Q3 2025 Fortuna Mining Corp Earnings Call
Speaker #3: Greetings and welcome to the FORTUNA MINING CORP. Q3 2025 financial and operational Results call . At this time , all participants are in a listen only mode .
Speaker #3: 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 #3: Please note this conference is being recorded . I will now turn the conference over to your host Carlos Baca VP of Investor Relations at FORTUNA MINING CORP.
Speaker #3: . You may begin .
Speaker #4: Thank you . Paul . Good morning , ladies and gentlemen , and welcome to FORTUNA MINING CORP. Conference Call to discuss our financial and operational results for the third quarter of 2025 .
Speaker #4: Hosting today's call on behalf of Fortuna are Jorge Alberto Ganoza , President and Chief Executive Officer and co-founder and chief Financial officer , Cesar Velasco chief operating officer , Latin America .
Speaker #4: And David Whittle chief operating Officer , West Africa . Today's earnings call presentation is available on our website at FORTUNA MINING CORP. . Statements made during this call are subject to the reader advisories , included in yesterday's news release .
Speaker #4: The webcast presentation or management discussion and analysis , and the risk factors outlined in our annual Information form . All financial figures discussed today are in US dollars , unless otherwise stated .
Speaker #4: Technical information presented has been reviewed and approved by Eric Chapman . Fortuna Senior Vice President of Technical Services and a qualified person as defined by National Instrument 43 101 .
Speaker #4: I will now turn the call over to Jorge Alberto Canosa , president , Chief Executive Officer and co-founder of FORTUNA MINING CORP. . Good morning , and thank you for joining us today .
Speaker #4: The third quarter was a strong one for Fortuna , not only in terms of operational delivery , financial results and continued build up of a fortress balance sheet , but also in the meaningful progress we have made in positioning the company for the next stage of growth .
Speaker #4: But let's start with safety. By the end of October, we achieved 318 days, or 9.7 million work hours, without a lost time incident.
Speaker #4: Injury , or longest streak yet . Our total recordable injury frequency rate improved to 0.86 , down from 1.6 a year ago . These results demonstrate our collective commitment to ensuring everyone returns home safe and sound .
Speaker #4: Turning to the numbers , we realized an average gold price of $3,467 per ounce , up 5% from the second quarter and up 20% from the first quarter of the year .
Speaker #4: Attributable net income reached $123.6 million , or $0.40 per share , driven by a $69 million impairment reversal at our Lindero mine . Adjusted net income was $0.17 per share , impacted by higher share based compensation due to a rising share price and a $7.4 million foreign exchange loss in Argentina , which both together account to approximately $0.04 per share .
Speaker #4: For strong free cash flow from operations was $73 million , with net cash from operating activities before working capital changes at 114 million , or $0.37 per share , surpassing analysts consensus of $0.36 .
Speaker #4: During the quarter . We recorded $13.5 million in withholding taxes related to the repatriation of $118 million from Argentina and Cote d'Ivoire . We expect regular repatriations moving forward .
Speaker #4: Overall, our business benefited from higher realized gold prices, improving margins, and strong cash generation. As a result, our liquidity position at the end of the quarter stands at a solid $588 million, with a growing net cash position of $266 million.
Speaker #4: This enables us to accelerate our pursuit of multiple high value opportunities in the asset portfolio across different benefits stages of the product life cycle in Cote d'Ivoire at our flagship mine , we are expanding the life of mine and boosting annual gold output through exploration success at the Sunbird and Kingfisher deposits in Senegal .
Speaker #4: Our pre-development stage , the project boasts strong economics , advancing towards a construction decision in the first half of next year in Salta , Argentina .
Speaker #4: We're excited to drill for gold at one of the largest , untested , high level epithermal anomalies in the north of the country , the project , held privately for years , now offers us an exciting exploration opportunity or strategic investments .
Speaker #4: Announced this year in awarded resources and JV with the Soto Resources position , us with exciting gold prospects on both the Ivorian and Guinean sides of a prolific basin which straddles these two countries .
Speaker #4: And with continue advancing a pipeline of early stage projects in Mexico , Peru and Cote d'Ivoire . For consolidated cash costs remained below $1,000 per ounce , and all in sustaining costs at our minds is tracking within guidance .
Speaker #4: Linderoth: All-in sustaining costs have been trending lower every quarter, reaching the current range of $1,500 per ounce, where we expect it will stabilize at Shigella.
Speaker #4: The story is inverse. We expect to complete the year on the upper end of guidance, but we're coming from a low all-in sustaining cost of $1,290 in the first quarter of the year to the current $1,738.
Speaker #4: In the third quarter, this is driven mainly by the timing of capital investments and the impact of higher gold prices on royalty payments, as key investments at Shigella are completed in Q3 and into Q4 to support our 2026 expanded production of 160,000 to 180,000 oz of gold.
Speaker #4: We expect to see all in sustaining costs in the range of 16 to $1700 per ounce range . Kaoma will finish just outside its guidance range due to relative metal prices used in gold equivalencies .
Speaker #4: As you know , Kaoma has a significant base metal , lead , zinc component to its production . Now turning to growth for the ambassador project in Senegal continues to advance at pace on a fast track approach .
Speaker #4: In mid-October , we released the preliminary economic assessment for an open pit and conventional carbon in leach plant , confirming strong economics that support our goal of reaching a definitive feasibility study and a construction decision .
Speaker #4: In the first half of 2026 . Using a gold price of $2,750 , the after tax internal rate of return of the project is 72% , and the net present value at a 5% discount is $553 million .
Speaker #4: The mineralization at the ambassador remains wide open , and we're drilling nonstop with five rigs expecting to add resources by the time the DFS is published on October 7th , we filed the environmental and Social Impact Assessment expecting the certificate of Acceptance in the first half of next year .
Speaker #4: Side camp . Early works are progressing with an approved $17 million phase one budget , and the government is being very supportive and we have received consent to move ahead with a phase two early works , including the Water Damage , excavations and excavations for other key infrastructure .
Speaker #4: We we plan to fast track front end engineering design activities during the feasibility work to shorten and the risk to development timeline by securing long lead equipment early , the Amba is a project that can bring additional 150,000oz of gold of annual production on average for the first three years of operation .
Speaker #4: Regarding the business environment in key jurisdictions , for us , both Cote d'Ivoire and Argentina held national elections in late October in Argentina , the government electoral victory in Congress and Senate strengthened its mandate for advancing structural economic reforms .
Speaker #4: Argentina's business climate has improved significantly , and we remain optimistic about the country's trajectory in Cote d'Ivoire . President Alassane Ouattara was re-elected for a fourth term with a decisive majority .
Speaker #4: We anticipate the continuation of pro-business and pro policies that have made Cote d'Ivoire one of the fastest growing and most resilient economies in West Africa .
Speaker #4: In summary, Q3 was a strong quarter for Fortuna in terms of safety record, as we continue to set new benchmarks for operations. We remain resilient, and our growth projects are advancing according to plan.
Speaker #4: We enter the final quarter of the year with a solid balance sheet, strong cash generation, and a clear path of mid-term organic growth driven by the ambassador and expanded gold output.
Speaker #4: I'll now hand the call over to David Whittle for chief Operating officer for West Africa and Cesar Velasco chief operating Officer for Latam , who will review the respective operational results .
Speaker #4: We can start with you, David.
Speaker #5: Thank you . Jorge . So gala achieved another impressive quarter , delivering excellent
Speaker #5: both production and safety . This position ségala well to exceed upper production guidance for 2025 with gold near to output now projected to surpass 150,000oz .
Speaker #5: Our dedication to safety and environmental excellence remains steadfast , and we are making steady progress toward our goal of zero harm across all our operations .
Speaker #5: I'm pleased to report that no injuries occurred at any of our West African locations during the quarter . At Seguela , we produced 38,799oz of gold , maintaining consistency with prior quarters and surpassing the mine plan .
Speaker #5: Mining during the quarter totaled 272,000 tons of ore at an average grade of 3.66g per tonne . Gold , along with 4.43 million tonnes of waste , resulting in a strip ratio of 16.3 to 1 .
Speaker #5: The processing plant treated 435,000 tonnes at an average grade of 3.01g per tonne . Gold with throughput averaging 208 tonnes per hour for the quarter .
Speaker #5: All was primarily sourced from the antenna and and cooler pits during the quarter , we received permitting approvals for five satellite pits , including the sunbird , kingfisher and Badi or open pits .
Speaker #5: Several major projects also advanced successfully over the third quarter. The 8.5 million TSF lift was completed, providing tailings storage and current throughputs.
Speaker #5: Until late 2029 . The replacement of the transmission tower at the Sunbird Pit and $9 million project progressed well , and we are now prepared to commence pre mining operations at the Sunbird Pit in Q4 , the rock breaker at the primary crusher was commissioned and is operating effectively further debottlenecking the processing circuit and the six megawatt solar plant project is expected to be complete in the first quarter of 2026 , which will help to reduce power costs .
Speaker #5: So Gayla's performance resulted in a cash cost of $688 per ounce and an all in sustaining cost of $1,738 per ounce , both aligning with our budget site costs continue to be managed efficiently with the increased oil in sustaining costs , primarily attributed to royalties on the higher gold price exploration .
Speaker #5: Drilling at the sunbird underground project continued in the third quarter , with encouraging results . The ongoing success of this drilling , combined with results from the Kingfisher deposit , provides us with a resource base that offers further opportunities to optimize production from Ségala .
Speaker #5: Whilst current process plant puts have focused on maximizing available capacity with minimal investment , we now investigating options to further enhance process plant throughputs drilling is continuing with five drill rigs at the Sunbird Underground deposit in Q4 , aiming to further expand the underground resource engineering studies and permitting activities will continue in Q4 and 2026 , with the expectation of commencing underground mining operations in 2027 .
Speaker #5: The Kingfisher deposit remains open in all directions and further drilling will be undertaken in 2026 to convert inferred resources to indicated faces . Status and further expand the resource at our project in Senegal , exploration , environmental permitting and feasibility activities made significant progress during the quarter .
Speaker #5: Government approvals were received for early works programs . The Isia was submitted for approval and the PSA was published following the rainy season .
Speaker #5: Drill rigs have been remobilized to conduct further drilling at the southern Arc deposit at Amber, with the aim of enhancing the resource base and building on the strong pay results.
Speaker #5: Thank you and back to you , Hogei .
Speaker #4: Thank you David Caesar .
Speaker #6: Thank you George , and good afternoon everyone . I am pleased to report that both Lindero and Kaoma ongoing multiple safety initiatives are driving continuous improvement and reinforcing a culture of accountability and care across all of our operations , delivering excellent safety , performance in Argentina .
Speaker #6: We had a strong quarter achieving our highest gold production this year . Gold output reached 24,417oz , a 4% rise from 23,550oz in the second quarter , driven by a 5% increase in gold grade and effective inventory recovery from the leach ban .
Speaker #6: We placed 1.7 million tonnes of ore on the leach pad at an average heart grade of 0.6g per ton , containing about 32,775oz of gold , with 1.5 million tonnes of ore mined and a favorable strip ratio of 1.9 to 1 .
Speaker #6: We are well aligned with our mining plan. Processing performance was robust, with continued optimization of the crushing circuit, achieving an average throughput of 1,061 tons per hour, about 8% above the 2024 average rating. Progress in our operational efficiency initiatives.
Speaker #6: However , on September , the 27th , we experienced an unexpected shutdown of the primary crusher due to mechanical issues . Involving high amperage and overheating of the Pitman shaft specifically traced to the premature wear of the primary wear parts , such as the bushings and bearings .
Speaker #6: Replacement parts have been secured and corrective actions are underway to resolve the structural misalignment . We anticipate the crusher will be fully operational by mid November .
Speaker #6: Meanwhile , we have implemented effective mitigation strategies such as using a portable jaw crusher and direct run of mined or screening to ensure uninterrupted operations .
Speaker #6: Consequently , we do not foresee any impact on our annual production targets regarding costs , the cash cost in Q3 was $1,117 per ounce of gold , compared to $1,148 per ounce in Q2 , marking a 3% improvement due to higher ounces sold and stable operating conditions .
Speaker #6: The all in sustaining cost decreased significantly to $1,570 per ounce from $1,783 per ounce in the second quarter . A notable 12% reduction , supported by lower costs , reduced sustaining capital , higher byproduct credit and a 7.7% increase in ounces sold overall , Lindero delivered strong performance this quarter , supported by disciplined cost management , resilient production , and solid margins of approximately $2,500 per ounce to our attic .
Speaker #6: Based on current gold prices . At Caylloma in Peru , we delivered another steady and reliable quarter of production meeting operational expectations . The Kaoma mines continues to exceed all of its physical and cost targets for the year , reflecting strong operational execution .
Speaker #6: However , our reported metal equivalents are being impacted by the silver and base metal conversion factors , which affect the calculation of both the gold and silver equivalent production .
Speaker #6: In terms of costs , the cash cost per silver equivalent ounce was $17.92 , compared to $15 and 12 $0.16 in Q2 , mainly due to slightly lower silver production and higher realized silver prices .
Speaker #6: The all in sustaining cost increased modestly to $25.17 per silver equivalent ounce from $21.73 in Q2 , primarily due to the same factors and fewer silver equivalent ounces sold .
Speaker #6: Despite this cost movements , Kaoma maintained healthy margins supported by strong base metal prices and disciplined operational control . With the current strength in silver prices , we are looking to access some of the highest grade silver zones that Kaoma is known for .
Speaker #6: These areas , which are better suited to conventional mining methods , are becoming economically attractive and once again under the present price environment .
Speaker #6: In summary , the third quarter highlighted strong production growth at Lindero , steady performance at Kaoma and lower unit costs across the region .
Speaker #6: Our teams in Argentina and Peru continue to execute with discipline and focus , maintaining momentum in operational reliability , cost efficiency and safety as we move into the year's final quarter .
Speaker #6: Back to you , Jordan .
Speaker #4: Thank you . I'll now hand the call over to Luis , our CFO , who will review financial results . Thank you . So we have reported net income at attributable to Fortuna of $123.6 million , or $0.40 per share .
Speaker #4: This result includes a $70 million non-cash impairment reversal at the Lindero mine , which includes $17 million of low grade stockpiles . After adjusting for non-cash , non-recurring items , attributable net income was $51 million , or $0.17 per share .
Speaker #4: This represents a strong 56% increase year over year , and a 14% sequential increase over Q2 . The growth was driven mainly by higher metal prices .
Speaker #4: The cash cost per ounce for the quarter was $942 . Broadly aligned with the prior quarter , and slightly above Q3 of 2024 .
Speaker #4: As a result of higher mine stripping ratios at NATO and as per our mine plans , we have reported two non-operational items impacting our results this quarter .
Speaker #4: The effect of our stock based compensation of the increase in our share price during the period , representing a one time increase to share based expense of $6.3 million and a foreign exchange loss of 7.4 million .
Speaker #4: A foreign exchange loss was mostly attributable to our lindero operations in Argentina . As a peso experienced a sharp 14% devaluation in Q3 .
Speaker #4: For the first nine months of the year , our ethics loss related to the Argentinian operations amounts to $10 million , of which over half is related to the accumulation of local currency , cash balances .
Speaker #4: However , I want to emphasize that we implemented structures to preserve the value of these funds and the FX loss on local cash balances for the full year is fully offset in our income statement through the interest income investment gains and derivative line items , we were able to restart repatriation in the month of July from Argentina and under current conditions , we expect to maintain local cash balances at a minimum in Q3 , a total of $62 million were repatriated , net of withholding taxes .
Speaker #4: Our general and administration expenses for the quarter were $26.3 million . This represents an increase over the prior year of 20 of $12.6 million .
Speaker #4: This was due mainly to higher stock based compensation as explained , plus an increase in corporate G&A of $4 million related mostly to timing of expenses .
Speaker #4: Our annual corporate G&A remains relatively stable at around 28 to $30 million , and a breakdown is provided in page 11 of our mDNA .
Speaker #4: Moving to our cash flow statement , our capital expenditures for the quarter totaled $48.5 million . Of this , we classified $17 million as growth CapEx , which primarily consists of investments in the the project of 6.8 million and exploration activities of around $10 million .
Speaker #4: Our anticipated capital expenditures for the full year have adjusted upward slightly from the 180 million previously disclosed to approximately 190 million . This increase , primarily reflects added exploration allocations due to continued exploration success at tequila and Yamba .
Speaker #4: In terms of free cash flow , we generated $73.4 million from ongoing operations , up from 57.4 million in the prior quarter , reflecting the effects again of a higher gold price and our net cash position increased by $51 million .
Speaker #4: After growth CapEx and other items . All of this brings our total liquidity to $588 million , and our net cash position to $266 million .
Speaker #4: This represents an increase of over $200 million year to date in the current price environment . We expect this trend to accelerate . That's it for me .
Speaker #4: Back to you , Jorge . We would now like to open the call to questions . Please go ahead .
Speaker #3: Certainly, at this time, we'll be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad.
Speaker #3: A confirmation tone will indicate your line is in the question queue for participants using speaker equipment and may be necessary to pick up your handset before pressing the star keys.
Speaker #3: Once again , that's star one on your phone at this time . If you wish to ask a question . One moment please .
Speaker #3: While we pull for questions . And the first question today is coming from Mohamed Sidibe from National Bank . Mohamed , your line is live .
Speaker #7: Thank you . Good morning , George and Tim , and thanks for taking my questions . Maybe just starting with your strong balance sheet .
Speaker #7: Strong free cash flow that you're printing and you know , the elevated gold and silver prices . How are you thinking about , you your capital allocation priorities ?
Speaker #7: I know you have coming up , but specifically as it relates to capital return to shareholders , as you're looking into next year .
Speaker #7: Thank you .
Speaker #4: Yes . As you pointed out , we have a pipeline of near-term growth . So that is the first priority . We have with respect to capital allocation .
Speaker #4: We expect we will be making a construction decision on the ambassador next year . In the first half of the year , we're advancing early works .
Speaker #4: They're trying to you know , the risk . The the the timeline and shorten the the timeline . Also for first goal that the by advancing this early works we are also scoping right now the potential to expand our process infrastructure .
Speaker #4: As you recall was originally designed at 1.25 million tons per annum were currently running the plant at 1.75 million tons per annum . And we're currently doing a scoping starting scoping work to expand it to a the range of 2.2 2.3 million tons per annum .
Speaker #4: Additional to that , as you have seen , we're expanding exploration work across the two regions , Latam and West Africa . We just expanded into Guinea through the JV with the Soto .
Speaker #4: We are expanding our exploration in Argentina. We're currently drilling in Mexico. We're currently drilling in Peru. So that is our first priority.
Speaker #4: And where we believe we can add most value right now . Second , we have our share buyback program in place . We were quite active with the share buyback program at the beginning of the year , end of last year .
Speaker #4: We repurchased approximately $30 million worth of stock . The share buyback program remains in place , and today is our preferred way to .
Speaker #4: Return to capital to shareholders . And , you know , we have made a pause in the last two quarters with the share buyback program .
Speaker #4: But we could be active in the market again anytime.
Speaker #7: Great . Thanks for that . And then maybe if I could shift to operations Lindero the unexpected shutdown and mindful that this has no impact on your annual production target , given the mitigation measures .
Speaker #7: But how should we think about this for costs into Q4 ? Should we could we see any potential impacts on that front and any color would be appreciated there .
Speaker #7: Thank you .
Speaker #4: Yes , I'll let Cesar address the question .
Speaker #6: Sure . Well , in particular , to cost , we have been able to compensate some some of those costs specifically with regards to the the portable rental .
Speaker #6: A jaw crusher . So we're offsetting that cost with other not non-critical initiatives that we had in Lindero . So we don't expect our cost to , you know , be significantly impacted in Q4 , that I should address it .
Speaker #7: Thank you .
Speaker #3: Thank you . And once again , if there were any other questions , please press Star One on your phone at this time .
Speaker #3: There were no other questions from the lines at this time . I will now hand the call back to Carlos Baca for closing remarks .
Speaker #4: Thank you Paul . If there are no further questions , I'd like to thank everyone for joining us today . We appreciate your continued support and interest in Fortuna mining .
Speaker #4: Have a great day .