. (All amounts expressed in US dollars, unless otherwise stated)
Vancouver, August 13, 2020: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) today reported net loss of $5.7 million, adjusted EBITDA of $9.4 million, and free cash flow from ongoing operations of $0.2 million for the second quarter of 2020.

Jorge A. Ganoza, President and CEO, commented, “Although the unprecedented volatility and government mandated shutdowns during the second quarter have resulted in a $5.7 million net loss, our cost and investment reduction plans have allowed us to maintain a neutral free cash flow position from ongoing operations.” Mr. Ganoza continued, “We continue to face challenges under the current environment, but remain optimistic as we adapt and refine our plans to cope with COVID-19 related constraints. ” Mr. Ganoza added, “At Lindero we look forward to the start of heap irrigation as we advance towards a first gold pour at the end of the third quarter.”

Second quarter 2020 highlights
•Sales of $44.5 million, compared to $67.9 million in Q2 2019
•Net loss of $5.7 million, compared to net income of $10.3 million in Q2 2019
•Adjusted net loss1 of $5.1 million, compared to adjusted net income1 of $7.2 million in Q2 2019
•Adjusted EBITDA1 of $9.4 million, compared to $27.2 million in Q2 2019
•Free cash flow from ongoing operations1 of $0.2 million, compared to $15.4 million in Q2 2019
•Silver and gold production of 1,273,922 ounces and 7,099 ounces, respectively
•AISC/oz Ag Eq2 for the San Jose Mine and the Caylloma Mine was $11.18 and $15.81, respectively

Notes:
1.Refer to non-GAAP financial measures and Forward-Looking Statements at the end of this news release
2.AISC oz Ag Eq calculated at realized metal prices of $1,727/oz Au, $17.03/oz Ag, $0.75/lb Pb, and $0.89/lb Zn

Second quarter government mandated COVID-19 related constraints’ impact on operations

In April 2020, the Company withdrew its production and cost guidance for the year until further notice due to the uncertainties related to the impact caused by COVID-19 constraints on the Company's business and operations (refer to Fortuna news release dated April 2, 2020).

Operations at the San Jose Mine were suspended for 54 days, from April 2 to May 25, due to government mandated industry wide constraints related to the rapid spread of COVID-19 (refer to Fortuna news release dated May 26, 2020). Production at the Caylloma Mine, despite government mandated COVID-19 restrictions, were not disrupted. The mine initially operated by drawing ore from its coarse ore stockpile, and as the stockpile decreased, the mine re-started using a reduced task force (refer to Fortuna news release dated April 27, 2020). On March 19, 2020, construction activities at the Lindero gold Project were temporarily halted. On April 28, the Company submitted and received approval to its Minimum Emergency Operations Program which permitted the Company to resume construction activities (refer to Fortuna news release dated May 8, 2020).

Second Quarter 2020 Consolidated Results, see on
https://www.fortunasilver.com/investors/news/2020/fortuna-reports-consolidated-financial-results-for-the-second-quarter-2020/

Note:
1.Refer to non-GAAP financial measures and Forward-Looking Statements at the end of this news release

Sales for the three months ended June 30, 2020 were $44.5 million, a 34% decrease from the $67.9 million reported in the second quarter of 2019. The decrease was due primarily to the impact of a 54-day government mandated suspension of operations at the San Jose Mine resulting in a $20.4 million decrease in sales as silver and gold sales volume decreased 56% and 53%, respectively, despite higher metal prices compared to the same period in 2019. Two other factors that lead to lower sales were lower lead and zinc prices and higher treatment charges.

The Company recorded an operating loss of $1.3 million for the three months ended June 30, 2020 compared to $15.7 million in operating income for the same period in 2019. The swing to an operating loss was due primarily to the significant reduction in sales due to the impact of government mandated COVID-19 related restrictions and $2.0 million spent on care and maintenance costs incurred during the temporary suspension of operations at San Jose, a $6.4 million increase in share-based payment expense due to mark-to-market effect of stock price increase over the quarter, and $2.8 million in foreign exchange losses on a weaker Mexican and Argentine Pesos.

The $1.3 million operating loss described above was offset by $2.2 million of Argentine Pesos denominated investment gains from cross border trades, resulting in positive income before income taxes of $0.6 million. A net loss for the quarter of $5.7 million (Q2 2019: net income of $10.3 million) was recorded after deducting $6.2 million of income tax provision. The devaluation of the Mexican Peso had a negative impact on our income tax provision in the quarter of $2.0 million, of which $1.2 million was a deferred tax effect.

Net cash provided by operating activities for the three months ended June 30, 2020 decreased 86% to $3.4 million compared to $24.0 million in the second quarter of 2019. The decrease was due to reduced cashflows from San Jose as well as negative changes in working capital as a result of timing of settlement of trade receivables and payables.

Free cash flow from ongoing operations for the three months ended June 30, 2020 was $0.2 million compared to $15.4 million in the second quarter of 2019. The decrease was due primarily to the decrease in cashflow generation from the San Jose Mine as a result of a government mandated temporary suspension of mining operations.

Capital resources and liquidity

Total liquidity available to the Company as of June 30, 2020 was $132.0 million, which includes $55.0 million of available credit under our $150.0 million credit facility. At the end of the quarter, the Company had cash and cash equivalents of $76.7 million (December 31, 2019: $83.4 million), a decrease of $6.7 million since the start of the year. During the second quarter of 2020, the Company completed an equity financing for gross proceeds of $69.0 million and paid down $55.0 million of the revolving credit facility.

Lindero Project

Construction at the Lindero gold Project is approximately 97% complete as at June 30, 2020.

The following table summarizes spending on construction and preproduction related costs for the six months ended June 30, 2020:

Lindero Construction capital expenditures and total spending


Note:
1.Consists of Argentina financial transaction taxes, contractor advances for operations and other costs
2.$16.9 million of construction trade payables were unpaid as of the end of the second quarter 2020

As of June 30, 2020, the Company estimates the remaining funding required to complete the Project, inclusive of pre-production expenditures, working capital and value added tax payments to be in the range of $55.0 to $60.0 million up to the start of gold sales during the commissioning of the mine in the fourth quarter of 2020. Commercial production is expected to be in the first quarter of 2021.
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Second Quarter 2020 Consolidated Results

San Jose Mine, Mexico



Notes:
1.Production cash cost Ag Eq and AISC Ag Eq are calculated using realized metal prices for each period respectively
2.Production cash cost, production cash cost Ag Eq, and AISC Ag Eq are non-GAAP financial measures; refer to non-GAAP financial measures in the associated MD&A for a description and calculation of these measures

Quarterly Results

The San Jose Mine produced 1,029,049 ounces of silver and 6,654 ounces of gold in the second quarter of 2020, which were 52% and 50% lower than the comparable quarter in 2019. Lower silver and gold production was attributed to a 54-day government mandated temporary suspension of operations and to mining lower grade material.

Cash cost per tonne of processed ore decreased 4% to $65.98 per tonne compared to $68.99 per tonne for the comparable quarter in 2019. The decreased cash cost was due to lower milling costs related to tailings disposal and energy costs, and lower execution of community support activities. Cash costs incurred during the temporary suspension of operations were reported as care and maintenance costs for a total amount of $2.0 million during the quarter.
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Caylloma Mine, Peru



Notes:
1.Production cash cost Ag Eq and AISC Ag Eq are calculated using realized metal prices for each period respectively
2.Production cash cost, production cash cost Ag Eq, and AISC Ag Eq are non-GAAP financial measures; refer to non-GAAP financial measures in the associated MD&A for a description and calculation of these measures

Quarterly Results

The Caylloma Mine produced 6.8 million pounds of lead and 11.0 million pounds of zinc during the second quarter of 2020, which were 3% and 2% lower than the comparable quarter in 2019. The lower production was due primarily to lower metallurgical recovery despite a 6% and 2% higher head grade for lead and zinc, respectively. Silver production totaled 244,873 ounces with an average head grade of 72 g/t, which was 6% higher than the 230,000 ounces with an average head grade of 64 g/t for the comparable quarter in 2019.

Cash cost per tonne of processed ore was $74.92, which was 13% lower than the $86.11 cash cost per tonne for the comparable quarter in 2019. The lower cash cost was due primarily to reduced mining operations resulting from COVID-19 restrictions and cost reduction initiatives implemented during the second quarter.

Non-GAAP Financial Measures

The following tables represent the calculation of certain non-GAAP financial measures as referenced in this news release.

Reconciliation to Adjusted Net Income (loss) for the three and six months ended June 30, 2020 and 2019


Note: Certain figures may not add due to rounding and certain comparative figures have been reclassified to conform to the current year presentation


Note: Certain figures may not add due to rounding and certain comparative figures have been reclassified to conform to the current year presentation

Reconciliation to Adjusted EBITDA for the three and six months ended June 30, 2020 and 2019



Reconciliation to Free cash flow from ongoing operations for the three and six months ended June 30, 2020 and 2019



The financial statements and MD&A are available on SEDAR and on the Company's website:
https://www.fortunasilver.com/investors/financials/2020/.

Conference call to review second quarter 2020 financial and operational results

A conference call to discuss the financial and operational results will be held on Friday, August 14, 2020 at 9:00 a.m. Pacific time | 12:00 p.m. Eastern time. Hosting the call will be Jorge A. Ganoza, President and CEO, and Luis D. Ganoza, Chief Financial Officer.

Shareholders, analysts, media and interested investors are invited to listen to the live conference call by logging onto the webcast at: https://www.webcaster4.com/Webcast/Page/1696/36036 or over the phone by dialing in just prior to the starting time.

Conference call details:

Date: Friday, August 14, 2020
Time: 9:00 a.m. Pacific time | 12:00 p.m. Eastern time

Dial in number (Toll Free): +1.844.369.8770
Dial in number (International): +1.862.298.0840

Replay number (Toll Free): +1.877.481.4010
Replay number (International): +1.919.882.2331
Replay Passcode: 36036

Playback of the conference call will be available until August 28, 2020. Playback of the webcast will be available until August 14, 2021. In addition, a transcript of the call will be archived on the company’s website: https://www.fortunasilver.com/investors/financials/2020/.

About Fortuna Silver Mines Inc.


see & read more about figures on
https://www.fortunasilver.com/investors/news/2020/fortuna-reports-consolidated-financial-results-for-the-second-quarter-2020/