Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to announce the full exercise and closing of the over-allotment option granted to CIBC Capital Markets, Scotiabank and BMO Capital Markets. The Company issued and sold to the Underwriters an additional US$6 million aggregate principal amount of 4.65% senior subordinated unsecured convertible debentures pursuant to the exercise of the Over-Allotment Option, in connection with the Company’s bought deal offering that closed on October 2, 2019, for an aggregate principal amount of US$40 million 4.65% senior subordinated unsecured convertible debentures.
Pursuant to the exercise of the Over-Allotment Option, Fortuna today issued 6,000 Additional Debentures to the Underwriters at a price of US$1,000 per Additional Debenture for additional gross proceeds to the Company of US$6 million, bringing the total aggregate gross proceeds to Fortuna under the Offering to US$46 million.
The Additional Debentures mature on October 31, 2024 and bear interest at a rate of 4.65% per annum, payable semi-annually in arrears on the last business day of April and October in each year, commencing on April 30, 2020. The Additional Debentures are convertible at the holder’s option into common shares in the capital of the Company at a conversion price of US$5.00 per share, representing a conversion rate of 200 Common Shares per US$1,000 principal amount of Additional Debentures, subject to adjustment in certain circumstances.
Subject to certain exceptions in connection with a change of control of the Company, the Additional Debentures will not be redeemable by the Company prior to October 31, 2022. On or after October 31, 2022 and prior to October 31, 2023, the Additional Debentures may be redeemed in whole or in part from time to time at the Company’s option at a price equal to their principal amount plus accrued and unpaid interest, provided that the volume weighted average trading price of the Common Shares on the NYSE for the 20 consecutive trading days ending on the fifth trading day preceding the date on which the notice of the redemption is given is at least 125% of the Conversion Price. On and after October 31, 2023, the Additional Debentures may be redeemed in whole or in part from time to time at the Company’s option at a price equal to their principal amount plus accrued and unpaid interest regardless of the trading price of the Common Shares.
The Offering, including the qualification of the Over-Allotment Option, was made pursuant to a short form prospectus dated September 25, 2019, filed in each of the provinces of Canada, except Québec, and in the United States on a private placement basis pursuant to an exemption from the registration requirements of the United States Securities Act of 1933, as amended, and certain other jurisdictions.
The Company will use the net proceeds from the Offering, including the additional proceeds received pursuant to the exercise of the Over-Allotment Option, for working capital in relation to the start-up of the Lindero project and for general working capital purposes.
This news release does not constitute an offer of securities for sale in the United States. The securities have not been and will not be registered under the U.S. Securities Act, and may not be offered or sold in the United States or to a U.S. person (as defined in Regulation S under the U.S. Securities Act) absent registration or an applicable exemption from the registration requirements of the U.S. Securities Act.
About Fortuna Silver Mines Inc.
Fortuna is a growth oriented, precious metals producer focused on mining opportunities in Latin America. The Company’s 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.
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