Fortuna reports consolidated financial results for the third quarter 2018

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VANCOUVER, British Columbia, Nov. 08, 2018 (GLOBE NEWSWIRE) -- today reported net income of $6.9 million, earnings per share of 4 cents and revenue of $59.6 million in the third quarter of 2018.

Jorge A. Ganoza, President and CEO, commented, “We have delivered a solid quarter in spite of a 12% and 5% decrease in silver and gold prices, respectively, in the third quarter, with earnings per share of $0.04, EBITDA of $24.2 million, and free cash flow, excluding Lindero construction costs, of $13.6 million.” Mr. Ganoza concluded, “The rate of spending at Lindero continues to increase as construction activities accelerate towards year end. It is estimated that a total of between $110 million to $130 million will be spent in 2018. Construction activities are progressing according to the project´s schedule with commercial production planned for the end of the third quarter of 2019.”

Net income for the three months ended September 30, 2018 was $6.9 million or $0.04 per share compared to $10.3 million or $0.06 per share for the comparable quarter in 2017. Sales for the third quarter of 2018 decreased 7% to $59.6 million compared to $64.0 million for the comparable quarter in 2017 due primarily to a decline in metal prices for silver, lead, and zinc and to a lesser extent, the timing of recognizing revenue on concentrates delivered to the warehouse prior to the end of the quarter of about $1.5 million, but which were not recognized in sales for the third quarter.

Operating income for the three months ended September 30, 2018 was $10.5 million, a 44% decrease from the $18.9 million of operating income for the comparable quarter in 2017. The key drivers for the decrease were lower sales from a decline in metal prices, higher production costs at the Caylloma mine as well as a $1.4 million provision for a community support obligation that will be paid over the next 2.5 years.

Adjusted net income decreased 46% during the quarter to $7.1 million compared to $13.1 million for 2017. Adjusted EBITDA decreased 21% to $24.2 million compared to $30.6 million for the comparable period in 2017.

Free cash flow, excluding Lindero construction costs, was $13.6 million in the quarter and $42.2 million year to date. At September 30, 2018, the Company had cash, cash equivalents and short-term investments of $176.7 million which along with our undrawn credit facility of $80.0 million will provide sufficient liquidity to meet our funding needs during the construction of the Lindero Project.

The San Jose Mine produced 1,991,211 ounces of silver, representing a 12% increase in silver production over the same period in 2017 while gold production declined 6% to 12,387 ounces compared to 13,248 ounces during the same period in 2017. Average head grades for silver and gold were 258 g/t and 1.61 g/t which were 13% higher and 6% lower than the same period in 2017.

Cash cost per tonne of processed ore increased 2% to $63.3 for the third quarter compared to $62.2 for the same quarter in 2017 due primarily to higher energy tariffs and partially offset by lower mining costs. Cash cost per for the nine months ended September 30, 2018 increased 4% to $63.0 compared to $60.3 for the comparable period in 2017 and was slightly above our annual guidance. Cash cost per tonne for the year is expected to remain within 5% of our annual guidance of $61.2.

The Caylloma Mine produced 7.6 million pounds of lead and 11.5 million pounds of zinc during the third quarter of 2018 representing a 2% increase in zinc production a 1% decrease in lead production over the same period in 2017. Average head grades for lead and zinc were 2.74% and 4.24%. Silver production was 239,253 ounces which was 2% higher than the comparable period in 2017.

Cash cost per tonne of processed ore for the third quarter of 2018 was $88.5 or 16% higher than the $76.0 cash cost for the comparable quarter in 2017. Cash cost per tonne on a year-to-date basis was $81.4 or 4% above 2017. The slightly higher cash cost for the nine months ended September 30, 2018 was due to higher labour and related personnel expenses that came into effect on August 2018. The Company expects an incremental cost of approximately $1.1 in the fourth quarter relating to a community support agreement entered into in the third quarter. Cash cost per tonne for the year is expected to be within 5% of our annual guidance of $81.3.

The following tables represent the computation of certain Non-GAAP Financial Measures as referenced in this news release.

The financial statements and MD&A are available on SEDAR and have also been posted on the Company's website at

Date: Friday, November 9, 2018Time: 9:00 a.m. Pacific | 12:00 p.m. Eastern

Dial in number (Toll Free): +1.877.407.8035Dial in number (International): +1.201.689.8035

Replay number (Toll Free): +1.877.481.4010Replay number (International): +1.919.882.2331Replay Passcode: 10460

Playback of the conference call will be available until November 23, 2018 at 11:59 p.m. Eastern. Playback of the webcast will be available until November 8, 2019. In addition, a transcript of the call will be archived on the company’s website: . 

Fortuna is a growth oriented, precious metals producer with its primary assets being the Caylloma silver mine in southern Peru, the San Jose silver-gold mine in Mexico and the Lindero gold Project in Argentina. The Company is selectively pursuing acquisition opportunities throughout the Americas and in select other areas. For more information, please visit its website at www.fortunasilver.com.

ON BEHALF OF THE BOARD

Jorge A. Ganoza President, CEO and DirectorFortuna Silver Mines Inc.

Trading symbols: NYSE: FSM | TSX: FVI Investor Relations: Carlos Baca- T (Peru): +51.1.616.6060, ext. 0

More news and information about Fortuna Silver Mines Inc.

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Globe Newswire: 00:18 GMT Friday 9th November 2018

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