Fortuna Mining Corp. (FVI:CA) Q1 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call reveals strong financial performance with a 3.5% increase in silver production and high EBITDA margins. The Q&A highlighted effective cost management and strategic expansion plans, including the Diamba Sud and Seguela projects. Despite some cost increases, the company maintains controlled power costs and anticipates imminent permit approval for Diamba Sud. The strategic focus on Guyana and diversification efforts further bolster prospects. While some management responses were unclear, the overall sentiment is positive, suggesting a likely stock price increase of 2-8% over the next two weeks.
Key Financial Performance
Sales $342 million, reflecting higher realized gold and silver prices.
Adjusted Net Income $111 million or $0.36 per share, a quarterly record for the company.
Adjusted EBITDA $219 million, also a record.
Free Cash Flow from Ongoing Operations $174 million, representing the strongest quarterly cash generation to date.
Proven and Probable Mineral Reserves Increased by 15% year-over-year to 3 million gold ounces after depletion.
Indicated Mineral Resources Increased by 56% to 2.1 million gold ounces.
Inferred Mineral Resources Increased by 4% to 2.2 million gold ounces.
All-in Sustaining Cost (AISC) $2,107 per gold equivalent ounce, with $122 per ounce attributable to external factors like higher gold prices on royalties and share-based compensation.
Séguéla Gold Production 42,016 ounces of gold, a 14% improvement over the previous quarter.
Séguéla Cash Cost $679 per ounce.
Séguéla All-in Sustaining Cost (AISC) $1,760 per ounce of gold.
Lindero Gold Production 21,545 ounces, a 12% increase compared to the fourth quarter of 2025.
Lindero Sales $101.5 million, with an EBITDA margin of 69% of sales.
Lindero Cash Cost $1,208 per ounce.
Lindero All-in Sustaining Cost (AISC) $1,783 per ounce.
Caylloma Silver Production 258,000 ounces, up 3.5% quarter-over-quarter.
Caylloma Sales $34.6 million, with an EBITDA margin of 62% of sales.
Caylloma Cash Cost $30.26 per ounce of silver equivalent.
Caylloma All-in Sustaining Cost (AISC) $44.36 per ounce of silver equivalent.
Average Realized Gold Price $4,884 per ounce, compared with $4,166 per ounce in Q4 2025 and $2,884 per ounce in Q1 2025.
Cash Cost per Gold Equivalent Ounce $951, broadly consistent with the prior quarter and slightly above Q1 2025.
General and Administration Expenses $27.8 million, up $3.9 million year-over-year due to higher year-end bonuses and timing of expenses.
Foreign Exchange Loss $2.1 million, driven by modest depreciation of the euro and West African franc against the U.S. dollar.
Effective Tax Rate 33% for the quarter, compared with 28% in Q1 2025, due to changes in deferred tax positions.
Free Cash Flow from Ongoing Operations $174 million, excluding new development projects and growth initiatives.
Additions to Property, Plant, and Equipment $45.3 million, including $28 million of sustaining capital and $17 million of nonsustaining spend.
Cash and Net Cash $665.9 million of cash and $493 million in net cash after financial debt.
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Operating Highlights
Séguéla mine expansion: Expansion of the Séguéla mine in Côte d'Ivoire is underway, with a focus on increasing production capacity through the addition of a ball mill and other enhancements. The mine produced 42,016 ounces of gold in Q1 2026, a 14% improvement over the previous quarter.
Diamba Sud project: The Diamba Sud project in Senegal is advancing towards production, with early works and exploration activities progressing. The feasibility study is expected to be completed in May 2026, and environmental approval is anticipated imminently.
Gold production growth: The company aims to achieve approximately 60% growth in annual gold production over the next 24 months, targeting 0.5 million ounces annually.
Mineral reserves and resources: Proven and Probable Mineral Reserves increased by 15% to 3 million gold ounces, Indicated Mineral Resources grew by 56% to 2.1 million gold ounces, and Inferred Mineral Resources rose by 4% to 2.2 million gold ounces.
Safety performance: Achieved 5 consecutive quarters free of lost time injuries, reflecting strong safety measures.
Operational efficiency: Generated record sales of $342 million, adjusted net income of $111 million, and free cash flow of $174 million in Q1 2026. All-in sustaining cost was $2,107 per gold equivalent ounce.
Shareholder returns: Returned $40 million to shareholders through share repurchases, representing 11% of free cash flow from operations in Q1 2026.
Sustainability initiatives: A 6-megawatt solar power plant at Séguéla is nearing completion, expected to reduce power costs by 35%.
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Risk or Challenges
Cost Pressures: The company faces cost pressures due to inflationary trends, particularly in Argentina, where high inflation and a stronger-than-expected peso have increased dollar-denominated costs. Temporary and nonrecurring factors such as equipment rentals and temporary crushing solutions have also impacted costs.
Regulatory Approvals: The company is awaiting environmental approval and final mining permits for the Diamba Sud project in Senegal. Delays in these approvals could impact project timelines and growth plans.
Operational Costs: All-in sustaining costs (AISC) have been affected by external factors, including higher gold prices impacting royalties and share-based compensation. Additionally, the decision to accelerate mining at the Sunbird South pit has increased forecasted AISC.
Supply Chain and Equipment: The development of the Sunbird underground mine requires additional capital expenditure of $25 million for primary mining equipment, which could pose challenges if supply chain issues arise.
Taxation: The company expects a higher effective tax rate in 2026, transitioning from a deferred tax asset to a deferred tax liability position at the Lindero mine in Argentina. This could impact financial performance.
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Guidance & Outlook
Gold Production Growth: The company aims to achieve approximately 60% growth in annual gold production over the next 24 months, reaching approximately 0.5 million ounces of annual gold production. This growth will be driven by the expansion of the Séguéla mine in Côte d'Ivoire and the development of the Diamba Sud project in Senegal.
Project Feasibility and Approvals: The Diamba Sud feasibility study and Séguéla Expansion study are expected to be completed in May 2026. Environmental approval for Diamba Sud is anticipated imminently, followed by the final mining permit shortly thereafter.
Capital Expenditures and Funding: The company plans to allocate approximately $330 million for exploration, sustaining, and nonsustaining capital in 2026, funded entirely from internal cash flow. Of this, 56% is allocated to growth and exploration.
Mineral Reserves and Resources: Proven and Probable Mineral Reserves increased by 15% year-over-year to 3 million gold ounces. Indicated Mineral Resources increased by 56% to 2.1 million gold ounces, and Inferred Mineral Resources increased by 4% to 2.2 million gold ounces.
Sunbird Underground Mine Development: The company plans to develop the Sunbird underground mine on an owner-operator basis, with an incremental increase in budgeted CapEx of $25 million. Initial development is targeted for the first half of 2027.
Processing Plant Expansion at Séguéla: Studies for the processing plant expansion at Séguéla are ongoing, with plans to add a ball mill and increase thickening, leaching, and gravity circuit capacity. The current primary crushing capacity is expected to support the planned throughput increase.
Exploration Activities: Exploration drilling at Séguéla is focused on further conversion and expansion of the Sunbird and Kingfisher resources, as well as testing below the southern extent of the Antenna pit and the newly discovered near-surface footwall opportunity at Sunbird.
Cost Management and AISC: The company expects all-in sustaining costs (AISC) to move toward $1,300 per ounce by Q4 2026, reflecting cost reductions as temporary measures are removed and efficiency gains are realized.
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Shareholder Return Plan
Share Repurchase Program: Year-to-date, Fortuna Mining returned $40 million to shareholders through the repurchase of 4.2 million shares. For the quarter, $20 million was spent on share repurchases, representing 11% of the company's free cash flow from operations.
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Key Q&A
Q:What factors contributed to the cash cost outperformance at Séguéla during the quarter?
A:The cash cost outperformance at Séguéla was driven by three main factors: (1) increased gold output of 42,000 ounces, about 14-15% higher than previous quarters; (2) accounting aspects related to the schedule, where stripping either falls into OpEx or sustaining CapEx; and (3) a lower stripping ratio of 13.9:1 for the quarter compared to the forecasted annual ratio of over 16.
Q:Are there any significant cost pressures in-country, particularly on fuel or diesel?
A:There are no material cost pressures at this stage. There have been some increases in grinding media, but power costs remain controlled by the Côte d'Ivoire government, with no significant increases reported.
Q:What is the status of the Diamba Sud permit with the Senegal government?
A:The ESIA for Diamba Sud was submitted at the end of last year, and approval is expected imminently. The exploitation permit is anticipated by mid-year, with progress aligning with outlined expectations.
Q:Does the company have a formal cyber due diligence framework for M&A processes, particularly for acquisitions with existing processing infrastructure?
A:No, the company has not been evaluating targets at that level of development. Their recent acquisitions have focused on predevelopment stage opportunities, such as the acquisition of Chesser Resources for the Diamba Sud project. The company’s M&A mandate is currently focused on predevelopment stage opportunities.
Q:What attracted the company to invest in Guyana, and are there plans to accelerate investments there?
A:The company has been monitoring the Guyana Shield for over a year due to its geological similarity to West Africa. The recently announced Quartzstone auction agreement is seen as an exciting entry point. The company is focused on expanding its presence in Guyana and exploring opportunities in Suriname. The region offers a pro-business environment and significant geological potential.
Q:What is the development plan for the Sunbird underground project, and when will drilling from underground begin?
A:Drilling will continue from the surface through 2026 and likely into 2027. Underground drilling infrastructure is expected to be developed by late 2027. The company is currently focused on surface drilling at Sunbird Deep for underground mining planning.
Q:What is the company’s approach to greenfields exploration versus equity stakes in existing companies?
A:The company does not have a set budget for equity investments but evaluates opportunities based on geology and team quality. Greenfields exploration is focused in Côte d'Ivoire, Guinea, Senegal, Argentina, and Peru. The company is retreating from Mexico and reallocating resources to the Guyana Shield. Equity investments are made selectively, as seen with Awalé Resources in Côte d'Ivoire.
Q:How does the company view diversification and managing geopolitical risks in its operations?
A:The company acknowledges geopolitical risks but offsets them by seeking benefits such as shorter time to cash flow. Its NAV is diversified across multiple countries, reducing concentration risk. Operations are managed from regional hubs in Abidjan (West Africa) and Lima (Latin America) to efficiently handle geographic dispersion.
Q:Review of Unclear Management Responses
A:Management avoided directly answering the question about whether they have a formal cyber due diligence framework for M&A processes. The response indicated that they have not been evaluating targets at that level of development and deferred to legal counsel for further details.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
AISC ounce
Animas
Antenna pit
Boxcut
CEO Director
Caylloma
Côte dIvoire
Diamba Sud
Fortuna Mining
Founder President
Mineral
President CEO
Sunbird pit
base
cash generation
completion
conversion
date
drilling
equipment
exploration capital
gram tonne
metal price
mineral reserve
month
operation
option
ounce factor
plant expansion
power plant
pressure
price cost
quarter
resource
section Sunbird
share record
tonne ore
vein
volume
FSM Transcript
Fortuna Mining Corp. (FVI:CA) Q1 2026 Earnings Call Transcript
Positive5-7
The earnings call reveals strong financial performance with a 3.5% increase in silver production and high EBITDA margins. The Q&A highlighted effective cost management and strategic expansion plans, including the Diamba Sud and Seguela projects. Despite some cost increases, the company maintains controlled power costs and anticipates imminent permit approval for Diamba Sud. The strategic focus on Guyana and diversification efforts further bolster prospects. While some management responses were unclear, the overall sentiment is positive, suggesting a likely stock price increase of 2-8% over the next two weeks.
Fortuna Mining Corp. (FVI:CA) Q4 2025 Earnings Call Transcript
Positive2-19
The earnings call presents a mixed but generally positive outlook. Gold production exceeded guidance at Seguela, and cost management was strong. However, Lindero's production missed targets, and some management responses lacked clarity. The Q&A highlighted optimistic growth plans, particularly with Diamba Sud's potential. Despite some uncertainties, the company's strategic expansion and strong cost control suggest a positive stock price movement, especially given the market cap of $1.49 billion, indicating moderate sensitivity to these factors.
Fortuna Mining Corp. (FSM) Q2 2025 Earnings Call Transcript
Positive8-7
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.
Fortuna Mining Corp. (FSM) Q1 2025 Earnings Call Transcript
Positive5-8
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.
FSM Report
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