then tails off in Q4.
Speaker Change: and it is
Speaker Change: It sets up the mind.
Speaker Change: to receive, or the PAD to receive reserves for over a decade. There are also, you know, throughout the next decade, other minor investments that will have to be done periodically, as it would be expected.
Cesar: But the bulk of the investment is being executed now, and it sets the mind for the next decade, right? So, perhaps Cesar or...
Luis Adillo Vanosa: Main drivers for the higher net income were an increasing gold volume sold of 66 percent as well as higher gold prices of 17 percent. As has been noticed, the increasing gold sold is explained by the Seguilla mine, which contributed 33,000 ounces in Q2 or 36 percent of total gold sold. Our consolidated cash cost per gold equivalent ounce was $988, slightly above our Q2 2023 cash cost of $968, excluding San Jose for which we are currently expensing all capital items.
Speaker Change: or Luis have a detail right now on our expected CAPEX for the fourth quarter, but the project is complete on the fourth quarter. So, CAPEX.
Luis: Still heavy carpets on Q3 and then tails off in Q4.
Luis Adillo Vanosa: Our consolidated cash cost in the quarter was $879 per ounce. Representing a reduction on approximately $90 per ounce year over year, the reduction was due to the low cost contribution of Seguilla with $564 per ounce partially offset by higher cost per ounce at Lindeiro and Yermoco. As in the case of Lindeiro, as Cesar has mentioned, we expect we can remain for the year within the ASIC guidance range. However, it is worth noting that we have been seeing an increasing impact on our cost from the growing appreciation of the peso, as even though inflation is trending down, the pace of the valuation has been lagging the inflation rate.
John Pereira: Okay, so that $64 million number was the overall total of which you're saying $40 million was for the leach pad, 60% spent on that, so say $24 million, there's another $6 million to spend on the leach pad, and then the remainder of the $64 million will be spent between the third and fourth quarters. Yeah, I understand you'll have ongoing... wouldn't a So I'd say it's somewhere around $30-$35 million still to be spent in Q3 and Q4 in terms of larger CapEx spend on Lindero. Would that be fair?
Speaker Change: Okay, so that $64 million number was the...
Speaker Change: Overall, the total of which you're saying $40 million was for the leech pad, 60% spent on that, so say $24 million, there's another $6 million to spend on the leech pad and then
Speaker Change: And then the remainder of the $64 million will be spent between the third and into the fourth quarter. Yeah, I understand you'll have ongoing...
Speaker Change: Nominal amounts for CAPEX costs for maintenance on any mine, but the bulk of the leach pad and the other CAPEX for Lendero will be
Speaker Change: I'd say it's somewhere around $30-$35 million still to be spent in Q3 and Q4 in terms of larger CapEx spend on Lindero. Would that be fair?
Jorge Alberto Ganoza: Yes, perhaps Luis or Cesar can help complement here and have those details.
Speaker Change: Yes, perhaps Luis or Cesar can help complement here and have those details.
Luis Dario Ganoza: This is Luis here, that is accurate, that is a fair estimate of what we should expect in the second half of the year, and just to complement on an ongoing basis, annual capex for Lindero, we should expect to see more in the range of $20 million on a recurrent basis, right, beyond 2024.
Speaker Change: This is Luis here. That is accurate. That is a fair estimate of what we should expect for the second half of the year. And just to complement, on an ongoing basis,
Luis Adillo Vanosa: We expect this trend to continue for the remainder of the year. A few comments on the financials, depreciation in the quarter was $57 million, which includes $17.5 million in depletion of the purchase price related to the acquisition of Rocks World in 2021. On general and administration expenses, we recorded $22.4 million, and as shown in the breakdown, we provided in the news release, and in page 10 of our MDNA, this was comprised of close to $10 million of in-country GNA at our mining operations, $6.6 million of corporate GNA, and $5.8 million of shared-based compensation.
Speaker Change: Annual capex for Lindero we should expect to see more in the range of 20 million dollars on a recurrent basis, right, beyond 2024.
John Pereira: Annualized basis 20 to 25 million ongoing CapEx. Yes, yes, yes, yes, yes. And then there's a component in Argentina for a larger component in CapEx as well.
Speaker Change: So annualized basis is $20 to $25 million ongoing CapEx earlier. Yes, yes, yes. And then there's a component in Argentina for a larger component in CapEx.
Speaker Change: as well.
John Pereira: Again, on an ongoing basis, yeah. Go ahead, Luis. Go ahead.
Speaker Change: Or no, did I have that wrong?
Speaker Change: Again, on an ongoing basis, yeah, go ahead Luis, go ahead.
Luis Dario Ganoza: I just wanted to provide some clarification. So for 2024, I think we just recapped what we should expect for the second half, and you correctly pointed out what we had indicated for a total year in terms of total CAPEX, including the Leach Fed, and what we're clarifying now is that beyond the Leach Fed expansion, the $20-$25 million is a fair estimate for the recurrent annual capex for LINDERO. Moving forward, there's nothing else.
Luis: I just wanted to provide a clarification. So for 2024 I think we just recapped what we should expect for the second half and you correctly pointed out what what we had indicated for a total year in terms of total CAPEX.
Luis Adillo Vanosa: Compared to Q2 of 2023, we have a higher-mine GNA related to the addition of Seguella, and higher share-based compensation, explained by the rise of our share price in the second quarter to a large extent. Our effective tax rate for the quarter is distorted by the $12 million deferred tax recovery I previously alluded to. Excluding this effect, our effective tax rate was 39%, which is in the high end of the range of what we expect on average, which is between 32 and 36%.
Luis: including the Leach Fed. And what we're clarifying now is that beyond the Leach Fed expansion, the 20-25 million dollar is a fair estimate for the recurrent annual capex for Lindero moving forward. There's nothing else.
John Pereira: Okay, so again, thank you for taking all the time guys, but I guess what I'm also saying is, you know, for anywhere else, any of the other minds, is there any... additional major sustainable CapEx. And obviously, you got your CapEx for exploration, that second light item there. But is there any other major sustainable CapEx expected here in Q3 and Q4?
Speaker Change: Okay, so again, thank you for taking all the time guys, but I guess what I'm also saying is, you know, for anywhere else, any of the other minds, is there any...
Speaker Change: You know additional major sustainable CapEx and obviously you got your CapEx for exploration that's second light item there but is there any other major sustainable CapEx expected here in Q3 and Q4 and going forward?
Luis Adillo Vanosa: Moving on to the cash flow and the cash flow statement, we're going on to cash flow and the cash flow statement, sorry, we generated $73.5 million of net cash provided by operating activities, which includes $20.6 million of taxes paid, the majority of which is related to the Seguella mine in Ivory Coast. There is a pronounced timing effect impact in the quarter, as the bulk of taxes paid at Seguella are concentrated in Q2.
Jorge Alberto Ganoza: No, no, no, no, no, no. We have a lot of visibility and control on our capital projects for 2024 and 2025 and 2026. We have at every mine an expansion of the tailings facility and things like that. All of those are scheduled in our lumps. But certainly, the elephant in the room here is a leach pad expansion for $42 million. And there is none, no, yeah, no...
Speaker Change: that you're aware of.
Speaker Change: No, no, no, no. We have a lot of visibility and control on our capital projects for 2024 and 2025 and 2026.
Speaker Change: We have at every mine always an expansion of tailings facility and things like that. All of those are scheduled in our lombs. But certainly the elephant in the room here is a leach pad expansion with $42 million, right?
Luis Adillo Vanosa: In the investing section of the cash flow statement, we recorded $50.4 million under addition to mineral properties, land, and equipment, consisting of $32.8 million of sustaining capital, including Brownfield's exploration, and $17.6 million of non-sustaining capital expenses. This includes $6.5 million to acquire one half of the 1.2% NSR royalty held by Franco Nevada at Seguella, $5 million spent at the ambassad, and $6.2 million of exploration. Our free cash flow from going operations was $38.6 million, which considers corporate expenses and sustaining capital, and our net free cash flow after all capital expenditures was $21 million.
Speaker Change: There are no other projects of that nature in the portfolio today.
John Pereira: Okay, and then sorry, then the last clarification on the question is when you have a completion of that leech pad, it's not, it's not essentially going to. It's just going to allow you to process, as you indicated, process product for the next several years, the next decade or so.
Speaker Change: Okay and then sorry then the last clarification on the question is when the completion of that you have a completion of that leech pad it's not it's not essentially going to
Speaker Change: enable additional throughput it's just it's just going to allow you to process as you indicated process product you know for the next several years the next decade or so correct
John Pereira: Correct? That is correct. Okay, that's great. Thank you very much for taking the time to answer those questions and elaborate. I appreciate it, gentlemen.
Speaker Change: That is correct.
Speaker Change: Yeah.
Speaker Change: Okay, that's great. Thank you very much for taking the time to answer those questions and elaborate. Appreciate it, gentlemen.
Operator: Your next question for today is from Thomas Beslanovitz, a private investor.
Speaker Change: Thank you.
Speaker Change: Your next question for today is from Thomas Besson.
Thomas Beslanovitz: Uh, yes. I have a question because of, uh...
Speaker Change: This is Lenovitz, a private investor.
Luis Adillo Vanosa: We expect to see a peak in sustaining capital expenditure levels in Q3, mostly associated to the progression of the Lichpa expansion and the Lindero mine, and as Jorge has emphasized and as we have communicated before, 2024 is a heavy capex year at Lindero with a total budget including capitalized tripping of $64 million, comprising around 50% of our consolidated capital expenditures, excluding exploration activities.
Thomas Besson: Yes, I have a question because of...
Thomas Beslanovitz: The lack of power, uh..., and the amount of tonnage that you could produce through your mill, you used a higher grade of material to compensate for the lower amount of tonnage. Going forward into the third and fourth quarter, are you still going to use that same amount of high-grade ore? Uh to mill, and uh, if you do, I'm assuming that that would be a much higher output of gold. And that's just what I want to kind of know is, Is that how you're going to do things going forward? Thank you.
Thomas Besson: The lack of power, uh...
Thomas Besson: and the amount of tonnage
Speaker Change: that you could produce through your mill, you used a higher grade of material to compensate for the less amount of tonnage.
Speaker Change: Going forward into the third and fourth quarter, are you still going to use that same amount of high-grade ore?
Luis Adillo Vanosa: Moving on to the balance sheet, we closed the offering of $172.5 million of convertible notes on June 10. The notes have a five-year maturity, they're a 3.75% coupon and have a conversion price of $6.59 per share. At quarter end, the proceeds from the offering were partially used to fully repay the outstanding $125 million under our revolving credit facility. Subsequent to the end of the quarter, that $46 million of convertible notes issued in 2019 were settled with approximately $10 million within the cash and $36 million converted into shares.
Speaker Change: to Mill, and if you do, I'm assuming that that would be,
Speaker Change: much higher output of gold and that's just what I want to want to kind of know is
Speaker Change: Is that how you're gonna do things going forward? Thank you.
Jorge Alberto Ganoza: Yes, you are right about how we mitigated the power outages. We lost 19 days, 19, one, nine, 19 days of operation in the quarter, no? An aggregate of 19 days due to the intermittent power outages throughout the quarter. The way we mitigated that was we had the capacity to run the mill at a higher rate, so we did. And because we had some flexibility in the mine plan and in the mine schedule, we were able to source higher grades. That was a mitigating plan put in place and executed well by our site team.
Speaker Change: Yes, you are right.
Speaker Change: How we mitigated the power outages. We lost at the Seguela mine 19 days, 1919, 19 days of operation in the quarter, no? An aggregate of 19 days due to the intermittent power outages throughout the quarter.
Speaker Change: The way we mitigated that was we had the capacity to run the mill at a higher rate.
Jorge Alberto Vanosa: Back to you, Jorge. Thank you.
Speaker Change: And because we had some flexibility in the mine plan, in the mine schedule.
Operator: We can move on to Q&A operator. Certainly.
Speaker Change: we were able to source higher grades.
Operator: At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two 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 star keys. One moment please while we pull for questions.
Speaker Change: That was a mitigating plan put in place and executed well by our site team and in July we have received 100% power from the grid almost.
Jorge Alberto Ganoza: And in July, we almost received 100% power from the grid. So we are reverting back to our original mining schedule. You should expect to see a great decline with respect to what we saw in the second quarter.
Speaker Change: So, we are reverting back to our original mining schedule.
Speaker Change: You should expect to see great decline with respect to what we saw in the second quarter.
Jorge Alberto Ganoza: And what we should do is continue what we're working to do. You should expect to see us continue to push the throughput, or the bottlenecking efforts, initiatives, and optimization. And you should continue to see higher throughput. So that's where the gain is more than great right now. Bells.
Speaker Change: And what we should do is continue what we're working to do. You should expect to see us continuing pushing the throughput.
Speaker Change: Thank you very much.
Adrian Pay: Your first question for today is from Adrian Pay with Adrian Pay Asset Management. Yes, hi. How are you?
Thomas Beslanovitz: Thank you very much for answering my question, and I look forward to when Chris Marcus interviews you on Fortuna Silver on his site, and I'll be listening to that when you're on the air with him very shortly. Thank you very much, sir.
Jorge Alberto Vanosa: I have two questions. If I may, the first question was on the base metals, the zinc and the lead. What proportion, I should note, I could work this out, but what proportion of the revenue from the mine is that? How do you see that going over the next six to 12 months? That's the first question. Hello, Adrian. Hi. I would say, base metals, I can stand to be corrected here by Luis or Cesar, but if my mother doesn't tell me, base metals are comfort for two thirds of revenue today at the mine.
Chris Marcus: Thank you very much for answering my question and I look forward to when Chris Marcus interviews you on Fortuna Silver on his site.
Jorge Alberto Vanosa: How do you see that changing in the next 12 months or so? In the previous cycle, just as a quick reference, talking about 2011, some years ago now, silver and base metals were pretty much 50-15 in terms of revenue contribution that has shifted to some more base metal rich component and we expect this break of silver and base metals will remain as what we have in our plans for 2024, 2025. Can we adjust that? Yes, we could, we have some silver rich veins, but those veins at these prices today are not in the mines. Plan.
Speaker Change: and I'll be listening to that when you're on the air with him very shortly. Thank you very much sir.
Adrian Pay: Okay, okay, that's helpful.
Speaker Change: Thank you.
Operator: Your next question for today is from Don DeMarco with National Bank Financial. Don, your line is live.
Speaker Change: Your next question for today is from Don DeMarco with National Bank Financial.
Speaker Change: and many more. Thank you. Thank you.
Speaker Change: Dawn, your line is live.
Don Demarco: Thank you, Operator, and, uh... Good afternoon, Jorge and team. I was disconnected, just getting back in the queue, so I apologize if my questions have already been asked, but I wanted to get a little bit more detail on Kingfisher. In June, you released some exploration updates, some intercepts, and seeing some wide intercepts, high grades certainly garnered some attention. But I wonder what the next steps are at Kingfisher, namely. And how much infill drilling is required, and how about, in terms of, is there potential to, or is it too early to say, supplant some of the... The ore that's queued up over the next quarters or years with this higher grade ore? Thank you.
Dawn: Thank you, Operator.
Don Demarco: Good afternoon, Jorge and team. I was disconnected just getting back in the queue, so I apologize if my
Jorge Alberto Ganoza: Yes, at Kingfisher, since the discovery hole to now, so basically throughout this year, we have already drilled about 14,000 meters. The 14,000 meters have outlined gold mineralization in a shear zone that was not previously identified for a strike length of 2 kilometers. And our plan right now is to drill non-stop until the end of the year with the aim of producing a first resource estimate. We expect the bulk of that resource estimate will be in the inferred category.
Don Demarco: I wanted to get a little bit more detail on Kingfisher. In June you released some exploration updates, some intercepts and seeing some wide intercepts, high grades.
Speaker Change: Certainly garnered some attention, but I wonder what the next steps are at Kingfisher, namely...
Speaker Change: How much infill drilling is required and and how about like in terms of is there potential to or is it too early to say to supplant some of the
Speaker Change: The ore that's queued up over the next quarters or years with this higher grade ore.
Speaker Change: Thank you.
Speaker Change: yes at the king fisature up to since a discovery hold to now known so basically throughout this year we have already drilled about fourteen thousand meters
Jorge Alberto Vanosa: And then secondly, I don't know, I know you've talked a little bit about San Jose, but can you expand maybe a little bit on what your current thinking is about San Jose the next year? Yes, at San Jose, we have a currently three options in front of us. We are set to exhaust reserves as they were, the reserves we estimated early late last year, early this year. And we've been working on several fronts.
Speaker Change: The 14,000 meters have outlined gold mineralization in a shear zone that was not previously identified for a strike length of 2 kilometers.
Speaker Change: And our plan right now is to continue drilling non-stop until the end of the year with the aim of producing a first resource estimate.
Speaker Change: We expect the bulk of that resource estimate will be in the inferred category. We are not focused on tight infield drilling now to upgrade the quality of the resource.
Jorge Alberto Vanosa: One is exploration and the yes event, something that we have been talking about. Second is, you know, there are changing scenarios, higher prices, the peso over the last weeks has weakened against the dollar. So all of those variables are being assessed as we continue optimizing the resources we have. We are short on reserves right now, but we have close to, I would say around 20, 29, 29 million ounces of silver in resources.
Speaker Change: but rather fully understand the lateral and vertical extent of mineralization at this point.
Jorge Alberto Ganoza: We are not focused on tight infield drilling now to upgrade the quality of the resource but rather fully understand the lateral and vertical extent of mineralization at the... So that is the focus of the program right now. Something exciting about this discovery is that it's a blind discovery. It has no surface expression.
Speaker Change: a so
Speaker Change: That is the focus of the program right now. Something exciting about this discovery is that it's a blind discovery. It has no surface expression. If you're acquainted with West Africa, you know that a lot of the deposits, most of the deposits in production today throughout the region have some sort of artisanal mining on top of them.
Jorge Alberto Ganoza: If you're acquainted with West Africa, you know that a lot of the deposits, most of the deposits in production today throughout the region have some sort of artisanal mining on top of them, and this one doesn't, it's virgin ground, and we are currently running orientation geophysical surveys to see if we can pick up signatures that we can extrapolate. As part of our larger exploration program in the property, we control 35 kilometers of this belt. There is a lot of ground to cover. So,
Jorge Alberto Vanosa: And the work we are doing is trying to optimize our processes to see how many of those ounces we can bring into reserve. So we have three options in front of us. One, a year end, we call a progressive closure. Second, we go into a current maintenance while our exploration and evaluations continue. Or third, we have the opportunity to continue mining, depending on the success of the work we carry over the coming weeks, months before the end of the year.
Speaker Change: And this one doesn't, it's virgin ground.
Jorge Alberto Vanosa: We certainly need to have clarity on which of those three avenues we will take in the third quarter, right? We are updating our mine closure plan, we're conducting exploration. We are doing several iterations on the optimization of existing resources. All of that is taking place right now, but we certainly need to have a position where we expect we can have a position during this third quarter.
Speaker Change: And we are currently running orientation geophysical surveys to see if we can pick up
Adrian Pay: Okay, super, that's very helpful. Thank you.
Speaker Change: signatures that we can extrapolate as part of our larger exploration program in the property. We control 35 kilometers here.
Speaker Change: on the belt, a lot of ground to cover still.
Jorge Alberto Ganoza: Going back to Kingfisher, we expect to produce a first resource estimate by year-end. You should expect most of it to be in the inferred category in this first pass. We expect to have a good sense of size and dimension. [inaudible] and then probably follow with infield drilling in 2025, early 2025. A-A-A-A-A-A-A, Kingfisher needs to, you know, first produce a resource, then upgrade the resource in certainty category to indicate it.
Speaker Change: So, going back to King-Fisher, we expect to produce a first resource estimate by year end. You should expect most of it to be in the inferred category in this first path.
Speaker Change: We expect to have a good sense of size and dimension.
Speaker Change: and then probably follow with infield drilling in 2025, early 2025.
Speaker Change: Kingfisher needs to, you know, first produce a resource, then upgrade the resource in uncertainty category to indicate it. We need to work on permits, no, for this one deposit to incorporate it into our mine plan and schedules.
Tony Christ: Your next question is from Tony Christ with Odyssey Investments. Yeah, thank you. It's crisp, pronounced like crisp. Anyway, thank you for taking the question.
Jorge Alberto Ganoza: We need to work on permits, no, for this one deposit to incorporate it into our mine plan and schedules, and... But still early, early days, but we're thrilled about what we're seeing. Wide zones of mineralization on a well-defined shear that has not been identified before, striking for over two kilometers that remains open with a vertical extent that remains open as well.
Speaker Change: But still early days, but we're thrilled about what we're seeing, wide zones of mineralization on a well-defined shear that has not been identified before.
Tony Christ: Jorge, congratulations on the quarter. You're experiencing dramatic growth. I have a two, actually a two-part question.
Speaker Change: striking for over two kilometers.
Jorge Alberto Vanosa: I'm wondering if you can give an update on the share repurchase that you announced after the last quarter announcement, and if the company is able to participate in any share repurchase and any guidance or color you can give on it. And then, and I, and secondly, I'd like to know if your team might consider coming on a Zoom call with water tower research, their English, and they handle smart companies. I was on a call with B2 Gold, and I was impressed.
Speaker Change: that remains open with a vertical extent that remains open as well. It's shaping up to be probably the largest deposit we have in inventory at Ceguela today.
Don Demarco: It's shaping up to be probably the largest deposit we have in inventory at Segel. So, uh... Give us a bit of time to have the drill rigs, truth, the deposit, and probably in early 2025, we can start thinking about timelines for when this can contribute to a mine plant. I don't want to put the carriage in front of the horses. So, but We're thrilled, we're excited. It looks meaningful. We just have to do our work, right? OK.
Speaker Change: So, uh...
Speaker Change: Give us a bit of time.
Speaker Change: to have the drill rigs, truth, the deposit, and probably in early 2025, we can start thinking.
Speaker Change: about timelines for when this can contribute to a mine plant. I don't want to put the carriage in front of the horses. So, but we're thrilled, we're excited, it looks meaningful. We just have to do our work, right?
Jorge Alberto Vanosa: They had 12 research analysts, and they have, I think, more stability. Well, they have less variability in the price of their stock. And I think it helps get the word out through an entity that's not a vested interest entity. So, I'd like to ask if you consider that if I can call them in a range of having that.
Don Demarco: Okay, well thanks for that. We'll keep an eye out for the main and resource and any updates in the interim. That's all for me. Good luck with Q3. As a reminder, if you would like to ask a question, please press
Speaker Change: Okay.
Speaker Change: Okay, well, thanks for that. We'll keep an eye out for the maiden resource and any updates in the interim. That's all for me. Good luck with Q3.
Operator: As a reminder, if you would like to ask a question, please press star 1. We have reached the end of the question and answer session, and I will now turn the call over to Carlos for closing remarks.
Speaker Change: Thank you.
Speaker Change: As a reminder, if you would like to ask a question, please press star 1.
Jorge Alberto Vanosa: But thank you, and congratulations, again, just an astronomical quarter. You're growing even if gold prices stay constant. So, congratulations.
Jorge Alberto Vanosa: Thank you for that with respect to the share repurchase program. Yes, we have a program in place. We have not been active on the program over the last month. But that is something that we are revisiting constantly and when we participate in the market response to our use of funds at the time or view on valuation and movements in the market. So you can expect to see us active in the market any time with respect to meeting and learning about other, as I understand, the potential houses that can be interested in learning more about the company. Yes, absolutely. There is a channel through Carlos Baca, the info for tuna and we can certainly arrange a conversation and anytime.
Speaker Change: We have reached the end of the question and answer session and I will now turn the call over to Carlos for closing remarks.
Carlos Baca: Thank you, Holly. 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, Holly. If there are no further questions, I would like to thank everyone for listening to today's earnings call. Have a great day.
Operator: This concludes today's conference, and you may go.
Tony Christ: I will contact Carlos. Thank you so much.
John Pereira: Your next question for today is from John Pereira, a private investor.
John Pereira: Good morning, gentlemen. Again, I reiterate congratulations on the quarter. Just as a follow-up to the previous question on San Jose and all there's exploration going on with the yesy vein. When do you expect that we're going to see an update on that exploration? I guess that is part, I guess, ties into one of the three options for the San Jose mine. So the first question is when do we expect to see an update on that exploration program?
John Pereira: The bulk of our drilling is done. We're currently assessing the results and running iterations with the results we have in place. As I said, it is in this third quarter that we must have clarity on the path forward, bringing into consideration these exploration results, the iterations of the optimization of existing resources for reserves and the updating of the mine closure plan. So yeah, it's work that it's ongoing and hopefully before the end of the quarter we can be in a position to make a decision and share it with the market.
John Pereira: Right. Okay. And then the second question is, thank you for that. And the second question is on the sustainable capital costs that the company is incurring. And it was indicated that Lendero was a $64 million CapEx plan for the leech pad and so on. I didn't, maybe I missed it, but I didn't get an understanding of how much it's left to be spent off that 64 million. I did read that the remainder of that was going to be spent here in Q3.
John Pereira: Maybe just give a little bit more clarity to that component of catbacks. How much more is to be spent on the two leech pad and what additional capacity they're going to provide. And then maybe when that that catbacks number drops. And you know, if you can give some clarity on when that catbacks number drops and took into what it's going to, you expect it to drop to as a normalized quarter on quarter catbacks rate for sustainable capital.
John Pereira: Yes, just a clarification, the total sustaining capital for Lindeiro this year is the 60 plus million dollars you mentioned. Out of that figure, the leech pad is 42 million this year. Right. So we are the six, the leech pad is over 60% complete, 60, 64% complete by the end of the quarter. And we do expect to see still catbacks execution in the third quarter. And that catbacks execution tails off in the fourth quarter.
John Pereira: The leech pad expansion is a project that was always in the technical report. It was a project scheduled to be executed on years, three of operations. And it is the it sets up the mine to receive or the the pad to receive a reserve for over a decade. There are also, you know, throughout the next decade, other minor investments that will have to be done periodically as it wouldn't be expected. But the book of the investment is being executed now, and it sets the mind for the next decade.
John Pereira: Right. So perhaps a cesar or, or at detail right now on our expected a catbacks for the fourth quarter, but the project is complete on the fourth quarter. Okay. So that's 64 million dollar number was was the overall capital, the total of which you're saying 40 million was for the leech pad 60% spent on that. So say 24 million is another six million to spend on the leech pad and then and then the remainder of the 64 million will be spent between the third and the four into the fourth quarter.
John Pereira: Yeah, I understand you'll have ongoing, you know, nominal amounts for, you know, a catbacks cost for for maintenance on on any mine, but the bulk of the the leech pad and the other catbacks for Linda, will be, well, so I'd say it's what somewhere around 30, 35 million still to be spent in Q3 and Q4, you know, in terms of large or cat-backed spend on Lindaro. Would that be? Yeah, perhaps Luis or Cesar can help compliment here.
John Pereira: This is Luis here. That is, that is accurate. That is a firm. It's a firm estimate of what we should expect in the, for the second half of the year, and just to compliment on an ongoing basis, annual capex for Lindaro, we should expect to see more in the range of $20 million on a recurrent basis, right, beyond 2024. So annualized, annualized basis 20, 20 to 25 million ongoing capex for Lindaro.
John Pereira: Yes, and then there's a component in Argentina for a larger component in capex as well. Or no, did I have that wrong? No, again, on a ongoing basis, yeah, go ahead Luis, go ahead. No, just wanted to provide clarification. So for 2024, I think we just recap what we should expect for the second half, and you correctly pointed out what we had indicated for a total year in terms of total capex.
John Pereira: Including the leach bat. And what we're clarifying now is that beyond the leach bat expansion, the 20, 25 million dollar is, it's a fair estimate for the recurrent annual capex for Lindaro. Moving forward, there's nothing else. Okay, so I'm again, thank you for taking all the time guys, but I guess what I'm also saying is, you know, for anywhere else, any of the other minds, is there any additional major sustainable capex and obviously you got your capex for exploration that second line item there.
John Pereira: But is there any other major sustainable capex expected here in Q3 and Q4 and going forward? If you're aware of it, no, no, no, no, no, we have a lot of visibility and control on our capital projects for 2024 and 2025 and 2026. We have, at every mine, always an expansion of tailings facility and things like that, all of those are scheduled in our looms. But certainly the elephant in the room here is a leach bat expansion with 42 million dollars, right?
John Pereira: Yeah, no, no, no, no, there are projects of that nature in the portfolio today. Okay, and then sorry, then the last clarification on the question is, when the completion of that, yeah, the completion of that leach pad, it's not, it's not essentially going to enable additional throughput. It's just, it's just going to allow you to process as you indicated process product, you know, for the next several years, the next decade or so, correct? That is correct. Yeah. Okay, that's great.
Jorge Alberto Vanosa: Thank you very much for taking the time to answer those questions and elaborate. Appreciate it, gentlemen. Thank you.
Thomas Besslonovitz: Your next question for today is from Thomas Besslonovitz, a private investor. Yes. I have a question because of the lack of power and the amount of tonnage that you could produce through your mill, you use a higher grade of material to compensate for the less amount of tonnage. Going forward into the third and fourth quarter, are you still going to use that same amount of high grade or to mill? And if you do, I'm assuming that that would be much higher output of gold. And that's just what I want to kind of know is, is that how you're going to do things going forward.
Jorge Alberto Vanosa: Thank you. Yes, you're right in how we mitigated the power outages. We lost at the Segela mine 19 days, 19, 19, 19 days of operation in the quarter, no, an aggregate of 19 days due to the intermittent power outages throughout the quarter. The way we mitigated that was we had the capacity to run the mill at a higher rate. So we did. And because we had some flexibility in the mine plan in the mine schedule, we were able to source higher grades.
Jorge Alberto Vanosa: That was a mitigating plan put in place and executed well by our site team. And in July, we have received 100% power from the grid almost. So we are reverting back to our original mining schedule. You should expect to see great decline, which respect to what we saw in the second quarter. And we what we should do is continue what we're working to do. You should expect to see us continuing pushing the throughput, no, or the bottlenecking efforts initiatives optimization. And you should continue to see a higher throughput. So that's where the gain is more than great right now.
Thomas Besslonovitz: Thank you very much for answering my question. And I look forward to when Chris Marcus interviews you on Fortuna silver on his site. And I'll be listening to that when you're on the air with him very shortly. Thank you very much, sir.
Unknown Attendee: Thank you.
Don Demarco: Your next question for today is from Don DeMarco with National Bank Financial. Don, your line is live. Thank you operator and good afternoon, Jorge and team. I was disconnected just getting back in the queue, so I apologize if my. Questions are going to ask.
Don Demarco: I wanted to get a little bit more detail on Kingfisher. In June, you released some expiration updates, some intercepts and seeing some wide intercepts, high grades, certainly garnered some attention, but I wonder what the next steps are at Kingfisher. How much intel drilling required and how about in terms of is there potential to or the two early to say to supplant some of the, the.
Jorge Alberto Vanosa: Or that's queued up over the next quarter or three years with this higher grade or thank you. Yes, at Kingfisher up to since a discovery hold to now, so basically throughout this year, we have already drilled about 14,000 meters. The 14,000 meters have outlined the gold mineralization in a sheer zone that was not previously identified for a strike length of two kilometers. And our plan right now is to continue drilling nonstop until the end of the year with the aim of producing a first resource estimate, we expect the bulk of that resource estimate will be in the first category.
Jorge Alberto Vanosa: We are not focused on tight infield drilling now to upgrade the quality of the resource, but rather fully understand the lateral and vertical extent of mineralization at this point. So that is the focus of the program right now, something exciting about this discovery is that it's a blind discovery has no surface expression. If you're acquainted with West Africa, you know that a lot of the deposits, most of the deposits in production today throughout the region have some sort of artisanal mining on top of it.
Jorge Alberto Vanosa: And this one doesn't, it's a virgin ground and we are currently running orientation, geophysical surveys to see if we can pick up signatures that we can extrapolate as part of a larger exploration program in the property. We control 35 kilometers here on the belt, a lot of ground to cover still. So going back to King Fisher, we expect to produce a first resource estimate by year end, you should expect most of it to be in the first category in this first path, we expect to have a good sense of size and dimension, and then probably follow with infield drilling in 2025, early 2025.
Jorge Alberto Vanosa: King Fisher needs to, you know, first produce a resource, then upgrade the resource in certainty, category to indicate it, we need to work on permits, no, for this one deposit to incorporate it into our mind plan and schedules. But still early, early days, but we're thrilled about what we're seeing, white zones of mineralization on a well-defined shear that has not been identified before, striking for over two kilometers that remains open with a vertical extent that remains open as well.
Jorge Alberto Vanosa: It's shaping up to be probably the largest deposit we have in inventory at seghele today. So give us a bit of time to have the drill rigs truth the deposit, and probably in early 2025 we can start thinking about timelines for when this can contribute to a mind plan. I don't want to put the courage in front of the horses, but we're thrilled, we're excited. It looks meaningful. We just have to do our work, right? Okay.
Don Demarco: Okay, well thanks for that. We'll keep an eye out for the main resource and any updates in the intern. That's all for me. Good luck with Q3. Thank you. As a reminder, if you would like to ask a question, please press the button. We have reached the end of the question and answer session, and I will now turn a call over to Carlos for closing remarks. Thank you, Holly. If there are no further questions, I would like to thank everyone for listening to today's earnings call. Have a great day. This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation. Thank you, everyone.