Good day, ladies and gentlemen, and welcome to the Fortuna Silver Mines Second Quarter 2021 Financial and Operational Results. At this time, all participants are on a listen-only mode, and we'll open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Luis Ganoza, Director of Investor Relations. Sir, the floor is yours.

Hi, Matthew. Thank you. By the way, Luis Ganoza is our CFO. It's Carlos Baca, Director of Investor Relations speaking. Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silver Mines and to our financial and operations results call for the second quarter of 2021. Hosting the call today on behalf of Fortuna will be Jorge Alberto Ganoza, President and Chief Executive Officer; and Luis Dario Ganoza Chief Financial Officer. Today's earnings call presentation is available on the featured presentation box on our homepage @fortunasilver.com. As a reminder, statements made during this call are subject to the reader advisories, included in yesterday's news release and in the earnings call presentation. Financial figures contained in the presentation and discussed in today's call are presented in US dollars unless otherwise stated. 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, Co-Founder of Fortuna.

Thank you, Carlos, and good morning to all. I will start the presentation on slide 6, which shares our second quarter highlights. In spite of COVID-19 related challenges at Lindero, which have led us to revise guidance for the year, our second quarter results continue to reflect the strength of our business with record sales of $120 million EBITDA of $55 million and an EBITDA margin over sales of 46%. Adjusted earnings of $0.12 per share came in largely in line with analyst consensus. We maintain a liquidity position of $122 million with a debt-to-EBITDA ratio of 0.2%. Our healthy balance sheet plus the incremental planned contributions to free cash flow from Lindero and Yaramoko in the second half add to our ability to fund Segeula construction under various price metal scenarios. Lindero produced 19,500 ounces of gold in the period. A dramatic surge of COVID cases in Argentina during the quarter impacted Lindero leading to a 16 day stoppage spread over the three months. In addition, continued restrictions in the country impaired our ability to support our ramp-up, which relies on foreign vendor technicians. These entry issues into the country have been partially resolved over the last couple of months. Today, we have specialized technicians on-site for all stages of crushing, including the HPR, and we're working to get superior technicians for the stacking system in the country in this third quarter. On July 2, we closed the Roxgold acquisition. We're working on a 100-day integration plan, which is advancing well and in many instances exceeding our expectations. With this acquisition, Fortuna is cementing a diversified low-cost production platform, sourcing precious metals from four operating mines and with a robust permitted development project in Seguela, where we expect a construction decision this third quarter, as we close the mining…

Yes. Thank you, Jorge. So on Slide 16, just a moment, on Slide 16, as Jorge had mentioned we had record sales in the quarter and overall a strong financial performance across our main financial metrics. As a reminder, and also as mentioned by Jorge, results in the comparative period in 2020 were depressed due to the impact of the pandemic and related government-mandated stoppages. So the emphasis will be mostly about the absolute figures in the quarter as opposed to the variance year-over-year. Earnings per share were $0.09 in the quarter and adjusted earnings per share was $0.12. After adjusting for $3.5 million of expensed amounts related to the Roxgold transaction and other non-cash, non-recurring items. Adjusted EBITDA of BRL54.9 million was at an all-time high except only for the $60.8 million recorded in Q1 2021 the first quarter of this year. And free cash flow from ongoing operations was $18.5 million, reflecting the capacity of our business to translate EBITDA results into free cash flow, in spite of COVID related challenges at Lindero. Also in relation to free cash flow, we had negative changes in non-cash working capital items of $8.3 million in the quarter and $24.7 million year-to-date. The amounts year-to-date are related mostly to accounts receivable at San Jose and natural buildup of accounts receivable and leach pad inventory at Lindero. We expect these absolute amounts to maintain or slightly come down in Q3 and a stronger recovery of receivables towards year-end. Next slide, Slide 17, yes, so sales increased by $76 million over Q2 2020 out of the total impact attributable to higher volume of metals sold of $51.8 million, as shown in the bridge chart. Around two-third is explained by Lindero, 30% San Jose and the balance of around 4% would be Caylloma. Similar…

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

Certainly. Ladies and gentlemen, the floor is now open for questions. Your first question is coming from Don Demarco. Your line is live.

Thank you, operator, and good afternoon, gentlemen. Just a couple of questions from me. First of all, on the call it was mentioned that some of the production at Lindero has been deferred to 2022. This year at Lindero, we're looking at maybe 100,000 ounces. Can you give us any indication of how much higher the production at Lindero might be in 2022?

We are currently budgeting the year, Don. We are in the process of -- we have started the budgeting process. And -- but the message here is we have a capacity to produce in the range of 150,000 ounces. If we are not achieving that based on the grade that we have at the mine is basically because the rate of production is down. So I would expect that our production for the second 2022 would be able to capture at higher rate annual production closer to what our target was this year right in the range of between 120,000 and 150,000 ounces. The message basically this is not an absolute loss of ounces but rather a deferral. I mean the models are conciliating well. The metallurgy is conciliating well. And it's just a very painful ramp-up in Argentina right now for the team.

Okay. Thank you for that. My next question has to do with the Roxgold transaction. And I see, on the cash flow statement I see an item the promissory note, $35 million promissory note. Can you give us an indication of the total transaction cost for the acquisition? Is it just the $35 million in that promissory note, or is it more than that? And any other details in terms of what the major items were would be appreciated.

Yes. So the promissory note really is a balance based on total costs to be paid out directly by Roxgold at the time of closing and their availability of cash. But in terms of total expenses or total transaction cost, the figure I mentioned of $29 million of cash payouts for change of control items and settlement of long-term incentives is the largest amount. The rest really would be related to legal expenses, advisory fees and these amounts will be fully disclosed in our Q3, right. But certainly the largest component of that is the amounts we have disclosed in our subsequent events right.

Okay. That's helpful. Okay. Well, that's all for me. Good luck gentlemen getting Yaramoko added into your portfolio of Q3 and we look forward to Lindero rebounding as well. Thank you.

Thank you.

Thank you. Your next question is coming from Michael Anthony . Your line is live.

Yes sir. The mine that you just had the acquisition, can you tell me exactly what precious metals they have?

If I understand your question, you're asking about the recent acquisition and the assets that we're bringing. If that is right, they are all gold assets. The Yaramoko mine is a gold-only mine and the Seguela project is a gold-only.

Yes sir. Well, I got one more. Will you all be paying a dividend any time this quarter or maybe in the future?

Not in this quarter. The question of a dividend for us is not a question of if but when really. And the purpose of bringing -- one of the purposes of bringing the Roxgold transaction is to build a portfolio of assets that can provide sustainability over the long-term to provide investors with a return that is sustainable over time. Quality assets, high-margin assets that can be sustainable over time will make a dividend or a means to return to shareholders sustainable over time. So for us it's a question of when, we have a capital project an important capital project in Seguela that is in the midst of a construction decision this quarter. So I think that with the -- in this price environment once we launch that project, the discussion of a dividend is one that the Board will be engaging with.

Well. This was a great quarter. It was a very strong quarter. And I appreciate everything you're all doing for shareholders.

Thank you, sir.

Thank you. That's all the questions.

Thank you. Your next question is coming from Ryan Thompson. Your line is live.

Yes. Hi Jorge and team. Thanks for the update. Just a question for me on Lindero. I see you stacked about 1.5 million tons to the pad in the second quarter. If I just look at sort of the ratio of ounces produced down to stack, I'm getting about 43% on my math. Could you just talk a little bit or maybe give a breakdown of how much of that 1.5 million tons was course ore versus sort of HPGR crushed and agglomerated ore? And are you seeing differences in the metallurgical performance between those sorts of two types of ore types?

Yes. In our Q2 disclosure, we provide a breakdown of the stacked ore. Give me a second here. We provide a very detailed explanation here where we trucked or amounted for roughly 800,000 tons. So Q2 was not particularly a good quarter in terms of the composition of the stacking mix, the trucked ore from the run-off mine and core ore stockpiles placed on the leach but total 800,000 tons. And it was 32% higher than originally planned. At this stage, we have completely stopped truck stacking. All the stacking is taking place with the conveyor stacking system. So, everything that's going to the leach part is going -- is running through the HPER agglomeration and conveyor stacking. So, that's an important development and that speaks about the continued improvements in reliability and mechanical efficiency we are achieving with that part of the system. Now, our metallurgical performance based on the types of ore that we are stacking in certain sales, be it course ore and conveyor stacked ore, again, our metallurgical performance and cyanide consumption and line consumption all of that is tracking according to our planned extraction and recovery rate. So the key change that we'll see in the third quarter is a significantly higher contribution of conveyor stacked ore as we have again stopped already course ore stacking, right? That was always a temporary measure that we decided to implement, knowing last year around March of last year or June of last year, that it is a complex system, running the HPR agglomeration and stacking and we were doing it alone. We didn't have the benefit of foreign vendor technicians for any of the three components of the system those being the HPR agglomeration and stacking and we were doing it alone. We didn't have the benefit of foreign vendor technicians for any of the three components of the system those being the HPR the West Pro agglomerators and the superior stacking system. So now we're working with technical support on site at least for the HPR and over time our operators have gained more experience. It's taking longer than anticipated again because we're doing it alone. But that's a significant change Ryan right in the -- this is the last quarter has been the last quarter you'll see in any way significant amounts of trucked ore placed on the leach.

Okay. No that's good to hear that those stacking systems sound like they're starting to perform a bit better here. Maybe just switching gears a little bit going over to West Africa. You mentioned negotiations on the mining convention for Seguela. Could you maybe just dig into that a little bit more and just provide us some more color on those negotiations and what we should expect there?

Yes. We are in I'll say the first round of negotiations with the Cote d'Ivoire government. And we are getting back to them on this first draft of the convention. It is not far from where the team expected we would land. But it is a negotiation. It's a process and we're doing it with a lot of care and respect for the country and the authorities. And we expect we can have an agreement between the parts in a way that would allow us to launch the construction of the project towards the end of this quarter. But we are currently engaged with the government in the negotiations.

Perfect. Thanks for that. And maybe I'll just ask one more. Are you able to provide any commentary on how Yaramoko performed in Q2? I know that obviously the deal didn't close until Q3. But if you can make any comments on how it performed in Q2 or even just in the month of July. Anything would be helpful there?

Yes in Q2 Yaramada a small shortfall in ounces due to the sequencing of some grade in the plant. They were in some extremely high-grade areas. And those high-grade areas do carry high variability as well. And in this place that variability played against the plan. But we understand it as a local event. And we – the mine is out of those high grade zones right now. So, in July we are already seeing performance tracking in line with the short-term and long-term plan. And we all know Yaramoko is quite a reliable asset and we don't see this small shortfall in Q2, as anything of concern or a change in trend but rather a feature of a particular area extremely high-grade area in the mine.

Got it. Okay. Thanks for the update, Jorge. That's all I have today.

Thank you. Ryan.

Thank you. Your next question is coming from Adrian Day . Your line is live.

Yeah good afternoon. I had a couple of questions, if I may. Can you remind me please, what the anticipated CapEx for Seguela is? Also if you have any other major CapEx items over let's say the next 12 months? And then given that do you have any plans for financing?

Good morning Adrian.

Good morning.

The estimated capital for Seguela is approximately $150 million as per the feasibility study. A big chunk of the CapEx around $65 million $70 million are encapsulated within the EPC agreement that we are aiming to execute with for the execution of the project. So and this is usually the case with these projects the bigger capital expense as you start seeing flow through towards half to two-thirds of the construction. And this is probably 1.5 years construction. In terms of financing, as we mentioned during our prepared commentary, we believe we have plenty of comfort to launch into construction activities based on the corporate facility we are putting in place and our existing cash availability plus just ongoing free cash generation.

Okay. No I know you've got enough, you've always run a very conservative balance sheet, which I like, but you think you've got enough without any additional financing?

Yes, that is an absolute, yes. Q – Unidentified Analyst: Okay great. Thank you.

Thank you. There are no further questions in the queue at this time.

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

Thank you. Ladies and gentlemen this does conclude today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.