Q3 2024 Fortuna Mining Corp Earnings Call
Thank you.
Speaker Change: Greetings. Welcome to Fortuna Mining's Q3 2024 Financial and Operation Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.
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 advisory included in Yesterdays News release, the earnings call webcast presentation, MD&A and the risk factors in our annual information form financial.
Speaker Change: All figures contained in the presentation and discussed in today's call are presented in U S dollars unless otherwise stated.
Speaker Change: Legal information in the presentation has been reviewed and approved by Eric <unk> Senior Vice President of technical services and quantified Firstly I would like now.
Speaker Change: I would now like to turn the call over to Paul.
Paul: And also president and Chief Executive Officer, and co founder of portfolio.
Paul: Thank you Carlos Q3 performance demonstrates the strength of our business, we remain focused on delivering value to our shareholders.
Paul: Our strategic investments operational excellence, when you're allergic to potential for broker T cell responsible mining practices.
Speaker Change: For two and a half.
Speaker Change: <unk> had a record quarter on several key financial metrics, starting with record sales of $275 million.
Speaker Change: And we're tracking to generate sales of over $1 billion. This year, when we benefited from incrementally higher gold prices.
Speaker Change: Selling at an average realized price of $2490 per ounce.
Speaker Change: Compared to $2330 in the second quarter, and 2000 and the Navy the orders in the first quarter.
Speaker Change: We recorded earnings of $55 million and earnings per share of <unk> 16 cents.
Speaker Change: All ahead of analysts' consensus of 11 cents.
Speaker Change: Our EBITDA was a strong $131 million.
Speaker Change: Representing a 48% margin over sales.
Speaker Change: This is an increase from 43% in the second quarter and 42% in the first quarter.
Speaker Change: Our free cash flow from ongoing operations was a strong 56 million.
Speaker Change: Conferred to $38 million in the second quarter.
Speaker Change: We remain disciplined with our costs.
Speaker Change: Achieving a cash cost.
Speaker Change: $5059 per gold equivalent ounce in the quarter.
Speaker Change: $977 for the nine months.
Speaker Change: We're well aligned to meet our guidance for the year of $935 2055, So that's a range for guidance.
Speaker Change: Throughout the mine.
Speaker Change: We're not experiencing significant inflationary pressures on labor services are consumed levels again.
Speaker Change: So our annual budget.
Speaker Change: Our West African operations, yet and wont go and say here are driving performance and trucking on the low end of cost guidance.
Speaker Change: In Argentina, Linda it always have about 10% above guidance for the year due to lagging currency devaluation against inflation.
Speaker Change: Our capital projects are also tracking well against our guidance under the concept of sustaining capital at our mines, we have a global budget figure for the year of $130 million for the nine months, we have executed $98 million.
Speaker Change: Or 75% of the annual budget.
Speaker Change: All of our mines remain within their capital execution plans and are expected to finish the year within budget range with the only exception all of the local mine, which is accelerating 2025 underground development.
Speaker Change: In the second half of this year with an additional capital budget of $11 million.
Speaker Change: Recent budget the development is bringing new mineralized zones identified throughout 2024 into 2025 mine plan.
Speaker Change: Additionally, our or largest sustaining capital projects in 2020 for Israel in their old Leach pad expansion with a budget of $42 million.
Speaker Change: The project remains on time and on budget, we started placing ore on the leach pad in mid October and the project is scheduled for completion with final demobilization of contractors, taking place in January and February of next year.
Speaker Change: I remind you that in 2020 for these 48 alone represents approximately $400 in the literally seek and $90 and our consolidated AC.
Speaker Change: This project once completed.
Speaker Change: Services in mind.
Speaker Change: For a decade.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Or ASIC for the quarter and nine months were $1695.
Speaker Change: And $1618 respectively.
Speaker Change: Construction on the upper end of the guidance range for the year driven by the aforementioned increase in underground development to access new resources at the yard and local mine and the higher costs suddenly and data are resulting from the lagging basically devaluation against the inflation.
Speaker Change: Regarding exploration, we have increased our 2024 global budget from there or you know $37 million to the current $44 million in order to expand our drill program at this forgive my mind's Kingfisher discovery made earlier this year.
Speaker Change: So continue extending deeper mineralization at December the policies in support of an underground mine plan.
Speaker Change: Our aim remains to produce an updated resource estimate for sale before the end of the year encompassing new mineral deposits have extensions such as king fee shared whether you're in Sunbury deep.
Speaker Change: Yes.
Speaker Change: With respect to the San Jose mine.
Speaker Change: After 13 years of operations, we have made a decision to initiate a progressive mine closures starting in Q1 2025.
Speaker Change: Our project team is expected to deliver the final closure plan and.
Speaker Change: In the fourth quarter of.
Speaker Change: Of this year.
Speaker Change: Which considers closure and monitoring activities or a need here theory.
Speaker Change: Closure activities will be concurrent.
Speaker Change: With continued mining and processing at a reduced rate of under 1000 tonnes per day for approximately the initial 18 months starting next year.
Speaker Change: Management would expect cash flow from continued operations during 2025 and half of June 26, We love said closure costs.
Speaker Change: Cause quarterly.
Speaker Change: Provision at around $15 million to $20 million, but expected to increase as a result of the updated feasibility level closure plan being developed.
Speaker Change: With respect.
Speaker Change: <unk> capital allocation priority piece first.
Speaker Change: We have achieved the objective of putting together a fortress balance sheet upstream capital intensive few years here. The company, we recorded a net cash position this quarter and reduced our restructure or credit lines providing for liquidity.
Speaker Change: So about $350 million, maintaining our debt to EBITDA ratio.
Speaker Change: Under a low zero point too.
Speaker Change: Reducing or.
Speaker Change: Or financial costs year over year comparison by about $3 million.
Speaker Change: Second.
Speaker Change: Alrighty, we continue investing record annual amounts to unlock the geologic potential and value for appropriate Ts, we're focused on high value opportunities in our portfolio at this scale in mind that the <unk> project in Senegal unveiling the remaining Argentina.
Speaker Change: With that Oh, Thank you for your continued support.
Speaker Change: I will now let.
Speaker Change: David will provide us with an update on West African operations.
David: Thanks, Alright.
David: I'm pleased to report on this strong operational performance significant milestones achieved by our West African operations during the third quarter 2024.
David: Both mines exceeded their planned production target.
Speaker Change: Again reported zero lost time injuries for the quarter.
Speaker Change: <unk> had a successful third quarter regarding production.
Speaker Change: <unk> thousand four ounces of gold for the quarter.
Speaker Change: <unk> hundred 99168 ounces.
Speaker Change: With three quarters of 2020 or.
Speaker Change: Power interruptions experienced by both <unk> and <unk> did not extend into the third quarter.
Speaker Change: I know you will buy mice to surpass that production target for the quarter.
David: In the third quarter to <unk> 494000 tons of all.
David: The average gold grade of two point alright.
David: And two 9 million tonnes of waste.
David: And a strip ratio of 6.1 to one.
David: The processing plant treated 418000 tons at an average grade of 269 grams per tonne.
Speaker Change: Have you seen 34998 ounces of gold for the quarter.
Speaker Change: Entitles 102537 ounces for the first nine months 2024.
Speaker Change: The increase run time due to the additional power availability of the processing plant.
Speaker Change: I'll add to the processing of additional low grade ore when compared to previous quarters.
Speaker Change: But at least 210 tons per hour for the quarter.
Speaker Change: Peak of 216 tonnes per hour have reached in September.
Speaker Change: Initial team started in order to further optimize the processing plant performance.
Speaker Change: The increased throughput at Zscaler has necessitated the advancement in preparations for the night with the tightening storage facility.
Speaker Change: The design for the night snacks Theres been completed which Wayne comes stroke take we'll see sufficient tailings storage capacity until May 2029 of the planning stage rights contract Quantitation, some being received and construction activities are expected to commence in the fourth quarter.
Speaker Change: Yeah.
Speaker Change: In the third quarter scalar experience full power availability from the national grid.
Speaker Change: Power generating capacity is now installed on site to mitigate any further power supply issues and.
Speaker Change: <unk> schedule to commence on the construction of the solar power plant in the fourth quarter.
Speaker Change: Mining activities at <unk> continue to be focused on the antenna.
Speaker Change: CNN cooler pits.
Speaker Change: Mining at each of the three states being in line with the mine plan.
Speaker Change: Continued exploration success.
Speaker Change: And with the processing plant optimizations, providing exciting opportunities for this and gala mind to surpass previously stated annual production targets.
Speaker Change: 2025, we will see as bringing forward a number of capital initiatives to exploit these opportunities.
Speaker Change: <unk> drilling is continuing at the kingfisher deposit.
Speaker Change: And some good underground project.
Speaker Change: It is expected that a maiden resource for the teen patient deposit will be produced by year end.
Speaker Change: There's some data on the Grand project is producing good results on mining feasibility work is progressing well.
Speaker Change: <unk> deposits have the potential to be coal production be police for a number of years to gayla.
Speaker Change: In addition on our initial scoping study is currently being conducted with regards to underground mining opportunities at the <unk> pit.
Speaker Change: Whilst further drilling continues within the lease on some of the many identified exploration targets.
Speaker Change: The continued strong production performance together resulted in a cash cost of $655 per ounce.
Speaker Change: Now you see somebody 11, homegoods and $76 per ounce of gold.
Speaker Change: So the island remains ahead of schedule a year to date as young track to achieve annual production guidance of between 126 and 138000 ounces.
Speaker Change: <unk> hundred 2000 tons were mined at an average grade at 7.75 grams per tonne.
Speaker Change: 25599 ounces of gold.
Speaker Change: The processing plant. So you said 124000 tons and average guidance six points to seven one grams per tonne introducing 28006 ounces of gold in line with the mine plan and totaling 86680 31 ounces for the three quarters of 2020.
Speaker Change: Useful.
Speaker Change: Following the seismic event in the second quarter mining schedules are designed 55 ore body will reassess to mitigate the effects of skus, yet future seismic campaigns.
Speaker Change: This review and subsequent re sequencing of mining activities reduced the availability of the higher grade stopes during the third quarter, leading to this slightly lower production when compared to the second quarter.
Speaker Change: As a result of this review all cheering us being able to optimize the development lay out of the mine.
Speaker Change: Reduce future development requirements.
Speaker Change: As such he is now expected.
Speaker Change: Development operations will cease designed 50 pipe ore body late in the fourth quarter with only stoping activities occurring in 2025 and beyond.
Speaker Change: Mining operations at the Q V. P ore body continued in line with the mine plan.
Speaker Change: Recent drilling is indicating the potential for the extension of mining further along strike to the east and development will commence to test those extensions in the fourth quarter.
Speaker Change: Yeah, Mike I strong production during the quarter resulted in a cash cost of $974.
Speaker Change: <unk> $1373 per ounce and go and remains on track to achieve its production guidance about hundred employed.
Speaker Change: 19000 ounces and go.
Speaker Change: The <unk> project in Senegal drilling will recommence in the fourth quarter.
Speaker Change: That season is over.
Speaker Change: A resource update is currently being prepared based on the drilling to date geotechnical RJ lunch equal environmental and other studies are continuing in order to be able to produce a b I in 2025.
Speaker Change: Our West African operations have demonstrated resilience and strong performance.
Speaker Change: We remain focused on optimizing production advancing our exploration opportunities, whilst maintaining our commitment to safety and operational excellence.
Speaker Change: But to your whole guy.
Speaker Change: Yeah.
Speaker Change: Thank you David Lewis will now take us through the highlights for our financial report.
David Lewis: Thank you.
David Lewis: Net income for shareholders for the quarter was $55 million or <unk> 16 cents per share. This compares to a 13% in the prior quarter and nine cents in Q3 of 'twenty to 'twenty three.
Speaker Change: Our strong financial performance in the quarter was a result, as Jorge emphasize or Rick or a high metal prices and cost per ounce aligned with our guidance for the year.
Speaker Change: Our cash cost per gold equivalent ounce was $1069 higher than the last two quarters, but still within our forecast.
Speaker Change: When compared to the same quarter in 2023.
Speaker Change: Cost per ounce was higher by $244, mostly as a result of higher cost figure dollar and euro mogul.
Speaker Change: With a lesser impact at San Jose in that case, I'll say, hey log costs are higher due to the low cost production in Q3 of the previous year related to low stripping ratios and the higher initial headwinds.
Speaker Change: A few comments on the.
Speaker Change: And the income statement.
Speaker Change: <unk> depletion in the quarter was $59 million, which includes $16 $8 million in depletion of the purchase price related to the acquisition of rock school in 2020 one.
Speaker Change: On the general the General and administration line item expenses were $16 million and as shown in the break down we providing are in page 11 of our MD&A and in the news release. This was comprised of $9 $9 million of in country DNA.
Speaker Change: Mining operations.
Speaker Change: $3 $96 million of corporate G&A, and $2 $2 million of share based compensation.
Speaker Change: We recorded investment gains of $3 $2 million for the quarter from cross border Argentine peso denominated bond trades.
Speaker Change: And $8 $3 million year to date.
Speaker Change: This is a benefit granted two explorers by the Argentine government, whereby 20% of export proceeds is allowed to be converted into pesos at a preferential exchange rate.
Speaker Change: We saw a $2 million reduction in interest and finance cost this quarter contributing to our overall, our overall cost efficiency as shown in note 21 of our financials for the actual interest expense charge was $3 million below the prior year, reflecting.
Speaker Change: Lower than balances and lowered cost of financing year over year.
Speaker Change: Our effective.
Speaker Change: The tax rate was 21% for the quarter and 22% year to date. The nine months period is distorted by the 12 million deferred tax recovery related to the convertible note offering closed in Q2 <unk>.
Speaker Change: Excluding this effect.
Speaker Change: <unk> quarterly variability from foreign exchange.
Speaker Change: At current metal prices, we expect our effective tax rate to be in the 28% to 30% range and our current tax rate to be in the 30% to 35% range.
Speaker Change: Moving on to our cash flow.
Speaker Change: We generated $92 $9 million of net cash provided by operating activities, which includes $26 $4 million of negative changes in working capital.
Speaker Change: The bulk of this negative change is related to timing of accounts receivable as.
Speaker Change: As we have disclosed before we have been experiencing challenges in the collection of the a T. Our euro more corporations in Burkina Faso.
Speaker Change: And anticipate this might continue to be a challenge moving forward.
Speaker Change: E D receivables at <unk> increased $2 $6 million in Q3 and $12 million year to date.
Speaker Change: In the investing section of our cash flow statement, we recorded $52 million under additions to property plant and equipment.
Speaker Change: Assisting of approximately $38 million of sustaining capital, including Brownfields exploration.
Speaker Change: And $12 million of non sustaining capital expenses.
Speaker Change: Year to date, we have recorded additions to property plant and equipment of.
Speaker Change: 141, $9 million, consisting of 103 million of sustaining capital.
Speaker Change: And around $39 million of non sustaining capital.
Speaker Change: This includes $19 million in exploration $11 $4 million in December.
Speaker Change: And the $6 5 million dollar repurchase of that singular N. S are back at the beginning of the year.
Speaker Change: For Q4, we expect to see similar levels of Capex as in Q3, mostly related to the completion of the Leach pad expansion at Lynn Liddle.
Speaker Change: Our free cash flow from ongoing operations was $56 $6 million. This is after corporate expenses interest and all sustaining capital expenditures.
Speaker Change: Our net free cash flow after all capital expenditures was $44 million.
Speaker Change: Moving onto our balance sheet, we closed the quarter with a cash position of $181 million and total liquidity of $431 million, including the full and drawn amount of our $250 million revolving credit facility.
Speaker Change: Subsequent to the end of the quarter, we have amended the credit facility to reflect a stronger balance sheet position coming out of a convertible note offering in the second quarter.
Speaker Change: The amendment includes a resizing of the facility from $250 million to $150 million.
Speaker Change: Additionally, the prior facility carried an accordion feature of $50 million, which has been increased to $75 million.
Speaker Change: We have also achieved improvements in the pricing and covenant terms in summary, this has allowed us to reduce our cost of capital and provided us with added financial flexibility.
Speaker Change: But do you.
Carlos: Thank you Carlos.
Speaker Change: I would like sorry, we would now like to open the call to any questions. You may have please Paul if you can probably be audience.
Speaker Change: Certainly at this time, we will be conducting a question and answer session. If you'd 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.
Speaker Change: For participants using speaker equipment that may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Once again, please press star one on your phone if you wish to ask a question at this time.
Speaker Change: One moment, please while we poll for questions.
Speaker Change: On the first question today is coming from Don Demarco from National Bank financial.
Speaker Change: Dan Your line is live.
Speaker Change: Thank you operator, and good morning, Jorge and team congratulations on the strong quarter.
Speaker Change: So first question Jorge I'm, just reading in the MD&A that atlan Darryl the company may be required to temporarily repatriate U S dollars.
Speaker Change: Argentina and convert them from Argentina convert them into Argentine pesos.
Speaker Change: Can you just give us a sense of what.
Speaker Change: Quantify.
Speaker Change: The financial implications of this.
Speaker Change: Okay.
Speaker Change: So.
Speaker Change: What we what we're disclosing is that.
Speaker Change: In the next few quarters, what we expect to see in Argentina is a shift from what we had been seeing up to now.
Speaker Change: [noise], where we hadn't been able to repatriate cash surpluses from Lynn Liddle.
Speaker Change: Through intercompany financing arrangement, we had in place that has been exhausted by now.
Speaker Change: And we will find ourselves in this invasion, most exporters are into they need cash surpluses.
Speaker Change: Well.
Speaker Change: We don't have to be.
Speaker Change: Either kept in country or.
Speaker Change: We will be looking into different alternatives as to how to manage that exposure all cash.
Speaker Change: Surpluses are camping.
Speaker Change: Local currency and vessels in country right.
Speaker Change: So we are rolling out all these start accumulating cash locally towards year end it will build up in current prices over the course of funding 25.
Speaker Change: And we're looking to different alternatives as to my.
Speaker Change: Manage that exposure that's the best we're going to say at this stage, yes, and this is subject of course to the current effects restrictions country. They go.
Speaker Change: Maine has consistently been signaling lifting.
Speaker Change: Those restrictions, but have not provided a.
Speaker Change: So as we know Mr. Malaise are very pro market.
Speaker Change: Yeah.
Speaker Change: The pricing and trying to you know.
Speaker Change: [laughter] promote investment into the country and the removal of all those effects controls is central to that and also I mean, she indicates he's a priority lifting those FX controls either.
Speaker Change: The priority, but he has not provided I think.
Speaker Change: For that.
Speaker Change: We believe the country is tracking in the right direction, but we still need to see that those some of those milestones.
Speaker Change: Positive signs there.
Speaker Change: GAAP between the official rate and the.
Speaker Change: The parallel rate industry has significantly narrowed.
Speaker Change: Country risk is coming down.
Speaker Change: But again.
Speaker Change: Positive signs that we.
Speaker Change: We're not.
Speaker Change: We are still subject in the country, you know the country still subject to those ethics restrictions right.
Speaker Change: Okay.
Speaker Change: And do you have any opportunities to invest either at madera or in Argentina.
Speaker Change: Yes, absolutely we are well why don't we have been expanding our leach pad for the next decade that has been a $42 million.
Speaker Change: That said to the mine as I said for a very long time for a life of reserves. We currently have.
Speaker Change: And we have other opportunities in that he's had a porphyry in other appropriate disease south days that were to be the case that.
Speaker Change: We're looking at options I think it's still very very dynamic we are in a different situation than about a year ago no.
Speaker Change: And with respect to the then they they Gorman no the previous government for the previous government removal of those effects controls was not a matter of discussion for these government. It is a priority.
Speaker Change: So you know when it happens is something we're all looking and watching carefully right.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for that.
Speaker Change: Then just one more question.
Speaker Change: On the mining codes and or.
Speaker Change: The proposed changes to mining codes and card in Burkina Faso have you been in touch with the government or have any dialogue with the government or a sense of what.
Speaker Change: You know what the potential implications.
Speaker Change: These changes might be on either yarmulke Guadalajara.
Speaker Change: Or separately the opposite.
Speaker Change: Yes.
Speaker Change: The answer is we are aiming very close I mean in sometimes intense dialogue with both.
Speaker Change: The golar.
Speaker Change: Governments on the matter.
Speaker Change: Hum.
Speaker Change: Uh huh.
Speaker Change: At a company level and also through the mining chambers that are quite active in both countries.
Speaker Change: And.
Speaker Change: With respect to the changes recently enacted in Burkina Faso.
Speaker Change: They really do not impact us.
Speaker Change: Today, we do not see an impact to our business.
Speaker Change: Yeah.
Speaker Change: And with respect to two who got dihua there is.
Speaker Change:
Speaker Change: A different process being driven I believe the authorities are doing the right thing there is a draft.
Speaker Change: The new mining code being circulated and appropriately.
Speaker Change: Consulted with industry.
Speaker Change: And that's what's taking place right now and we see that as positive.
Speaker Change: Yeah.
Speaker Change: I would say if I have to characterize the processing Cote d'ivoire has been far more orderly than what we seen in Burkina Faso.
Speaker Change: Yeah.
Speaker Change: But yes, we're we're very engaged in them and right now we don't see any any dramatic change to tour business in Cote d'ivoire are working our process and outcome of these changes.
Speaker Change: Okay. Thank you for that that's all for me good luck with Q4.
Speaker Change: Thank you.
Speaker Change: Thank you. The next question will be from John Pereira, China's a private investor John Your line is lives.
John Pereira: Yeah. Thank you.
Speaker Change: And Jorge Yeah, congratulations on a good quarter.
Speaker Change: The team from the last call you reported that the Leach pad and I think you just mentioned that was a $40 million project correct correct me if I'm wrong.
Speaker Change: Was you were expecting to complete the.
Speaker Change: The capex spend on that during third.
Speaker Change: Q3, I think I heard earlier that that was going to extend into.
Speaker Change: January of 2025.
Speaker Change: Hmm.
Speaker Change: And you are could you just elaborate on.
Speaker Change:
Speaker Change: What's still left to complete.
Speaker Change: Not not the details of the project, but in terms of the spend.
Speaker Change: Here in Q4, and you know so how much how much more is left on that the capex.
Speaker Change: Capex spend.
Speaker Change: But I think neither.
Speaker Change: Okay. Thank you for your question there the Leach pad has a couple of key components. One is the availability of that real estate for placing war for leaching right. So that hasnt been met even ahead.
Speaker Change: Okay.
Speaker Change: In in early mid October right. So we are the the leach pad has been turned to operations.
Speaker Change: And.
Speaker Change: The Leach pad has been turned to operations and are replacing or on the leach pad right now.
Speaker Change: The second one is there are some ancillary activities that are done in part the continued operations of the expanded reach but.
Speaker Change: That will drive long until you know early 2025, and conclude with demobilization activity piece of a contractor and whatnot.
Speaker Change: And January perhaps spending into February.
Speaker Change: The key thing is that the niche fed east operation.
Speaker Change: With respect to the Leach pad.
Speaker Change: The amount that we might see still coming into 2024.
Speaker Change: Yeah.
Speaker Change: Not that it wasn't an isolated minor for the leach but weekend.
Speaker Change: What we can say is that part.
Speaker Change: Part of the payments.
Speaker Change: Expect in Q3 associated to the.
Speaker Change: The leach pad have.
Speaker Change: Our rolling into Q4.
Speaker Change: Of course, I mentioned the project for all material purposes on track, it's a matter of timing of payments, mostly and.
Speaker Change: The leach pad.
Speaker Change: And exclusivity it might be in the range of $10 million to $15 million right in Q4.
Speaker Change: The expectation that we have provided before with respect to a bit of a spend taking place in January is hasnt changed for any significant purpose.
Speaker Change: Yeah, it's about $10 million, we might see coming into Q4.
Speaker Change: And the range, Okay totally undrawn.
Speaker Change: Yeah.
Speaker Change: Okay. Yeah. So you had $38 million of sustaining capital. In Q3 are you are you expecting any upward surprises than in sustaining capital here in Q4.
Speaker Change: Or are you expecting then that the sustaining capital cost should start to diminish.
Speaker Change: As time goes on because essentially that this project is completed.
Speaker Change: Yes that is the case.
Speaker Change: That is oh.
Speaker Change: As I said, we will see a bit of a spillover into 2025 of whom you know a couple of million dollars.
Speaker Change: Yeah.
Speaker Change: So something in the range of $4 million to $5 million.
Speaker Change: And then something in the range of 8 million still attached to the final activities of the Leach pad in Q4.
Speaker Change: Yeah, just trying to get a sense for the you know the cash flow number.
Speaker Change: Overall cash flow number and net cash flow.
Speaker Change: But anyway.
Speaker Change: Just a second question a follow up on Burkina Faso.
Speaker Change:
Speaker Change: You mentioned you know in terms of the government noise about the licenses, it's really not going to affect.
Speaker Change: Fortuna and you know I think the understanding from the news release, you put out on it was there.
Speaker Change: That.
Speaker Change: You know those were just.
Speaker Change: Their impact would be just on new mines, and new licenses being issued going forward.
Speaker Change: Does that does that kind of defense that are that youre getting from from the government.
Speaker Change: So I believe you're referring to are unfortunate to statements made by the president of working that Faisel.
Speaker Change: The captain throw some weeks ago is that what you're referring to yes, yes, that's correct.
Speaker Change: Yes, he was misquoted really.
Speaker Change: What he was saying in that statement is it.
Speaker Change: The companies that do not comply with the new mining code.
Speaker Change: Who could be subject to cancellation of their licenses.
Speaker Change: I think that as a general statement are something we're all subject to in many jurisdictions all the time.
Speaker Change: If you don't comply with the law, while you you're subject to cancellation of your process.
Speaker Change: Yeah.
Speaker Change: But I believe that statement was caught by our ROIC theirs.
Speaker Change: Food out there without much context.
Speaker Change: We do not see us a restate any any indication to a reason this.
Speaker Change: From the mining new mining code.
Speaker Change: Or any actions of the government.
Speaker Change: It could take or not I think the government are working are firstly, it's vital for all the challenges the country is going through and security humanitarian crisis and political instability is quite receptive to.
Speaker Change: Therefore, the mining companies in country right.
Speaker Change: We need dialog with the minister of finance is available with them in Israel.
Speaker Change: The mine is available with the head of National security. He's available so all of that is going well.
Speaker Change: Hmm Okay.
Speaker Change: Yeah, and then there was another statement that was made earlier.
Speaker Change: About recovery.
Speaker Change:
Speaker Change: And was that a V a T I didn't quite understand.
Speaker Change: And is that in is that in Burkina Faso.
Speaker Change: Can you just elaborate on what that was.
Speaker Change: Yes, yes.
Speaker Change: All companies are struggling to get to be a recovery in in Burkina Faso that is a it's not an inconsequential amount of money that's building up.
Speaker Change: Yeah.
Speaker Change: On V D for us towards the end of the year is a fear in the amount of $40 million to $50 million.
Speaker Change: The government of working at Fosterville over let's say up to a year ago has been quite diligent and providing returns on V. H P.
Speaker Change: But that has stopped.
Speaker Change: The country is going through all sorts of crisis, you know not only security humanitarian financial crisis as well.
Speaker Change: So we did receive a an advance on V D are within the last.
Speaker Change: Three or four months.
Speaker Change: About one and a half million dollars, but it's trickling down right, it's coming slowly.
Speaker Change: It's building up price, particularly at these prices.
Speaker Change: So when you reported your your cash flow numbers or are you accruing for these.
Speaker Change:
Speaker Change: The V. A T numbers that are are they included in their accrued or they are just not included in the cash flow number because you haven't recovered yet.
Speaker Change: It is it is included as a negative change in working capital right. So when we talk about free cash flow.
Speaker Change: It is considering the fact that we're seeing those delays in collecting the 18th yes.
Speaker Change: Was that part of the $25 million in receivables that was referenced.
Speaker Change: Is that V a T in that.
Speaker Change: Yes, that's correct.
Speaker Change: Okay, Okay alright.
Speaker Change: So it did it so it's not you're not including it in your cash flow. It's affecting your cash flows will that'll that'll come through whenever that comes through and be built into the cash flow at that time.
Speaker Change: That is correct yes.
Speaker Change: Okay and then the last question I'm, sorry for taking up so much time, but last question with respect to San Jose We didn't see any further drill results on San Jose, but I guess I'm going to assume that there is nothing meaningful that would.
Speaker Change: That would allow the company to make the decision to continue to run the mine you know combination of higher silver prices and.
Speaker Change: A new fine.
Speaker Change:
Speaker Change: Has the company looked at potentially selling that mine.
Speaker Change: As you.
Speaker Change: You know Oh.
Speaker Change: Obviously sustaining the closing costs that youre going to that youre going to have to absorb over the next months or years.
Speaker Change: With respect to the first part of your question, we have stopped exploration at this stage.
Speaker Change: And as I stated during the call we are.
Speaker Change: Planning to carry and mining.
Speaker Change: At least for four four for 18 months because the mine although it is exhausting the reserves, we estimated a year, who still has resources right.
Speaker Change: We already have the ESC vein and the resources the Victoria vein in other portions of the of the mine. So yes, we are updating those resources.
Speaker Change: Based on not only the current prices.
Speaker Change: But also.
Speaker Change: Yeah.
Speaker Change: At the current exchange rate, which has moved in our favor.
Speaker Change: We are in peso to the dollar is at around 20.
Speaker Change: And when a year ago was closer to 16.
Speaker Change: Right.
Speaker Change: So all of those things do have an impact.
Speaker Change: But the way we see this is just residual mining right.
Speaker Change: And we're always considering strategic options for the asset.
Speaker Change: Yes.
Speaker Change: Yeah.
Speaker Change: But independent of those that might come or not.
Speaker Change: We have a base case, which is the progressive closure.
Speaker Change: Okay.
Speaker Change: Our current strategy, you're calling it a progressive closure. So you continue to mine on a reduced rate to you know to help absorb picking them months pretty much.
Speaker Change: So okay. We will we're winding down operations, we have a we're this year already we executed a significant reduction in workforce.
Speaker Change: And concurrent with mining activities in 2025 and into 2026 that we will be taking place at a reduced rate.
Speaker Change: And we will be conducting also closure activities of ancillary facilities.
Speaker Change: We have two tailings disposal facilities, we have a a dry stack facility and are in a conventional tailings facility.
Speaker Change: We will be starting that work to close the one of those now.
Speaker Change: So concurrent with the.
Speaker Change: Production at a smaller rate there or a lot of activities that we can initiate.
Speaker Change: And at the same time as I say, we keep the strategic options open right. There is still remaining resources.
Speaker Change: Exploration opportunities in the bigger appropriately package that we have decided for strategic reasons not to pursue.
Speaker Change: Mhm, Okay, Yeah, and then the last point is I think the act that I read the expectation is that the ongoing reduce mining operation will should cover cost so you're you're expecting that that mine is back on a.
Speaker Change: It's not going to be a cash drain.
Speaker Change: It's going to continue to at least breakeven during that 18 month period.
Speaker Change: Okay.
Speaker Change: You know we are doing that trade off between a complete <unk> of our production.
Speaker Change: And just carrying the closure costs, which is a project right at closure.
Speaker Change: Our groceries up project.
Speaker Change: So you will be carrying a project that will be intensive in the initial 24 36 months and then goes into more of a monitoring phase right.
Speaker Change: And so we trade off.
Speaker Change: A complete halt of operations versus that option.
Speaker Change: And where the alternative is where we can continue doing some residual mining generate some positive cash flows that help offset.
Speaker Change: Some of those costs that we would be incurring anyhow right. Those project costs. If you will so you know in our in our estimate.
Speaker Change: We see a benefit an economic benefit.
Speaker Change: <unk> continue with that residual mining, while we concurrently Lou brochure activities, starting with scenarios right.
Speaker Change: Right.
Speaker Change: Okay, and then and then you had accrued for the mining closure costs I think it was $90 million several quarters ago.
Speaker Change: So the effect would there would not be an effect on the net earnings number just in effect on potentially effect on our cash flow number do you believe that what's been accrued.
Speaker Change: On the balance sheet.
Speaker Change: Should you know will be adequate to.
Speaker Change: At this point, we are updating we are currently as I stated during the call updating a feasibility level.
Glenn: Sure Glenn.
Glenn: And I am we anticipate that as an outcome of that.
Speaker Change: With more.
Speaker Change: Detailed engineering.
Speaker Change: On on some of the closure activities that figure will increase right.
Speaker Change: Right.
Speaker Change: So the final study will be are complete these fourth quarter, probably end of November sometime in December we should have the final numbers, but we can anticipate.
Speaker Change: That provision will likely increase right.
Speaker Change: Precise numbers in our balance sheet for direct closer costs are higher.
Speaker Change: And the $10 million range are the provision we carried on the balance sheet plus end of last year, we took a.
Speaker Change: Provision and charge for $6 million of severance costs severance costs, I'm, sorry of which around two and a half million dollars have been spent so that is the amount. That's currently in our balance sheet something in the range of 14.
Speaker Change: We anticipate that number will increase right.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: I have to go back and look at that Okay. That's it for me. Thank you very much gentlemen.
Speaker Change: Thank you.
Speaker Change: Thank you and the next question will be from Adrian day from Adrian Day asset management. Your line is live.
Speaker Change: Oh, yeah good.
Speaker Change: Good morning, excuse me I had two questions. If I may sorry, one one just quick follow up if I may I'm, sorry about this some San Jose.
Speaker Change: So does the residual mining get does the cost of a residual mining continued to show up as a cash cost of mining and does it get included in your all in sustaining costs.
Speaker Change: I'm, obviously, asking because you know with with the lower production that was supposed to get them to go way up and its kind of a sexual companywide costs or does it just councils Oh sorry.
Speaker Change: Sorry.
Speaker Change: No. That's a very good topical question for US right now and that's something we're looking into as we speak Hadrian.
Speaker Change: And what would be the more adequate way to account for that income right.
Speaker Change: The way we see it technically is we have a closure project that's generating some income we're even considering if we should include that those houses which are small.
Speaker Change: In our in our in our guidance right in our 2025 guide right.
Speaker Change: Where we're giving consideration to that and we're talking with your auditors were talking with our.
Speaker Change: We're analyzing that as we speak.
Speaker Change: I I wanted.
Speaker Change: We'll have more clarity when we provide guidance next year on how all of this is going to manage but we need we've been telling.
Speaker Change: Sharing with investors.
Speaker Change: At least that we will be taking a position with respect to the future of San Jose in the third quarter and consistent with that is that we are advancing to you will.
Speaker Change: That.
Speaker Change: San Jose is going into closure no and then we have the opportunity to offset.
Speaker Change: Yeah.
Speaker Change: A significant portion of those closure costs in the initial two years.
Speaker Change: Carrying some residual mining of resources that we have which are high grade right. Some of the higher grade resources updated to current exchange rate.
Speaker Change: Prices do believe we believe provide a.
Speaker Change: And economic benefit to the project right offsetting them.
Speaker Change: Sure costs. So that is what we're buying but we certainly have a bit more work to do as I said, we do not have final closure numbers. Yet we can anticipate that is gonna be a number higher than what we currently have in the provision.
Speaker Change: Cost with the previous caller.
Speaker Change: Yeah.
Speaker Change: How we're going to manage the reporting of those ounces or not is something that we're still figuring out.
Speaker Change: Okay. Okay. Thank you and the second question if I may is on exploration.
Speaker Change: So two parts one is what is the proportion of your total exploration spend that is on.
Speaker Change: New projects, New exploration projects and then do you look at new exploration projects when you're looking at the potential for new exploration project.
Speaker Change: Is it purely opportunistic or do you are you pay your marine in particular regions.
Speaker Change: Just hypothetically because you like to rebalance a little bit more to Latin America West Africa.
Speaker Change: Or are you favoring sudden laterals or is it purely opportunistic as to when the U.
Speaker Change: Take on a new project.
Speaker Change: I will start with the second part of your question and then we'll allow Louis to provide the breakup I don't know but to answer the second part of your question.
Speaker Change: We have the benefit of the athene in different geographies and we see opportunities emerge in all of them and what we do agent is we we rank them based on their own merit on their own technical Merit first.
Speaker Change: And then depending on the nature of the opportunity.
Speaker Change: We decided that it makes sense for us strategically we are very comfortable for the long term being in order here addictions, where we are right now technologically.
Speaker Change: There are places, where we could commit to deploy.
Speaker Change: The more capital than others.
Speaker Change: Today, we clearly favor a countrywide Senegal.
Speaker Change: I don't know the kina Faso or for any large capital investment our head of Argentina right.
Speaker Change: But or process to help you understand it is we first rank if we see opportunities emerging throughout we rank each one under technical Merit and then.
Speaker Change: We assess tactically.
Speaker Change: Yeah.
Speaker Change: If we can if it's an opportunity we'd hydrologic potential, but correspondingly low financial risk to the company, where we can be a bit more adventurous.
Speaker Change: Where we move or not versus opportunities of demand high capital commitment. So we do not gear or the opportunities as always we want to be more weighted towards Latin America now are more weighted towards silver or not no. We ran the emerging opportunities on their own merits.
Speaker Change: First.
Speaker Change: Okay. That's very helpful. Thank you Luis on the breakdown.
Speaker Change: Yeah. So.
Speaker Change: I mean, just to try to answer that question.
Speaker Change: Policy, the only new project really where we're extending spending exploration dollars.
Speaker Change: Is oh.
Speaker Change: There is.
Speaker Change: They have a greenfield two and a half million dollars, but they are the only new project really is the.
Speaker Change: The bulk of our exploration budget is being spent in the ER.
Speaker Change: Areas around our existing projects, our existing mine I should say.
Speaker Change: And and mainly today.
Speaker Change: Right, but what goes we have a regular of sustaining versus non sustaining question is have you been sustaining and non sustaining in terms of what we would call a brownfield exploration.
Speaker Change: <unk>.
Speaker Change: Around one third today is staying in sustaining and two thirds is being classified as non sustaining.
Speaker Change: The objective of those budgets.
Speaker Change: Budget is to expand the.
Speaker Change: Resources and the XP.
Speaker Change: Exploration camps right, yeah, so yeah close to $15 million allocated to sustaining.
Speaker Change: The balance okay sustaining.
Speaker Change: Okay I was thinking of you know new Greenfields like say.
Speaker Change: The joint venture or the other and then you have with Riverside on a daily or in Mexico.
Speaker Change: Is that are we.
Speaker Change: Very very small.
Speaker Change: Well, Yeah, Larry described by Luis our largest a greenfield.
Speaker Change: Greenfields project or is the amber.
Speaker Change: Right.
Speaker Change: Our total budget allocated to them in 2024 in the range of $13 million total budget that includes.
Speaker Change: The exploration engineering, you know or owners cost associated with being in country managing the project.
Speaker Change: So so that fear of horse around $13 million.
Speaker Change: 9 million out of that is.
Speaker Change: The classified as exploration.
Speaker Change: Okay.
Speaker Change: Okay. Thank you.
Speaker Change: Thank you and once again it is star one on your phone at this time, if you wish to ask a question.
Speaker Change: That is star one if you wish to ask a question.
Speaker Change: The next question is coming from Peter Freeze, who is a private investor Peter Your line is live.
Peter Freeze: Thank you moderator right my reader congrats.
Peter Freeze: Congratulations on the solid quarter my questions are regarding the normal course issuer bid.
Peter Freeze: Specifically, the approximately $36 million and funds.
Peter Freeze: Where to satisfy the 2019 convertible debentures.
Peter Freeze: And.
Speaker Change: Why.
Speaker Change: None of those funds were then used to repurchase DS 7.184 million shares.
Speaker Change: That were converted display.
Speaker Change: Despite several many opportunities to repurchase those shares at below $5.
Speaker Change: And then also what does this mean for the company's N CIB program going forward.
Speaker Change: Well in terms of execution, then civ, we've been as you would expect we've been managing that.
Speaker Change: At the discretion of management based on opportunities, we see in the market.
Speaker Change: We have not committed publicly to any any.
Speaker Change: In particular.
Speaker Change: Rice.
Speaker Change: And I think all that's relevant to say on that point is that we will continue taking those opportunities as we as we see them in the market given the restrictions we would typically have around certain blackout during the year.
Speaker Change: So we I mean within a specific reference to $5 I don't believe we've made any commitments again to any specific share price right.
Speaker Change: Well our Florida.
Speaker Change: Our capital allocation priorities.
Speaker Change: I think a clear win our first giving priority to providing the strength we need in the in the balance sheet I believe at times like these companies.
Speaker Change: Mining companies, where we have no purchasing power pricing power of course.
Speaker Change: Need to work on the balance sheet and that's something we've been doing after many years of capital intensive phase right. The first time, we've evolved into a.
Speaker Change: Net cash.
Speaker Change: Net positive cash position in several years.
Speaker Change: So with that you know it is.
Speaker Change: Sedberry RFP that you know our strength on the balance sheet and return to shareholders of course.
Speaker Change: For us it's not a question of when or if but when and we have in place.
Speaker Change: N C a V.
Speaker Change: And.
Speaker Change: To be sure that you know we are keen to provide at the right time returns to our shareholders right.
Speaker Change: The buybacks or the institution of Ids and policy, that's something that's a you know wed be.
Speaker Change: Being analyzed and discussed at the board level at this time.
Speaker Change: Okay.
Speaker Change: Thank you.
Speaker Change: Thank you and there are no other questions from the lines at this time I would now like to hand, the call back to Carlos Baca.
Carlos Baca: For closing remarks.
Carlos Baca: Thank you Paul if there are no further questions I would like to thank everyone for listening to today's earnings call have a great day.
Carlos Baca: Thank you. This does conclude today's conference and you may disconnect. Your lines at this time. Thank you for your participation.
Carlos Baca: Thank you everyone.
Carlos Baca: Okay.