The Global Resource For Connecting Buyers and Sellers

Fortuna Silver takes $90.6m charge on Mexican mine closure

After more than a decade in operations, Fortuna Silver (TSX: FVI) (NYSE: FSM) will cease activities at its San José mine in Mexico this year, six months earlier than planned, due to rising costs and depleted reserves.

The Canadian miner, which reported a loss of $92.3 million in the fourth quarter of 2023, booked a $90.6 million charge related to the anticipated closure of the operation, which would leave about 5,800 direct and indirect employees in limbo.

The company also recorded impairment charge of $10.1 million related to materials inventory at San Jose, Burkina Faso’s Yaramoko, and Argentina’s Lindero mines.

After adjusting for impairment charges and other non-recurring items, the company’s adjusted attributable net income in the last quarter last year was $20.6 million or $0.07 per share. This compares to $6.4 million or $0.02 per share in Q4 2022 and can be explained primarily due to higher gold sales and prices.

Despite promising exploration results at the newly identified Yessi vein, the Vancouver-based miner is moving forward with its plans to close the San Jose mine, but said a decision on whether the Yessi discovery can support operations beyond 2024 will be made in the second half of the year. 

Chief executive Jorge Ganoza said this year Fortuna Silver will focus its exploration efforts on the Diamba Sud gold project in Senegal and the Seguela gold mine in Côte d’Ivoire.

Africa expansion

The precious metals producer inked a deal earlier this week with Australia’s Turaco Gold Limited (ASX: TCG) that gives it the option to gain a 80% interest in five exploration permits that make up the junior’s Tongon North project, in Côte d’Ivoire.

Under the agreement, Fortuna is required to make an initial payment of $100,000 to Turaco and invest a minimum of $3.5 million in the project over the next three years.

If Fortuna decides to exercise the option, Turaco can choose to either co-venture with Fortuna, maintaining a 20% interest, or sell its remaining stake for $1.5 million in cash.

The deal would expand Fortuna’s presence in the region, adding to a portfolio that also includes the Yaramoko gold mine in Burkina Faso.

Other than in Africa, the company has operating mines in Argentina, Mexico and Peru. 

Source: MINING.COM – Read More