Fortuna update on COVID-19

Caylloma Mine, Peru

On 15 March 2020, the government of Peru introduced a series of measures to contain the rapid spread of COVID-19, including the closing of international borders and a declaration of a 15-day period of mandatory national ‘social isolation.’ The period of social isolation has been subsequently extended to 12 April 2020.

The company is working under the regulatory framework issued by the Ministerio de Energía y Minas MINEM) and the Ministerio del Interior (MININTER), which allows mines to operate during this period with essential personnel. The Caylloma Mine continues to operate with a reduced task force drawing ore from its coarse ore stockpile. The transportation of concentrates and essential supplies continues to be permitted and the operation has sufficient stock of critical supplies, consumables and camp provisions to cover the extended isolation period.

San Jose Mine, Mexico

On 31 March 2020, the government of Mexico announced extensive measures in response to the spread of COVID-19, such as the suspension of all non-essential activities, including mining, until 30 April 2020. As a result, the company has initiated the orderly temporary suspension of mining and processing activities. A reduced task force will remain on site to safeguard critical infrastructure and maintain environmental monitoring through the suspension period.

Lindero Project, Argentina

On 19 March 2020, the government of Argentina declared effective at midnight a period of mandatory national ‘social isolation’ in relation to COVID-19, effective until 31 March 2020. The period of isolation has been subsequently extended until 13 April 2020. All construction activities have been temporarily halted at Lindero and a reduced task force remains on site to maintain critical activities including security and environmental monitoring over the extended isolation period.

The company is assessing the impact of the temporary suspension of construction on the project's timeline and budget.

2020 production and cost guidance

As a result of the government-mandated constraints on business in the countries that host the company’s operations and the uncertainties related to these constraints, Fortuna is currently unable to determine the impact on its production and cost guidance for 2020. Therefore, the company is withdrawing production and cost guidance for 2020 until further notice.

Financial Position

As of the financial year ended 31 December 2019, Fortuna had total liquidity available of US$123.4 million, comprised of US$83.4 million in cash and an undrawn amount of US$40 million (subsequently drawn) under its US$150 million credit facility. An aggregate of US$30 million matures on 31 December 2020, with the balance maturing in January 2022.

The credit facility requires the company to maintain a debt to EBITDA ratio of not more than 3:1. As of the financial year ended 31 December 2019, the debt to EBITDA ratio was 1.7:1.

The company has implemented measures to reduce spending and capital expenses consistent with the current uncertain business environment. These measures include the postponement of approximately 40% of sustaining capital budgets, a 60% reduction in the Brownfields exploration budget and reductions in senior executive annual compensation and other corporate expenses.

Read the article online at: https://www.globalminingreview.com/finance-business/06042020/fortuna-update-on-covid-19/