• Revenue: Record sales of $275 million for Q3 2024.
• Earnings: Net income of $50.5 million, or $0.16 per share.
• EBITDA: $131 million, representing a 48% margin over sales.
• Free Cash Flow: $56 million from ongoing operations.
• Cash Cost: $1,059 per gold equivalent ounce for the quarter.
• Capital Expenditure: $98 million executed for the first nine months, 75% of the annual budget.
• Gold Production: 63,004 ounces from West African operations in Q3 2024.
• Cash Position: $181 million at the end of the quarter.
• Total Liquidity: $431 million, including a $250 million revolving credit facility.
• Debt to EBITDA Ratio: Maintained under 0.2.
• Exploration Budget: Increased from $37 million to $44 million for 2024.

• Warning! GuruFocus has detected 5 Warning Signs with FSM.

Release Date: November 07, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Fortuna Mining Corp (NYSE:FSM) reported record sales of $275 million for Q3 2024, with expectations to surpass $1 billion in sales for the year.
• The company achieved a strong EBITDA of $131 million, representing a 48% margin over sales, an increase from previous quarters.
• West African operations, particularly Yaramoko and Seguela, exceeded production targets and reported zero lost time injuries.
• Fortuna Mining Corp (NYSE:FSM) maintained a disciplined cost structure, achieving a cash cost of $1,059 per gold equivalent ounce for the quarter.
• The company has a strong balance sheet with a net cash position and liquidity of about $350 million, maintaining a low debt-to-EBITDA ratio under 0.2.

Negative Points

• The Lindero mine in Argentina is about 10% above cost guidance due to lagging currency devaluation against inflation.
• Fortuna Mining Corp (NYSE:FSM) is experiencing challenges in collecting VAT receivables in Burkina Faso, which may continue to impact cash flow.
• The San Jose mine is set to initiate a progressive closure starting in Q1 2025, which may lead to increased closure costs.
• The company faces potential financial implications from repatriating US dollars into Argentine pesos due to local FX restrictions.
• Exploration costs have increased, with the 2024 global budget rising from $37 million to $44 million to expand drilling programs.

Q & A Highlights

Q: Can you provide details on the financial implications of potentially repatriating US dollars into Argentina and converting them into Argentine pesos? A: Luis Ganoza Durant, CFO, explained that the company expects to start accumulating cash locally in Argentina towards the end of the year. They are exploring different alternatives to manage this exposure, as current FX restrictions require cash surpluses to be kept in local currency. The government has signaled a potential lifting of these restrictions, but no date has been provided.

Q: Are there any opportunities to invest in Argentina, specifically at the Lindero mine? A: Jorge Ganoza Durant, CEO, confirmed that they are expanding the Leach Pad at Lindero, a $42 million project, setting the mine for a long-term operation. They are also exploring other opportunities in the Arizaro area and other properties in Salta.

Q: What are the potential implications of proposed changes to mining codes in Cote d'Ivoire and Burkina Faso? A: Jorge Ganoza Durant, CEO, stated that the company is in close dialogue with the governments and mining chambers in both countries. The changes in Burkina Faso do not impact their current operations. In Cote d'Ivoire, the process is more orderly, with a draft mining code being consulted with the industry, which is seen as positive.

Q: Can you elaborate on the status and remaining capital expenditure for the Lindero Leach Pad expansion? A: Jorge Ganoza Durant, CEO, mentioned that the Leach Pad is operational, with some ancillary activities extending into early 2025. Luis Ganoza Durant, CFO, added that approximately $10 million in payments are expected in Q4, with a small spillover into 2025.

Q: How is the company managing VAT recovery issues in Burkina Faso? A: Jorge Ganoza Durant, CEO, acknowledged challenges in recovering VAT, with amounts building up to $40-$50 million. The government has been slow in providing returns, reflecting the country's financial crisis. Luis Ganoza Durant, CFO, noted that VAT receivables are included as a negative change in working capital, affecting cash flow.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.