Fortuna announces positive construction decision for its Séguéla
gold Project in Côte d’Ivoire
Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI)
is pleased to announce that the Board of Directors of the company
has made a decision to proceed with the construction of an open pit
mine at the Séguéla gold Project in Côte d’Ivoire. The company
is ready to immediately commence construction with long lead items
procured, and development teams established on the ground. In
July 2021, Fortuna completed the acquisition of Roxgold Inc.
which was advancing the Séguéla Project (see Fortuna's news release
dated July 2, 2021, “Fortuna and Roxgold complete combination to
create a global premier growth-oriented intermediate gold and
silver producer”). For specific details on the Séguéla Project
feasibility study, please refer to the technical report entitled
“NI 43‐101 Technical Report, Séguéla Project, Feasibility Study,
Worodougou Region, Côte d’Ivoire” dated May 26, 2021.
Jorge A. Ganoza, President and CEO of Fortuna,
commented, “With a nine year mine life in reserves, 130,000 ounces
of annual gold production in the initial six years, and compelling
economics, Séguéla is planned to become our fifth operating mine
with first gold by mid-2023.” Mr. Ganoza added, “Fortuna is in a
solid financial position to fund the remaining $162 million initial
capital investment and our teams in West Africa are primed and
ready to start.” Mr. Ganoza concluded, “Parallel to construction,
the company plans to continue with well funded drill programs to
test multiple remaining targets on the Séguéla property, where over
the last 12 months, the exploration team has successfully delivered
gold discoveries at the Koula, Sunbird and Gabbro North
prospects.”
Paul Criddle, COO - West Africa of Fortuna,
commented, “The decision to commence construction of the still
growing Séguéla Project, marks an exciting milestone for the
company.” Mr. Criddle continued, “The team has further derisked the
project by advancing detailed design and commencing procurement of
long lead items, including the SAG mill and the execution of
critical path agreements including the EPC agreement with
Lycopodium for the processing plant. This has allowed Séguéla's
critical path to be protected as well as managing the cost risk by
locking in substantial components of the initial capex in fixed
price contracts.” Mr. Criddle added, “Bulk earthworks contractors
have been mobilized and will break ground at the plant site in
October with the accommodation village expected to be completed in
November of 2021.”
The updated Séguéla Project total initial
capital investment is $173.5 million. $11.5 million of this amount
has previously been approved by the Board for early works items.
The anticipated construction schedule is approximately 20 months,
with ramp-up to name plate capacity expected in the third quarter
of 2023.
Séguéla Project feasibility study
economic
highlights1,5,6
The following table sets out the economic
highlights from the Séguéla feasibility study:
Operating Metrics
|
Units |
|
Results |
|
Life of mine |
Years |
|
8.6 |
|
Total mineralized material mined |
Tonnes |
|
12,064,000 |
|
Contained gold in mined resource |
Oz |
|
1,088,000 |
|
Strip ratio |
waste to ore |
|
13.9:1 |
|
Throughput @ start-up |
million tonnes per annum (Mtpa) |
|
1.25 |
|
Throughput @ peak |
Mtpa |
|
1.57 |
|
Head grade |
g/t Au |
|
2.8 |
|
Recoveries |
% |
|
94.5 |
% |
|
|
|
Gold Production |
|
|
Total production over life of mine (LOM) |
Oz |
|
1,028,000 |
|
Annual production over LOM |
Oz |
|
120,000 |
|
Annual production over first 6 years |
Oz |
|
133,000 |
|
|
|
|
Operating Costs over LOM |
|
|
Total mining costs |
$/t (mined) |
$2.79 |
|
Mining costs (sustaining capital) |
$/t (mined) |
$0.78 |
|
Mining costs (operating costs) |
$/t (mined) |
$2.01 |
|
Processing |
$/t (processed) |
$12.57 |
|
G&A |
$/t (processed) |
$5.30 |
|
Total operating costs (excluding sustaining capital) |
$/t (processed) |
$47.83 |
|
Financial Metrics
|
Units |
|
|
|
|
|
Results |
|
Cash costs2 |
|
|
|
Average cash
costs over LOM |
$/oz |
|
$567 |
|
Average cash
costs over first 6 years |
$/oz |
|
$528 |
|
AISC2 |
|
|
|
Average AISC2
over LOM |
$/oz |
|
$832 |
|
Average AISC2
over first 6 years |
$/oz |
|
$797 |
|
|
|
|
|
Valuation |
|
|
|
Gold price |
$/oz |
$1,600 |
|
$1,800 |
|
NPV @ 5% discount rate
(after-tax)(3) |
$M |
$380 |
|
478 |
|
After-tax IRR |
% |
|
49 |
% |
|
58 |
% |
Payback period |
years |
|
1.7 |
|
|
1.4 |
|
Average EBITDA2 over LOM |
$M |
$107 |
|
$127 |
|
Average EBITDA2 over first 6 years |
$M |
$130 |
|
$153 |
|
Environmental Data
|
Units |
|
Results |
Greenhouse gas emissions intensity (scope 1+2) |
tCO2e/oz |
|
0.58 |
Energy intensity |
GJ/oz |
|
4.39 |
Notes:
- Please refer to the technical
report entitled “NI 43‐101 Technical Report, Séguéla Project,
Feasibility Study, Worodougou Region, Côte d’Ivoire” dated May 26,
2021 co-authored by Paul Criddle, FAusIMM, Hans Andersen, MAIG,
Paul Weedon, MAI, Dave Morgan, AIMM, CPEng, Geoff Bailey, FIEAust,
CPEng, NPER-3, REPQ, Shane McLeay FAUSIMM and Niel Morrison Peng
filed on SEDAR under the Roxgold Inc. issuer profile
- Cash costs, all-in sustaining cash
costs and EBITDA are non-IFRS financial measures. Refer to Non-IFRS
Financial Measures at the end of this news release
- Attributable to Fortuna’s 90%
interest; the Government of Côte d’Ivoire holds a 10% carried
interest
- The Project economics are subject
to the assumptions as detailed in the Feasibility Study
- All references to dollar amounts in
the table and in this news release are expressed in US dollars
- The financial metrics in the table
are based upon an initial capital expenditure of $142 million as
set out in the Feasibility Study
Construction at Séguéla will incorporate
protocols to ensure the health and safety of employees, contractors
and host communities in respect of COVID-19.
The company will continue to provide
construction updates as progress is made at Séguéla in the upcoming
months.
Qualified Person
Paul Criddle, FAusIMM, Chief Operating Officer,
West Africa for the company, is a Qualified Person as defined by
National Instrument 43-101, Standards of Disclosure for Mineral
Projects, and has reviewed and approved the scientific and
technical information pertaining to the Séguéla Project contained
in this news release and has verified the underlying data.
About Fortuna Silver Mines
Inc.
Fortuna Silver Mines Inc. is a Canadian precious
metals mining company with four operating mines in Argentina,
Burkina Faso, Mexico and Peru, and an advanced development project
in Côte d’Ivoire. Sustainability is integral to all our operations
and relationships. We produce gold and silver and generate shared
value over the long-term for our shareholders and stakeholders
through efficient production, environmental protection, and social
responsibility. For more information, please visit
our website.
ON BEHALF OF THE BOARD
Jorge A. Ganoza President, CEO,
and DirectorFortuna Silver Mines Inc.
Investor Relations: Carlos Baca
| info@fortunasilver.com
Forward-looking statements
This news release contains forward-looking
statements which constitute “forward-looking information” within
the meaning of applicable Canadian securities legislation and
“forward-looking statements” within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995 (collectively, “Forward-looking Statements”). All
statements included herein, other than statements of historical
fact, are forward-looking statements and are subject to a variety
of known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those reflected
in the forward-looking statements. The Forward-looking statements
in this news release may include, without limitation, statements
about the company’s plans for the construction of an open pit mine
at the Seguela project in Cote D’Ivoire; the economics for the
construction of the mine at the Seguela project as set out in the
feasibility study; the estimated construction capex for the
project; the timelines and schedules for the construction of the
mine; the estimated internal rate of return on production; the
estimated net present value of the project and estimates of
production; estimated EBITDA; the ability of the company to
continue its exploration at the Séguéla project; the company’s
plans for its mines and mineral properties; the company’s
anticipated performance in 2021; estimated production forecasts;
estimated production costs and all-in sustaining cash costs; the
success of the company’s exploration activities at its mines and
development projects; the timing of the implementation and
completion of sustaining capital investment projects at the
company’s mines; the duration and impacts of COVID-19 on the
company’s construction plans at Seguela, production, workforce,
business, operations and financial condition; metal price
estimates, estimated metal grades; the timing of the signing of
construction contracts for the Séguéla Project; the company’s
business strategy, plans and outlook; the merit of the company’s
mines and mineral properties; mineral resource and reserve
estimates; production costs; timelines; the future financial or
operating performance of the company; expenditures; approvals and
other matters. Often, but not always, these forward-looking
statements can be identified by the use of words such as
“estimated”, “potential”, “open”, “future”, “assumed”, “projected”,
“used”, “detailed”, “has been”, “gain”, “planned”, “reflecting”,
“will”, “anticipated”, “estimated” “containing”, “remaining”, “to
be”, or statements that events, “could” or “should” occur or be
achieved and similar expressions, including negative
variations.
Forward-looking statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the company to be
materially different from any results, performance or achievements
expressed or implied by the forward-looking statements. Such
uncertainties and factors include, among others, changes in general
economic conditions and financial markets; changes in the
construction schedule at Seguela; the impact of the COVID-19
pandemic on the company’s mining operations and construction
activities; the duration and impacts of COVID-19 on the company’s
production, workforce, business, operations and financial
condition, and the risks relating to a global pandemic, which
unless contained could cause a slowdown in global economic growth;
uncertainties related to the impacts of COVID-19 which may include:
changing market conditions, changing restrictions on the mining
industry in the countries in which the company operates, the
ability to operate as a result of government imposed restrictions,
including restrictions on travel, the transportation of
concentrates and doré, access to refineries, the impact of
additional waves of the pandemic or increases of incidents of
COVID-19 in the countries in which we operate; the duration of any
suspension of operations at the company’s mines as a result of
COVID-19 which may affect production and the company’ business
operations and financial condition; changes in prices for gold,
silver and other metals; changes in the prices of key supplies;
technological and operational hazards in Fortuna’s mining and mine
development activities; risks inherent in mineral exploration; the
ability of the current exploration programs to identify and or
expand mineral resources, operational risks in exploration and
development; delays or changes in plans with respect to exploration
or development projects; uncertainties inherent in the estimation
of mineral reserves, mineral resources, and metal recoveries;
changes to current estimates of mineral reserves and resources;
changes to production and cost estimates; governmental and other
approvals; maintaining, obtaining or renewing environmental
permits; changes in government, political unrest or instability in
countries where Fortuna is active; fluctuations in currencies and
exchange rates; the imposition of capital control in countries in
which the company operates; labor relations issues; as well as
those factors discussed under “Risk Factors” in the company's
Annual Information Form. Although the company has attempted to
identify important factors that could cause actual actions, events
or results to differ materially from those described in
forward-looking statements, there may be other factors that cause
actions, events or results to differ from those anticipated,
estimated or intended.
Forward-looking statements contained herein are
based on the assumptions, beliefs, expectations and opinions of
management, including but not limited to the accuracy of the
company’s current mineral resource and reserve estimates; that the
company’s activities will be in accordance with the company’s
public statements and stated goals; that there will be no material
adverse change affecting the company or its properties; that the
reconciliation of mineral reserves at the company’s mines remains
consistent with the mineral reserve model; changes to production
estimates (which assume accuracy of projected ore grade, mining
rates, recovery timing, and recovery rate estimates and may be
impacted by unscheduled maintenance, labor and contractor
availability and other operating or technical difficulties); the
duration and impacts of COVID-19 on the company’s production,
workforce, business, operations and financial condition, and the
risks relating to a global pandemic, which unless contained could
cause a slowdown in global economic growth; government mandates in
Peru, Mexico, Argentina, Burkina Faso and Côte d’Ivoire with
respect to mining operations generally or auxiliary businesses or
services required for the company’s operations; government and the
company’s attempts to reduce the spread of COVID-19 which may
affect may aspects of the company’s operations, including
transportation of personnel to and from site, contractor and
supplier availability and the ability to sell or deliver
concentrate and doré; the expected trends in mineral prices and
currency exchange rates; that the company’s activities will be in
accordance with the company’s public statements and stated goals;
that there will be no material adverse change affecting the company
or its properties; that all required approvals will be obtained for
the company’s business and operations; that there will be no
significant disruptions affecting operations and such other
assumptions as set out herein. Forward-looking statements are made
as of the date hereof and the company disclaims any obligation to
update any forward-looking statements, whether as a result of new
information, future events or results or otherwise, except as
required by law. There can be no assurance that these
forward-looking statements will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such statements. Accordingly, investors should not
place undue reliance on forward-looking statements.
For readers to fully understand the information
in this news release, they should read the technical report
entitled “NI 43‐101 Technical Report, Séguéla Project, Feasibility
Study, Worodougou Region, Côte d’Ivoire” dated May 26, 2021 (the
“Technical Report” in its entirety, including all qualifications,
assumptions and exclusions that relate to the information set out
therein which qualifies the technical information contained in the
Technical Report. The Technical Report is intended to be read as a
whole, and sections should not be read or relied upon out of
context).
Cautionary Note to United States
Investors Concerning Estimates of Reserves and
Resources
Reserve and resource estimates included in this
news release have been prepared in accordance with National
Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI
43-101") and the Canadian Institute of Mining, Metallurgy, and
Petroleum Definition Standards on Mineral Resources and Mineral
Reserves. NI 43-101 is a rule developed by the Canadian Securities
Administrators that establishes standards for public disclosure by
a Canadian company of scientific and technical information
concerning mineral projects. Unless otherwise indicated, all
mineral reserve and mineral resource estimates contained in the
technical disclosure have been prepared in accordance with NI
43-101 and the Canadian Institute of Mining, Metallurgy and
Petroleum Definition Standards on Mineral Resources and
Reserves.
Canadian standards, including NI 43-101, differ
significantly from the requirements of the Securities and Exchange
Commission, and mineral reserve and resource information included
in this news release may not be comparable to similar information
disclosed by U.S. companies.
Non-IFRS Financial Measures
This news release also refers to non-IFRS
financial measures, such as cash costs, all-in sustaining cash cost
and EBITDA. These measures do not have a standardized meaning or
method of calculation, even though the descriptions of such
measures may be similar. These performance measures have no meaning
under International Financial Reporting Standards (IFRS) and
therefore, amounts presented may not be comparable to similar data
presented by other mining companies. For additional information
regarding non-IFRS measures, including reconciliations to the
closest comparable IFRS measures, see "Non-GAAP Financial Measures"
in Fortuna’s annual MD&A, which is available under Fortuna's
SEDAR profile.
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