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🔥 THIS Is a RECORD! 🔥 Silver and Gold Price fuel BIG PROFITS... (Fortuna Mining) · SILVER / GOLD / $UFD Meme Coin Investing & Global Economics

• 0:03
  Fortuna Mining reports record earnings for the third quarter
• 0:07
  of 2024. That was the big news this
• 0:11
  morning. Today, we're joined by Jorge
• 0:12
  Ginoza. He's the CEO of Fortuna Mining.
• 0:16
  We're going to talk about what's behind those numbers, but also
• 0:20
  what we have to look forward to for the balance of 2024 and
• 0:25
  heading into 2025. Jorge, congratulations on a
• 0:29
  great report and welcome to Ron's Basement.
• 0:32
  Thank you, Ron. Yeah, indeed we had a an
• 0:36
  excellent quarter. We reported historic record
• 0:42
  earnings about $50 million, a record revenue $275 million on
• 0:50
  earnings per share at 16 cents, we beat the consensus of
• 0:58
  analysts, which was sitting at around 11 cents.
• 1:02
  And on cash flow from operations, we also generated a
• 1:08
  strong $0.38 per per share, about $119 million, which also
• 1:15
  did beat analyst expectations, analyst consensus, which was
• 1:20
  sitting at around 32 cents against the 38 that we recorded,
• 1:24
  right. So the the results were were
• 1:26
  received by the market. Again, I think the business,
• 1:30
  it's exhibiting its strength and we're very happy and pleased
• 1:34
  with that. Yeah.
• 1:35
  And you, you have a portfolio of five operating minds if I'm
• 1:39
  correct kind of a division that operates in Latin America and
• 1:43
  then more of a gold focused operation in West Africa along
• 1:48
  with I would say like an advanced stage development
• 1:51
  project, the Diamba SU project in in Senegal, West Africa.
• 1:56
  Would you walk us through just maybe the five minds and, and in
• 2:00
  your thoughts on, on each of those briefly in terms of how
• 2:04
  they're operating and and what you see as we move forward?
• 2:08
  Yes. And and before we we dig into
• 2:10
  the detail of the single assets, I think the, the, the pivotal
• 2:16
  concept here is that we have been able to manage our cost and
• 2:21
  manage our capital in a way that has allowed us to capture the
• 2:27
  benefit of the rising gold price and expanding margins.
• 2:34
  Right. And central to that discussion
• 2:37
  is the performance of the assets, which is what you're
• 2:40
  asking for. But just to give you a sense in
• 2:44
  the fourth, in the third quarter or EBITDA margin or EBITDA was a
• 2:50
  strong $130 million and the margin over sales was 48%.
• 2:57
  This compares to 42% margin in the first quarter of the year,
• 3:02
  right? So we've been able to expand our
• 3:05
  our margins and we could not do that if the assets were not
• 3:10
  performing right. And you know our lowest cost
• 3:15
  mine today is the Segala mine in in Cote d'Ivoire, the Ivory
• 3:18
  Coast. It's a mine that operates at a
• 3:21
  cash cost of under $700.00 per oz.
• 3:26
  Then we have our our Yaramoko mine in Burkina Faso.
• 3:29
  It's also a mine that operates with a low cost around seven,
• 3:37
  $700.00, under $1000 on on cash cost, right.
• 3:44
  And then we have our mines in Latin America, which are the
• 3:48
  Lindero mine and Lindero is operating at a cash cost of
• 3:53
  approximately $1000 per oz, right.
• 3:57
  So on on a cost per oz basis, I I would say that the the drivers
• 4:02
  for the better performance right now are the West African mines,
• 4:06
  but the Latin American mines are holding their own right?
• 4:11
  Yeah. And you, you, you know, when you
• 4:13
  talked about positioning the company or I guess you know, a
• 4:16
  word that you used to use with me six months a year ago was to
• 4:20
  position the company to be able to harvest during good periods
• 4:25
  of time. Do you feel like now is one of
• 4:28
  those periods in it? I guess that's what we're seeing
• 4:30
  with these record results is that you made disciplined
• 4:35
  strategic decisions in the past that are now because the mines
• 4:39
  are executing allowing you to allowing the company and the
• 4:43
  shareholders to harvest some, some impressive gains from from
• 4:47
  the numbers that you're reporting.
• 4:49
  Absolutely, Ron. And, and you know, in this
• 4:52
  business, because it's a cyclical business, no, we have
• 4:56
  no pricing power. So you know, gold price can go
• 5:00
  up, can come down, it has volatility at certain periods of
• 5:07
  time, during certain periods of time.
• 5:08
  So, you know, I've sometimes I, I find or observe companies
• 5:16
  trying to time the market for when they build, right, when,
• 5:22
  when there is appetite for, for the, the metal for gold and
• 5:29
  there is appetite for mining equities, then these companies
• 5:34
  push ahead with their development projects, right?
• 5:38
  We apply a different approach because we're here every day.
• 5:42
  So we, we try to drive the business throughout the the
• 5:47
  precious metals price cycle. No, so that allows us, you know,
• 5:52
  from time to time to look smart and and because you know, if if
• 5:58
  you're performing managing the business throughout the precious
• 6:03
  metals price cycle, undoubtedly there are times where where you
• 6:06
  are counter cyclical, right? And that has been the case for
• 6:10
  us. You know, gold has been out of
• 6:11
  favour for for a long time and that's when we were building
• 6:15
  mines, right. It was not very popular back
• 6:19
  then, I have to say. But we have to run the business,
• 6:23
  particularly a business like ours with, with a long term
• 6:26
  view, right. So today the mine is built, it's
• 6:29
  been operating fabulously for, for over a year.
• 6:32
  That's our, we operate 5 mines, but this is our newest mine and
• 6:36
  our core asset, a pillar in our portfolio, our lowest cost
• 6:39
  producer. And yeah, we're, we're
• 6:42
  harvesting today the benefits of expanded margins and, and good
• 6:49
  returns. We generated $56 million of free
• 6:53
  cash flow from operations, you know, and, and that's what this
• 7:00
  is all about, right? Yeah.
• 7:02
  Yeah. Well, and I think part of it
• 7:03
  also is, and obviously I'll be interested in your commentary
• 7:06
  and this is another thing that you've talked about over the
• 7:09
  years is I've talked with you is having a fortress balance sheet
• 7:13
  and and having a very solid financial position, taking on
• 7:18
  little bits of debt when necessary, when big construction
• 7:22
  projects are underway, that type of thing.
• 7:23
  But overall, managing the finances of the company in a
• 7:27
  conservative manner so that when opportunities do come along and
• 7:32
  like they did, let's say two years ago, when the with the
• 7:35
  rocks gold merger that you're able to execute on them.
• 7:39
  And and then, you know, have the financing, have the financial
• 7:43
  strength to be able to build the minds and position the company
• 7:47
  to again, not to overuse the word, but to be in a position to
• 7:51
  to harvest like you are today is.
• 7:55
  You know, again, our capital projects this year excluding
• 7:59
  exploration are about $130 million in the portfolio.
• 8:04
  If I consider exploration that's about $175,000,000 a capital
• 8:10
  intensive business, right, right.
• 8:12
  So coming out of our latest construction, the priority was
• 8:20
  put together a fortress balance sheet.
• 8:22
  So today what are those financial metrics?
• 8:26
  You know, one is we are running the Business Today with $180
• 8:32
  million in cash. We have pivoted into a positive
• 8:38
  net cash position. You know that means we could
• 8:42
  service all of our debt today and still be cash positive.
• 8:48
  We have a debt to EBITDA ratio, you know the the gearing of the
• 8:52
  business. We have a debt to EBITDA ratio
• 8:54
  of 0.221. No, that's in an inconsequential
• 8:59
  low number. We have liquidity available to
• 9:03
  the company in the order of 350, four, $100 million.
• 9:08
  So we have achieved that set objective of coming out of a
• 9:13
  construction where we had to you know leverage the company, the
• 9:17
  leverage now, deleverage it now and and and strengthen the
• 9:21
  balance sheet, provide maximum flexibility.
• 9:24
  What are the opportunities that come along with that?
• 9:26
  The simple ones is last year, so quarter third quarter 2024
• 9:34
  versus third quarter 2023. We have lowered our financial
• 9:38
  costs by $3,000,000 quarter over quarter, year over year.
• 9:45
  You know we have lowered the the rate, we have lowered the
• 9:48
  financial costs and removed the restrictive covenants from the
• 9:55
  facility, right. So you know our balance sheet
• 10:01
  today is is among the strongest in that space of mid sized
• 10:06
  producers where we play. Right.
• 10:09
  Yep, Yep. And because you're delivering
• 10:12
  cash flow, because you're delivering profit, you know, I'm
• 10:16
  kind of an accounting nerd. I was actually looking over the
• 10:18
  balance sheet before we came on that was released with the most
• 10:22
  recent financials and from December 30th of last year.
• 10:26
  So during these first nine months of the year, you've seen
• 10:29
  a pretty significant, I don't have it in front of me here, but
• 10:32
  a pretty significant increase in your total assets of the
• 10:35
  company, maybe a little under 100 million.
• 10:38
  And the total debt of the company went down by I think
• 10:42
  about $75 million. So you, you had a fortress
• 10:46
  balance sheet at the beginning of the year.
• 10:48
  Now you have for lack of a better word, a more fortress
• 10:51
  balance sheet. Now like you said, when I
• 10:54
  compare it to other companies in the mid size producer range,
• 10:57
  there's I can't find anyone who compares to to Fortuna and on
• 11:02
  top of that, there's what I think is very exciting growth
• 11:05
  opportunity within the company as well.
• 11:08
  Can you give us a little bit of an idea, let's say when you look
• 11:11
  through just the fourth quarter here, which were nearing almost
• 11:15
  being halfway through at this point and then as you look into
• 11:18
  2025, anything that that excites you or you think could be you
• 11:23
  know a good growth opportunity for the for fortune, no.
• 11:26
  We have in the portfolio opportunities and challenges as
• 11:30
  well. Sure, we can talk about both,
• 11:32
  OK. Yep, the on the side of
• 11:33
  opportunities, clear ones, we have what we term high value
• 11:38
  opportunities. We have several of those at the
• 11:42
  Segala mine in Cos d'ivoire. As I said before, that's our,
• 11:48
  our flagship asset or flagship mine where we have a commanding
• 11:52
  land position and we continue making discoveries.
• 11:55
  And through this, you know, through discovery is that we can
• 11:59
  create the the most value to our shareholders right through the
• 12:04
  drill bit, you know, and, and, and we continue making
• 12:07
  discoveries so much so that we have expanded our exploration
• 12:11
  budgets in 2024 from the original $33,000,000.34 to you
• 12:18
  know, the current forty $44 million and all of those funds
• 12:23
  are being allocated to Segal Exploration, right, That's one.
• 12:28
  The second one is the ambassador in Senegal where we have a most
• 12:32
  exciting advanced stage exploration project.
• 12:37
  We expect to produce a first Fortuna resource estimate for
• 12:42
  this deposit, for this gold deposit towards the end of the
• 12:45
  year. And parallel to that, we're
• 12:48
  advancing with engineering studies, working to deliver a
• 12:52
  preliminary economic assessment. You know, with some luck with
• 12:59
  the drill bit, this project can become our next mind, right.
• 13:04
  So there there's still some hurdles we need to get through,
• 13:09
  you know as a resource and and an economic assessment, but we
• 13:12
  are working towards that. And parallel to that, we're also
• 13:15
  conducting a, you know, the environmental permitting studies
• 13:20
  required. So we're running this on
• 13:21
  parallel tracks rather than sequential and that doing that
• 13:26
  because we have the financial means to do it.
• 13:29
  And if we decide to advance this project to construction, we
• 13:34
  don't run into a time delays or bottlenecks because of that.
• 13:39
  Permitting or engineering? Further engineering, You know,
• 13:43
  so we're running, let's say, 3 parallel tracks, exploration,
• 13:48
  engineering and environmental studies.
• 13:51
  Slash permitting, right? Very smart.
• 13:54
  I, I like that. I like that strategy, Jorge.
• 13:57
  If I, I want to circle back to Seguela for, for a minute,
• 13:59
  because that's been such a great success story for the company.
• 14:03
  And for those of our viewers who are maybe new to the company,
• 14:07
  I'll just refresh the story, which was 2-3 years ago when you
• 14:12
  acquired Rocks Gold in the in the Saguaya project in Cote
• 14:17
  d'Ivoire, There was some skepticism in the market.
• 14:20
  It was what you talked about earlier and what in my opinion
• 14:23
  were courageous and smart strategic decisions being made
• 14:28
  at a time when many other companies were, were just
• 14:31
  hunkering down. You built that mine, you built
• 14:35
  it pretty much on budget, on time.
• 14:38
  And it is, is, is. And I didn't see this in the
• 14:42
  latest report, but I know that in previous quarters it had been
• 14:45
  producing above nameplate capacity.
• 14:49
  And now what you're saying is that there's potential for
• 14:53
  expanding the resource, expanding the amount of, of, of,
• 14:57
  of gold that can be produced because of exploration success.
• 15:02
  And, and I think last time when you and I talked, you shared
• 15:05
  with me that when you built that mine, that, that maybe there's
• 15:11
  some allowances were made in the construction that, that would
• 15:14
  make it a little easier to possibly expand it at some point
• 15:17
  in the future. Is that is that so it sounds
• 15:19
  like you know all everywhere the company is doing well, but it
• 15:23
  sounds like Seguela and and in particular has some real bright
• 15:27
  prospects. In front, we have a lot of
• 15:30
  things coming together at Seguela.
• 15:33
  Yeah, 1 is exploration success. We continue finding gold ounces.
• 15:38
  Right. Second one is as you just
• 15:42
  described, all of those opportunities that were built
• 15:46
  into the original design we have been able to capture and today
• 15:51
  the meal is processing ore at a rate at a throughput rate that's
• 15:58
  35% above name plate capacity of the original design of the
• 16:05
  blueprints, right, right. So you know those two things
• 16:11
  coming together help build a very exciting case for the near
• 16:18
  future of this mine, right, Yes. So we talked about the
• 16:22
  opportunities in the portfolio and certainly Segala D'ambasu in
• 16:28
  Senegal. We also have some challenges.
• 16:31
  We have a mine, that's what has been an important mine in our
• 16:35
  portfolio coming to the end of its life.
• 16:38
  This is the San Jose mine in Oaxaca in Mexico.
• 16:42
  It's a mine that we acquire. We set foot on that property in
• 16:47
  December of 2005 and we've taken that from early stages of
• 16:53
  exploration all through development, financing,
• 16:57
  engineering, construction, start of operations, expansions.
• 17:03
  That mine started production in 2011 and by 2016 was among the
• 17:11
  top largest top twelve largest silver producers in the world.
• 17:17
  Right. So it's coming to the end of its
• 17:21
  life of reserves. We're exhausting reserves this
• 17:25
  year. So in the results call today, we
• 17:31
  announced that the mine will be going into a progressive closure
• 17:35
  starting in 2025. Progressive closure will take
• 17:40
  place still with some concurrent mining activities, but a much
• 17:44
  reduced production rate than what we've been operating the
• 17:47
  mine before. So it's an 8 year closure plan
• 17:52
  where the bulk of a closure activities take place in years
• 17:55
  1-2 and three and then we go into a monitoring phase, right.
• 18:00
  So that is now there is a trade off here because today the San
• 18:07
  Jose mine is a high cost mine. So we have high cost Oz coming
• 18:14
  out of production and growth, organic growth coming with
• 18:18
  Segela which is the lowest cost mine in the portfolio at Segala.
• 18:22
  Let me remind you and your audience or cash cost per oz is
• 18:27
  sub $700. Wow.
• 18:32
  Or all in sustaining cost, considering all the capital that
• 18:35
  we we invest on tailings expansions and capitalize
• 18:38
  stripping a lot of that good stuff, It's 1100 to $1200.
• 18:46
  Let me remind you again that the average only sustaining cost for
• 18:50
  the global gold mining industry travels today at around $1500
• 18:55
  per oz. So this is a mine that produces
• 18:59
  at significantly lower costs than the average for the global
• 19:03
  gold mining industry. Yeah, yeah.
• 19:06
  So it balances each other out. It I would imagine, Jorge, that
• 19:10
  it's a difficult decision to close a mine down.
• 19:14
  And it sounds like as I heard you talking about Yaramoko, you
• 19:17
  know, you, you probably remember almost 20 years ago, setting
• 19:21
  foot there for the first time, doing the exploration work,
• 19:24
  building the mine, getting to know the community, the people.
• 19:28
  It must be, I imagine, because I've heard you over the years
• 19:33
  talk about that Fortuna Mining is not just for Higganosa.
• 19:37
  It's all the employees, everybody.
• 19:39
  It must be a tough decision. I mean, but there's only so much
• 19:43
  you can do. But is it was it was it a
• 19:45
  difficult decision to to to look at that mine and in the in the
• 19:50
  decision to to finally close it down?
• 19:53
  No, it's just part of the cycle. It's part of the life cycle.
• 19:58
  Right. Yeah.
• 20:00
  It's just part of the life cycle and what what really we want to
• 20:06
  focus on is making sure that we do things right from beginning
• 20:11
  to the end. To the end, yeah, Yeah.
• 20:13
  That's what we need to focus on, you know, try to guarantee as
• 20:18
  much as we can the the safety of our people.
• 20:21
  And I can tell you many stories and we can have a program and
• 20:26
  dedicated to that. You know, we have a young boys
• 20:32
  and girls from the local community and this is a very
• 20:36
  disadvantaged area, right. So we we that have a trained in,
• 20:42
  in mining, in, in communications, in business
• 20:45
  administrations. And when we got there, they were
• 20:49
  five years old. Yeah, right.
• 20:53
  Yeah, 5610 year old, years old. Yeah.
• 20:57
  And they know they are, you know, in their, you know, early
• 21:03
  20s, mid 20s, early 30s. Yeah, yeah.
• 21:07
  And working for a company and then assuming leadership
• 21:10
  positions in the company, Right, right, right.
• 21:13
  So you know, if the mine is not there tomorrow, something that
• 21:18
  we done is provided skills and experience so so these young
• 21:24
  professionals can seek opportunities with dignity.
• 21:32
  Yeah. Anywhere.
• 21:33
  Yeah, That's, that's, that's that's pretty awesome, Jorge.
• 21:38
  Yeah. Yeah.
• 21:38
  And remember that, you know, years ago in the mining
• 21:43
  industry, the the mindset was, you know, I go to all of these
• 21:49
  places and I pay taxes and and give jobs.
• 21:51
  So respect me, right. Oh, you know, these mines are
• 21:59
  located in areas where people are disadvantaged.
• 22:02
  The, the state, the government struggles to get to these remote
• 22:07
  areas with proper infrastructure for education for, for, to
• 22:13
  manage the, the, the health of the people.
• 22:17
  So we do a, we, you know, end up playing a big role there.
• 22:22
  And it's not like the mines are in a industrial park and, you
• 22:27
  know, if you are not working for Fortuna, well, you just walk a
• 22:31
  block away and there you have the the Tesla plant or the
• 22:34
  Volkswagen or the Ford assembly line where you can ask for a
• 22:39
  job. No, we're in a in remote areas
• 22:43
  and we provide skills training, experience to people and we
• 22:48
  change lives, right? A lot of people, if they decide,
• 22:51
  if they choose to do so, they have now skills to migrate with
• 22:56
  dignity. Yeah, yeah.
• 22:58
  I value that. And to me, yeah, I, I want, I, I
• 23:03
  will admit that there is a bit of, you know, sadness in, in,
• 23:07
  in, in closing your mind, but it's part of the cycle of, of,
• 23:11
  of the mining business. This is never eating business,
• 23:14
  right? Yeah, it's a, it's a there's,
• 23:16
  there's a finite amount of silver and gold in the ground
• 23:20
  and people know that. But I really like how you
• 23:22
  describe that because what I envision is right, you get you
• 23:26
  these children when you showed up, you know, 1520 years ago are
• 23:30
  now in their 20s or 30s. And that could have real
• 23:33
  generational impact, right? They could take those skills, go
• 23:37
  somewhere else and and have a much better life than if Fortuna
• 23:42
  had never shown up. So those are things that get
• 23:45
  lost when your business is in a in an urban center.
• 23:50
  Yeah, yeah. Yeah.
• 23:51
  We are in very remote locations and again in areas that are very
• 23:56
  disadvantaged in developing nations, in poor areas where
• 24:01
  where, you know, there are things that we tend to take for
• 24:05
  granted and probably not in these parts of the world.
• 24:09
  So we want to focus is do right throughout the process, not just
• 24:15
  when we're coming in and we're all excited about this new
• 24:18
  project, but keep the same level of commitment and responsibility
• 24:22
  as we're going out, right? Yeah, yeah, yeah, yeah.
• 24:25
  It that makes sense. And I think on a long term
• 24:28
  business strategic perspective that also happens to pay
• 24:33
  dividends for the company in the in the long run as well.
• 24:36
  Doing the right thing, Jorge, as always, it's been a great honor
• 24:40
  to talk to you. You know, again, these third
• 24:42
  quarter numbers I think to me demonstrate the execution and
• 24:47
  strategy that you and the management team at at Fortuna
• 24:51
  had put into place. Is there anything I forgot to
• 24:54
  ask you or anything you want to mention before we before we sign
• 24:58
  off? I think we touched on the on the
• 25:00
  main topics, Ron, and thank you for the opportunity to speak to
• 25:03
  your audience. Yeah.
• 25:04
  Well, on behalf of our audience, many of my, you know, community
• 25:08
  are shareholders and Fortuna, I'm a shareholder in Fortuna.
• 25:12
  I will mention that if people want to learn more about the
• 25:14
  company, there's a newer website, fortunamining.com.
• 25:19
  They're active. Fortuna is active on X, formerly
• 25:22
  Twitter. And Jorge, thank you again so
• 25:25
  much. And I'll look forward to seeing
• 25:28
  how the company performs here in the fourth quarter.
• 25:30
  I appreciate it. Thank you.