Fortuna Mining Corp. Q3 FY2025 earnings call

Management Statement and Operational Highlights:

• Safety: Achieved 318 days or 9.7 million work hours without a lost time injury, longest streak yet, with total recordable injury frequency rate at 0.86, down from 1.6 a year ago.
• Financial Results: Average gold price $3,467 per ounce, up 5% from Q2 and 20% from Q1. Attributable net income $123.6 million or $0.40 per share, driven by a $69 million impairment reversal at Lindero. Adjusted net income $0.17 per share. Strong free cash flow from operations $73 million. Liquidity position at end of quarter $588 million with net cash position $266 million.
• Growth Projects: In Côte d’Ivoire, Séguéla expanding life of mine via exploration success at Sunbird and Kingfisher deposits. In Senegal, Diamba Sud project advancing towards construction decision in first half of next year. In Argentina, drilling for gold at Cerro Lindo project. Strategic investments in Awalé Resources and JV with DeSoto Resources. Consolidated cash costs below $1,000 per ounce, all-in sustaining cost at mines tracking within guidance.

Segment Performance:

• Séguéla: Produced 38,799 ounces of gold. Cash cost was $698 per ounce and all-in sustaining cost was $1,738 per ounce, both aligning with budget. Gold output projected to surpass 150,000 ounces for 2025.
• Lindero: Achieved highest gold production this year with 24,417 ounces. Cash cost was $1,117 per ounce, all-in sustaining cost decreased to $1,570 per ounce. Experienced a temporary shutdown of the primary crusher in September due to mechanical issues but mitigation strategies in place with no impact on annual production target.
• Caylloma: Delivered steady production, meeting operational expectations. Cash cost per silver equivalent ounce was $17.92, all-in sustaining cost increased modestly due to silver and base metal factors, but maintained healthy margins.

Guidance:

• Annual capital expenditures adjusted upwards from $180 million to approximately $190 million due to added exploration allocations.
• Diamba Sud project expected to make construction decision in first half of 2026.
• Lindero's all-in sustaining cost trending lower to $1,500 per ounce range and expected to stabilize.
• Séguéla expected to complete 2025 with all-in sustaining cost in range of $1,600 to $1,700 per ounce and produce 160,000 to 180,000 ounces of gold in 2026.

Risks:

• Lindero experienced an unexpected shutdown of the primary crusher in September due to mechanical issues, though mitigation strategies in place to ensure no impact on annual production target.
• Potential impact of metal price fluctuations on financial results.
• Uncertainty in project progress and execution, such as delays in exploration or construction of growth projects.

Q: How are you thinking about your capital allocation priorities given your strong balance sheet, free cash flow, and elevated gold and silver prices?

A: First priority is near-term growth projects, including making a construction decision on Diamba Sud next year, advancing early works for Diamba Sud, scoping expansion of Séguéla process infrastructure, and expanding exploration work across regions. Second, the share buyback program remains in place and could be active in the market again.

Q: How should we think about the impact of Lindero's unexpected shutdown on Q4 costs?

A: We have been able to compensate some costs with portable rental jaw crusher and other noncritical initiatives in Lindero, so no significant impact on Q4 costs is expected.