VANCOUVER, March 24 /PRNewswire-FirstCall/ -
Fortuna Silver Mines Inc. (TSX: FVI) (Lima Exchange: FVI)
has filed its audited financial statements and MD&A for 2010.
The full documents are available on SEDAR and have also been posted
on the Company's website at www.fortunasilver.com.
2010 Financial Statements and MD&A
Highlights:
- Net income of US$ 12.96 million, compared to US$ 0.62 million
in 2009
- Earnings per share of US$ 0.12, compared to US$ 0.01 in
2009
- Sales of US$ 74.06 million compared to US$ 51.43 million in
2009; increase of 44%
- Net cash from operating activities of US$ 21.02 million,
compared to US$ 13.69 million in 2009, increase of 54%
- Cash position (including short term investments) and working
capital as at year end were US$ 90.81 million and US$ 97.09 million
respectively
- Record silver production: 1,906,423 oz, up 13% over 2009
- Silver accounted for 48% of revenue
- Cash cost per silver oz, net of by-product credits, was
negative US$ 7.73
- Cash cost per tonne of ore was US$ 51.20 and the corresponding
unit net smelter return (NSR) was US$ 163.59
Jorge Ganoza, President and CEO, commented:
"Fortuna remains one of the lowest cost silver producers. During
2010, the Company capitalized on the increase of silver and base
metal prices providing its best year to date in earnings and
operating margins. With the commissioning of our San Jose
Mine planned for the third quarter of 2011, Fortuna offers one of
the most exciting organic production growth profiles amongst
emerging silver producers, ensuring increasing leverage to rising
silver prices."
Financial Results
|
Expressed in US$ millions |
|
Year ended December 31, |
|
|
2010 |
|
2009 |
Sales |
$ |
74.06 |
$ |
51.43 |
Mine operating income |
|
44.93 |
|
27.73 |
Operating income |
|
30.11 |
|
14.38 |
Net income |
|
12.96 |
|
0.62 |
Cash flow from operations |
|
21.02 |
|
13.69 |
Silver sold (oz million) |
|
1.89 |
|
1.65 |
Cash cost per ag oz net of by-product credits
(US$/oz) |
|
(7.73) |
|
(4.86) |
During the year ended December 31, 2010, the
Company generated net income of US$ 12.96 million (2009: US$ 0.62
million) on operating income of US$ 30.11 million (2009: US$ 14.38
million). Record results were driven by an increase in ounces
of silver sold as well as higher silver and base metal prices.
Operating Results
The increase in sales is primarily attributable
to higher silver prices (38%) and greater sales volume (15%).
Zinc and lead metal sold were below last year (7% and 11%
respectively) with zinc and lead prices above last year (31% and
25% respectively). Average realized prices for silver, lead,
and zinc were US$ 19.05/oz, US$ 0.80/lb and US$ 0.60/lb
respectively.
During 2010, the Company produced 1,906,423
ounces of silver (2009: 1,682,546 ounces) with a cash cost per
ounce of payable silver of negative US$7.73 which includes
by-product credits. The Caylloma Mine treated 434,656 tonnes of ore
in 2010, compared to 395,560 tonnes in the prior year. The cash
cost per tonne was US$ 51.20 (2009: US$ 46.27) for 2010. The 13%
increase in silver production over 2009 is attributable to an
increase in throughput of 10%, an increase in silver recoveries of
0.3% and a 3% increase in silver head grade.
Zinc and lead production during 2010 decreased
by 8% and 15%, respectively, compared to 2009. This decrease
was related to a shift in the mine plan designed to replace the
polymetallic ore from the Animas vein with higher grade silver ore
from level 6 in the upper part of Animas vein. The mine plan
shift was made because of lower than expected grades from the
Bateas silver vein which lead to an acceleration of the
incorporation of level 6 into the production plan.
Corporate selling, general and administrative
expenses increased in 2010 when compared to 2009 by US$ 5.23
million due to the growth of the Company, legal fees related to the
credit facility, development of corporate projects and bonus
payments.
Net income includes commodity contracts gain of
US$ 0.74 million (2009: loss US$ 7.36 million), foreign exchange
loss of US$ 2.70 million (2009: US$ 0.65 million), and stock-based
compensation recovery of US$ 0.42 million (2009: expense US$ 2.71
million).
San Jose Mine Construction
The Company anticipates that its San Jose
project, currently under construction in Mexico, will begin to
contribute both silver and gold ounces starting in the third
quarter of 2011, allowing the Company to maintain its organic
silver production growth in 2011.
Construction activities to date are on budget
and commissioning of the mine is scheduled for the third quarter of
2011.
Construction Highlights as of March 14, 2011:
- Processing plant construction is 33% complete. Foundation work
for crushers, milling, flotation, thickening and filtering areas is
complete. Mounting and installation of major plant equipment
was initiated in January 2011. The 13' x 19.5' ball mill has
been mounted where the milling section is 42% advanced. The
three stage crushing circuit is being mounted and installed with a
66% advance. Flotation cells have arrived on site and thickeners
are being mounted and installed.
- Tailings dam construction was concluded in January 2011.
- The 8MW power substation construction and commissioning has
been concluded; connection to the national grid is expected in
March 2011.
- The mine access ramp has reached the 1,400 meter elevation,
where the first production level is being developed.
- Three stopes are being developed and prepared for the start of
production in the third quarter at the initial rate of 1,000 tpd;
stope K is being developed on the Trinidad, Fortuna and Bonanza
veins on sub-level 1430. Stopes L and M are being developed
on level 1400. Overall advance on stope preparation is 115% against
the program.
- To December 31, 2010, the mine had built an ore stock pile of
6,816 tonnes grading 234 g/t Ag and 2.13 g/t Au. The Company
anticipates having an inventory of approximately 30,000 tonnes
before the start of commercial operations in the third quarter of
2011.
- Water pipeline installation to the mine site is 87%
completed.
Conference Call to Review 2010 Year End Financial
Results
The Company will hold a conference call to
discuss the financial results on Monday, March 28, 2011 at 9:00
a.m. (PST) / 11:00 a.m. (Lima time) / 12:00 p.m. (EST).
Hosting the call will be Jorge Ganoza, President and CEO and Luis
Ganoza, Chief Financial Officer.
Shareholders, analysts, media and interested
investors are invited to listen to the live conference call by
logging onto the webcast at
http://www.investorcalendar.com/IC/CEPage.asp?ID=163866 or over the
phone by dialing just prior to the starting time.
Conference call details:
Date: Monday, March 28, 2011
Time: 9:00 a.m. (PST) / 11:00 a.m. (Lima time) / 12:00 p.m.
(EST)
Dial in number (Toll Free):
+1.877.407.8035
Dial in number (International): +1.201.689.8035
Replay number (Toll Free):
+1.877.660.6853
Replay number (International): +1.201.612.7415
Replay Passcodes (both are required for playback):
Account #: 286
Conference ID #: 369466
Playback of the webcast will be available until
June 29, 2011. Playback of the conference call will be
available until 11:59 p.m. (EST) on April 11, 2011. In
addition, the call will be archived in the Company's website.
Fortuna Silver Mines Inc.
Fortuna is a growth oriented, silver and base
metal producer focused on mining opportunities in Latin
America. Our primary assets are the Caylloma Silver Mine in
southern Peru and the San Jose Silver-Gold Project in Mexico.
The Company is selectively pursuing additional acquisition
opportunities. For more information, please visit our website
at www.fortunasilver.com.
ON BEHALF OF THE COMPANY
Jorge Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Symbol: TSX: FVI / Lima Stock Exchange: FVI
Forward-Looking Statements
Certain statements in this press release
constitute forward-looking statements and as such are based on an
assumed set of economic conditions and courses of action. These
include estimates of the time of commencement, commissioning and
full production, future production levels, expectations regarding
mine production costs, expected trends in mineral prices and
statements that describe Fortuna's future plans, objectives or
goals. There is a significant risk that actual results will vary,
perhaps materially, from results projected depending on such
factors as changes in general economic conditions and financial
markets, changes in prices for silver and other metals,
technological and operational hazards in Fortuna's mining and mine
development activities, risks inherent in mineral
exploration, uncertainties inherent in the calculation of mineral
reserves, mineral resources, and metal recoveries, the timing and
availability of financing, governmental and other approvals,
political unrest or instability in countries where Fortuna is
active, labor relations and other risk factors.
SOURCE Fortuna Silver Mines Inc.