Fortuna eyeing positive cash generation at Peru mine
Fortuna Silver expects improved performance at its Caylloma mine in Peru this year, resulting from an increased focus on base metals, according to CEO Jorge Ganoza.
Fortuna's Peruvian subsidiary Minera Bateas, which operates Caylloma, generated a net loss of US$21.1mn in 2015, compared to net earnings of US$5.6mn the previous year.
The company's Mexican division and San José mine delivered net earnings of US$23.1mn, down from US$28.4mn, with companywide net loss at US$10.6mn, compared to 2014 net earnings of US$15.6mn, including corporate costs.
Earnings were also impacted by a post-tax impairment at Caylloma of US$17.5mn.
MINE PLAN
Fortuna halted mining at the high-grade Bateas silver vein in Q4, following a decision to shift to base metal-rich zones in the Animas vein.
The change in mine plan is expected to lift overall returns at Caylloma, Ganoza told the earnings call, with higher 2016 lead and zinc production of 20,000t more than offsetting lower silver guidance of 1.20Moz.
Output last year was 1.70Moz silver, 10,811t lead and 16,252t zinc.
In addition, a switch to 100% grid power in February, compared to 70% from the grid and 30% from diesel generators previously, will lower production costs.
Fortuna is also commissioning a plant-optimization project which will lift throughput to 1,500t/d from 1,300t/d, and expects improved recoveries this year.
"We should have a cash-positive year at Caylloma," Ganoza said.
The company may decide to shift back to high-grade silver mining at silver prices of US$19/oz, he added.
At San José, Fortuna plans to spend US$23mn advancing an expansion to 3,000t/d from 2,000t/d this year, expected to conclude in July, the CEO said.
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