Q2 2024 Fortuna Mining Corp Earnings Call
Operator: 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. 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.
Speaker Change: Greetings. Welcome to the Fortuna Mining Corp Q2 2024 Financial and Operational Results Call.
Speaker Change: 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.
Speaker Change: 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,
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 Vanosa, President, Chief Executive Officer, and Co-Founder of Fortuna.
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 Vanosa, 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.
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.
Speaker Change: Q2 was marked by significant operational and financial results.
Speaker Change: Specifically, we made strides in three relevant areas.
Jorge Alberto Ganoza: 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: Advancement of Key Capital Projects.
Speaker Change: capturing high-value exploration opportunities and consolidating a fortress balance sheet.
Speaker Change: 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: Hello?
Speaker Change: Hello?
Jorge Alberto Ganoza: The average realized price increased to $2,334 per ounce from $2,087 in Q1. This led to total sales of $260M, with gold contributing 81%, silver 10%, and byproducts zinc and lead making up the remainder. The business generated $93 million in cash flow before working capital adjustment, equivalent to 30 cents per share, and achieved $39 million in free cash flow from operations, or Adjusted EBITDA was $113 million, reflecting a robust margin of 43% overseas.
Speaker Change: 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. This led to total sales of $260M, with Gold contributing 81%, Silver 10%, and by-products Zinc and Lead making up the remainder.
Speaker Change: 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 Lindero Leach Pad 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.
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, this is our largest capital project.
Speaker Change: 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.
Jorge Alberto Ganoza: We anticipate the leach pad to be concluded and ready to receive ore by Q4, setting the stage for the next decade of reserves. 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 designed capacity of 154, 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.
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 designed capacity of 154.
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.
Jorge Alberto Ganoza: 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 two-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: 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 2-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 three times oversubscribed.
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 oversubscribed.
Jorge Alberto Ganoza: 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 EBITDA ratio of 0.2. The strong balance sheet allows us to pursue value-focused opportunities in our regions throughout the market cycle. 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: This has increased our liquidity to $350 million and lowered our cost of capital from 7.7% down to $3.75 million.
Speaker Change: We also maintain a low total net debt to EBITDA ratio of 0.2.
Speaker Change: The strong balance sheet allows us to pursue value-focused opportunities in our regions throughout market cycles.
Speaker Change: 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.
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. 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. While both Ceguela and Yaramoto had power supply limitations, they remained on target to achieve production targets.
Speaker Change: Now, David Whittle will give you an overview of the performance of our business in West Africa. David?
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 tons at an average gold grade of 3.47 grams per ton, producing 32,983 ounces of gold for the quarter, totaling 67,539 ounces in the first half of 2024. This was despite power limit interruptions from the national grid resulting in a reduction of 455 hours or 19 days of processing time.
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.
David Whittle: Sagada and Yaramoko had a successful second quarter regarding production, combining 64,430 ounces of Gold for the quarter and 126,163 ounces for the first half of 2024.
Speaker Change: While both Sagela and Yaramoto had power supply limitations, they remained on target to achieve production targets. Both mines also maintained their excellent safety record.
Speaker Change: In the second quarter, Cigala mined 420,000 tons of ore at an average grade of 3.03 grams per ton and 2.5 million tons of waste, achieving a strip ratio of 5.9 to 1.
Speaker Change: The processing plant treated 318,000 tonnes at an average Gold grade of 3.47g per tonne, producing 32,983oz of Gold per 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, Segala 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, Segella experienced full power availability from the national grid.
David Whittle: Backup power generating capacity has been 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 metric tons. Mining activities at Sigala have been focused on the Antenna Pit to deliver higher grade ore to the processing plant.
Speaker Change: Backup power generating capacity is being expanded on site to mitigate any future power supply issues.
Speaker Change: 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.
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 tonnes of ore have been mined at the Ancien and Cooler Pits year-to-date, surpassing the planned targets.
David Whittle: Additionally, over 75,000 tons of ore have been mined at the Ancien and Cooler Pits here today, surpassing the planned target. Continued exploration success of the Baddy 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. These developments, along with the emerging Kingfisher Discovery, bode well for the future of the Ceguela mine. Despite these power supply issues, the strong production performance at Segella resulted in a cash cost of $564 per ounce. And an AC 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 in 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 were mined at an average grade of 8.0 grams per ton for 28,709 ounces of gold. 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 Yarimuco, 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, 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, due to 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 Coquihua.
David Whittle: 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 operation. As experienced at Segala, normal power supply has been 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 is being provided from the national grid in the third quarter.
Jorge Alberto Ganoza: 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. Consequently, 55 zone development operations are now projected to continue until the first quarter of 2025. Although this extension will likely elevate the forecast of the 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 forecast of the oil 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.
Jorge Alberto Ganoza: 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. The Aramoco strong production during the quarter resulted in a cash cost of $953 and an ASIC of $1,389 per ounce of gold, and it 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 a 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 in 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: The Aramoco 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 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 optimizing production, advancing our exploration opportunities while maintaining our commitment to safety and operational excellence.
Jorge Alberto Ganoza: Thank you, David. Cesar, can you please share with us the highlights of the LATAM this year?
Speaker Change: Thank you. Back to you, Jorge.
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 per 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.
Cesar: Collectively producing 28,286 ounces of gold, 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.
Cesar: I am pleased to report that all our Latin American operations are on track to meet their production guidance for the year.
Cesar: 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 outage 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.
Cesar: So, starting in Argentina, Linderos Gold production in the quarter was 22,874 ounces, a slight 2% decrease compared to the previous quarter.
Cesar: This was due to a longer-than-expected maintenance loss 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, 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.
Cesar: The new impulsion line pump arrived on site in July . Liner installation has progressed and contracts for the major mechanical works have been executed.
Cesar: 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.
Cesar Velasco: And an ASIC of $2033 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 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 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 acical vendetta would be between $1,400 to $1,500 per hour.
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 .
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.
Speaker Change: If we were to exclude the leach pad expansion and inflation devaluation effect, the ASIC offing data would be between $1,400 to $1,500 per ounce.
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.
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 the Argentine 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, 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: Moving up to Mexico, San Jose produced 684,176 ounces of silver.
Operator: Greetings. Welcome to the Fortuna Mining Corp Q2 2024 Financial and Operational Results Call. At this time, all participants are in a listenly mode.
Speaker Change: and 5,269 ounces of gold at an average hate rates of 140 grams per ton of silver and 1.09 grams per tons of gold, respectively.
Operator: 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.
Speaker Change: Reflecting a 10% decrease and a 16% increase when compared to the first quarter of 2024.
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.
Carlos Baca: 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.
Cesar Velasco: 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. 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 care and maintenance or maintain operations of the mine.
Carlos Baca: Hosting the call today on behalf of the company will be Jorge Alberto Vanosa, President and Chief Executive Officer Luisario Vanosa, Chief Financial Officer, Cesar Velasco, Chief Operating Officer Latin America, David Willow, 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, Westcas presentation, MDNA, and the risk factors in our annual information form. Financial figures are contained in the presentation and discussed in today's call are presented in U.S, dollars unless otherwise stated.
Speaker Change: Silver and 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.
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.
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.
Eric Chapman: Technical information in the presentation has been reviewed and approved by Eric Chapman, Fortuna Senior Vice President of Clinical Services and Qualified Person.
Speaker Change: or putting the mine on care and maintenance or maintaining operations of the mine.
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. I am 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.
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.
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.
Jorge Alberto Vanosa: 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 sheet. For mines, produce the 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 2087 in Q1. Hello? The average realized price increased to $2,334 per ounce from 2087 in Q1.
Cesar Velasco: 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 year. Exploration drilling continues at the Yassie vein to provide a better understanding of the economic potential of the mineralized zone. 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.
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Speaker Change: As previously indicated,
Speaker Change: sound whoes mine plan for the second half of the year accounts for higher production
Speaker Change: 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 Yassie vein to provide better understanding of the economic potential of the mineralized zone.
Speaker Change: Moving to Peru.
Speaker Change: the kila line produced three hundred and six thousand three hundred ninety eight thousands of silver at an average at grate of eighty-three ground perton of silalver in the second quarter of two thousand and twenty four three percent and five percent lower respectively when compared to the previous quarter
Cesar Velasco: 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 an average head grade of 4.80% and 3.83%, respectively. 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. Income-led production for the first six months of 2024 totaled £25.2 million and £20.1 million, respectively.
Speaker Change: Silver production for the first six months of 2024 totaled 621,858 ounces in line to meet annual guidance.
Speaker Change: Zinc and lead production was 13.0 and 10.5 million pounds.
Jorge Alberto Vanosa: This led to total sales of 260 million with gold contributing 81 percent, silver 10 percent, and by product making up their image. The business generated $93 million in cash flow before working capital adjustments, equivalent to $0.30 per share, and achieved $0.39 million in free cash flow from operations. Firstly, the Lindeiro Leach Pad expansion has reached 60% completion, with a total of $20.24 construction budget of $42 million, this is our largest capital project.
Speaker Change: At an average head grades of 4.80% and 3.83% respectively, a 7.10% increase when compared to the first quarter.
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, well on track to meet the upper end of guidance for the year.
Cesar Velasco: 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. This was driven primarily by lower treatment and refining charges. The ASIC per ounce of payable silver equivalent was $19.87. Both cash costs and ASIC are aligned with annual 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
Speaker Change: The ASIC per ounce of payable silver equivalent was $19.87.
Jorge Alberto Vanosa: 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 Leach Pad to be concluded and ready to receive or buy Q4, setting the stage for the next decade of reserves. And secondly, the Seguila 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. 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.
Speaker Change: Both cash costs and ASIC are aligned with annual guidance for the year.
Jorge Alberto Ganoza: Up to you, Jorge.
Jorge Alberto Ganoza: Cesar, Luis, a briefing on the...
Speaker Change: upto you hy
Speaker Change: Thank you, Cesar. Luis, a briefing on the financial results.
Luis Dario Ganoza: Sure, thank you. 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.
Speaker Change: yeah
Luis: Sure, thank you.
Luis: 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.
Speaker Change: This is compared to $3.4 million and one cent 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.
Luis Dario Ganoza: 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. 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.
Speaker Change: Adjusting for this and other non-cash, non-recurring items.
Luis: 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.
Jorge Alberto Vanosa: On our high-value exploration opportunities, we are thrilled about the Emerging King Fisher Discovery at the Seguila 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. King Fisher is a remarkable discovery, as it does not have surface expression. The prospect is located just 4 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: The main drivers for the higher net income were an increase in gold volumes sold of 66%
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 Dario Ganoza: 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. Durant.
Luis: Our consolidated cash cost per gold equivalent ounce was $988, slightly above our Q2 2023 cash cost of $968.
Luis: Excluding San Jose, for which we are currently expensing all capital items, our consolidated cash cost in the quarter was $879 per ounce.
Jorge Alberto Vanosa: 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. 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 eviter ratio of 0.2. The strong balance sheet allows us to pursue value-focused opportunities in our regions throughout market sites.
Luis Dario Ganoza: 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.
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.
Jorge Alberto Vanosa: 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.
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 Roxwold in 2021. 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.
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: 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 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.
Cesar: We expect this trend to continue for the remainder of the year.
Luis Dario Ganoza: Close to $10 million of in-country G&A at our mining operations, $6.6 million of corporate GNA, and $5.8 million of shared base compensation. 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 higher. Our effective tax rate for the quarter is distorted by the $12 million deferred tax recovery I previously alluded to.
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 Roxwold in 2021.
Speaker Change: 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.
David Whittle: While both Saguaro and Yaramoka had power supply limitations, they remained on target to achieve production targets. Both mines also maintained 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.
Speaker Change: This was comprised of close to $10 million of in-country G&A at our mining operations.
Speaker Change: $6.6 million of corporate GNA and $5.8 million of shared base compensation.
Speaker Change: 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.
Speaker Change: Our effective tax rate for the quarter is distorted by the $12 million deferred tax recovery I previously alluded to.
Luis Dario Ganoza: 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.
Speaker Change: 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
David Whittle: Despite our 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 throughputs, which have these 208 tonnes per hour for the quarter, with a high of 213 tonnes per hour of reaching June. In the third quarter, Saguaro experienced full power availability from the national grid, back up our 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.
Speaker Change: between 32 and 36 percent.
Speaker Change: Moving on to cash flow and the cash flow statement, sorry, we generated $73.5 million of net cash provided by operating activities.
Speaker Change: Which includes $20.6 million of taxes paid, the majority of which is related to the Seguela Mine in Ivory Coast.
Speaker Change: There is a pronounced timing effect impact in the quarter as the bulk of taxes paid at Ceguela are concentrated in Q2.
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 for exploration. Our free cash flow from going operations was $38.6 million, which considered corporate expenses and sustaining capital.
Speaker Change: Thank you for watching. See you next time.
David Whittle: As a result, Saguaro remains ahead of Saguaro's year to date and is on track to achieve annual production guidance of between 126 and 138,000 ounces. Mining activities at Saguaro have been focused on the antenna pit to deliver high of grade ore to the processing plant. Additionally, over 75,000 tonnes of ore have been mined at the antsy and then cooler pets year to date, surpassing the main plant targets. Continued exploration success of the Badiolcastral and Gabro Northpix is providing further opportunities with the life of mine plants, and opens the potential for underground mining of the sunbird and antsy and deposit.
Speaker Change: In the investing section of a cash flow statement, we recorded $50.4 million under additions to mineral properties, land, and equipment.
Speaker Change: Consisting of $32.8 million of sustaining capital, including brownfields exploration.
Speaker Change: And $17.6 million of non-sustaining capital expenses.
Speaker Change: This includes $6.5 million to acquire one half of the 1.2% NSR royalty held by Franco Nevada at Ceguela.
Speaker Change: $5 million spent at the Embasad.
Speaker Change: And $6.2 million of exploration.
David Whittle: These developments along with the emerging kingfish are discovered both well for the future of the Segela mine. Despite the power supply issues, the strong production performance, its Segela resulted in a cash cost of $564 per ounce, and an A-seq of $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.
Speaker Change: Our free cash flow from the 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 with the progression of the leach pad expansion at the Lindero mine.
Speaker Change: And our net free cash flow after all capital expenditures was $21 million.
Speaker Change: 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 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, 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.
Speaker Change: 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, comprising around 50% of our consolidated capital expenditures, excluding exploration activities.
David Whittle: Therefore, outperforming the mine plan and totally 58,624 ounces for the first half of 2024. 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 or 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 putt in the fourth quarter.
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.
Jorge: And I 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, sequentially to the end of the quarter. The $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.
Speaker Change: At quarter end, the proceeds from the offering were partially used to fully repay the outstanding $125 million under our evolving credit facility.
Speaker Change: Subsequent to the end of the quarter.
Speaker Change: The $46 million of convertible notes issued in 2019 were settled with approximately
Speaker Change: $10 million redeemed in cash and $36 million converted into shares.
David Whittle: Yaramoco was also affected by power availability in Bikina Faso, resulting from power supply reductions in Yarn or in Kokiwa. Yaramoco already has backup diesel generating capacity, which was complemented by the mobilization 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.
Jorge Alberto Ganoza: Thank you. We can move on to 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.
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.
Speaker Change: 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.
Operator: One moment, please, while we poll for questions. Your first question for today is from Adrian Pay with Adrian Pay Asset Management. Yes, hi. How are you?
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 will sustain in cost per ounce in 2024, potentially reaching or exceeding the upper end of our current items, 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 Yaramoco have identified a promising satellite open fit opportunity at the 109-zone located just to the north of the processing plant.
Speaker Change: Your first question for today is from Adrian Pay with Adrian Pay Asset Management.
Adrian Day: 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 to 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: 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?
David Whittle: This opportunity has undergone all required studies and has been permitted by the Bikina Faso government, recurrently evaluating tender submissions with mining expected to commence in the fourth quarter of 2024. The Aramaco Strong Production during the quarter resulted in a cash cost of $950-$53 at a basic of $1,389 per ounce of no and remains on track to achieve its production guidance of 105 to 119,000 ounces of gold.
Jorge Alberto Ganoza: Hello, Adrian. 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.
Speaker Change: Hello, Adrian. Hi.
Speaker Change: 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 the total.
Adrian Day: And how do you see that changing in the next, you know, 12 months or so?
Speaker Change: of revenue today at the mine.
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. Now, that has shifted towards a more base metal-rich component. We expect this break between silver and base metals to 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.
David Whittle: 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. Thank you. Back to you, Jorge.
Speaker Change: You know, in the previous cycle, just as a quick reference,
Jorge Alberto Vanosa: Thank you, David.
Speaker Change: Talking about 2011.
Speaker Change: Some years ago now, silver and base metals were pretty much 50-50 in terms of revenue contribution.
Speaker Change: That has shifted.
Speaker Change: towards a more base metal rich component and we expect this break
Cesar Velasco: Cesar, can you please share with us the highlights of the Latin business? Thank you, Jorge, and good morning to everyone. Lindeiro, 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: How much of Silver and Base Metals will remain? That's 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.
Adrian Day: Okay. Okay, that's helpful. And then secondly, I don't know. I know you 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 late last year and early this year. And we've been working on several fronts. 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 week, has weakened against the dollar.
Speaker Change: Yes, at San Jose, we have currently three options.
Speaker Change: In front of us, we are set to exhaust reserves as they were, the reserves we estimated late last year, early this year.
Speaker Change: And we've been working on several fronts.
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, Lindeiro'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 gold were mined at a stripping ratio of 0.7 to 1.
Jorge: One is exploration and the Yessie vein, something that we have been talking about. Second is, you know, there are changing scenarios, higher prices. The peso over the last weeks,
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 million ounces of silver in resources. And the work we are doing is trying to optimize our processes to see how many of those houses we can bring into reserve. So we have three options in front of us. One, by year end, we call it a progressive closure.
Jorge: has weakened against the dollar.
Jorge: 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.
Jorge: And the work we are doing is trying to optimize our processes to see how many of those ounces we can bring into reserve.
Jorge: 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 and 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, good. Best of luck to you.
Jorge: 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.
Cesar Velasco: A total of 1.4 million tons of gold were placed on the leach pad at an average gold grade of 0.61 grams per ton, containing an estimated 27,663 ounces. The operation experienced lower front and 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 ed grades and ore tonnage to be placed on the leach This remains aligned with the annual guidance for the year.
Jorge: 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.
Jorge: We are updating our mine closure plan. We are conducting exploration. We are doing several iterations on the optimization of existing resources.
Jorge: 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.
Cesar Velasco: 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, liner installation has progressed and contracts for the major mechanical works have been executed.
Operator: Your next question is from Tony Christ with Odyssey Investments.
Tony Christ: Yeah, thank you. It's Chris, pronounced like Chris.
Jorge: Your next question is from Tony Christ with Odyssey Investments.
Tony Crist: Yeah, thank you. It's Crist, pronounced like Crist. Anyway, thank you for taking the question, Jorge. Congratulations on the quarter. You're experiencing dramatic growth.
Tony Christ: Anyway, thank you for taking the question, Jorge. Congratulations on the quarter. You're experiencing dramatic growth.
Tony Christ: Uh, I, uh. I actually 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 would like to know if your team might consider coming on a Zoom call with Water Tower Research. They are English, and they deal with smaller companies.
Tony Crist: I.
Tony Crist: 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.
Speaker Change: And then, uh...
Speaker Change: And I...
Speaker Change: And secondly, I'd like to know if your team might consider
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. Lindeto 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 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.
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.
Tony Christ: 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 entity.
Speaker Change: And they have...
Speaker Change: I think more stability, well, they have less variability in the price of their stock.
Jorge: And I think it helps get the word out.
Speaker Change: to an entity, through an entity that's not a vested interest entity.
Tony Christ: 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.
Jorge Alberto Ganoza: Thank you for that. With respect to the share repurchase program, yes, we have a program in place. We have not been active in the program over the last month. But that is something that we are, you know... Constantly. And, uh...
Speaker Change: So, congratulations.
Cesar Velasco: As anticipated in our guidance for the 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 Lindeto would be between $1,400 to $1,500 per ounce. For the second half of the year, the company expects in debt of cash cost an ASIC to remain aligned with annual guidance if the Argentine microeconomics do not worsen. Moving up to Mexico, San Jose produced 684,176 ounces of silver and 5,269 ounces of gold.
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
Tony Christ: When we participate in the market, the 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 at any time. With respect to meeting and learning about potential houses that might be interested in learning more about the company, absolutely. There is a channel through Carlos Baca at Info Fortuna, and we can certainly arrange a conversation at any time. Yeah, I will.
Speaker Change: We participate constantly, and when we participate in the market, response to our use of funds at the time, our 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: At an average, 8 grades 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 plan to yield 136,214 tons, averaging 1,980 tons per day. The great profile for the period was consistent with the geological model. [inaudible] 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 meeting and learning about
Speaker Change: Other, as I understand, potential houses that can give...
Speaker Change: Would you 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: Okay, I will contact Carlos. Thank you so much.
Speaker Change: 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.
John Pereira: Yeah, good morning, gentlemen. Again, I've got to iterate. Congratulations on the quarter.
John Pereira: Yeah, good morning, gentlemen. Again, I'd like to reiterate 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 Etsy. 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. 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.
John Pereira: 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 reserves, 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.
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 putting the mine on care maintenance or maintaining operations of 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: Right. Okay.
Speaker Change: The bulk of our drilling is done. We are currently assessing the results and running iterations with the equipment.
Cesar Velasco: and Cesar Velasco.
Cesar Velasco: and the updating of the mine closure plan.
Cesar Velasco: It's work that is ongoing.
Speaker Change: Hopefully, before the end of the quarter, we can be in a position to...
Speaker Change: to make a decision and share it with the market.
John Pereira: 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 Linderol was a $64 million CAPEX plan for the leach pad and so on. 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. Maybe just give a little bit more clarity on how much more is to be spent on the two leach pads and what additional capacity they're going to provide.
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 a 16 alignment with our annual guidance for the year. Exploration drilling continues at the YSI vein to provide better understanding of the economic potential of the mineralized zone. 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.
Speaker Change: Bye.
Speaker Change: Okay, and then the second question is, thank you for that, and the second question is...
Speaker Change: It's on the sustainable capital costs that the company is incurring. It was indicated that Lundaro was a $64M CapEx plan for the leach pad and so on.
Speaker Change: 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...
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 then maybe when that CapEx number drops.
Cesar Velasco: 3% and 5% lower respectively when compared to the previous quarter. Silver production for the first six months of 2024 total 621,858 ounces in line to meet annual guidance. Zinc and lead production was 13.0 and 10.5 million pounds at an average head grades of 4.80% and 3.83% respectively, a 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 animals vein.
John Pereira: And, you know, and then maybe when that CapEx number drops. 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: 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-plus million you mentioned. Out of that figure, the leach pad is $42 million. This year, right?
Speaker Change: Yes, just a clarification. The total sustaining capital for Lindero this year is the $60-plus million you mentioned. Out of that figure, the leach pad is $42 million.
Jorge Alberto Ganoza: So, uh... We are, the six, the leach pad is, you know, over 60% complete, 60, 64% complete, by the end of the quarter. And we do expect to see CapEx execution continue in the third quarter. And that CapEx execution tails off in the fourth quarter. The leach pad expansion is a project that was always in the technical report. It was a project scheduled to be executed in the year three of operation, and Iris.
Speaker Change: This year.
Speaker Change: Right.
Speaker Change: So, uh...
Speaker Change: The leach pad is over 60% complete, 60-64% complete.
Cesar Velasco: Zinc and lead production for the first six months of 2024 total 25.2 million pounds 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 secara line with annual guidance for the year. Back to you, Jorge. Thank you, Cesar.
Speaker Change: By the end of the quarter, we do expect to see still CAPEX execution in the third quarter, and that CAPEX execution tails off.
Cesar Velasco: in the fourth quarter.
Cesar Velasco: 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 sets up the mind 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 it would be expected, but the bulk of the investment is being executed now, and it sets up the mine 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.
Cesar Velasco: And it is...
Cesar Velasco: It sets up the mine.
Speaker Change: There are also, throughout the next decade, other minor investments that will have to be done periodically, as it would be expected.
Luisario Vanosa: Luis, briefing on the financial results. Sure, thank you. So, for Q2 2024, we have recorded net income attributable to Fortuna shareholders of $43.3 million, has previously stated by Jorge, or $13 cents per share.
Cesar Velasco: But the bulk of the investment is being executed now, and it sets the mine for the next decade. So, perhaps Cesar or...
Luisario Vanosa: 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 attributable 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. Main drivers for the higher net income were an increasing gold volume sold of 66%, as well as higher gold prices of 17%.
Speaker Change: Luis has a detail right now on our expected CAPEX for the fourth quarter, but the project is complete on the fourth quarter. So CAPEX, still heavy CAPEX on Q3 and then tails off in Q4.
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 $60 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... nominal amounts for CAPEX costs for maintenance on any mine, but the bulk of the leach pad and the other CAPEX for Lindaro will, 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 dollar number was the...
Speaker Change: Overall, the total of which you're saying $40M was for the leach pad, $60% spent on that, so say $24M. There's another $6M to spend on the leach pad and then
John Pereira: Yes, perhaps Luis or Cesar can help complement it here and have those details here.
Luisario Vanosa: As has been noticed, the increasing gold sold is explained by the Segela 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 per ounce. Representing a reduction in approximately $90 per ounce year over year, the reduction was due to the low cost contribution of Segela with $564 per ounce partially upset by a higher cost per ounce at Lindeiro and Yaramoco.
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 the leach pad and and the other CAPEX for Lindaro 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 a fancy pair?
Speaker Change: Yes, but perhaps Luis or Cesar can help complement here and have those details in here.
Luis Dario Ganoza: This is Luis here, that is, 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 in the, for the second half of the year, and just to compliment on an ongoing basis,
Speaker Change: Annual capex for Lindero, we should expect to see more in the range of $20 million on a recurrent basis, right, beyond 2024.
John Pereira: There is a component in Argentina for a larger component in CapEx as well. Or, did I have that wrong?
Luisario Vanosa: 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 peso evaluation has in lagging the inflation rate.
Speaker Change: So, annualized base is $20 to $25 million ongoing CAPEX. Yes. Yes. Yes. Yes. And then there's a component in Argentina for a larger component in CAPEX.
Luisario Vanosa: We expect this trend to continue for the remainder of the year.
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. Go ahead Luis, go ahead.
Luis Dario Ganoza: I just wanted to provide clarification. 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 the whole year in terms of total CAPEX. 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 we had indicated for a total year in terms of total CAPEX.
Luisario Vanosa: 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: And what we're clarifying now is that beyond the leach fat expansion, the $20-$25 million is a fair estimate for the recurrent annual capex for Lindero moving forward. There's nothing else.
John Pereira: Okay, so and 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 mines, is there any, you know, additional major sustainable CapEx, and obviously, you got your CapEx for exploration, that's the second line 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 mines, 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?
Luisario Vanosa: Compared to Q2 of 2023, we have a higher mine GNA related to the addition of Segella, 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%.
Jorge Alberto Ganoza: No, 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 logs. 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: if you're aware of it at all.
Speaker Change: No, no, no. We have a lot of visibility and control on our capital projects for 2024, 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 lumps. But certainly the elephant in the room here is a leach pad expansion with 42 million dollars, right?
Luisario Vanosa: Moving on to the cash flow and the cash flow statement, 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 Segella mine in ivory coast. There is a pronounced timing effect impact in the quarter, as the bulk of taxes paid at Segella are concentrated in Q2.
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 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 going to allow you to, as you indicated, process product for the next several years, the next decade or so, 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: And then the last clarification on the question is, when the completion of that leach pad it's not, it's not essentially going to.
Speaker Change: enable additional throughput, it's just going to allow you to process, as you indicated, process product for the next several years, the next decade or so, correct?
Luisario 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 Segella, $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: That is correct.
Speaker Change: Thank you.
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 Beslanovitz, a private investor.
Thomas Beslanovitz: Uh, yes. I have a question because of, uh...
Thomas Beslanovitz: Yes, I have a question because of
Thomas Beslanovitz: The lack of power, uh...
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 quarters, are you still going to use that same amount of high-grade ore? to mill, and 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 that how you're going to do things going forward? Thank you.
Speaker Change: 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?
Speaker Change: to mill and if you do, I'm assuming that that would be
Luisario 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.
Speaker Change: That's a much higher output of gold and that's just what I want to kind of know.
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 at the Seguela Mine 19 days of operation in the quarter, 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 grade material. 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.
Luisario 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: The way we mitigated that was we had the capacity to run the mill at a higher rate.
Speaker Change: And, because we had some flexibility in the mine plan, in the mine schedule, we were able to source higher grades.
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 have received almost 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. What we should do is continue what we're working to do. You should expect to see us continue to push the throughput for 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. Thanks for watching, and don't forget to like, share, and subscribe to our channel.
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.
Luisario Vanosa: Back to you Jorge. Thank you.
Operator: We can move on to Q&A operators. Certainly.
Speaker Change: And what we should do is continue what we're working to do.
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 speak requirement, it may be necessary to pick up your handset before pressing the star keys. One moment please while we pull for questions.
Speaker Change: You should expect to see us continuing pushing the throughput, or the bottlenecking efforts, initiatives, optimization, and you should continue to see higher throughput. So that's where the gain is more than great right now.
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.
Speaker Change: Thank you very much for answering my question, and I look forward to when Chris Marcus interviews you on Fortuna Silver on his site.
Speaker Change: And I'll be listening to that when you're on the air with him very shortly. Thank you very much, sir.
Operator: Your next question for today is from Don DeMarco with National Bank Financial. Don, your line is live.
Speaker Change: Thank you.
Adrian Pay: Your first question for today is from Adrian Pay with Adrian Pay Asset Management. Yes, hi. How are you? I had two questions if I may. The first question was on the base metals for 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 and how do you see that going over the next six to twelve months? That's the first question.
Speaker Change: Your next question for today is from Don DeMarco with National Bank Financial.
Speaker Change: For more UN videos visit www.un.org
Speaker Change: that
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.
Dawn: Dawn, your line is live.
Don Demarco: Thank you, operator, and good afternoon, Jorge and team. I was disconnected, just getting back in the queue, so I apologize if my...
Don Demarco: 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, I'm seeing some wide intercepts, high grades. They certainly garnered some attention, but I wonder what the next steps are at Kingfisher, namely. How much infill drilling is required? Is it too early to say to supplant some of the ore that's queued up over the next quarters or years with this higher-grade ore? Thank you.
Speaker Change: 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.
Adrian Pay: Hello, Adrian. Hi. I would say, based metals, I can stand to be corrected here by Luis or Sessor, but if my master doesn't film me, based metals are comfort for two thirds of revenue today at the moment. How do you see that changing in the next twelve 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 reach 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 reach veins, but those veins at these prices today are not in the mine.
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 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.
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 14,000m have outlined gold mineralization in a shear zone that was not previously identified for a strike length of 1m. 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.
Speaker Change: Thank you.
Speaker Change: Yes, at Kingfisher, since the discovery hole to now, basically throughout this year, we have already drilled about 14,000 meters.
Speaker Change: The 14,000m have outlined gold mineralization in a shear zone that was not previously identified for a strike length of 2km.
Speaker Change: 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 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 this site. 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.
Jorge Alberto Vanosa: 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 the next year? Yes. At San Jose, we have currently three options in front of us. We are set to exhaust reserves as they were, the reserves we estimated did early late last year, early this year. And we've been working on several fronts.
Speaker Change: but rather fully understand the lateral and vertical extent of mineralization at this point.
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 any... signatures that we can extrapolate. As part of our larger exploration program in the property, we control 35 kilometers here on the belt. There is a lot of ground to cover. So
Jorge Alberto Vanosa: One is exploration and the yes event, something that we had 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, 29,000, 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.
Speaker Change: and this one doesn't. It's virgin ground. And we are currently running orientation geophysical surveys to see if we can pick up
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, and then probably follow with infield drilling in 2025, early 2025. A. Kingfisher needs to first produce a resource, then upgrade the resource to the Certainty category to indicate it.
Speaker Change: So, 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 path.
Jorge Alberto Vanosa: So we have three options in front of us one a year and 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. We certainly need to have clarity on which of those three avenues we will take in the third quarter.
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 first produce a resource, then upgrade the resource in certainty category to indicate it. We need to work on permits for this one deposit to incorporate it into our mine plan and schedules.
Jorge Alberto Ganoza: We need to work on permits for this one deposit to incorporate it into our mine plan and schedules, but it's 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, striking for over 2km that remains open with a vertical extent that remains open as well.
Jorge Alberto Vanosa: 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. Okay, super, that's very helpful.
Speaker Change: he
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.
Adrian Pay: Thank you.
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, the truth, the deposit, and probably in early 2025, we can start thinking about timelines for when this can contribute to a mine plan. 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: Striking for over two kilometers 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.
Speaker Change: So, uh...
Tony Christ: Your next question is from Tony Christ with Odyssey investments. Yeah, thank you. It's Chris, pronounced like Chris. Anyway, thank you for taking the question, Jorge. Congratulations on the quarter. You're experiencing dramatic growth.
Speaker Change: Give us a bit of time.
Speaker Change: To have the drill rigs, the truth, the deposit, and probably in early 2025, we can start thinking about it. Thank you.
Speaker Change: I don't want to put the carriage in front of the horses, but we're thrilled, we're excited, it looks meaningful, we just have to do our work, right?
Jorge Alberto Vanosa: I have a two actually a two-part question. I'm wondering if you can give an update on the share repurchase that you announced after the last quarter announced. 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, if your team might consider coming on a Zoom call with water tower research, they're English, and they handle smaller companies.
Jorge Alberto Ganoza: Thanks for that. We'll keep an eye out for the main 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.
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: 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: So I was on a call with B2 Gold 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 to an entity 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 and arrange it, having that. But thank you, and congratulations again in just an astronomical quarter. You're growing even if gold prices stay constant. So congratulations.
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.
Operator: This concludes today's conference, and you may disconnect.
Jorge Alberto Vanosa: Thank you for that. With respect to a shared 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, 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 anytime.
Jorge Alberto Vanosa: 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 at Info Fortuna, and we can certainly arrange a conversation at any time. I will contact Carlos. Thank you so much.
John Pereira: Your next question for today is from John Pereira, a private investor. Yeah, good morning, gentlemen.
Jorge Alberto Vanosa: Again, I'd reiterate congratulations on the quarter. Just as a follow-up to the previous question on San Jose, and 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?
Jorge Alberto Vanosa: 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.
Jorge Alberto Vanosa: 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.
Jorge Alberto Vanosa: Maybe just give a little bit more clarity to that component of CapEx. How much more is to be spent on the to each pad. And what additional capacity they're going to provide. And then maybe when that that CapEx number drops, and if you can get 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 Vanosa: 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 leach pad is 42 million this year. Right. So we are the six the leach pad is over 60% complete, 60, 64% complete 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 in the fourth quarter.
Jorge Alberto Vanosa: The leach 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 mind to receive or the the pad to receive a reserve for over a decade. There are also, you know, throughout the next decade, all the reminder investments that will have to be done periodically as it would be expected.
Jorge Alberto Vanosa: But the book of the investment is being executed now, and it sets the mind for the next decade. Right. So perhaps a set or or or at detail right now on our expected the CapEx for the fourth quarter, but the project is complete on the fourth quarter. So CapEx still got heavy CapEx on Q3 and then tails off in Q4. Okay, so that 64 million dollar number was was the overall cap that the total of which you're saying 40 million was for the leach pad 60% spent on that.
Jorge Alberto Vanosa: So say 24 million is another 6 million to spend on the leach pad. And then and then the remainder of the 64 million will be spent between the third and the four into the fourth quarter. Yeah, I understand you'll have ongoing. You know, nominal amounts for, you know, CapEx costs for for maintenance on on any mine, but the bulk of the the leach pad and and the other CapEx for Lendero, will be, well, so I'd say it's what's 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.
Jorge Alberto Vanosa: Would that be? Yeah, perhaps Luis or Cesar can help complement here. This is Luis here. That is, that is accurate. That is. It's a fair estimate of what we should expect in the, for the second half of the year. And just to complement 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 are there.
Jorge Alberto Vanosa: 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 ongoing basis. Yeah, go ahead Luis, go ahead. No, just wanted to provide a 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.
Jorge Alberto Vanosa: 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 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's second light item there.
Jorge Alberto Vanosa: 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 homes. But certainly the elephant in the room here is a leach bat expansion with 42 million dollars, right.
Jorge Alberto Vanosa: Yeah, no, no, no, no, no, there are projects of that nature in the portfolio today. Okay, and then sorry, and then the last clarification on the question is, when the completion of the, 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.
Thomas Bislanovitz: Thank you. Your next question for today is from Thomas Bislanovitz, 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 ore to mill?
Thomas Bislanovitz: 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? Thank you. Yes, you are right in how we mitigated the power outages. We lost at the Seguella 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.
Thomas Bislanovitz: 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. 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.
Thomas Bislanovitz: 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 is us continuing pushing the throughput, no, or the bottlenecking efforts initiatives optimization. And you should continue to see higher throughput. So that's where the game is more than great right now. Thank you very much for answering my question.
Thomas Bislanovitz: And I look forward to when Chris Marcus interviews you on Portuna 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. 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.
Jorge Alberto Vanosa: I was just connected just getting back in the queue, so I apologize if my questions are going to ask. 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 garners some attention, but I wonder what the next steps are at Kingfisher. Namely, how much infiltration required? How about, in terms of, is there potential to, or is it too early to say, to plant some of the, the, or that's queued up over the next quarter or three years with this higher grade or.
Jorge Alberto Vanosa: 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 straggling of two kilometers. 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. 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. 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 Vanosa: And this one doesn't. It's a virgin ground, and we were 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.
Jorge Alberto Vanosa: We expect to have a good sense of size and dimension. And then, probably follow with infield drilling in 2025, early 2025, King Fisher needs to, you know, first produce a resource, then upgrade the resource in certain ticasevery 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 Segela today. So, give us a bit of time to have the drill rigs truth that 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. So, but we're thrilled, we're excited, it looks meaningful, we just have to do our work.
Thomas Bislanovitz: Okay. 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 star one.
Carlos Baca: 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.