Good day, ladies and gentlemen. And welcome to your Fortuna Silver Mines Fourth Quarter and Full Year 2019 Financial and Operational Results Call. After the presentation, there will be a question-and-answer session [Operator Instructions]. At this time, it's my pleasure to turn the floor over to Mr. Carlos Baca, Investor Relations Manager. Sir, the floor is yours.

Thank you, Tom. Good morning, ladies and gentlemen. I would like to welcome you all to Fortuna Silver Mines and to our financial and operational results call for the fourth quarter and full year 2019. Today, we will be using a webcast presentation, which will be controlled by us. To download the presentation, please go to our Web site at www.fortunasilver.com, click on the Investors tab then click on the Financials sub tab and under Q4 2019, click on the earnings call webcast link. Jorge Alberto Ganoza, President, CEO and Director and Luis Dario, CFO, will be hosting the call from Lima, Peru. Before I turn over the call to Jorge, I would like to indicate that this earnings call contains forward-looking information that is based on the company's current expectations, estimates and beliefs. This forward-looking information is subject to a number of risks, uncertainties and other factors. Actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. Certain material factors or assumptions were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information. Additional information about the material factors that could cause actual results to differ materially from the conclusion, forecast or projection in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information, is contained in the company's annual information form and MD&A, which are publicly available on SEDAR. The company assumes no obligation to update such forward-looking information in the future, except as required by law. I would now like to turn the call over to Jorge Alberto Ganoza, President, CEO and Co-Founder of Fortuna.

Thank you, Carlos, and good morning to all. As Carlos stated along with Luis, our CFO, we'll be presenting our review of our Q4 and year-end financial results and main developments across our products and operations in Mexico, Peru and Argentina. In Slide 6 of the presentation, under highlights for the year, we're pleased to report strong financial results with annual adjusted earnings of $28 million, free cash flow from ongoing operations of $34.5 million and a robust EBITDA margin of 37%. Liquidity available stands at $123 million with a current debt to EBITDA ratio of 1.7. This ratio is expected to peak 2.4 by midyear before the start of commercial operations at Lindero. As of the end of January, Lindero showed the completion of 89% with $280 million of construction spending and first doré is planned for the end of Q2 2020. As announced in our December construction up. A year of strong financial results and difficult challenges that we have overcome was tainted by a fatal accident of a mine contractor at our San Jose mine in August. This terrible loss was a blow to our renovation at a time when our efforts are showing sustained improvement year-over-year in safety performance indicators as we will show. We pledge our commitment to our culture and procedures conducive to a safe work environment where all our personnel goes back home safe and sound every day. In the second quarter of this year, we will be releasing our 2019 sustainability report. This is a much improved and comprehensive effort compared to our first published report for 2018. We expect this report will set a solid baseline from which we can benchmark our progress on key areas of environment, social and economic benefit to the communities. Next slide please. In Slide 7,…

Thank you. On Slide 25, as has been discussed by Jorge, we had a strong fourth quarter, driven by higher sales of 16% over Q4 2019. We reported quarterly net income of $19 million compared to $2.2 million in Q4 of 2018. And after adjusting for noncash and certain nonrecurring items, we recorded adjusted net income of $10.9 million, significantly above the $4.4 million in 2018. As Jorge mentioned as well, adjusted EBITDA increased 11% to $25.1 million. Free cash flow from ongoing operations was $6.4 million, down 46% over 2018 due mostly to timing issues on our sales and trade receivables, as well as an accumulation of VAT receivable at our San Jose mine. For the full year 2019, we recorded adjusted net income of $28.4 million, 26% below 2018 as a result of slightly lower sales, higher production cash costs over the prior year and higher share based payments expenses and exploration and evaluation costs. Our annual EBITDA of $95.4 million was 16% below the prior year. And we generated annual free cash flow from ongoing operations for the full year of $34.5 million, which was impacted by an accumulation of VAT receivable in Mexico of around $10 million in the year. Next slide, Slide 26. When breaking down our sales performance for the quarter, we can see the highest impact came from higher silver and gold metal prices, which were 19% and 20% above Q4 2018, as well as higher silver and zinc production. Moving on to the next slide, Slide 27. When looking at our comparative segmented results over Q4 2018, we can see that the strong results in the quarter were driven by the San Jose mine, which saw improved EBITDA of 34%. As we have discussed, these results were in turn driven by higher…

Thank you, Luis. We would now like to turn the call over to any questions that you may have.

Thank you [Operator Instructions]. And we do have a question coming through from Justin Stevens with PI Financial. Justin, please check your mute button on your phone, we cannot hear you at this time [Operator Instructions]. And Justin, your line is open again could you check the mute button please.

I was mostly wondering on power at Lindero. You guys have a power purchase agreement from a contractor. So the diesel generation has done at a fixed price per kilowatt hour?

We are responsible for sourcing the fuel for the power generation. So we are currently contemplating price protection or hedging alternatives taking advantage of where the oil being trending, so that’s where we’re looking at right now...

But because of your supply if you're sourcing all the diesel for the site then you could theoretically realize some of the sort of recognize some of these lower prices and lock them in going forward?

Yes.

Other than that, just the timing on that first doré pour I guess will depend on how quickly you can irrigate after stacking. But the current plan is to stack you've had in April and then when do you think you'll be irrigating?

The irrigation is a function of available surface area on the ore placed and the leach pad. There are several factors there. One is our ability to have a smooth commissioning and placement of ore from the start on the leach pad. We have our commissioning curve that we are working under, the delays that we have been encountering. Although fortunate, it also creates opportunities and give time for us that we're not just sitting there. So, the primary crushing, the secondary crushing, for example, we are stretching the equipment. We already are advancing with addressing issues that otherwise we would be dealing with in the commissioning phase with the entire site within operation. For example, small spills and the corrections on structures and shoots that are typical at the startup commissioning. So, we are gaining time on primary, we're gaining time on secondary and we're going to start doing the same with tertiary soon. So, we have a curve for the commissioning and operation ramp up or systems to test start placing ore on the leach pad. And we believe we can start irrigating relatively soon and that ore is going to be closer to plastic, we expect we can be generating enough solutions that we can start running more ADR by late May or June.

And you currently, I'm assuming you've got everything that you need on-site. Now, there's nothing that's really outstanding yet on that end?

In terms of supplies you mean?

Yes, supplies and equipment, everything has been transported to site.

Yes, in terms of equipment, we have everything, in terms of supplies, explosives, we're drilling and blasting every day for since September. Cyanide, we have -- due to concerns on supply chain, due to the coronavirus, we are taking action to guarantee our key supplies to site.

And just on the stockpiling, are you still sort of mostly running, moving waste and some of the lower grade ore to expose the higher grade ore, or have you started moving to some of the higher grade ore yet?

We are going to start now building a smaller higher grade stockpile. In preparation, probably a week to two weeks of ore in the higher grade stockpile. Again, the idea was to minimize re-handle in our mine plan. Our mine plan has a unique grade stockpile. We manage for the first units to meet grade stockpile. So we have basically accomplished that through this pre-production phase. We have the primary, the higher grade ore exposed. We're going to start building a small higher grade stockpile, just a small. And then we're going to start slowing down our mining rate until our crushing circuit rate to start taking load.

And then so once you put the drainage layer like the liner, on top of the liners of, I'm assuming sort of low grade, the first thing down will be some of that high grade from both the pit, as well as that stockpile?

Yes.

We'll take our next question from Adrian Day with ADAM.

First one is on San Jose, obviously you got your stay in court, which was essential. But I don’t know if you care to say are you in negotiations with the Mexican authorities on the potential settlement, or are you just pursuing it in the courts? And then the second question will be on Caylloma. Do you have any sense for next several quarters what the mix of silver versus zinc et cetera might be?

We are pursuing three lines of action with respect to the royalty claim in Mexico at our San Jose mine. First are the legal ones. We have, as you mentioned, we requested an injunction to a court and, or request for an injunction was first admitted by the court. And second, the court issued, first, a temporary state that later moved into on March 2nd, moved into a permanent state of execution. So the DGM on Mexican mining authorities have a period to appeal that, I believe late this week early next week is the deadline. That appeal will likely take several weeks, if not months to get resolved. But our legal team in Mexico believes that our arguments are sound and our legal position is strong. And the reflection of that is the continued resolutions we have been getting in this court. Second, there is just a part on what's called in Mexican administrative court, where we have no filed an injunction, but we have filed a request that the authorities remove the inscription of the royalty from our title. The administrative court is hearing this case. We presented this request in front of that court last year, and that is a process that is ongoing. And third, directly to your question, it’s the direct negotiations with the authorities. Yes, we would like to have an agreement with authorities where we can settle these out of court. It is our strong view that there is no legal basis for the royalty. But, we would agree to a reasonable settlement at least out of court with authority. I have personally met already in two occasions with the Secretary of Mines of Mexico. We have had conversations where we have worked towards a plan to achieve this negotiation. The Mexican law…

And so t obe around 20% silver in the revenue composition to-date approximately.

But there'll be no difficulty going back to those silver rich areas veins?

There is a period of preparation. I would, if I have to provide a ballpark figure to you, today it likely takes several months to open up and prepare those areas for production back again. It will be measured in months.

[Operator Instructions] And Mr. Baca, there appears to be no further questions at this time. I'll turn the call back over to you for closing remarks.

Thank you, Tom. If there are no further questions, I would like to thank everyone for listening in to today's call. And we look forward to you joining us next quarter. Have a great day.

Ladies and gentlemen, thank you for joining us today on today's conference call. We appreciate your participation. You may disconnect at this time, and have a great day.