Fortuna Silver's (FSM) Q2 Gold Production Increases 4% Y/Y
Fortuna Silver Mines Inc. FSM reported gold production of 64,348 ounces and silver production of 1,262,561 ounces in second-quarter 2023. Gold output marked a 4% year-over-year increase, which was mainly attributed to the commencement of production at FSM’s newest flagship mine, Séguéla.
Silver production was down 24% year over year. The decline mainly reflected the impact of the 15-day shutdown of operations at the San Jose mine due to the illegal blockade by the workers’ union. Gold equivalent ounces were reported at 93,454 ounces in the second quarter of 2023.
Mine Performances in Q2
FSM currently has five operating mines in its portfolio, with the Séguéla mine located in Côte d´Ivoire pouring its first gold on May 24, 2023. The mine produced 4,023 ounces of gold during the initial ramp up weeks of the second quarter.
At the Lindero mine in Argentina, second-quarter gold production was 25,456 ounces which was down 12% year over year mainly due to the lower head grade of mineralized material placed on the leach pad that is aligned with the mineral reserves and mining sequence. The company however stated that the mine remains on track to meet annual production guidance.
The Yaramoko Mine in Burkina Faso produced 29,002 ounces of gold, which was up 18% year over year reflecting higher grades mined and an increase in milled tons. Production at Yaramoko is expected to be at the upper end of the annual guidance range.
The San Jose mine in Mexico produced 0.96 million ounces of silver and 5,788 ounces of gold in the second quarter. Silver production was down 31% year over year while gold production was down 30%. The shutdown of operations for 15 days due to the illegal blockade by the workers’ union led to lower-than-expected production in the quarter. It also impacted mine preparation, delaying access to higher grade stopes planned for the quarter. Fortuna Silver has adjusted the mine plan to access these stopes in the third quarter and expects to achieve the lower end of the mine’s guidance for the year.
The Caylloma mine in Peru produced 305,296 ounces of silver in the June-ended quarter, up 14% year over year. Zinc production was around 14 million pounds and lead production was 10.2 million pounds. Compared to the last year quarter, zinc and lead production improved 29% and 34% respectively. This improvement was due to higher head grades sourced from lower levels at the Animas vein.
2023 Guidance Maintained
Gold equivalent production guidance range is maintained between 412,000 ounces and 463,000 ounces. The range projects an increase of 3-15% year over year.
Fortuna Silver expects the Séguéla mine to produce 60,000 ounces to 75,000 ounces of gold in 2023 at an all-in-sustaining cost of between $880 per ounce of gold and $1,080 per ounce of gold. Gold production guidance is 282,000 ounces to 320,000 ounces for 2023, which indicates growth of 9-23% from the 2022 level. Silver production guidance for the year is 6.3-6.9 million ounces, which suggests a decline of up to 9% from the 2022 output.
Price Performance
Shares of Fortuna Silver have gained 32% in the past year compared with the industry’s 12.3% growth.
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Zacks Rank & Other Stocks to Consider
Fortuna Silver currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks from the basic materials space are Carpenter Technology Corporation CRS, Orla Mining Ltd. ORLA and Osisko Gold Royalties Ltd OR. These companies sport a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carpenter Technology has an average trailing four-quarter earnings surprise of 30.9%. The Zacks Consensus Estimate for CRS’s fiscal 2023 earnings is pegged at $1.04 per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. Its shares have surged 109% in the last year.
Orla Mining has an average trailing four-quarter earnings surprise of 85.4%. The Zacks Consensus Estimate for ORLA’s 2023 earnings is pegged at 15 cents per share. The consensus estimate for 2023 earnings has moved 87.5% north over the past 60 days. ORLA’s shares have gained 91% in the last year.
The Zacks Consensus Estimate for Osisko Gold Royalties’ fiscal 2023 earnings per share is pegged at 47 cents. Earnings estimates have moved 6.8% north in the past 60 days. OR’s shares have gained 51% in the past year.
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