Fortuna(FSM) - 2025 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported record adjusted net income of $0.23 per share for Q4 2025, in line with analysts' consensus, and net cash from operations before working capital adjustments was $0.48 per share, exceeding estimates of $0.43 [4] - Free cash flow reached a record $132 million for the quarter and $330 million for the full year, highlighting strong operational performance [4] - The company ended 2025 with $704 million in total liquidity, a $327 million increase over 2024, driven by strong operating results [27] Business Line Data and Key Metrics Changes - Séguéla produced 36,942 ounces of gold in Q4, totaling 152,426 ounces for the full year, exceeding guidance by 4% [10] - Lindero's full-year gold production totaled 87,489 ounces, approximately 6% below the lower end of guidance due to mechanical downtime in Q4 [15] - Caylloma produced 250,000 ounces of silver in Q4, maintaining production levels consistent with previous quarters [17] Market Data and Key Metrics Changes - The average realized gold price was $4,166 per ounce, an increase of over $1,500 per ounce compared to the previous year [21] - Consolidated cash costs rose marginally by 5% to $971 per ounce, while all-in sustaining costs (AISC) for the year were $1,716 per ounce, within guidance range [21][17] Company Strategy and Development Direction - The company aims to grow annual gold production to over 500,000 ounces within the next 24 months, representing approximately 65% growth from current levels [5] - Key growth projects include Diamba Sud in Senegal and Séguéla in the Ivory Coast, with a $100 million budget approved for Diamba Sud [5][7] - The company is focused on maintaining capital discipline and enhancing asset quality to support growth [5] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving production targets, with Séguéla expected to contribute significantly to the overall production increase [41] - The company is actively managing risks related to equipment delivery times and resource availability as demand for gold mining increases [47] - Future production at Lindero is expected to be impacted by ongoing improvements to the primary crusher, with a gradual increase anticipated in the second half of the year [36] Other Important Information - The company recorded a foreign exchange loss of $2.9 million for Q4, primarily driven by operations in Argentina [24] - Capital expenditures for the quarter were $44.5 million, with $109 million dedicated to sustaining capital and $69 million to growth initiatives [26] Q&A Session Summary Question: Update on Diamba Sud resource and production profile - Management indicated that the updated resource will extend the mine life and improve the production profile due to higher grades [31] Question: Gold price assumptions for Diamba Sud - The company uses a gold price of $3,300 for resource estimates and $2,600 for reserves, reflecting current market adjustments [34] Question: Production cadence for 2026 - Production is expected to be steady, with Lindero experiencing softer production in the first half due to ongoing improvements [36] Question: Plans to reach 500,000 ounces of production - Management detailed that Séguéla and Diamba Sud will be key contributors, with Séguéla's throughput expected to increase significantly [41][42] Question: Underground development plans for Sunbird - Production from the underground is anticipated to start in late 2027 or early 2028, pending permitting approvals [60]