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Fortuna Reports Net Income of US$ 1.2 Million and Cash from Operations of US$ 5.7 Million in Q2 of 2009
August 12, 2009: Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: FVI) -- The Company is pleased to announce that record sales of US$ 12.9m in Q2 2009 have resulted in net income of US$ 1.2m and operating cash flow (before changes in non-cash working capital items) of US$ 5.7 million for the quarter. Cost per silver ounce produced, net of by-product credits, was negative US$ 2.98 in the quarter. The Company remains debt free with US$ 31.2m in cash.
Second quarter 2009 highlights:
- Negative US$ 2.98 cash cost per silver ounce, net of by-product credits
- Historic record sales of US$ 12.86 million compared to US$ 7.77 million in Q2 2008
- Operating cash flow, before changes in non-cash working capital items, of US$ 5.69 million compared to US$ 2.47 million in Q2 2008
- Net income of US$ 1.20 million compared to net income of US$ 2.49 million in Q2 2008
- Cash position and working capital as at June 30, 2009 were US$ 31.17 million and US$ 36.01 million respectively
The Company remains debt free and its precious metal production remains unhedged, providing strong leverage to the silver price.
Jorge Ganoza, President, CEO and Director, commented, "The Company has delivered another strong financial quarter. This is a reflection of the success in our investment strategy which has developed Caylloma into an efficient operation with strong cash margins, resilient to low metal prices. "
The Company has filed its financial statements and MD&A for the three months ended June 30, 2009. The full documents are available on SEDAR and have also been posted on the Company's website at www.fortunasilver.com.
A conference call has been scheduled for Thursday, August 13, at 10.05am Eastern (7.05am Pacific) to discuss the quarterly results. Details of the call are available at the end of this release.
Financial Results
During the second quarter of 2009, the Company generated record quarterly revenue of US$ 12.86 million compared to US$ 7.77 million over the same period in 2008. The volume of concentrate sales during the second quarter of 2009 was 51% more than the same period in 2008. The significant increase in sales is the result of the Company's investment plan over the last two years in mine development, processing plant expansion and infrastructure.
Operating income for the first quarter of 2009 was US$ 4.36 million compared to US$ 0.83 million in first quarter 2008. This improvement, in spite of significantly lower metal prices, is a consequence of an increase in throughput, head grades, metal recoveries, and lower operating costs.
Summary of financial results:
| US$000s |
Three months ended |
Six months ended |
| 30-Jun-09 |
30-Jun-09 |
| Revenue |
12,862 |
21,842 |
| Operating Income |
4,355 |
4,432 |
| Net Income |
1,196 |
142 |
| Cash Flow from Operations before changes in non-cash working capital items |
5,691 |
9,921 |
| Cash Cost per Ag oz net of by-product credits (US$/oz) |
-2.98 |
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Operating Results
In the second quarter of 2009, the Caylloma mine achieved significant improvements in metal output with respect to both the previous quarter and the corresponding quarter in 2008. Silver production was 468,823 ounces, representing 47% of total revenue. Caylloma is forecast to produce 1.6 million ounces of pure silver in 2009.
The average throughput rate for Q2 2009 was 1,146 tonnes per day, and the cash cost per silver ounce, net of by-product credits, was negative US$ 2.98 in the quarter.
The expansion project for the processing plant was concluded fifteen days ahead of its scheduled start-up and since mid April, the plant is processing ore at a rate of 1,200 tpd. The newly added copper circuit is still in the commissioning phase. It was launched in the last week of April and was subsequently halted to undergo several design adjustments. The copper circuit is now scheduled to be restarted in the month of August 2009.
San Jose Project Status
The Company is working to complete the project resource estimation during September and conclude the pre-feasibility study in the fourth quarter. A comprehensive project update will be released in the upcoming weeks.
Conference Call to Review Quarterly Financial Results
The Company will hold a conference call to discuss the financial results on Thursday, Aug. 13, 2009, at 10:05 a.m. Eastern Time (7:05 a.m. Pacific Time). Hosting the call will be Jorge Ganoza, president, chief executive officer and director, and Luis Dario 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 the Investor Calendar website or over the phone by dialing just prior to the starting time.
Conference call details
Date: Thursday, Aug. 13, 2009
Time: 10:05 a.m. (Eastern Time), 7:05 a.m. (Pacific Time)
Dial in number (toll-free): 877-407-8035
Dial in number (international): 201-689-8035
Replay number (toll-free): 877-660-6853
Replay password (international): 201-612-7415
Replay passcodes (both are required for playback)
Account No.: 286
Conference identification No.: 330289
Playback of the webcast will be available until Saturday, Nov. 14, 2009. Playback of the conference call will be available until 11:59 a.m. (Eastern Time) on Aug. 27, 2009. 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.
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 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.
Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.
ON BEHALF OF THE BOARD
Jorge Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Symbol: TSX.V: FVI / Lima Exchange: FVI
Investor Relations:
Lima office: Carlos Baca - Tel: 51.1.616.6060
Vancouver office: Erin Ostrom - Tel: 604.484.4085
- Associated File: http://www.fortunasilver.com/i/pdf/Aug12.pdf
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