46
FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
Cost of sales
for Q4 2014 increased 7% to $27.8 million (Q4 2013: $26.0 million), driven by a 16% higher tonnage of
concentrate sold. Direct mining costs increased $1.4 million to $21.5 million (Q4 2013: $20.1 million). Depletion and
depreciation increased $0.1 million to $5.4 million (Q4 2013: $5.3 million).
Workers’ participation for San Jose increased $0.4 million to $0.5 million (Q4 2013: $0.1 million).
(Refer to non-GAAP financial measures for the reconciliation of cash cost to the cost of sales.)
Expressed in $ millions
Three months ended December 31,
2014
2013
Caylloma
San Jose
Total
Caylloma
San Jose
Total
Direct mining costs
1
$ 10.8
$ 10.7
$ 21.5
$ 10.4
$ 9.7
$ 20.1
Workers' participation
0.1
0.5
0.6
0.3
0.1
0.4
Depletion and depreciation
2.0
3.4
5.4
2.0
3.3
5.3
Royalty expenses
0.2
0.1
0.3
0.2
–
0.2
$ 13.1
$ 14.7
$ 27.8
$ 12.9
$ 13.1
$ 26.0
1
Direct mining costs includes salaries and other short term benefits, contractor charges, energy, consumables and production related
costs.
Selling, general and administrative expenses
for Q4 2014 increased 46%, or $1.6 million, to $5.2 million (Q4 2013: $3.6
million). The main driver for the increase was the rise in share-based payments to $1.4 million, compared with the same
period in the prior year, mostly related to mark-to-market effects, in particular the increase in share price.
General and administrative expenses consist primarily of corporate office and subsidiary expenses, such as salaries
and payroll-related costs for executives and management. These expenses include administrative, legal, financial,
information technology, and human and organizational development, procurement, and professional service fees. General
and administrative expenses for Q4 2014 decreased 7% to $3.6 million (Q4 2013: $4.1 million).
Expressed in $ millions
Years ended December 31,
2014
2013
Corporate
Bateas Cuzcatlan
Total
Corporate
Bateas Cuzcatlan
Total
General and administrative expenses
$ 2.1 $ 0.9 $ 0.6 $ 3.6 $ 2.6 $ 0.7 $ 0.8 $ 4.1
Foreign exchange
(0.3)
0.2
0.2
0.1
(0.6)
–
–
(0.6)
Share-based payments
1.4
–
–
1.4
0.1
–
–
0.1
Workers' participation
–
–
0.1
0.1
–
–
–
–
$ 3.2 $ 1.1 $ 0.9 $ 5.2 $ 2.1 $ 0.7 $ 0.8 $ 3.6
Restructuring and severance costs
for Q4 2014 amounted to $1.1 million (Q4 2013: $nil) and pertained to the Company’s
cost-reduction program, and include all salaries and post-employment costs.
Write-off of mineral properties, plant and equipment
for Q4 2014 amounted to $nil (Q4 2013: $0.1 million, pertaining
to the San Luisito concessions).
Impairment of mineral properties, plant and equipment
for Q4 2014 amounted to $nil (Q4 2013: $15.0 million related
to the impairment of Caylloma as a result of declining silver prices recorded in Q4 2013).
Impairment of inventories
for Q4 2014 amounted to $0.1 million (Q4 2013: $0.1 million) and related to the write-down
of materials in inventory to their net realizable value.
Interest income
for Q4 2014 amounted to $0.1 million (Q4 2013: $0.1 million).
Interest expense
for Q4 2014 amounted to $0.3 million (Q4 2013: $0.2 million).
Income taxes
for Q4 2014 decreased to $3.4 million (Q4 2013: $6.4 million) mainly because of no further impact of the
Mexico special mining royalty on deferred income tax along with an increase in current taxes in Mexico even after
accelerating the depletion of Mexico mining rights.
In Q4 2013, income taxes included a $4.8 million tax impact related to the impairment charge of Caylloma and to the
deferred income provision of $7.7 million resulting from the Mexico special mining royalty.
