Fortuna pays down an additional $41 million of debt
NEWS RELEASE
Fortuna pays down an additional $41 million of debt
(All amounts expressed in US dollars)
Vancouver, January 10, 2024: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to report that
the Company has paid down an additional $41 million of its revolving credit facility at the end of the fourth
quarter of 2023, using cash on hand.
After the payment of $41 million, the Company expects to bring down the leverage ratio1 below 0.5 times
total net debt2 to adjusted EBITDA 3 (which was reported for the third quarter of 2023 ).
At December 31, 2023 , it is expected that Fortuna’s total outstanding debt balance will stand at
approximately $165 million on its credit facility (excluding letters of credit), and approximately $46 million
of convertible notes, for an estimated total net debt, after cash and cash equivalents, of $83 million as at
December 31, 2023. This represents a reduction of approximately $50 million in total net debt in the
period, reflecting cash flow contributions from the Séguéla Mine in its second full quarter of production.
The estimated total net debt and liquidity for Fortuna as at the end of the fourth quarter of 2023 is
preliminary financial information and has been prepared by management and remains subject to final
review by the Company’s audit committee and approval by the Company’s board of directors. Such
preliminary financial information for the fourth quarter of 2023 is subject to the finalization and closing
of Fortuna´s accounting books and records for the period and should not be viewed as a substitute for the
Company’s annual financial statements prepared in accordance with accounting principles generally
accepted under International Financial Reporting Standards (IFRS). The Company’s auditor has not audited
the preliminary financial information contained in this news release, nor have they expressed any opinion
or any other form of assurance on the preliminary financial information contained herein . Refer to the
“Cautionary Statements” section at the end of this news release.
It is expected that Fortuna will release its financial statements and management’s discussion and analysis
as at and for the three and twelve months ended December 31, 2023, as approved by its audit committee
and board of directors, by mid-March, 2024.
Notes:
1. Total net debt to adjusted EBITDA is a non-IFRS ratio; refer to the “Non-IFRS Measures” section at the end of this news release for a description
of this non-IFRS ratio and the reconciliation from debt, the most comparable IFRS measure
2. Total net debt is a non-IFRS measure; refer to the “Non-IFRS Measures” section at the end of this news release for a description of this non-
IFRS measure and a reconciliation to debt, the most comparable IFRS measure
3. Adjusted EBITDA is a non-IFRS measure; refer to the “Non-IFRS Financial Measures” section in the Company’s management discussion and
analysis for the three and nine months ended September 30, 2023 (“Q3 2023 MD&A”), for a description of the measure on page 28 and for
a reconciliation to net income the most directly comparable IFRS measure on page 37, and which aforementioned sections are incorporated
by reference herein. The Q 3 2023 MD&A may be accessed on SEDAR+ at www.sedarplus.ca under the Company’s profile
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About Fortuna Silver Mines Inc.
Fortuna Silver Mines Inc. is a Canadian precious metals mining company with five operating mines
in Argentina, Burkina Faso, Côte d'Ivoire , Mexico, and Peru. Sustainability is integral to all our
operations and relationships. We produce gold and silver and generate shared value over the
long-term for our stakeholders through efficient production, environmental protection, and social
responsibility. For more information, please visit our website.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO, and Director
Fortuna Silver Mines Inc.
Investor Relations:
Carlos Baca | [email protected] | www.fortunasilver.com | X | LinkedIn | YouTube
Cautionary Statements
The estimated total net debt and liquidity for the Company as at the end of the fourth quarter of 2023, is preliminary financial
information and has been prepared by management and remains subject to final review by the Company’s audit committee and
approval by the Company’s board of directors. Such preliminary financial information for the fourth quarter of 2023 is subject to
the finalization and closing of our accounting books and records for the period and should not be viewed as a substitute for the
annual financial statements prepared in accordance with accounting principles generally accepted under International Financial
Reporting Standards (IFRS). The Company’s auditor has not audited the preliminary financial information contained in this news
release, nor have they expressed any opinion or any other form of assurance on the preliminary financial information containe d
herein.
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 uncertainties 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 include, without limitation, the Company’s anticipated financial
and operational performance in 2023; preliminary estimated financial information for the fourth quarter of 2023; a preliminary
estimate of the Company’s liquidity and outstanding debt balance and total net debt as at December 31, 2023; a preliminary
estimate of the reduction in total net debt compared to the third quarter ended September 30, 2023; the economics for the mine
at Séguéla; statements about the Company's plans for its mines and mineral properties; the Company's business strategy, plans
and outlook; the merit of the Company's mines and mineral properties; the future financial or operating performance of the
Company; the anticipated timing for release of the Company’s financial statements and management’s discussion and analysis as
at and for the three and twelve months ended December 31, 2023. Often, but not always, these Forward looking Statements can
be identified by the use of words such as "estimated", “expected”, “anticipated”, "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.
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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, the preliminary
estimated financial infor mation, liquidity and outstanding total debt may not be consistent with the final quarterly results and
statement of liquidity and debt subsequently approved by the Board; operational risks associated with mining and mineral
processing; uncertainty relating to Mineral Resource and Mineral Reserve estimates; uncertainty relating to capital and operating
costs, production schedules and economic returns; uncertainties related to new mining operations such as the Séguéla Mine; risks
relating to the Company’s ability to replace its Mineral Reserves; risks associated with mineral exploration and project
development; uncertainty relating to the repatriation of funds as a result of currency controls; environmental matters includ ing
obtaining or renewing environmental permits and potential liability claims; uncertainty relating to nature and climate conditions;
risks associated with political instability and changes to the regulations governing the Company’s business operations; changes in
national and local government legislation, taxation, controls, regulations and political or economic developments in countries in
which the Company does or may carry on business; risks associated with war, hostilities or other conflicts, such as the
Ukrainian - Russian co nflict, and the impact it may have on global economic activity; risks relating to the termination of the
Company’s mining concessions in certain circumstances; developing and maintaining relationships with local communities and
stakeholders; risks associated with losing control of public perception as a result of social media and other web-based applications;
potential opposition to the Company’s exploration, development and operational activities; risks related to the Company’s ability
to obtain adequate f inancing for planned exploration and development activities; property title matters; risks relating to the
integration of businesses and assets acquired by the Company; impairments; risks associated with climate change legislation;
reliance on key personnel; adequacy of insurance coverage; operational safety and security risks; legal proceedings and potential
legal proceedings; the possibility that the Court ruling in favor of Compañia Minera Cuzcatlan S.A. de C.V. to reinstate the
environmental impact aut horization at the San Jose Mine will be successfully appealed ; temporary restrictions imposed by the
Company’s lenders on the Company’s abilities under the Credit Facility; our ability to access the capital markets; uncertaint ies
relating to general economic conditions; risks relating to a global pandemic, which coul d impact the Company’s business,
operations, financial condition and share price; competition; fluctuations in metal prices; risks associated with entering in to
commodity forward and option contracts for base metals production; fluctuations in currency exchange rates and interest rates;
tax audits and reassessments; risks related to hedging; uncertainty relating to concentrate treatment charges and transportation
costs; sufficiency of monies allo tted by the Company for land reclamation; risks associated with dependence upon information
technology systems, which are subject to disruption, damage, failure and risks with implementation and integration; risks
associated with climate change legislation ; labor relations 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, expectations and opinions of management,
including but not limited to expectations regarding the Company’s financial performance for the fourth quarter of 2023; that
management’s preliminary financial information for the fourth quarter of 2023 will be consistent with the final full quarterly and
annual financial results; that the Company’s activities will be conducted in accordance with the Company’s public statements and
stated goals; that there will be no material adverse change affecting the Company, its properties or its production estimates
(which assume accuracy of projected head grade, mining rates, recovery timing, and recovery rate estimates and may be impacted
by unscheduled maintenance, labor and contractor availability and other operating or technical difficulties); the duration and
effect of global and local inflation; geo-political uncertainties on the Company’s production, workforce, business, operations and
financial condition; the expected trends in mineral prices, inflation and currency exchange rates; ; that all required approvals and
permits will be obtained for the Company’s business and operations on acceptable terms; that there will be no significant
disruptions affecting the Company's operations; the Company’s ability to access the capital markets; the ability to meet current
and future obligations and such 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 these Forward-looking Statements
will prove to be accurate, as actual results and future events could differ materially from those anticipated in such stateme nts.
Accordingly, investors should not place undue reliance on Forward-looking Statements.
The purpose of disclosing the Company's estimated total outstanding debt balance and estimated total net debt, after cash and
cash equivalents is to assist readers in understanding the impact of cash flows from the contribution of the Company's
Séguéla Mine on its outstanding indebtedness. This information may not be appropriate for other purposes.
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Non-IFRS Financial Measures
The Company has disclosed certain financial measures and ratios in this news release which are not defined under IFRS, as issued
by the International Accounting Standards Board, and are not disclosed in the Company's financial statements, including but not
limited to total net debt and total net debt to adjusted EBITDA ratio . These non-IFRS financial measures and non -IFRS ratios are
widely reported in the mining industry as benchmarks for performance and are used by management to monitor and evaluate the
Company's operating performance and ability to generate cash. The Company believes that, in addition to financial measures and
ratios prepared in accordance with IFRS, certain investors use these non -IFRS fina ncial measures and ratios to evaluate the
Company’s performance. However, the measures do not have a standardized meaning under IFRS and may not be comparable to
similar financial measures disclosed by other companies. Accordingly, non-IFRS financial measures and non-IFRS ratios should not
be considered in isolation or as a substitute for measures and ratios of the Company’s performance prepared in accordance wit h
IFRS. Except as otherwise described below, the Company has calculated these non -IFRS financial measures and non -IFRS ratios
consistently for all periods presented. To facilitate a better understanding of these measures as calculated by the Company,
descriptions are provided below.
Total net debt is a non-IFRS measure which is calculated as debt consisting of credit facilities and convertible debentures less cash
and cash equivalents.
Management believes that total net debt provides valuable information as an indicator of the Company’s liquidity and ability to
fund working capital needs fund capital expenditures. Total net debt is also a common metric that provides additional information
used by investors and analysts for valuation purposes based on an observed or inferred relationship between total net debt an d
enterprise value. Total net debt is not meant to be a substitute for other subtotals or totals presented in accordance with I FRS
measures, but that rather should be evaluated in conjunction with IFRS measures.
The following table presents a reconciliation of Total net debt from Debt 1, the most directly comparable IFRS measure, as of the
date of this news release:
Note:
1. The debt, cash and cash equivalents, and total net debt figures for the Company presented in the table above, represent preliminary financial information estimated
by management which remains subject to final review by the Company’s Auditors, audit committee and approval by the Company’s board of directors .
Total Net Debt to Adjusted EBITDA Ratio
Total net debt to adjusted EBITDA ratio is a non -IFRS ratio which is calculated as total net debt divided by adjusted EBITDA.
Management believes that total net debt to adjusted EBITDA provides valuable information as an indicator of the Company’s
solvency and ability to fund working capital needs and fund capital expenditures. Total net debt to adjusted EBITDA ratio is also
a common metric that provides additional information used by investors and analysts for valuation purposes based on an observed
or inferred relationship between total net debt to adjusted EBITDA ratio and enterprise value. Total net debt to adjusted EB ITDA
ratio is not meant to be a subst itute for other subtotals or totals presented in accordance with IFRS measures, but rather should
be evaluated in conjunction with IFRS measures.
The following table presents a reconciliation of total net debt to adjusted EBITDA ratio from debt, the most directly compara ble
IFRS measure, as of September 30, 2023:
As at December 31, 2023
Debt $210,700,000
Less: cash and cash equivalents $(127,800,000)
Total net debt $82,900,000
As at September 30, 2023
Debt $251,200,000
Less: cash and cash equivalents $(117,800,000)
Total net debt $133,400,000
Adjusted EBITDA (last four quarters) $270,100,000
Total net debt to adjusted EBITDA ratio 0.5