Canadian precious metals mining company Fortuna Silver Mines has posted a lower adjusted net income for the first quarter of the year due to increased operating expenses. The mining company announced last week that gold production in Q1 2023 was down by 9%, from 103,098 gold equivalent ounces in Q1 2022 to 94,110 gold equivalent ounces in 2023’s first quarter.
The company noted that it produced 60,092 ounces of gold in Q1 2023, down more than 10% from 66,800 ounces in Q1 2022. According to Fortuna Silver Mines, the reduced output was caused by a reduction in head grades at the Yaramoko and Lindero mines.
Silver production also saw a drop of 5%, going from 1,760,128 ounces in Q1 2022 to 1,586,378 in Q1 2023, with the company milling marginally lower head grades and tonnage at its Caylioma and San Jose mines.
Fortuna Silver Mines reported a net income of $11 million for the quarter, down from $27 million in Q1 2022 and an adjusted net income of $13.2 million in Q1 2023 compared to $33.2 million in Q1 2022. The company said in a news release that the reduction in its adjusted net income for Q1 was mainly caused by higher operating expenses primarily due to an increase in output costs across its entire mining operation. The company also reported that reduced operating margins at Lindero and Yamaroko in relation to lower head grades also contributed to its lower adjusted net income.
Fortuna Silver CEO and president Jorge A Ganoza said that production and total cost per once were generally “on plan” for Q1 of the year and led to new earning of $0.04 per share coupled with a free cash flow of $8.5 million. He added that commissioning activities at the company’s Séguéla mine were well advanced and going according to plan for the initial gold pour in May and that the company was confident about a hassle-free ramp-up process to design capacity.
Mining operations at Fortuna Silver’s San Jose mine were halted in early March after union workers blockaded the mine to protest profit-sharing protocols at the company. The mine, which produced 34,124 ounces of gold and 5.8 million ounces of silver in 2022, employs close to 1,000 people. It resumed operation in early May after nearly two months of zero production. The company expects similar output from the San Jose mine in 2023 despite the relatively lengthy hiatus.
It would be interesting to know how other silver mining enterprises such as Hecla Mining Company (NYSE: HL) are coping with the rising costs of operation in order to protect their profit margins.
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