Fortuna’s Growth Plan: More Mines, More Cash Flow | Jorge Ganoza

Fortuna Mining (NYSE: FSM; TSX: FVI) President and CEO Jorge Ganoza joins Kitco Mining’s Kitco Spotlight with Paul Harris to discuss the company’s Q1 2026 results, released in early May, and how Fortuna is using record free cash flow to fund its next phase of growth without issuing shares.
Fortuna reported $120 million in net earnings and $174 million in free cash flow in Q1 2026 on production of about 72,000 gold equivalent ounces. Ganoza said the company is “truly capturing the benefit of this high-price environment” as it advances a 60% gold production growth plan over the next 24 months, driven by the Séguéla expansion in Côte d’Ivoire and Diamba Sud development in Senegal.

Ganoza also discusses Fortuna’s path to 500,000 oz per year, Diamba Sud permitting after a September 2025 submission, May 2026 project studies, exploration upside at both assets, West Africa government take, frontier-market tradeoffs, potential M&A opportunities in Africa, and share buybacks.

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To learn more about Fortuna Mining, visit: https://fortunamining.com/

00:23 - Record Q1 2026 Results and Free Cash Flow
03:33 - Roadmap to 500,000 oz of Annual Gold Production
06:38 - Exploration Upside at Séguéla and Diamba Sud
08:41 - Why Fortuna Sold Short-Life Mining Assets
10:56 - Caylloma Mine Outlook and Free Cash Flow
13:48 - West Africa Mining Risk and Government Take
17:09 - Fortuna’s Frontier Market Strategy and Tradeoffs
22:30 - Share Buybacks and Shareholder Returns

Sponsored content. This video was produced with support from a Kitco sponsor. Kitco does not endorse or recommend any company, security, investment product, or investment strategy. This content is for informational purposes only and should not be considered investment advice.
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Transcript

SPEAKER_00 0:05

Hello and welcome to Kitco Mining with me, Paul Harris. Today is Thursday, May the 7th, and joining me is Jorge Genosa, president and CEO of Fortuna Mining, which trades on the New York Stock Exchange under the ticker FSM and on the Toronto Stock Exchange under the ticker FBI. Jorge, welcome to Kitco.

SPEAKER_01 0:24

Paul, a pressure to be here with you again.

SPEAKER_00 0:27

Likewise, thank you, Jorge. And you've pretty much come fresh from your conference call for your first quarter 2026 results, which you put out last night. Very good set of results there. Congratulations. These included record net earnings of 120 million US dollars and record free cash flow of 174 million dollars on production of about 72,000 ounces of gold equivalent. As I say, Jorge, congratulations. What stuck out for you? What pleased you most about these results?

SPEAKER_01 0:57

No, we we are enjoying consecutive successful quarters for and and uh this Q1 uh is in very much in line with with uh several, again, as I said, very successful quarters. As you well pointed out, uh over a hundred million dollars of uh earnings, and uh more importantly, in our business, free cash flow from operations, very strong and record, 174 uh million dollars. Uh so our business is performing exceedingly well. We're truly capturing the benefit of this uh high price environment.

SPEAKER_00 1:41

Excellent. Now, your all-in sustaining cost was about three percent higher on the quarter, giving you a margin of about 57% or $2,777 uh ounce dollars per ounce in dollar terms. You're generating more cash than you budgeted for, Jorge. So, uh what are you planning to do with the additional funds that you're sort of bringing in through through the precious metal sales?

SPEAKER_01 2:05

Yeah, you see, with respect to capital allocation, there is uh a bigger story for Fortuna beyond this very strong and exciting quarterly results, and that is the growth that we have in front of us. Uh over the next 24 months, we are preparing to deliver 60% growth in our annual gold production. That growth comes from two projects: the expansion of our Segela mine in Côte d'Ivoire and bringing our future mining to production, the Ambassud in Senegal. This month of May, we're looking to deliver the feasibility study for the Ambassud and the expansion study for Segela, providing a greater visibility to investors and the market in general on where we sit with those two projects. But our timeline for first gold on on both is uh 18-24 months, so that puts us sometime in 2028. So that that's really the bigger story, and this is growth poll that we control. Those are projects where we have the reserves, the resources, we have the ounces, are projects that are technically very simple, are projects that uh you know have good social acceptance and are financially de-risked by the strength of our balance sheet.

SPEAKER_00 3:38

Okay, so uh looking at your corporate presentation, you talk about having a pathway towards producing some 500,000 ounces per year. The the investment decisions that you have coming up at the Ambassud in Senegal and Seguela, the expansion there in Cote d'Ivoire, obviously a key part of that. Um, what what steps will they be in that path towards getting to 500,000 ounces per year? Will you get there with these or do you anticipate further investments beyond that to get to that level?

SPEAKER_01 4:09

Those are the two uh big projects that take us to or set target of half a million ounces of annual production. So, with respect to capital allocation and what are we doing with all the cash we're currently generating, uh we can deliver this growth without issuing any shares, right? We are using internal cash flow generation to fund these initiatives that create substantial uh value per share for shareholders. So there are things to watch as we advance both. As I just mentioned, both will have their studies published this month of May, late May. Permitting. The permitting, the environmental and social study uh impact assessment for the Ambassude project in Senegal. We submitted the study in the month of September to the government authorities, and we are expecting approval imminently this in the coming days, will. So uh seven, eight months uh from submission to receipt of the permit, that's our expectation. Where in the world do you find that? So uh that is something uh another milestone that we expect. But having said that, I mean our conviction on the project is very high, Paul. And uh for 2026, our capital budget for the Amba Sud is uh uh $100 million. So we're already investing in early works, we're already placing orders for uh power uh supply, we're investing in uh placing orders for sag mill. I mean, we're building the camp. So we are advancing with a lot of early works, looking to the risk, budget, and timeline by the time we make a final investment decision, which it would be a formality for me, really.

SPEAKER_00 6:17

Okay, do you anticipate um um sort of following the the trajectory that Ciguela has had? You know, you built Ciguela, now you're contemplating an expansion. Do you anticipate a similar thing in in Senegal where you know it's got a relatively short mine life, I think. So are you planning on some more exploration? Do you see more upside there, potentially a future expansion as well?

SPEAKER_01 6:43

What you're pointing out is very important because we were able to expand Segela consecutively, almost year after year, to where we are today, where we continue to seek expansions. But what underpins those expansions has been our exploration success. And uh what drew us back in 2021 to make the acquisition of Segela through the Roxco Business Combination back then was our view on the exploration potential of Segela, something that we've been able to capture. Let me tell you that when we back in 2021, the mineral endowment of Segela was the total mineral endowment uh in inventories, right, was 1.4 million ounces of gold. Today uh Segela holds about 3 million ounces if I combine all sorts all categories of reserves, resources. 3 million ounces and growing. We see the the the same at uh Diamba Sud. What drew our attention to that project in the first instance was the expiration upside. So we've been growing the ounces. Today it holds about 1.3 million ounces of gold, mostly in indicated migrating to reserves by the time we publish the feasibility study late this month. But we are currently drilling with six rigs, we're enjoying a lot of success. So, our view, yes, oh, is that there the resources, the reserves will likely continue to grow, uh, providing support for uh further expansions.

SPEAKER_00 8:36

Excellent. Um, this reminds me perhaps of B2 Gold and the success they've had at Fucola and the expansions they've had at Fu Cola. Um, not a bad pathway to follow or to copy there. Um, in addition to expanding your assets and investing more there, you've also been divesting some assets. You recently sold Yaramoko in Burkina Faso, and you sold uh another project as well. Um, why did you feel it was necessary to sort of reshape and divest some assets at this point in time?

SPEAKER_01 9:06

Very good point because we divested of those two mines uh in the first quarter of last year, 2025, right? And uh basically the mines were running very short on reserves, were profitable, but running very short on reserves. And uh more than short on reserves, short on exploration upside in our view. That's a difficult call to make sometimes. So what we want strategically in the portfolio call is mines with meaningful production, minimum a hundred thousand ounces with pathways to go to 150, 180 at the minimum. So we need to see that pathway. I don't mind the mine that starts producing at about 100,000 ounces a year, but it needs to show a pathway to higher production. That's one. And second, we need to see a decade plus in terms of life of mine. When we look at combined resources, reserves, we need to see the path to a decade in life of mine at the very least. And those mines, although profitable in the short term, did not meet that uh key criteria for us. So we would have been in a position of having to face mine closures. And as you well know, a mine closure is a project, it's a project that demands capital, demands management's attention. And uh I rather have my team and my financial resources directed to playing offense, if we want to use an American football term, rather than difference, right? Yeah.

SPEAKER_00 10:59

Okay, uh that that makes a lot of sense. So um looking at things, looking at your portfolio through that optic Jorge, where where does where does Cayoma in Peru stand? Because that's uh an older operation, um, it's got a limited life ahead of it. You know, will that be an asset that at some point you seek to pass on and divest to somebody else?

SPEAKER_01 11:21

I was expecting that question because Cayoma, if you look at it, it doesn't have uh some of the features that we just talked. Cayoma uh has uh gold uh or silver equivalent production because it's a it's a precious metal-based metal mine, right? It's a silver-based metal mine. So if we do uh an equivalency today, it's probably a two million ounce, one and a half, two million ounce, uh uh closer to a two million ounce per year producer, right? Uh silver ounce, right? So it's small when we think of how does this fit in the in the portfolio. With respect to life of mine, I'll I'll I'll correct you there, Paul, because Cayoma is a mine that has been operating for 500 years, uninterruptedly, for 500 years. And uh it's one of those Andean type uh intermediate uh vein type deposits, epitermal, with uh you know, limb, you know, it's difficult to build a lot of reserves ahead of you, but if you take the reserves and the resources, you can clearly see a decade in production. So it does not meet the minimum size criteria in terms of annual production for us, but I'll tell you something. The team at that mine, for 20 years under our leadership, has been delivering exceptional results. There is no headache-free mind. No, there is no headache-free mind. Every mind gives you a headache. But if there is one that gets close, gets close to being a head-free operation, is that one. So every year it gives us free cash flow with very little headaches. So I'm happy to keep it in the portfolio because of that. It's a mind that continues giving. It's been operating with three, four, five years in reserves for 20 years under our management. And it gives us free cash flow every year. This year, and the current price and price environment is likely going to give us some 50, 40 million dollars of free cash flow. So I'm happy to keep it in the portfolio, even though it doesn't tick all the boxes.

SPEAKER_00 13:51

Okay, well, I appreciate the correction there, Jorge. Now, in terms of headaches, um, Fortuna is rapidly expanding in Africa at a time when several African nations are moving to obtain larger stakes and increase the government take from the gold projects in their territories. Um, to what extent or not do you anticipate this becoming a headache for you in the countries that you operate in in Africa?

SPEAKER_01 14:17

Yes. Let me make you you just said something that's very important, and I think I want to highlight it. The governments want more, and that is a negotiation, and and and it's a fair negotiation, right? The problem, the headache, is when you are uh dealing with a with a government that poses the question the the discussion is not about how much they want, but if they want mining or not, right? And that's a complete different discussion. And sometimes we find ourselves in those situations where you have a government uh that uh debates if they want mining or not, right? And it is not about how much they want, it's if they want it at all or not. Uh in the case of the countries where we operate in West Africa, currently Côte d'Ivoire and Senegal, the discussion is about how much. And I have to say that yes, we are engaged from time to time with the government on those discussions, but these are governments that uh have been up to now listening, no, and they know that there is a competitive uh there is worldwide competition for resources. And uh, for example, in the case of Côte d'Ivoire, they have done an exceptional work, an exceptional job in positioning Cote d'Ivoire as the premier mining jurisdiction in West Africa. So if they are gonna raise uh government take through royalties or other means, they are having to carefully assess what's that balance between ruining the good work they done, establishing Côte d'Ivoire as a premier mining jurisdiction, and increasing government take. And I think that's the approach they are taking, right? So I think it's a sensible approach, and you can understand a natural impulse to uh wanting more when you see gold price at $5,000 or 45. I mean, it's a natural impulse, right? So um, but I think up to now what I can say is the discussions are are sensible and and uh and uh the parties are listening to each other.

SPEAKER_00 16:47

Okay, well that's good to hear. Um, to what extent are some of your investors or the investors you speak with, to what extent are investors nervous about Africa and the potential for a government to seek to increase the government take? Um and do you think you suffer from or experience an Africa discount because the key part of your production base comes from countries in Africa?

SPEAKER_01 17:12

Yes. Let me uh give a bit of a twist to your question here, and because I think it's relevant in the case of uh Fortuna's approach to the business. For us, folks, mining has always been a frontier business. And we are designed and happy to play in that frontier. All of us in Fortuna have built our careers working on developing nations, on on uh emerging democracies, having to deal with political instability, and let's call that the frontier, and we're happy to play in the frontier. You will not see Fortuna developing minds in Arizona or Ontario. It's not uh it's not our our focus. I believe we leverage our expertise, being a bit more adventurous. Now, what do we ask in exchange for that higher perceived geopolitical risk? That is the real question. What does Fortuna ask in exchange to go into Côtious, Senegal, Peru? Uh and you're close to Peru. Uh Peru has had uh eight presidents in 10 years, right? So, you know, talk about political instability. We know what's happening in Mexico with under the previous administration and uh their attempt to ban mining, right? So what do we ask in exchange is the question. So it's not just taking risk blindly, right? And a good example, uh, Paul, is something I mentioned already. We're going to Senegal to build a mine, or next mine will be in Senegal. And we have been able to permit the mine in seven months. And that is not that is without cutting any corners. We have done uh uh an environmental and social study, gone through social consultation using international standards. But on the our counterparty is uh is a government that once sees mining as a as an incredible opportunity to advance their economic agenda and the well-being of the nation. So they are willing to work expeditiously with us to see that mine come to uh production and and and create value for all stakeholders. So that is what we have. Uh that is the trade-off between higher perceived geopolitical risk and uh operating in these countries. There is a trade-off, and and I'm telling you, in Guyana, for example, you know we just entered Guyana through an option agreement, and I'm very excited about opportunities to continue expand their business in Guyana. It's ideology that is very familiar to us in West Africa already. Uh but in Guyana, once you are granted an exploration license, the drilling permits and all of those things that we require usually are embedded in the exploration concession. So immediately as you get the exploration concession, you are granted already permits to drill and conduct your exploration work. Right? In Peru today, it can take you two years to get an exploration permit. In Mexico, it takes uh months if you get a concession, because the government will not give you a concession. New concessions are not being granted still in Mexico. Uh so you know, there is a higher procedure of political risk, but we ask for something in exchange. And that's how we view it in Fortune.

SPEAKER_00 21:11

Okay, thank you, Jorge. Let's talk about some potential, other other potential opportunities in Africa. Uh, we see one of the biggest players in Africa, Barak Mining. Uh, the company is in the process of splitting its assets into two companies. Um, what would be your reaction, Jorge, if if Barak seeks to sell some of its or any of its African assets? Do you see potential opportunities there to continue growing in Africa?

SPEAKER_01 21:37

Absolutely. I'm gonna be controversial here, and I just find uh kind of uh crazy that uh you know it only in 20 2018, when was it 2019? Uh you know the the chairman of Parrick and and uh and uh Mr. Bristol forged this uh business combination that created so much excitement and uh uh past six seven years and everything is being dismantled. No, I don't know. Uh but uh it will certainly create a lot of opportunity. It would certainly create a lot of opportunity.

unknown 22:30

Yeah.

SPEAKER_00 22:31

Okay, well, perhaps not uh it's best not to go down that rabbit hole too far, Jorge. Um let's get back to the company's balance sheet. You've begun to buy back shares with 40 million spent to date on that, which is about I think uh 15% of your free cash flow. Uh gold companies are becoming increasingly competitive on shareholder returns. Um, is that perhaps forcing your hands uh to sort of give shareholder returns, to give you know a good level of shareholder returns to remain competitive with your peer group?

SPEAKER_01 23:07

We don't need to be convinced or forced to return to shareholders by what our peers are doing. I mean, for us, it's always a matter of of when, not if if, and and uh as I just described at the beginning of the conversation, uh we have a clear path for growth, meaningful growth, 60% expansion of our annual production over the next 24 months. That's the best value we can give to our shareholders, is a cheap that growth. Now we're generating so much cash that at the same time we can uh return to shareholders. So we are providing uh uh returns right now via the share buyback. That's the means that we have in place for returns, and uh yeah. So uh once we're out of this capital-intensive phase, uh would we uh uh look to increase shareholder returns? Absolutely. It also depends on on what you know growth opportunities uh we have in front of us. But I believe that our shareholders today are best served by us delivering this brownfield growth uh you know that will be extremely accreditive on a sure uh basis, on a per share basis.

SPEAKER_00 24:39

Excellent. Well, I'm looking forward to seeing the studies on those two development projects uh when they come out later this month. Once again, Fortuna Mining trades on the New York Stock Exchange under the ticker FSM and on the Toronto Stock Exchange under the ticker FBI. Jorge Genosa, thank you very much for joining me today.

SPEAKER_01 24:58

Thank you for the invitation, Paul.

SPEAKER_00 25:01

And of course, if you like what you see, don't forget to hit that subscribe button. I'm Paul Harris, and this is KitCo Mining.