Gold Resource Expansion And Project Developments Will Drive Strong Production Ahead

Key Takeaways

• Expansion projects and exploration in West Africa and Latin America position Fortuna to boost production, access new revenue streams, and support long-term growth.
  
• Operational efficiencies, rising precious metals prices, and improved ESG performance collectively strengthen profitability, reduce risks, and enhance earnings stability.
  
• Heavy reliance on fewer assets and high costs, combined with execution risks and complex political environments, threatens future growth, margins, and cash flow stability.

Catalysts

Engages in the precious and base metal mining and related activities in Argentina, Burkina Faso, Côte d’Ivoire, Mexico, Peru, and Senegal.

• Expansion at Seguela and the development of Diamba Sud position Fortuna to restore and surpass its previous production levels, with higher-margin and longer-life ounces, aligning with anticipated increases in global demand for gold and other strategic metals-supporting future revenue and cash flow growth.
  
• Fortuna's ongoing operational efficiency and cost optimization initiatives are expected to deliver $50–$70 million in cumulative savings over the next three years, which should drive consolidated all-in sustaining costs significantly lower and bolster net margins and profitability.
  
• Intensified exploration and early-stage project pipeline investments, particularly in underexplored West African and Latin American regions, align with the global trend toward supply chain security and regionalization-potentially unlocking new revenue streams and improving long-term growth visibility.
  
• Rising precious metals prices due to macroeconomic factors (inflation, de-dollarization) have already expanded margins and could continue to support higher average realized prices, directly impacting future net income and EBITDA.
  
• Enhanced ESG performance, including investments in renewables (photovoltaic plant at Lindero) and reduced CO2 emissions, alongside strong community/government relations (notably in Senegal), may further lower future regulatory and operational risks-positively affecting cost of capital and long-term earnings stability.

Fortuna Mining Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Fortuna Mining's revenue will decrease by 4.5% annually over the next 3 years.
• Analysts assume that profit margins will increase from 14.4% today to 22.7% in 3 years time.
• Analysts expect earnings to reach $235.3 million (and earnings per share of $0.72) by about September 2028, up from $171.2 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 10.7x on those 2028 earnings, down from 14.0x today. This future PE is lower than the current PE for the CA Metals and Mining industry at 18.0x.
• Analysts expect the number of shares outstanding to decline by 2.03% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.58%, as per the Simply Wall St company report.

Fortuna Mining Future Earnings Per Share Growth

Risks

• The recent sale of San Jose and Yaramoko mines reduces near-term production by roughly 130,000 gold equivalent ounces per year, making Fortuna more reliant on successful ramp-up of fewer core assets; this concentration increases operational and geopolitical risks, potentially impacting revenue and cash flows if expansion or permitting is delayed or underperforms.
  
• The company's elevated all-in sustaining costs (AISC)-reaching $1,932/oz in Q2 and only expected to decrease to $1,500–$1,750/oz by late 2025–2026-remain high relative to industry peers and reliant on successful execution of capital projects and cost-savings initiatives, creating a risk of margin contraction or earnings pressure if input cost inflation continues or gold prices reverse.
  
• Fortuna's ambitious growth strategy is heavily dependent on the successful development, environmental permitting, and construction of the Diamba Sud project in Senegal and the Seguela expansion; setbacks from permitting delays, social opposition, or adverse regulatory changes (such as resource nationalism or stricter ESG requirements) may hinder future production and revenue growth.
  
• The increasing capital expenditures ($180 million annual budget, with $60 million for growth and $30 million for Diamba Sud) put pressure on free cash flow, and there is risk that exploration and early-stage greenfield investments may not generate economically viable discoveries, limiting long-term reserve replacement and potentially requiring dilutive equity or increased leverage.
  
• Delays in collecting significant VAT receivables in Côte d'Ivoire (currently at $37 million, representing approximately 17 months outstanding) and reliance on improving local fiscal regimes for fund repatriation in Argentina highlight ongoing exposure to complex political and regulatory environments that could restrict liquidity, impact net margins, or create earnings volatility.

Valuation

• The analysts have a consensus price target of CA$9.917 for Fortuna Mining based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of CA$10.57, and the most bearish reporting a price target of just CA$8.01.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.0 billion, earnings will come to $235.3 million, and it would be trading on a PE ratio of 10.7x, assuming you use a discount rate of 6.6%.
• Given the current share price of CA$10.75, the analyst price target of CA$9.92 is 8.4% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.