Fortuna announces proposed amendments to financial covenants in credit facility
Fortuna announces proposed amendments to financial covenants in credit facility
Vancouver, May 5, 2020-- Fortuna Silver Mines, Inc. (NYSE: FSM) (TSX: FVI) provides an update on
discussions with its senior lenders to amend the financial covenants contained in its US$150 million credit
facility (the “Credit Facility”) (refer to Fortuna news release dated April 2, 2020).
The Credit Facility requires the Company to maintain a total debt to EBITDA ratio of not greater than
3:1. As of the financial year ended December 31, 2019, the total debt to EBITDA ratio was 1.7:1.
Government-mandated constraints on business to curb the spread of COVID-19 in Peru and Mexico, which
host the Company’s operating mines, have resulted in reduced operations at the Caylloma Mine during
the first quarter of 2020, and subsequent to the end of the quarter, have resulted in the suspension of
operations at the San Jose Mine. As a result, the Company has entered in to discussions with its senior
lenders under the Credit Facility, and obtained agreement in principle to amend the financial covenants
as follows:
• Total Net Debt to EBITDA ratio of not greater than 4.5:1 for the remaining three quarters of
2020 and the first quarter of 2021 , reducing to 4:1 in the second quarter of 2021 for the
remainder of the term of the Credit Facility
• Net Senior Secured Debt to EBITDA ratio of not greater than 3:1 in the remaining three
quarters of 2020 and the first quarter of 2021, reducing to 2:1 in the second quarter of 2021
for the remainder of the term of the Credit Facility
• EBITDA to Interest Expense 1 ratio of a minimum of 4:1 beginning in the second quarter of
2020
The interest rate on the Credit Facility will continue to be based on a sliding scale at one -month LIBOR
plus an applicable margin ranging from 2.5% to 3.5% but will be amended to be based on the Net Senior
Secured Debt to EBITDA ratio.
The amendment to the Credit Facility is subject to the completion of definitive documentation between
the parties.
Note:
1. Interest coverage is to be based on rolling four quarters of EBITDA and Interest Expense, beginning with
the four quarters covering the third quarter of 2019 to the second quarter of 2020, for the remainder of the term
of the Credit Facility
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About Fortuna Silver Mines Inc.
Fortuna is a growth oriented, precious metals producer focused on mining opportunities in Latin America.
Our primary assets are the Caylloma silver Mine in southern Peru, the San Jose silver-gold Mine in Mexico
and the Lindero gold Project, currently under construction, in Argentina. The Company is selectively
pursuing acquisition opportunities throughout the Americas and in select other areas. For more
information, please visit our website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Trading symbols: NYSE: FSM | TSX: FVI
Investor Relations:
Carlos Baca
T (Peru): +51.1.616.6060, ext. 0
Forward-looking Statements
This news release contains forward-looking statements which constitute “forward -looking information” within the
meaning of applicable Canadian securities legislation and “forward -looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (collectively, “Forward -looking
Statements”). All statements included herein, other than statements of historical fact, are Forward -looking
Statements and are subject to a variety of known and unknown risks and unce rtainties which could cause actual
events or results to differ materially from those reflected in the Forward -looking Statements. The Forward -looking
Statements in this news release may include, without limitation, statements about the execution of definit ive
documents to amend the terms of the Credit Facility; the duration and effects of COVID-19 and any other pandemics
on the Company’s workforce, business, operations and financial condition, and the risks relating to a global
pandemic, which unless contai ned could cause a slowdown in global economic growth and impact the Company’s
business, operations, financial condition and share price ; the duration of the reduced operations at the Caylloma
mine, the duration of the suspension of operations at the San Jose mine;. Often, but not always, these Forward -
looking Statements can be identified by the use of words such as “estimated”, “potential”, “open”, “future”,
“assumed”, “projected”, “used”, “detailed”, “has been”, “gain”, “planned”, “reflecting”, “will”, “containing”,
“remaining”, “to be”, or statements that events, “could” or “should” occur or be achieved and similar expressions,
including negative variations.
Forward-looking Statements involve known and unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be materially different from any results, performance
or achievements expressed or implied by the Forward -looking Statements. Such uncertainties and factors include,
among others, there can be no assurance that the parties will enter into a definitive agreement to amend the terms
of the Credit Facility; the worldwide economic and social impact of COVID-19, the duration and extent of COVID-19,
changes in general economic conditions and financial markets; the duration of government restrictions on business
related to COVID-19 including operations at the Caylloma mine and the San Jose mine ; changes in prices for silver
and other metals; technological and operational hazards in Fortuna’s mining and mine development activities; risks
inherent in mineral exploration; uncertainties inherent in the estimation of mineral reserves, mineral resources, and
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metal recoveries; changes to current estimates of mineral reserves and resources; changes to production estimates;
governmental and other approvals; changes in government, political unrest or instability in countries where Fortuna
is active; labor r elations issues; as well as those factors discussed under “Risk Factors” in the Company's Annual
Information Form. Although the Company has attempted to identify important factors that could cause actual
actions, events or results to differ materially from those described in Forward-looking Statements, there may be other
factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Forward-looking Statements contained herein are based on the assumptions, beliefs, ex pectations and opinions of
management, including but not limited to that the parties will enter into a definitive agreement to amend the terms
of the Credit Facility; management of the worldwide economic and social impact of COVID-19, that the duration and
extent of COVID-19 is minimized and not long -term, the expected trends in mineral prices and currency exchange
rates; the accuracy of the Company’s current mineral resource and reserve estimates; that the Company’s activities
will be in accordance with the Company’s public statements and stated goals; that there will be no material adverse
change affecting the Company or its properties; that all required approvals will be obtained; that there will be no
significant disruptions affecting operations and suc h other assumptions as set out herein. Forward -looking
Statements are made as of the date hereof and the Company disclaims any obligation to update any Forward-looking
Statements, whether as a result of new information, future events or results or otherwise, except as required by law.
There can be no assurance that the Company will be successful in its legal proceedings or that these Forward-looking
Statements will prove to be accurate, as actual results and future events could differ materially fro m those
anticipated in such statements. Accordingly, investors should not place undue reliance on Forward -looking
Statements.