Fortuna Announces Proposed Amendments to Financial Covenants in Credit Facility

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 into 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 Expense1 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

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.

Investor Relations:

Carlos Baca
T (Peru): +51.1.616.6060, ext. 0