Fortuna Mining Reports Q3 Results, Targets 60% Gold Output Growth by 2028

Fortuna Mining (NYSE: FSM ) reported third-quarter financial results on Thursday. The transcript from the company's third-quarter earnings call has been provided below. APIs provide real-time access to earnings call transcripts and financial data. Visit to learn more.

View the webcast at Summary Fortuna Mining Corp. aims for approximately 60% growth in annual gold production to half a million ounces by mid-2028, supported by projects at Séguéla and Diamba Sud. Third quarter production was 69,665 gold equivalent ounces, with adjusted EBITDA at $165 million, and adjusted attributable net income of $51 million, impacted by lower sales and higher costs. Séguéla experienced a production shortfall due to artisanal miner blockades, but operational issues were resolved, and the mine is expected to meet the lower end of production guidance.

Major growth projects include the Séguéla plant expansion and Diamba Sud construction, with significant investments underway and expected completion by 2028. The company maintains a strong balance sheet with $443 million in cash and plans to invest $750 million in growth and exploration over the next two years without issuing additional shares. Operational achievements include the acquisition of the Bambadji concession in Senegal and advancements in exploration, notably a maiden resource estimate at Kabi West by year-end.

Management paused share buybacks to prioritize funding growth projects but plans to reassess buybacks based on future financial performance and market conditions. Full Transcript OPERATOR (Moderator) Good day everyone and welcome to the Fortuna Mining Corp. third quarter 2026 financial and operational results call. At this time, all participants are placed on listen-only mode and we'll open the floor for your questions and comments after the presentation.

It is now my pleasure to hand the floor over to your host, Carlos Baca, Vice President, Investor Relations at Fortuna Mining. Sir, the floor is yours. Carlos Baca (Vice President of Investor Relations) Thank you, Matthew. Good morning everyone and welcome to Fortuna Mining's third quarter 2026 financial and operational results conference call.

Joining today's call on behalf of Fortuna are Jorge Alberto Ganoza, Chief Executive Officer, Director and co—founder; Kevin O'Reilly, Chief Financial Officer; Cesar Velasco, Chief Operating Officer, Latin America; and David Whittle, Chief Operating Officer, West Africa. Today's webcast presentation and Q3 2026 results materials are available on our website at fortunamining.com. Before we begin, please note that the statements made during today's call are subject to the reader's advisories included in yesterday's news release, the webcast presentation, our Management Discussion and Analysis, and the risk factors outlined in our Annual Information Form.

All financial figures discussed today are in US dollars unless otherwise stated. The technical information discussed on this call has been reviewed and approved by Eric Chapman, Fortuna's Senior Vice President of Technical Services and a qualified person as defined under National Instrument 43—101. Today's remarks will provide a concise overview of our third quarter results and the priorities guiding the business through the balance of the year. With that, I'll turn the call over to Jorge Alberto Ganoza.

Jorge Alberto Ganoza (Chief Executive Officer) Thank you, Carlos, and good morning to all, and thank you for joining us. During the third quarter we made significant progress on the growth projects that underpin Fortuna's next phase of growth. Led by the Séguéla plant expansion and the Diamba Sud construction, we're positioned to deliver approximately 60% growth in annual gold production to the level of roughly half a million ounces per year starting from mid—2028.

This growth comes from projects that we control, ounces already in our mineral inventory, supported by technically straightforward development plans, proven teams, and the financial capacity to execute. Operationally, the quarter was marked by a production shortfall at our Séguéla mine in July and August. These operating issues were contained within the quarter and corrective measures and actions taken by management have already delivered improved execution. Our priority is to sustain consistent operating performance while delivering this growth for shareholders.

First, a word on safety. We recorded one lost time injury at our Séguéla mine in July involving a light vehicle accident. For year to date, total recordable injury frequency rate as of September 30th was 1.23, below our corporate target of 1.37. I want to commend our teams for achieving 1,950 days and 1,080 days respectively without lost time injuries.

That's basically close to five and three years lost time injury free. Their performance demonstrates the sustained commitment to safety we seek across all of our operations. Our responsibility remains unchanged: ensuring that everyone goes home safely. We produced 69,665 gold equivalent ounces in the third quarter and remain on track to meet our annual production guidance in the range of 281,000 and 305,000 ounces.

Financially, adjusted EBITDA of $165 million and adjusted attributable net income of $51 million, or $0.17 per share, both were lower than in the previous quarter reflecting lower sales and lower volumes, realized metal prices, higher costs, and higher share—based compensation. The latter was a non—cash expense driven by the 24% rise in our share price during the quarter. Despite these pressures, including the Séguéla production shortfall, we generated $90.8 million in free cash flow from ongoing operations through the first nine months.

Fortuna generated $954 million in sales, $585 million in adjusted EBITDA, and $350 million in free cash flow from ongoing operations. Adjusted attributable net income was approximately $238 million, or $0.79 per share. This cash generation is a financial foundation for the growth program I'll now discuss. We're focused on delivering on our next phase of growth, so at Séguéla and Diamba Sud we're moving that strong growth strategy forward through concrete execution milestones.

Engineering and procurement are advancing for the approved Séguéla expansion, while at Diamba Sud we're progressing the remaining approvals and preparing for construction. At Séguéla we made the final investment decision in July for the $109 million plant expansion, which will increase processing capacity by 30%. Completion and commissioning are scheduled for the third quarter of 2028, targeting an annual production capacity of over 200,000 ounces of gold at this mine.

At Diamba Sud, the government has issued on November 2 the important notice of admissibility confirming that the government has reviewed our application for the exploitation permit and all documentation met the legal and technical requirements for the approval process. We expect to obtain the exploitation permit in the fourth quarter. Mining Convention negotiations are also in the final stages, with the convention adopting the 2016 Mining Code alongside provisions that will restabilize for a decade. We're advancing preparations to secure the project schedule, targeting first gold in mid—2028.

To support the schedule, the Board of Directors has authorized management to proceed with contract awards totaling $250 million, with execution spread across the construction timeline. We're also working with the Office of the President of Senegal and the Office of the Minister of Mines to arrange an on—site ceremony marking the formal start of construction in late November. The large and prospective Bambadji concession adds further exploration upside to our Senegal platform. The acquisition closed during the quarter for $206 million.

This is a property we acquired from Barrick, and we have already mobilized six drill rigs which are conducting infill programs across the Kabi West, Wadi, and Latifah prospects. Our immediate focus is to produce the first resource estimate for Kabi West by year end. This prospect is located just 2 km from the planned Diamba Sud plant site. We enter this investment phase, or growth projects, with a strong balance sheet.

At the end of September, we held $443 million in cash, close to $600 million in total liquidity, and a net cash position of $260 million, down approximately $160 million from the previous quarter, the decline in net cash coming primarily from the Bambadji acquisition. Over the next two years, we expect to invest approximately $750 million in growth and mineral exploration. Our available liquidity and free cash flow from the business position us to fund these programs without issuing additional shares or over—leveraging our balance sheet. This is growth designed to benefit and add significant value to our shareholders, backed by a clear funding plan.

We did not repurchase shares during the third quarter. Year to date, we have returned $106 million to shareholders through the repurchase of 10.8 million shares. As we launch the growth capital projects and advance on their execution, we will pause share buybacks. Growth is our first capital allocation priority, followed by shareholder returns through opportunistic buybacks.

While preserving balance sheet strength, we will assess opportunities to resume repurchases against project funding needs and available liquidity. As we move through the fourth quarter, our growth projects and exploration programs are gaining significant momentum. We look forward to reporting further milestones achieved as we advance the projects while maintaining the operational and financial discipline that underpins our production and business. With that, I'll turn the call over to Kevin, our CFO, to take us through the highlights of the quarter.

Luis Ganoza (Chief Financial Officer) Thank you, Jorge. Starting with the income statement, adjusted attributable net income for the quarter was 51.2 million, or $0.17 per share, in line with the 51 million in the third quarter of 2025 and down 47% from the 75.5 million in the second quarter of 2026. Quarter over quarter, the key change I want to highlight for net income is the impact of non-cash costs, specifically depreciation, depletion, and share-based compensation. Depreciation and depletion increased to $866 per ounce compared to $609 per ounce in the prior quarter.

This drove an increased cost of $15 million. Higher depletion was primarily due to planned mining sequencing at Séguéla and Lindero, as we saw greater amortization of previously capitalized stripping costs. This trend is expected to continue in the fourth quarter as Séguéla continues to source ore from the Ancien and Koula pits. The other major non-cash charge was share-based compensation expense of 10.9 million in the third quarter compared to a recovery of 0.3 million in the second quarter due to a 24% rise in the share price and the associated mark-to-market adjustments.

The impact of non-cash costs in the quarter helps to explain adjusted earnings per share of $0.17 compared to relatively robust operating cash flow per share of $0.43. Looking at the other parts of the income statement, sales are lower quarter over quarter due to lower production and a lower realized gold price of $4,281 per ounce versus $4,447 per ounce in the second quarter. Cash costs were higher as well quarter over quarter due to higher processing costs at Lindero from higher consumption of cyanide to improve leach kinetics and rental costs, and higher waste movement at Séguéla, but partially offset by lower royalties.

A foreign exchange loss of 2.5 million in the quarter was primarily driven by purchases of U.S. dollars to repatriate funds from Argentina, and the effective tax rate of 47% was broadly in line with the previous quarters, with the factors affecting our effective tax rate being those discussed in our second quarter update, namely deferred tax accruals in Argentina and withholding taxes. Cash costs increased to $1,244 per gold equivalent ounce from $1,034, and consolidated AISC was $2,286 per GEO, up $129 from $2,157 in the previous quarter.

Quarter over quarter, the increase primarily reflected lower production at Séguéla, which would normally contribute lower-cost ounces, and higher share-based compensation of $10.9 million compared to the recovery we mentioned in the second quarter. Share-based compensation on its own contributed $160 per GEO to the increase in AISC. When we look at AISC in the quarter compared to our guidance, I want to emphasize the continued impact of external factors relative to the assumptions underlying our annual guidance. External factors added $220 per GEO to the third quarter AISC.

This primarily reflected $116 from share-based compensation, $42 from higher consumable prices, mainly diesel, and $45 from macroeconomic factors impacting peso-denominated costs at Lindero. The temporary stoppage at Séguéla also contributed approximately $45 per GEO to AISC. Looking at consumables, similar to our peers, we've been seeing inflationary pressures in the cost of consumables and materials. However, the impact to our cost structure has not been experienced equally across all of our sites.

Inflationary pressures have been the most acute at Lindero, where diesel makes up around 10% of costs for mobile equipment and power generation. Relative to the assumptions in our guidance, we've seen diesel costs increase in the range of 60%, and explosives have been another factor at around 30% increases relative to guidance. Inflation has been more muted at Séguéla, where government price controls over diesel have limited the increase in fuel prices, but we have seen some pressures in mining costs, which rise and fall with our mine contractors, increase through the year.

In the quarter, looking at inflationary pressures of about $42 an ounce, Lindero accounted for roughly 85% of that and Séguéla the other 15. We expect AISC to trend down in the fourth quarter as Séguéla moves past its third quarter issues and Lindero maintains its performance. However, due to the external factors we've discussed, we still see an AISC that tracks above the top end of our guidance by about 5%. Stepping back and looking at the full year, the impact of persistent diesel price pressures, higher royalty cost, and macroeconomic impacts in Argentina are expected to push us 8 to 10% above the top end of guidance.

If we stripped out the impact of external factors, AISC would finish the year at or just above the top end of our guidance of $1,975 an ounce. Moving to cash flow, despite the challenges we faced in the quarter, the business continued to demonstrate the ability to generate cash flow with $90.8 million in free cash flow from operations and 126.7 million, or $0.43 per share, in net cash from operating activities before working capital changes. Free cash from operations increased from the 85.7 million in the second quarter primarily due to the timing of tax payments at Séguéla and lower sustaining capital expenditures.

In the fourth quarter, we do expect sustaining capital expenditures to trend back up to around $30 million to $34 million, and we also expect higher growth CapEx as work continues to advance at the Diamba Sud and Séguéla expansion. To finish off and look at our balance sheet, echoing Jorge's earlier comments, we see ample capacity to fund our $750 million growth program over the next two years based on a strong liquidity position of just 100600 million and underpinned by a robust business that generated $350 million in free cash flow year to date.

This provides a platform to allow us to organically fund our growth and support a target of a 60% increase in annual production by mid-2028. Back to you, Jorge. Jorge Alberto Ganoza (Chief Executive Officer) Thank you, sir. David, please give us an update on the West African business.

David Whittle (Chief Operating Officer — West Africa) Thanks, Jorge. Before turning to our operating results, I want to reaffirm that the safety and well-being of our employees and contractors remains our foremost responsibility. Our focus is on managing critical risks, reinforcing safe work practices, and ensuring that effective controls are consistently applied across all our operations and projects. At Séguéla, third quarter operations were affected by a temporary site-wide stoppage caused by a blockade by artisanal miners in early July, and by reduced equipment availability of one of our mining contractors.

These disruptions reduced mining volumes and limited access to higher-grade areas within the pits. We implemented several initiatives to address these issues, and mining volumes were back to planned levels in September. Mining was primarily carried out at the Antenna, Ancien, Koula, and Sunbird pits, with 6.5 million tonnes of waste and 340,000 tonnes of ore mined for a strip ratio of 19.1. A further 623,000 tonnes of waste were also mined at Sunbird South to provide access to the underground portal area.

Séguéla produced 33,744 ounces of gold during the quarter, processing 402,000 tonnes at an average grade of 2.67. Lower metallurgical recoveries associated with the Koula ore feed have been addressed, with the recoveries returning to previous levels. In October, Séguéla reported a cash cost of $947 and an all-in sustaining cost of $1,917 per ounce of gold for the quarter. Year to date, cash cost and AISC stand at $754 and $1,807 per ounce of gold.

With mining volumes, access to higher-grade ore, and recoveries restored, we expect a strong finish to the year and a return to first half production levels in the fourth quarter.