Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reports production results for the fourth quarter and full year 2021 from its four operating mines in the Americas and West Africa: the Lindero Mine in Argentina, the San Jose Mine in Mexico, the Caylloma Mine in Peru, and the Yaramoko Mine in Burkina Faso. For the full year 2021, the Company produced 207,192 ounces of gold and 7,498,701 ounces of silver or 305,859 gold equivalent¹ ounces.

2021 Consolidated Production Highlights

• Gold production of 207,192 ounces; 274 percent increase over 2020
• Silver production of 7,498,701 ounces; 5 percent increase over 2020
• Lead production of 32,989,973 pounds; 11 percent increase over 2020
• Zinc production of 47,549,301 pounds; 4 percent increase over 2020

2022 Consolidated Production Guidance Highlights

• Gold production of between 244 to 280 thousand ounces; a projected increase of between 16 to 35 percent over 2021
• Silver production of between 6.2 to 6.9 million ounces; a projected decrease of between 8 to 17 percent over 2021
• Gold equivalent production of between 326 to 371 thousand ounces; a projected increase of between 7 to 21 percent over 2021

2021 Consolidated Operating Highlights

Notes:

1. Gold equivalent production does not include lead or zinc, and is calculated using gold to silver ratio of 1 to 76
2. Metallurgical recovery for silver at the Caylloma Mine is calculated based on silver content in lead concentrate
3. Lindero production includes gold in carbon columns and precipitate/sludge; Yaramoko production includes only doré
4. Production from the Yaramoko Mine is subsequent to the completion of the business combination with Roxgold Inc. on July 2, 2021
5. Totals may not add due to rounding

Lindero Mine, Argentina: Record quarterly gold production of 36,072 ounces of gold, 37% over the previous quarter, and a total of 104,161 ounces for the year, in line with guidance

During the fourth quarter, the operation screened 60 positive cases of COVID-19 onsite, with no disruptions to the operations. Travel restrictions to the country were lifted in November which led to an improvement in lead times and onsite technical assistance from foreign vendors.

In the fourth quarter of 2021, a total of 1.46 million tonnes of ore were placed on the leach pad, averaging 1.04 g/t gold containing an estimated 48,900 ounces of gold. Total gold production for the fourth quarter was 36,072 ounces.

Gold production for 2021 totaled 104,161 ounces, comprised of 99,313 ounces in doré, 730 ounces of gold contained in precipitate/sludge and 4,118 ounces of gold-in-carbon (GIC) inventory, in the upper range of the production guidance (refer to Fortuna news release dated July 19, 2021).

2021 Operating Highlights

Mine production for the quarter performed according to management’s expectations. A total of 2,601,678 tonnes of ore were mined in the fourth quarter, at a strip ratio of 0.77:1. Total mine production for the year accounted for 8,493,508 tonnes of ore, at a strip ratio of 0.82:1, in line with plan.

All processing areas performed according to plan:

• A total of 1,444,260 tonnes of ore were crushed and placed on the leach pad via conveyor stacking during the fourth quarter, a 17 percent increase over the previous quarter
• Conveyor stacking performance averaged 16,228 tonnes per day during the fourth quarter, an increase of 21 percent over the previous quarter; including 31 days of conveyor stacking throughput of over 18,750 tonnes per day
• SART plant reached full design capacity of 393 cubic meters per hour in December 2021, in line with plan
• The expansion of carbon columns at the ADR plant was successfully commissioned in the fourth quarter of 2021 and is performing according to plan

Reconciliation of tonnes, head grade and gold ounces mined as ore demonstrated a good correlation with the reserve model throughout 2021, with differences for all parameters of less than 6 percent for the year.

The metallurgical balance indicates that overall actual gold recovery from the heap is performing in line with expected theoretical recoveries, supported by ongoing 2.5-meter-tall column test works and is according to the granulometric composition and metallurgical types of ore placed on the leach pad to date.

Notes:
1.  Lindero tonnes and gold grade are estimated using grade control sampling of blast holes; tonnes are reported to the nearest thousand
2.  Quarter-on-quarter change in GIC inventory

Quality Assurance & Quality Control

Grade control estimates at Lindero are based on blast hole chip samples submitted to Lindero’s on-site laboratory for preparation and assaying for gold, using fire assay with an atomic absorption finish. The QA-QC program includes the blind insertion of certified reference standards and assay blanks at a frequency of approximately 1 per 20 normal samples as well as the submission of duplicate samples for verification of sampling and assay precision levels by an ISO 9001:2000 certified umpire laboratory. ALS Global Laboratory in Mendoza, Argentina prepared the samples for assaying and then forwarded the samples to ALS Global Laboratory in Lima, Peru for assay by standard fire assay methods.

San Jose Mine, Mexico: Solid production performance and stronger fourth quarter in line with full-year production guidance

The San Jose Mine produced 1,717,533 ounces of silver and 9,929 ounces of gold in the fourth quarter of 2021, with average head grades for silver and gold of 219 g/t and 1.27 g/t, respectively.

Silver and gold production for 2021 totaled 6,425,029 ounces of silver and 39,406 ounces of gold, respectively. Average head grades for silver and gold for the year were 209 g/t and 1.29 g/t, respectively.

Yaramoko Mine, Burkina Faso: Second semester production slightly below guidance due to grade delay in the fourth quarter

The Yaramoko Mine produced 28,787 ounces of gold in the fourth quarter of 2021 with an average gold head grade of 6.99 g/t.

Gold production for the second semester of 2021 totaled 57,538 ounces of gold with an average gold head grade of 7.13 g/t; 7 percent below guidance for the period. This production shortfall was due to lower than planned mill feed grade in the fourth quarter of 2021, caused by the delay in mining several high-grade stopes and some localized grade variability at the 55 Zone. The unmined stopes will be resequenced into the mine plan in the first quarter of 2022.

Caylloma Mine, Peru: Outperformer producing 6,086 ounces of by-product gold, a 22% increase over upper production guidance range

Silver production in the fourth quarter of 2021 was 262,710 ounces with an average silver head grade of 73 g/t. Full 2021-year production totaled 1,073,672 ounces, an increase of 11 percent over 2020, with an average head grade of 76 g/t.

Gold production was 1,374 ounces in the fourth quarter with average gold head grade of 0.44 g/t. Gold production for 2021 totaled 6,086 ounces, an increase of 48 percent over 2020, with an average head grade of 0.49 g/t.

Lead and zinc production for the fourth quarter of 2021 was 8,419,454 pounds and 11,380,262 pounds with average head grades for lead and zinc of 3.20% and 4.25%, respectively. Base metal production for the full year of 2021 totaled 47,549,301 pounds of zinc, an increase of 4 percent over 2020, and 32,989,973 pounds of lead, an increase of 11 percent over 2020. Average head grades for lead and zinc for the year were 3.16% and 4.56%, respectively.

2022 Consolidated Production and Cost Guidance

The Company’s production and cost guidance set out below for 2022 assumes that operations will continue during the year without any major interruptions related to COVID-19. Health protocols for control, isolation and quarantine are in place at each of our mine sites, and these are revised and modified based on the circumstances at each location.

Notes:
1.  Cash Cost and all-in sustaining cost (AISC) are non-GAAP financial measures which are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Company and might not be comparable to similar financial measures disclosed by other issuers. Refer to “Non-IFRS Financial Measures” in the Company’s 2021 management discussion and analysis (“MD&A”) for the three and nine months ended September 30, 2021 dated November 10, 2021 (“Q3 MD&A 2021”), which is available under Fortuna’s SEDAR profile, and the note under “Non-IFRS Financial Measures” below.

2.  The following table provides the cash costs and AISC for the four operating mines for the nine months ended September 30, 2021 as follows:

(a)  Cash Cost and AISC are non-GAAP financial measures. Refer to Non-IFRS Financial Measures
(b)  Presented on a cash basis
(c)  Silver equivalent was calculated using the realized prices for gold (US$1,783 per ounce), silver (US$25.80 per ounce), lead US$0.98 per pound) and zinc (US$1.31 per pound) for the nine months ended September 30, 2021
(d)  Further details on the cash costs and AISC for the nine months ended September 30, 2021 are disclosed on pages 21, 23 and 24 (with respect to cash costs) and pages 22, 24 and 25 (with respect to AISC) of the Q3 MD&A 2021 which is available under Fortuna’s SEDAR profile at www.sedar.com and is incorporated by reference into this news release, and the note under “Non-GAAP Financial Measures” below
(e)  The estimated increase in all in sustaining costs at Yaramoko for 2022 are due to decreased estimated gold ounce production coupled with increased operating and capital costs as mining moves to the deeper regions of the underground mine

3.  The most comparable financial measure to cash costs is cost of sales. Please see the condensed interim consolidated financial statements of the Company for the three and nine months ended September 30, 2021 and pages 21, 23 and 24 of the Q3 MD&A 2021 for a reconciliation.

4.  AISC includes production cash cost, commercial and government royalties, mining tax, export duties (as applicable), worker’s participation (as applicable), subsidiary G&A, sustaining capital expenditures, and Brownfields exploration and is estimated at metal prices of US$1,700/oz Au, US$22/oz Ag, US$2,100/t Pb, and US$2,700/t Zn. AISC excludes government mining royalty recognized as income tax within the scope of IAS-12.

5.  The most comparable financial measure to AISC is cost of sales. Please see the condensed interim consolidated financial statements of the Company for the three and nine months ended September 30, 2021 and pages 22, 24 and 25 of the Q3 MD&A 2021 for a reconciliation.

6.  Totals may not add due to rounding.

2022 Guidance Outlook

Lindero Mine, Argentina

The Lindero Mine is expected to place 6.2 million tonnes of ore on the leach pad averaging 0.80 g/t Au, containing an estimated 160,000 ounces of gold. Capital investments are estimated at US$26.3 million, including US$17.7 million for sustaining capital, US$7.3 million of capitalized stripping and US$1.3 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

San Jose Mine, Mexico

At the San Jose Mine, the operation plans to process 1.06 million tonnes of ore averaging 176 g/t Ag and 1.09 g/t Au. Silver production and costs reflect the declining grade profile of Mineral Reserves. Capital investment is estimated at US$20.8 million, including US$13.4 million for sustaining capital expenditures and US$7.4 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

Yaramoko Mine, Burkina Faso

At the Yaramoko Mine, the operation plans to process 516,000 tonnes of ore averaging 6.52 g/t Au. Capital investments are estimated at US$48.4 million, including US$45.9 million for sustaining capital expenditures and US$2.5 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

Caylloma Mine, Peru

At the Caylloma Mine, the operation plans to process 532,000 tonnes of ore averaging 73 g/t Ag, 2.95% Pb, and 4.23% Zn. Capital investments are estimated at US$17.7 million, including US$16.3 million for sustaining capital expenditures and US$1.4 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

Séguéla Gold Project, Côte d’Ivoire

At the end of 2021, the Séguéla Project is 29 percent complete with critical path items on-track, targeting first gold pour in mid-2023 with ramp up to nameplate capacity in the third quarter of 2023. Critical path activities of “SAG Mill Procurement and Processing Plant EPC” contracts are 30 percent complete and are advancing in line with cost and schedule. Connection to the national electrical grid is on-track for completion in the fourth quarter of 2022, ahead of commissioning activities. Likewise, the tailings storage facility and water storage dam are expected to be completed before plant commissioning and the upcoming wet season, respectively.

In 2022, the key scopes for advancement to protect the project schedule are the processing plant EPC contract and the Mining Contract. The EPC contractor, Lycopodium, will mobilise to site in the first quarter of 2022. Similarly, in the second quarter of 2022, the Mining Contract is scheduled to be awarded and mobilisation is anticipated to commence ahead of mining operations schedule to start in the first quarter of 2023.

Management is working on the optimization of the mine design, strip ratio and scheduling and has identified potential gains that could lead to further improvements in the project cash flows. Continued reported drilling success at Koula depth and Sunbird satellite deposits represent further upside opportunities to the project.

2022 Exploration Outlook

Fortuna continues to advance its robust pipeline of Brownfield and Greenfield exploration projects in West Africa and the Americas, building on the success of the exploration programs carried out in 2021.

Brownfields Exploration

Fortuna´s consolidated Brownfields exploration budget for 2022 for its four mines totals US$20 million, which includes 113,000 meters of exploration drilling across all types (reverse circulation, diamond core and air core), and 1,120 meters of underground development.

San Jose Mine, Mexico

The Brownfields exploration program budget for 2022 at the San Jose Mine is US$7.4 million, which includes 26,200 meters of diamond drilling and 1,120 meters of underground development for drilling access, platforms, and services.

Séguéla Project, Côte d’Ivoire

The Brownfields exploration program budget for 2022 at the Séguéla Project is US$7.2 million, which includes 48,000 meters of exploration drilling to grow the emerging Sunbird prospect (refer to Fortuna news release dated December 9, 2021), test for further depth extensions at Koula, Ancien and Antenna, and continued generation and testing of near-mine targets.

Yaramoko Mine, Burkina Faso

The Brownfields exploration program budget for 2022 at the Yaramoko Mine is US$2.7 million, which includes 34,000 meters of exploration drilling, testing several surface geochemistry anomalies generated in 2021, in addition to expanding the 109 Zone and testing strike and depth projections of the 55 Zone.

Caylloma Mine, Peru

The Brownfields exploration program budget for 2022 at the Caylloma Mine is US$1.4 million, with the exploration focus turning to further understanding the region-wide controls on vein development and geometry, and the relationship to the formation of high-grade shoots at Animas, San Cristobal and other mineralized zones.

Lindero Mine, Argentina

The Brownfields exploration program budget for 2022 at the Lindero Mine is US$1.3 million, which includes 4,650 meters of drilling on the Arizaro target located 3.5 kilometers to the southeast of the mine where encouraging results were intersected in the 2021 programs (refer to Fortuna news release dated December 9, 2021).

Greenfields Exploration

Reconnaissance exploration and evaluation of potential new projects will continue to be actively pursued during 2022 across select jurisdictions including Mexico, West Africa, Argentina and select other jurisdictions with a budget of US$8.8 million.

Qualified Person

Amri Sinuhaji is the Technical Services Director – Mine Planning for the Company and is a Professional Engineer registered with the Association of Professional Engineers and Geoscientists of the Province of British Columbia (#48305) and a Qualified Person as defined by National Instrument 43-101- Standards of Disclosure for Mineral Projects. Mr. Sinuhaji has reviewed and approved the scientific and technical information contained in this news release and has verified the underlying data.

About Fortuna Silver Mines Inc.

Fortuna Silver Mines Inc. is a Canadian precious metals mining company with four operating mines in Argentina, Burkina Faso, Mexico and Peru, and a fifth mine under construction in Côte d’Ivoire. 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.