Fortuna Mining source document

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# tmb 20241231xex99d3

Source: https://www.sec.gov/Archives/edgar/data/1341335/000155837025003846/tmb-20241231xex99d3.htm
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tmb-20241231xex99d3.htm
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​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ MANAGEMENT’S DISCUSSION AND ANALYSIS ​ ​ ​ For the year ended December 31, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of March 5, 2025 ​ ​ ​ ​ ​ ​ ​ This Management’s Discussion and Analysis (“MD&A”) of the financial position and results of operations for Fortuna Mining Corp. (the “Company” or “Fortuna”) (TSX: FVI and NYSE: FSM) should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2024 and 2023 (the “2024 Financial Statements”) and the related notes thereto which have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. For further information on the Company, reference should be made to its public filings, including its annual information form, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar. ​ This MD&A is prepared by management and approved by the Board of Directors as of March 5, 2025. The information and discussion provided in this MD&A covers the year December 31, 2024, and where applicable, the subsequent period up to the date of issuance of this MD&A. Unless otherwise noted, all dollar amounts in this MD&A are expressed in United States (“US”) dollars. References to "$" or "US$" in this MD&A are to US dollars and references to C$ are to Canadian dollars. ​ Fortuna has a number of direct and indirect subsidiaries which own and operate assets and conduct activities in different jurisdictions. The terms "Fortuna" or the "Company" are used in this MD&A for simplicity of the discussion provided herein and may include references to subsidiaries that have an affiliation with Fortuna, without necessarily identifying the specific nature of such affiliation. ​ This MD&A contains forward-looking statements. Readers are cautioned as to the risks and uncertainties related to the forward-looking statements, the risks and uncertainties associated with investing in the Company’s securities and the technical and scientific information under National Instrument 43-101 – Standards for Disclosure of Mineral Projects (“NI 43-101”) concerning the Company’s material properties, including information about mineral reserves and resources, which classifications differ significantly from the requirements required by the U.S. Securities and Exchange Commission (“SEC”) as set out in the cautionary note 54 of this MD&A. All forward-looking statements are qualified by cautionary notes in this MD&A as well as risks and uncertainties discussed in the Company’s Annual Information Form for fiscal 2023 dated March 22, 2024 and its Management Information Circular dated May 1, 2024, which are available on SEDAR+ and EDGAR. ​ This MD&A uses certain Non-IFRS financial measures and ratios that are not defined under IFRS, including but not limited to: cash cost per ounce of gold; all-in sustaining cash cost per ounce of gold sold; all-in sustaining cash cost per ounce of gold equivalent sold; cash cost per payable ounce of silver equivalent; all-in sustaining cash cost per payable ounce of silver equivalent sold; all-in cash cost per payable ounce of silver equivalent sold; free cashflow and free cashflow from ongoing operations; adjusted net income; adjusted attributable net income, adjusted EBITDA, net debt and working capital which are used by the Company to manage and evaluate operating performance at each of the Company’s mines and are widely reported in the mining industry as benchmarks for performance. Non-IFRS financial measures and non-IFRS ratios do not have a standard meaning under IFRS, and may not be comparable to similar financial measures disclosed by other issuers. Non-IFRS measures are further discussed in the “Non-IFRS Measures” section 27 of this MD&A. ​ ​ Fortuna | 2 Fortuna Mining Corp. Management’s Discussion and Analysis For the year ended December 31, 2024 (in US dollars, tabular amounts in millions, except where noted) ​ ​ CONTENTS ​ ​ Business O verview 4 Corporate Developments 4 Highlights 5 Financial Results 7 Results of Operations 14 Quarterly Information 22 Liquidity and Capital Resources 23 Financial Instruments 26 Share Position & Outstanding Options & Equity Based Share Units 26 Related Party Transactions 27 Non-I FRS Financial Measures 27 R isks and Uncertainties 41 Critical Accounting Estimates, Assumptions, and Judgements 50 Controls and Procedures 51 Cautionary Statement on Forward-Looking Statements 52 Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources 54 ​ ​ Fortuna | 3 Fortuna Mining Corp. Management’s Discussion and Analysis For the year ended December 31, 2024 (in US dollars, tabular amounts in millions, except where noted) ​ BUSINESS OVERVIEW ​ Fortuna is a growth focused Canadian precious metals mining company with operations and projects in South America and West Africa. The Company produces gold, silver, and base metals and generates shared value over the long-term through efficient production, environmental protection, and social responsibility. As at the date of the MD&A, the Company has four operating mines and exploration activities in Argentina, Burkina Faso, Côte d'Ivoire, Peru and Mexico, as well as the preliminary economic assessment stage Diamba Sud gold project in Senegal. ​ The Company operates the open pit Lindero gold mine (“Lindero” or the “Lindero Mine”) located in northern Argentina, the underground Yaramoko gold mine (“Yaramoko” or the “Yaramoko Mine”) located in southwestern Burkina Faso, the underground Caylloma silver, lead, and zinc mine (“Caylloma” or the “Caylloma Mine”) located in southern Peru, and the open pit Séguéla gold mine (“Séguéla”, or the “Séguéla Mine”) located in southwestern Côte d’Ivoire. Each of the Company's producing mines is generally considered to be a separate reportable segment, along with the Company's corporate stewardship segment. The underground San Jose silver and gold mine (“San Jose” or the “San Jose Mine”) located in southern Mexico was operating during 2024, and has since been placed on care and maintenance. The mine is expected to be sold in the first quarter of 2025. Refer to “Corporate Developments” below. ​ Fortuna is a publicly traded company incorporated and domiciled in British Columbia, Canada. Its common shares are listed on the New York Stock Exchange (“NYSE”) under the trading symbol FSM and on the Toronto Stock Exchange (“TSX”) under the trading symbol FVI. Effective June 20, 2024, the Company’s name was changed to Fortuna Mining Corp. in order to reflect that the Company’s business has moved from being predominantly focused on the production of silver to the production of gold and silver. ​ CORPORATE D EV ELOPMENTS ​ Proposed Sale of the San Jose Mine ​ On January 14, 2025, the Company entered into a binding letter agreement for the sale of its 100% interest in Cuzcatlan, which owns the San Jose Mine in Oaxaca, Mexico, to Minas del Balsas S.A. de C.V., a private Mexican company. Consideration for the sale comprises $6 million plus certain prepaid working capital items, with $2 million and the pre-paid working capital items payable on closing and the remaining $4 million payable in equal installments over the following two years; and a contingent consideration of up to approximately $11 million payable upon the completion of certain conditions. In addition, the Company will receive a 1% net smelter return royalty on new production areas from the San Jose Mine concessions for a 5-year term from the start of production. The sale is expected to close in the first quarter of 2025, subject to certain closing conditions. ​ The transaction is not expected to have a material impact on the operating performance or cash flows of the Company as the San Jose Mine has been placed into care and maintenance and was set for closure in 2025. Shareholder and regulatory approvals are not required to close this transaction. ​ Share Buyback Program ​ During the quarter the Company repurchased and cancelled 6,402,640 common shares of the Company under its Normal Course Issuer Bid (NCIB) at a weighted average price of $4.77. Refer to Fortuna news release “ Fortuna reports progress on its share buyback program ” dated December 3, 2024). ​ ​ ​ ​ ​ ​ Fortuna | 4 Fortuna Mining Corp. Management’s Discussion and Analysis For the year ended December 31, 2024 (in US dollars, tabular amounts in millions, except where noted) ​ ​ HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2024 ​ Financial ● Sales were $1,062.0 million, an increase of 26% from the $842.4 million reported in the year ended December 31, 2023 (“2023”)   ● Mine operating income was $343.6 million, an increase of 81% from the $190.0 million reported in 2023 ● Operating income was $228.0 million, an increase of $228.4 million from the $0.4 million in operating loss reported in 2023 ● Net income was $141.9 million or $0.42 per share, an increase from a net loss of $43.6 million or $0.17 per share reported in 2023 ● Adjusted net income (refer to Non-IFRS Financial Measures) was $157.3 million compared to $72.6 million in 2023, representing a 117% year-over-year increase ● Adjusted EBITDA (refer to Non-IFRS Financial Measures) was $476.9 million compared to $335.1 million reported in 2023, representing a 42% year-over-year increase ● Free cash flow from ongoing operations (refer to Non-IFRS Financial Measures) was $202.9 million compared to $153.5 million reported in 2023, representing a 32% year-over-year increase ● Net cash provided by operating activities was $365.7 million, an increase of 23% from the $296.9 million reported in 2023 ​ Operating ● Gold production of 369,637 ounces, a 13% increase from 2023 ● Silver production of 3,724,945 ounces, a 37% decrease from 2023 ● Lead production of 39,555,339 pounds, a 3% decrease from 2023 ● Zinc production of 51,905,635 pounds, a 6% decrease from 2023 ● Consolidated All-in Sustaining Costs (“AISC”) of $1,640 per ounce on a gold equivalent sold basis compared to $1,480 per ounce for 2023 . See “Non-IFRS Measures - All-in Sustaining Cash Cost per Ounce of Gold Equivalent Sold” for additional information on the change on the calculation in AISC effective for Q4 2024 ​ Health & Safety For the fourth quarter, the Company recorded two lost time injuries (“LTI”), one restricted work injury (“RWI”) and two medical treatment injuries (“MTI”) over 3.76 million hours worked. The end of year LTI frequency rate (“LTIFR”) was 0.48 lost time injuries per million hours worked (0.36 at the end of 2023). The end of year total recordable injury frequency rate (“TRIFR”) was 1.36 total recordable injuries per million hours worked (1.22 at the end of 20

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