VANCOUVER, May 13 /CNW/ - Fortuna Silver Mines Inc. (TSX: FVI / Lima Stock Exchange: FVI) is pleased to announce that it has filed its financial statements and
MD&A for the three months ended March 31, 2011. The full documents are
available on SEDAR and have also been posted on the Company's website
First quarter 2011 highlights:
Net income of US$4.78 million, compared to US$5.72 million in Q1 2010
Revenue of US$21.67 million, compared to US$17.38 million in Q1 2010
Operating income of US$8.00 million, compared to US$9.04 million in Q1
Cash flow from operations before changes in non-cash working capital of
US$7.72 million, compared to US$5.49 million in Q1 2010
Cash position and working capital as at March 31, 2011 were US$82.57
million (including short term investments) and US$89.25 million
Silver production of 437,123 oz, down 9% over Q1 2010
Silver accounted for 58% of revenue
Cash cost per silver oz, net of by-product credits, was negative US$5.36
Jorge Ganoza, President, CEO and Director, commented, "Caylloma has
delivered another strong quarter in terms of net income and cash flow
from operations. With the commissioning of the San Jose Mine in the
third quarter of 2011, we will see a material impact on Fortuna's
silver and gold production as well as cash flow generation. The
Company continues on track to deliver on its strong organic production
Effective January 1, 2010, the Company has prepared its condensed
consolidated interim financial statements in accordance with
International Financial Reporting Standards ("IFRS"). The effects of
the transition to IFRS on shareholders' equity, financial position,
income, total comprehensive income and cash flows are presented in Note
19 of the Company's Condensed Consolidated Interim Financial Statements
for March 31, 2011.
Expressed in US$ millions
Three months ended March 31
Mine operating income
Cash flow from operations before changes in working capital
Silver produced (oz million)
Cash cost per ag oz net of by-product credits (US$/oz)
During the three months ended March 31, 2011 the Company generated net
income of US$4.78 million (2010: US$5.72 million) on operating income
of US$8.00 million (2010: US$9.04 million). The decrease in net and
operating income compared to the previous year, in spite of higher
sales of US$21.67 million (2010: US$17.38 million), is mainly explained
by a loss on commodity contracts of US$1.01 million (2010: gain US$1.75
million), higher selling, general and administrative expenses of
US$1.72 million compared to 2010 and higher cash cost per tonne of
US$63.73 (2010: US$55.56). The results were also affected by an
inventory build-up of 6% of production valued approximately at US$1.6
million at average selling prices for the period.
During the first quarter ended March 31, 2011, the Company achieved a
silver production of 437,123 ounces (Q1 2010: 479,821) with a cash
cost per ounce of payable silver of negative US$5.36, net of by-product
credits. In the first quarter of 2011, 104,937 tonnes of ore were
treated (Q1 2010: 101,503) and the cash cost per tonne of treated ore
was US$63.73 (cash cost is a non-GAAP measure).
The drop in silver production for the quarter compared to the same
period last year is mainly explained by lower head grades and lower
metallurgical recoveries. The latter is the result of higher than
expected oxidized material coming from level 6 in Animas vein.
San Jose Mine, Mexico
The Company anticipates that the San Jose Mine, currently under
construction, 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.
Construction Highlights to April 30, 2011
Processing plant construction is 50% complete. Foundation work for
crushers, milling, flotation, thickening and filtering areas is
complete. Mounting and installation of major plant equipment will be
concluded by the end of May with concentrate filters being the only
pending equipment. Piping, electrical, and minor equipment
installation is in process.
Tailings dam construction was concluded in January 2011.
The 8MW power substation construction and commissioning has been
concluded and is currently providing power to the project.
The mine access ramp is already below the 1,400 meter elevation and
continues towards level 1300.
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.
Currently stope preparation is being finalized through service
infrastructure. Stopping is scheduled to begin in July.
To March 31, 2011 the mine had built an ore stock pile of 33,000 tonnes
grading 142 g/t Ag and 1.2 g/t Au. The Company anticipates 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% advanced.
Conference Call to Review 2011 First Quarter Financial Results
The Company will hold a conference call to discuss the financial results
on Tuesday, May 17, 2011 at 9:00 a.m. (PDT) / 11:00 a.m. (Lima time) /
12:00 p.m. (EDT). 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=164555 or over the phone by dialing just prior to the starting time.
Conference call details:
Date: Tuesday, May 17, 2011
Time: 9:00 a.m. (PDT) / 11:00 a.m. (Lima time) / 12:00 p.m. (EDT)
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): +1.201.678.7415
Replay Passcodes (both are required for playback):
Account #: 286
Conference ID #: 372838
Playback of the webcast will be available until August 18, 2011.
Playback of the conference call will be available until 11:59 p.m.
(EDT) on May 31, 2011. In addition, the call will be archived in the
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
President, CEO and Director
Fortuna Silver Mines Inc.
Symbol: TSX: FVI / Lima Stock Exchange: FVI
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
SOURCE Fortuna Silver Mines Inc.
For further information:
Management Head Office: Carlos Baca - Tel: +51.1.616.6060, ext. 2
Corporate Office: Ralph Rushton - Tel: +1.604.484.4085