Ladies and gentlemen, hello and welcome. Thank you for joining us for this Fortuna Silver Mines Third Quarter 2020 Earnings Conference Call. As a reminder, all phone participants are presently in a listen-only mode but after today's prepared remarks, you will have the opportunity to ask questions. To get us started today with opening remarks and introductions, I'm pleased to yield the floor to IR Manager, Mr. Carlos Baca. Good morning sir.

Thank you, Jim. Good morning, ladies and gentlemen. I would like to welcome you to Fortuna Silver Mines and to our financial and operational results call for the third quarter of 2020.

Thank you, Carlos, and good morning to all, as we presenting an introduction to our third quarter results and discuss the status of our operations in Mexico, Peru and Argentina, and then turn the call over to Luis who will take you through financial statements. On Slide 6 of the presentation, in the third quarter, we have reported the highest financial figures in the company's history for sales, free cash flow from operations and adjusted EBITDA. Free cash from operations was a strong $30 million and our EBITDA margin stood at a robust 51% over sales. We have $85 million in cash as of the end of the quarter, and a comfortable liquidity position of 140 million with a moderate debt to EBITDA ratio of 0.7. At Lindero, we produced our first gold on October 20. We are pouring gold every week and made our first sales in November. We are immersed in the ramp up activities with the aim to sterilize production of disabilities and parameters by year-end and into the first quarter. And despite continued COVID-19 related restrictions, our mines in Peru and Mexico met production of objectives in the quarter. In Argentina restrictions on flow of personnel across national and provincial waters, hamper and drive our ability to provide quick response to various issues that arise as part of any production ramp up phase. Across all sites, we have strict sanitary protocols in place and have taken over 8200 PCR tests to our personnel reporting approximately 391 positive cases for COVID so far.

Thank you, Jorge. So as was previously mentioned, we had a record quarter in terms of sales, EBITDA and cashflow. We recorded sales of $83.4 million, 36% above Q3 2019. On the back of higher metal prices, higher metal production partially offset by higher treatment charges from 2019. We reported quarterly net income of $13.1 million and 16.1 million on an adjusted basis and earnings per share of $0.07. The loss in that comparative period of Q3 2019 was related to an 8.2 million foreign exchange loss related to the Lindero VAT receivable in Argentina. In q3 2020, we have reported an FX loss of 3.5 million, of which 2.7 million is related to the Lindero VAT. Also in the reporting quarter, we had higher effective tax rates than what we expect on a recurring basis with an impact of around $0.01 for share. Consistent with drivers I have mentioned we saw a material increase in EBITDA and free cash flow as Jorge pointed out as well. Free cash flow from operations of $30.1 million represents 36% of sales. This number contains a positive impact of around $5.5 million from changes in working capital related to timing of certain payroll items but even excluding this effect, free cash flow was close to 30% of sales. On the Slide 25, when breaking down our sales performance for the quarter, we can see the highest impact came from higher silver and gold metal prices. In particular, silver price contributed $5.2 million out of the total $22 million increase in sales. Also worth mentioning, the negative impact we see from treatment and refining charges and which have been a consistent feature of 2020 are expected to revert in 2021 as we are seeing much improved terms in the market for next year.

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

Gentlemen, thank you. We'll hear first from Trevor Turnbull at Scotiabank.

I had a question. You talked a little bit about what you're doing in the last few months of the year, November, December at Lindero. Can you talk a little bit about how October looked in terms of what you were able to get on the pad in terms of tons or ounces? And can you talk also a little bit maybe about how the mining costs are tracking at Lindero so far?

Yes. October was a difficult month in the ramp up. We had two break downs a conveyor head pulley something quite unusual, we never seen anybody in the team break of pulleys like that, particularly new pulleys. So that was a problem with fabrication. That took us down pretty much 12, 13 days in the month, right. Those are very simple to manufacture, we manufactured them ourselves in Salta. And we have manufactured spare cat pulleys something that we have never carried in stock in anywhere in light of what happened. But, nevertheless, that took us down around 12 days in the month of October or design rate of production in the crushing system is about 1100 metric tons per hour. And we've been -- we are running right now on average at around for the year so far at around 800. So in the ramp up, we're doing well. But the loss of operating hours in October, operating days in this case did take a two. So as I mentioned I think we're tracking in the right direction with team of unexperienced operators who we have trained but nevertheless, there is always a curve there, as they gain more experience with the equipment, under limitations with rotation of supervision and speed at which we can address issues. But in November we're faring better. And again, the message I think, overall is, we are heading in the right direction, where it's just taking a bit longer because all of these drugs with difficulties to move personnel and that are related to our ability to solve issues on site.

Now that November is kind of settling in and is a little more typical of operating. Can you say anything about how mining costs look on a unit cost basis compared to what you're targeting?

Unit costs of the mine are well within our expectation, we're not seeing any significant deviations. So for Q4, we expect to be reporting -- in a capacity to report mining costs within our original plan, there's not much deviation that say that different of course for plans and indirect cost, where there's still a distortion of a ramp up. But overall, we see that our expected costs at a steady state is achievable and on track, which is in the range of $10.5 to $11 per ton of processed ore.

The main drivers for cost on the side of consumables are, what fuel for energy as we self-generate, cyanide and layer. The pricing we enabled to achieve on cyanide and fuel is well within what was in our budgets.

Yes, absolutely.

Okay. That sounds good. And understand because the irrigation has been a little bit unsteady due to the way the stacking configurations. It hasn't gone exactly the way you'd originally planned. Is it possible to give us a sense of recovery though from the heap? How if that's tracking also the way you wanted to?

Yes. As I mentioned, the leaching kinetics is something we're looking at carefully. We have the benefit that this -- there is little interference with these initial cells as there is nothing stuck on top of them. And the percolation is quite rapid, right, solution percolation irrigation. The cycle is quite rapid as these are the cells closest to the plastic right to the bottom. So and we also have our column test to control what's happening and what we are going to report is that the leaching curves are performing according to our expectations remember that we are currently placing coarser ore than there were design coarse, we're placing ore at a of around 35 millimeters, design is 90 millimeters. But we have done the column tests and have done our projections based on this coarse are crushed. And we expect to be at around 50% recovery within 90 days and that's where we are tracking. In the initial cells, we did have some issues that are also more operational, we had a bit of bonding in one of the cells. We are after stacking with trucks before we start the irrigation, we prepare the ground. We rework the first 30 centimeters. We have to go a bit deeper due to traffic of trucks we have to go a bit deeper. And once we did that, the problem just went away. And then, we have some clogging of pipes because of dosage of reactants that we use in order to avoid deposition of carbonates in the pipes. That's also an issue that was identified and quickly addressed. But just normal stuff that you see through a ramp up in a new operation. And the problems are being managed, leaching kinetics are tracking along with our expectations, you're solving these issues. And with respect to the speed at which we can incorporate new areas under irrigation, yes, we have made an adjustment in our forecast, we are not able with -- we were not able to implement a retreat stacking, which would have allowed us to bring in irrigation at a much faster pace. We are stacking with trucks in an advance, not in retreat. So we need to wait until the cell is complete, and that's when we can start to irrigate. So that takes away the speed at which we can bring new ounces under irrigation. This is a temporary issue related to the fact that we're stacking with trucks. This week we started working with the conveyor stackers and this problem just goes away with conveyor stacking, which is designed for retreat starting.

Yes, understood. Maybe one just very simple last question for Luis and that is with respect to the VAT recovery, any sense of kind of how that how you expect that to play out?

Yes. We expect to start collecting VAT. As soon as we start selling, as Jorge mentioned, we had our first sale in November. And based on the existing regulation and the amounts we are able to collect as a percentage of sales every month. Our expectation is that within 12 and 14 months, we should be expected to -- we should be able to expect to collect the full amount in pesos let's -- as you might be aware, if the collection is in local currency. So that's the timeframe of drill.

Next, we'll hear from Chris Thompson at PI Financial.

Just looking at the pictures it looks like a great place to build a mine. Couple of quick questions here. You do mention that you're allowing for additional time to fully take, I guess the HPGR, agglomeration and stacking systems to commercial. Now is that built into the timeframe you anticipate for first commercial production in Q1?

We originally anticipated Chris to have -- to place about 0.5 million tons of crushed ore on the leach, crushed and agglomerated ore on the leach pad in December. We are reducing that tonnage down to about 320,000 tons and that is accounting for what we are projecting would be more realistic based on the limitations that we are facing with this COVID environment. And as I expected the flow of people, supervision, technical assistance. So how it is with commissioning. Sometimes it just goes very well and smooth and sometimes it gives you a bit of grief. So in this forecast, we're taking a bit of a more conservative position with respect to the tonnage. We have not translated that into the first quarter of this year. Certainly, something we are monitoring, our expectation today that we should be in a position early in Q1 to be achieving a about 0.5 million ounces ore for placed on the leach pad every month. We before incorporating before incorporating the HPGR and conveyor, we were already close to that rate of production right now, right?

Right. Can you Jorge, what do you need to achieve to tick the box by way of commercial production? Maybe you could just remind us of that?

No. I think we would like to see the mechanical aspects of the operation within 85% of design, no? Again, first, the mine is operating at the design rate, primary and secondary crushing have been operating within that range of efficiency and productivity. We need to be able to sustain it. And now we need to incorporate this last part of the train. With respect to the metallurgical performance, at the end of the day, metallurgical performance is what it will be, but leaching kinetic stacking according to our expectation so far, and the AVR plant, we also had some early issues with the ability to bring temperature in the cauldrons up to design, those issues have been solved. We leave the AVR today is at or close to design parameter. So, I think, the main thing is to see, this last portion of the crushing system coming in and how the entire train from primary crushing all the way to the stacking, delivering at or around 900 pounds per hour, right.

Okay. Just going -- just moving and just chatting about grade, I guess placed at the moment. When do you anticipate being in a position to place I guess or to increase the grade to expectations on the pad?

No. We are delivering the grade. If you look at the aggregate, we're behind. But the only reason why we are behind in the aggregate is because in the early start of the crushing, we did not have -- because of the social distancing guidelines, we didn't have room in the camp to accommodate the operations workforce. So what we were doing, we were feeding the mill with the medium low grade stockpile. We were feeding the plant with a medium low grade stockpile. So on the aggregate that's what's weighing down on us achieving design or planned grades. But as I said the conciliation is striking well and that was an issue related to the first month, two months of initial production and our operations are delivering the grade.No, I don't see an issue there.

All right. Okay. So we can -- as you say you are stacking 0.9 gram per ton right now on the pad?

If I go by today's report, 1.2. No, I mean, we're trucking with expectations here.

All right. Thank you for that Jorge. And then just flipping gears a little bit, just sound, I wonder if you could just update us on obviously there was news last year related to the royalty disagreement with the government. Any developments on that front?

Nothing new. Just as a recap. The case is in court. We have been granted a stay of execution by the court. So protecting us from any intention to collect the royalty on the part of the Secretary of Mines. And the case is in court. The development could be that we have some indications that we might see a ruling on first instance, faster than we really anticipated. We were expecting this would take several months to get resolved on first instance. And the latest is that, it is perhaps possible to see a ruling before the end of this year. A ruling would be a ruling on first instance, that any of the parties can appeal. And if that is the case, or stay of execution, protects the company through all the appeal process as well. So I think the only change could be, perhaps, is that there are some indications that we could see a ruling on first instance, faster than originally anticipated

Next, we'll hear from an individual investor, .

You boys are doing a good job. and VectorVest Canada, they have -- the company valued at $16.62 cents a share Canadian. And the last question, just wondering if Warren Buffett is interested in taking a large position. Thank you very much.

We have no relation with that banking. So we don't know that coverage. And the last I heard Warren is not interested in taking a position.

Next, we'll hear from Garrett Goggin with Silver Stock Analysts.

I had questions about Lindero, how we're looking in 2021 and through the end of this year, but I guess we went over them pretty clearly. And I guess my second ones would be Argentina, the capital controls. What was it, there was about 106 mil? I think you get out before capital controls kicked in, has that changed at all? And could you discuss that please Luis?

Yes. I can give a quick introduction to that. Yes, there are as we all know capital controls or restrictions on access to exchange rate -- dollar exchange rate in Argentina or a plan -- we have a repatriation plan in place considering all the current restrictions or limitations in place . And our repatriation plan is not impacted for the better part of 2021 by any of these measures, because the structures we used to contribute the funding to do Lindero, Luis, I don't know, if you want to…

Garrett to be more precise, we should be fine for the first $120 million to $130 million, we should be able to repatriate directly out of sales proceeds without having to bring those funds back into the country again, under the intercompany debt structure that we have in place. This particular component of the company that is out of the scope of existing restrictions today. And as Jorge mentioned that should cover us for the first -- we expect at least nine to eight months of 2021, right?

Right. That's well -- okay, so that gives us a little insight into Lindero outlook for 2021 as well, if you look at the cash flow of it.

Yes.

We'll hear next from Ryan Thompson at BMO.

Yes, I was actually going to ask the same question as the last caller, but maybe I'll just ask another one. In Argentina there was an export tax that was reintroduced. I think it was last year at some point and there was talk of that export tax potentially going away at some point. So can you maybe just comment on where things are at with that tax and what it currently says?

The export tax is currently at 8% for Gold products Ryan and in our particular case, we have a tax stability agreement at -- that fixes at about 5%. But that's something that in Argentina loss, you claim, after you close the exercise for the year. So in March, we're not planning to claim back anything for 2020. So our plan right now is that for 2021, which would include 2020, we will start the process to claim the difference. In Argentina it works a bit different than in other countries like Peru, for example, where we also have stability agreements -- tax stability agreements. In Argentina, unlike Peru, in Argentina you have to -- what they fix is the total amount of your tax burden in a way and looking at other taxable components of the total tax burden, as they look at the total amount and see if there is a gain or a loss. And then, you can claim the difference, right? In Peru it's different. It works by what you've fixed in terms of the IR or sorry, income tax or the royalty itself. But we plan to see if there is a difference in 2021 and then claiming back through 2022.

And ladies and gentlemen, that does conclude our Q&A session for today's call. I'm pleased to turn the floor back to the leadership team for Fortuna and Mr. Carlos Bacca.

Thank you, Jim. We would like to thank everyone for listening to today's earnings call and look forward to you joining us next quarter. Have a good end of the year. Bye.