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01/10 16:33
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The company's earnings call reveals strong financial metrics, including record free cash flow and a significant increase in net income. Despite an EPS miss, the company has optimistic guidance with planned investments and expansion projects. The Q&A section highlights positive interactions with government bodies and strategic investments. While there are concerns over elevated ASIC, the overall sentiment is positive, with a focus on growth and a strong balance sheet. Given the market cap and the optimistic outlook, a 2% to 8% stock price increase is anticipated.
Liquidity $537 million, up $76 million from the previous quarter, driven by $84 million in proceeds from the mine sales.
Net Cash $215 million at the end of the period, up from $137 million at the end of Q1 2025.
Free Cash Flow from Operations $57.5 million compared to $66 million in Q1, primarily due to the timing of tax payments.
Average Realized Gold Price $3,306 per ounce, up 14% with respect to what was averaged in the first quarter.
EBITDA Margin 55%, up from 50% in Q1.
Operating Margin 36%, up from 28% in Q1.
Net Earnings from Continued Operations $41 million or $0.14 per share compared to $33 million or $0.11 per share in Q1.
Adjusted EPS $0.14, includes a $17 million withholding tax accrual related to the inaugural full year dividend declared in Cote d'Ivoire for the Seguela mine, equivalent to $0.06 per share.
Cash Flow from Operations Before Working Capital Changes $97 million or $0.32 per share.
Gold Equivalent Production 75,950 ounces. From continuing operations, gold production was 71,229 ounces, slightly above the previous quarter and aligned with full year guidance.
Cash Cost $929 per ounce, up marginally 7% from Q1, mainly due to the gold to base metal ratio at the Caylloma mine.
Consolidated AISC $1,932 per ounce, up from $1,750 in Q1, due to temporary and timing effects related to CapEx and waste stripping at Lindero and Seguela.
Seguela Cash Cost $670 per ounce, very competitive.
Lindero AISC $1,783 per ounce, a reduction of 6.7% from the previous quarter.
Lindero Cash Cost $1,148 per ounce.
Lindero Net Sales $75.7 million, a 42% increase from Q1, supported by a strong gold price of $3,293 per ounce.
Lindero Operating Income $29.1 million, nearly 66% higher than the previous quarter.
Lindero Adjusted EBITDA $37.9 million, up 34% versus the previous quarter.
Lindero Free Cash Flow $35.7 million, reflecting strong operational execution and disciplined capital management.
Caylloma Cash Cost per Silver Equivalent Ounce $15.16.
Caylloma AISC $21.73 per ounce, both within the lower range of annual guidance.
Caylloma Free Cash Flow $9 million, driven by cost discipline and operational consistency.
Net Income Attributable to Fortuna $42.6 million or $0.14 per share. Adjusted to $44.7 million or $0.15 per share, representing a 380% increase over Q2 2024, driven by higher metal prices and an increase in gold sold.
Cash Cost per Ounce $929, about $88 higher than Q2 2024, consistent with mine plans.
Net Cash from Operating Activities $92.7 million.
Capital Expenditures $47 million, with $15 million classified as growth CapEx.
Free Cash Flow from Ongoing Operations $57.4 million, a slight decrease from Q1 2025 due to timing of tax payments and higher sustaining CapEx.
Seguela Expansion: Guided production increase from 140,000 ounces in 2025 to 170,000-180,000 ounces in 2026.
Diamba Sud Project: Indicated resources grew by 53% and inferred resources by 93%, with a combined 1 million ounces. Construction decision expected in 2026.
Mine Divestitures: Sale of San Jose and Yaramoko mines generated $84 million in proceeds and freed $50 million in capital for growth opportunities.
West Africa Operations: Divestiture of Yaramoko mine and focus on Seguela mine, which exceeded production expectations.
Safety Improvements: Achieved 7.2 million work hours without lost time injury, a company record.
Cost Optimization: Operational initiatives expected to save $50-$70 million over the next 3 years.
AISC Adjustments: Temporary increase in AISC due to capital investments, expected to normalize to $1,500 per ounce by 2026.
Portfolio Streamlining: Strategic sale of short-life mines to focus on higher-margin, longer-life assets.
Sustainability Initiatives: Commissioned photovoltaic plant at Lindero, reducing diesel costs and CO2 emissions.
Sale of San Jose and Yaramoko mines: The sale of these mines reduces near-term production, impacting annualized production from 460,000 ounces to 330,000 ounces. This poses a challenge in maintaining production levels and achieving strategic goals.
Elevated AISC (All-In Sustaining Costs): Consolidated AISC increased to $1,932 per ounce in Q2, up from $1,750 in Q1, due to temporary and timing effects related to CapEx and waste stripping. This could pressure margins and financial performance.
VAT receivables in Côte d'Ivoire: Delays in collecting $37 million in VAT receivables, representing 17 months outstanding, could impact liquidity and financial planning.
Waste stripping and capital investments: Planned waste stripping and capital investments at Seguela and Lindero mines are temporarily increasing costs, with Seguela's AISC expected to rise to $1,800 per ounce in Q4.
Rebuilding production to 0.5 million ounces: The company faces challenges in rebuilding production to 0.5 million ounces annually, requiring successful execution of growth projects like Seguela expansion and Diamba Sud development.
Political and regulatory risks in Argentina and Côte d'Ivoire: Delays in VAT collection in Côte d'Ivoire and reliance on favorable conditions in Argentina for repatriation of funds highlight potential political and regulatory risks.
Operational risks at Seguela and Lindero: Operational challenges include maintaining cost discipline and achieving production targets amidst planned capital expenditures and waste stripping activities.
Gold Production: Seguela mine is expected to produce 140,000 ounces of gold in 2025 and 170,000 to 180,000 ounces in 2026 as part of its expansion plan. The company aims to rebuild production to 0.5 million ounces per year with higher margins and lower risks.
Diamba Sud Project: The project in Senegal is progressing with a 2026 construction decision anticipated. Indicated resources have grown by 53% and inferred resources by 93%, totaling 1 million ounces. Exploration and permitting activities are ongoing.
All-In Sustaining Costs (AISC): Lindero mine's AISC is expected to trend below $1,500 per ounce by Q4 2025. Seguela's AISC is projected to rise temporarily to $1,800 per ounce in Q4 2025 due to planned waste stripping but will align with annual guidance. Consolidated AISC is targeted at $1,750 per ounce beyond 2025.
Capital Expenditures: The 2025 capital budget includes $78 million for Seguela's expansion and $30 million for the Diamba Sud project. Total capital expenditures for 2025 are projected at $180 million, with $120 million for sustaining and $60 million for growth.
Operational Savings: Optimization and productivity initiatives are expected to generate $50 million to $70 million in savings over the next three years through process optimization, equipment utilization, supply chain efficiencies, and energy management.
Exploration and Resource Expansion: Exploration drilling at Seguela's Sunbird and Kingfisher deposits is yielding positive results, with potential for further resource expansion. Diamba Sud's exploration program is expanding to new areas with promising mineralization.
Market and Financial Outlook: The company has a robust balance sheet with $537 million in liquidity and $215 million in net cash, supporting growth decisions. VAT receivables in the Ivoire Coast are expected to normalize by the end of 2025.
Dividend Declared: A $17 million withholding tax accrual was recognized related to the inaugural full-year dividend declared in Côte d'Ivoire for the Seguela mine, equivalent to $0.06 per share.
The company's earnings call reveals strong financial metrics, including record free cash flow and a significant increase in net income. Despite an EPS miss, the company has optimistic guidance with planned investments and expansion projects. The Q&A section highlights positive interactions with government bodies and strategic investments. While there are concerns over elevated ASIC, the overall sentiment is positive, with a focus on growth and a strong balance sheet. Given the market cap and the optimistic outlook, a 2% to 8% stock price increase is anticipated.
The earnings call highlights strong financial performance with record free cash flow, improved cost management, and a positive net cash position. The optimistic guidance and strategic divestments further strengthen the outlook. Despite a tragic safety incident and unclear management responses, the overall sentiment remains positive, supported by a robust shareholder return plan and strategic focus on high-value opportunities. Given the small-cap nature of the company, these factors suggest a positive stock price movement in the short term.
The company demonstrated strong financial performance with record sales, significant debt reduction, and robust shareholder returns. Positive net cash position and increased liquidity enhance financial stability. Despite some concerns in Q&A about exchange losses and unclear timelines, the overall outlook with stable/lower costs and continued investment in high-value projects is favorable. Given the market cap and recent achievements, a positive stock price movement of 2% to 8% is expected.
The company demonstrated strong financial performance with record free cash flow, net debt reduction, and surpassing $1 billion in sales for the first time. Positive shareholder returns through buybacks and strategic divestment of non-core assets enhance focus on high-value opportunities. Despite some risks, like regulatory and supply chain challenges, the stable to lower guidance for cash costs and ASIC, along with a strong cash position, suggest a positive outlook. Given the market cap, the stock is likely to react positively, with a predicted price increase of 2% to 8%.
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