Fortuna Silver Mines Inc.: Fortuna reports consolidated financial results for the third quarter 2017

(All amounts expressed in US dollars, unless otherwise stated)

VANCOUVER, British Columbia, 2017-11-08 22:46 CET (GLOBE NEWSWIRE) --
Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI) today reported net income of
$10.3 million, Adjusted EBITDA of $30.6 million, and revenue of $64.0 million
in the third quarter of 2017. 

Jorge A. Ganoza, President and CEO, commented, "We have had yet another quarter
of strong operating and financial results at our operating mines in Peru and
Mexico, positioning the company well on track to meet our annual production
targets and financial objectives." Mr. Ganoza continued, "Having announced a
positive construction decision for our Lindero gold Project in Argentina, we
expect free cash flow from our operations to contribute significantly towards
the funding of the construction capital requirements." 

Third quarter consolidated financial highlights

  -- Sales of $64.0 million, compared to $65.2 million in Q3 2016
  -- Net income of $10.3 million, compared to $10.2 million in Q3 2016
  -- Earnings per share of $0.06, compared to $0.08 in Q3 2016
  -- Adjusted net income of $13.1 compared to $10.0 million in Q3 2016
  -- Adjusted EBITDA of $30.6 million and Adjusted EBITDA margin over sales of
     48%
  -- Cash flow from operations before changes in non-cash working capital of
     $26.2 million, compared to $26.5 million in Q3 2016
  -- Cash position, including short term investments, and working capital as at
     September 30, 2017 were $195.8 million and $197.6 million, respectively
  -- Silver and gold production of 2,009,362 and 13,412 ounces, respectively
  -- AISC1 per ounce of payable silver was $6.1

Note
  1 All-in sustaining cash cost is net of by-product credits for gold, lead and
zinc (Non-GAAP financial measure) 

Third quarter consolidated financial results

Consolidated Financial       Q3        Q3        %       YTD       YTD         %
 Metrics                    2017      2016    Change    2017      2016    Change
           Figures expressed in $ millions except per share information and AISC
Sales                     $   64.0  $   65.2   -2  %  $  192.8  $  152.4   27  %
Mine operating income         24.9      28.4  -12  %      74.3      59.9   24  %
Operating income              18.9      21.2  -11  %      52.7      30.9   71  %
Net income                    10.3      10.2    1  %      32.2      11.3  185  %
                                                                                
Earnings per share            0.06      0.08  -25  %      0.20      0.08  150  %
 (basic)                                                                        
Earnings per share            0.06      0.07  -14  %      0.20      0.08  150  %
 (diluted)                                                                      
                                                                                
Adjusted net income1          13.1      10.0   31  %      36.4      11.0  231  %
Adjusted EBITDA1              30.6      30.6    0  %      87.3      53.5   63  %
Cash provided by              20.4      29.0  -30  %      41.2      26.9   53  %
 operating activities                                                           
Cash generated by             26.2      26.5   -1  %      61.3      39.6   55  %
 operating activities                                                           
 before changes in                                                              
 working capital                                                                
Capex (sustaining)             7.5       5.4   39  %      19.9      14.5   37  %
Capex (non-sustaining)         6.1       3.6   69  %      11.2      21.0  -47  %
Capex (Brownfield)             2.2       2.2    0  %       7.8       5.7   37  %
All-in sustaining cash         6.1       7.5  -20  %       6.8       8.8  -23  %
 cost                                                                           
Cash, cash equivalents,      195.8     123.6   58  %     195.8     123.6   58  %
 and short-term                                                                 
 investments2                                                                   
                                                                                
Total assets2                652.9     387.7   68  %     652.9     387.7   68  %
Non-current bank loan2        39.8      39.6    1  %      39.8      39.6    1  %
Other liabilities2             1.3       4.8  -73  %       1.3       4.8  -73  %
                                                                                
Note                                                                            
1 refer to Non-GAAP Financial Measures                                          
2 Comparative figures are as at December 31, 2016                               

Net income for the third quarter ended September 30, 2017 was $10.3 million or
$0.06 per share compared to a net income of $10.2 million or $0.08 per share
for the comparable quarter in 2016.  The slightly higher net income was driven
mostly by lower income tax expense of $5.2 million as the effective tax rate
for the third quarter was 34.7% compared to 51.2% for the comparable quarter in
2016.  Adjusted net income was $13.1 million compared to $10.0 million in 2016,
mostly after adjusting for a $2.2 million loss on financial instruments, net of
tax, in the current quarter. 

Operating income for the third quarter ended September 30, 2017 was $18.9
million, 11% below the comparable quarter in 2016, attributable mostly to lower
financial results at our San Jose Mine related in turn to a lower realized
silver price of 14% and higher unit costs of 13%.  These were partially offset
by stronger financial results at our Caylloma Mine driven by strong zinc and
lead prices and lower share based payments of $0.1 million, compared to $2.6
million in the third quarter of 2016. 

A graph accompanying this announcement is available at 
http://www.globenewswire.com/NewsRoom/AttachmentNg/78cdb59e-03c7-4d52-a704-92e21
d2c1bb3 

Cash provided by operating activities in the third quarter of 2017 was $20.4
million, a $8.6 million decrease from $29.0 million in the comparable quarter
of 2016.  The decrease was due primarily to negative changes in working capital
in the third quarter of 2017 compared to positive changes in Q3 2016.  The
negative changes in the current quarter are related to trade receivables and
inventory.  Cash provided by operating activities before changes in working
capital was $26.2 million, a $0.3 million decrease from $26.5 million in the
third quarter of 2016. 

Liquidity

At September 30, 2017, the Company had cash, cash equivalents, and short-term
investments of $195.8 million (December 31, 2016 - $123.6 million), an increase
of $7.8 million over the end of June 2017, and of $72.2 million since the
beginning of the year.  The increase over year end 2016 was due primarily to a
bought deal equity financing in the first quarter of 2017 for net proceeds of
$70.9 million. 

The Company is in the process of amending its existing credit facility with
Scotiabank from $40 million to $120 million.  This will provide an additional
$80 million of liquidity on top of the $40 million which have been drawn as of
September 30, 2017 and completes our funding requirement for the construction
of the Lindero Project. 

San Jose Mine, Mexico

                                       QUARTERLY RESULTS    YEAR TO DATE RESULTS
San Jose                               Three months ended,   Nine months ended, 
                                         September 30,         September 30,    
Mine Production                          2017       2016       2017       2016  
t milled                                263,697    268,242    799,420    632,432
Average t milled per day                  3,038      3,056      3,054      2,425
                                                                                
Silver                                                                          
Grade (g/t)                                 229        224        231        229
Recovery (%)                                 91         92         92         92
Production (oz)                       1,774,556  1,780,825  5,454,793  4,296,125
Metal sold (oz)                       1,739,066  1,761,101  5,392,495  4,270,370
Realized price ($/oz)                     16.85      19.47      17.16      17.37
                                                                                
Gold                                                                            
Grade (g/t)                                1.71       1.76       1.74       1.73
Recovery (%)                                 91         92         91         92
Production (oz)                          13,248     13,951     40,773     32,358
Metal sold (oz)                          12,817     13,739     40,079     32,155
Realized price ($/oz)                     1,280      1,327      1,251      1,268
                                                                                
Unit Costs                                                                      
Production cash cost ($/oz Ag)1            1.53       0.73       1.29       1.74
Production cash cost ($/t)                62.23      54.83      60.31      57.69
Unit Net Smelter Return ($/t)            162.62     175.61     165.76     160.73
All-in sustaining cash cost ($/oz          7.75       6.94       7.35       7.95
 Ag)1                                                                           
                                                                                
1 Net of by-product credits from                                                
 gold                                                                           
                                                                                

The San Jose Mine produced 1,774,556 ounces of silver and 13,248 ounces of gold
in the third quarter, 4% and 7% higher than plan. Compared to the third quarter
of 2016 silver was slightly slower by 0.4% and gold was 5% lower.  The decrease
in gold compared to 2016 was the result of lower head grades of 3% and lower
throughput of 2%. 

Cash cost per tonne of processed ore for the third quarter ended September 30,
2017 was $62.2, which includes approximately $0.6 per tonne of non-recurring
items mainly related to mine support works due to a major earthquake in
September and $0.70 per tonne due to the appreciation of the Mexican Peso
against the US dollar.  Excluding non-recurring items and exchange rate effects
the increase compared to budget was 4% and was related to higher mine support
cost and local inflation on the cost of energy and materials.  Cash cost per
tonne of processed ore for the quarter was 13% higher than the $54.8 cash cost
for the comparable quarter in 2016.  Cash cost for 2017 is expected to remain
within 5% of annual guidance (see Fortuna news release dated January 11, 2017). 

All-in sustaining cash cost per payable ounce of silver, net of by-product
credits, was $7.4 for the first nine months of 2017 and was below the annual
guidance of $8.4 as a result of higher gold credits. 

Caylloma Mine, Peru

                                     QUARTERLY RESULTS     YEAR TO DATE RESULTS 
Caylloma                           Three months ended,      Nine months ended,  
                                       September 30,           September 30,    
Mine Production                      2017        2016        2017        2016   
t milled                          133,726     132,558     395,069     379,707   
Average t milled per day            1,486       1,473       1,480       1,417   
                                                                                
Silver                                                                          
Grade (g/t)                            66          87          66          93   
Recovery (%)                           83          83          84          85   
Production (oz)                   234,806     308,680     704,624     963,994   
Metal sold (oz)                   226,155     309,813     691,659     980,418   
Realized price ($/oz)               16.89       19.56       17.19       16.91   
                                                                                
Lead                                                                            
Grade (%)                            2.87        2.71        2.77        3.22   
Recovery (%)                           91          94          91          94   
Production (000's lbs)              7,650       7,452      22,031      25,383   
Metal sold (000's lbs)              7,291       7,454      21,454      25,826   
Realized price ($/lb)                1.06        0.85        1.03        0.80   
                                                                                
Zinc                                                                            
Grade (%)                            4.26        4.09        4.16        4.32   
Recovery (%)                           90          89          90          89   
Production (000's lbs)             11,241      10,606      32,670      32,198   
Metal sold (000's lbs)             10,867      10,600      32,512      32,504   
Realized price ($/lb)                1.35        1.02        1.26        0.89   
                                                                                
Unit Costs                                                                      
Production cash cost ($/oz Ag)1    (39.53  )    (8.49  )   (31.22  )    (4.41  )
Production cash cost ($/t)          76.00       71.83       78.12       72.16   
Unit Net Smelter Return ($/t)      170.37      134.17      159.86      123.59   
All-in sustaining cash cost        (18.79  )     3.27      (11.23  )     5.14   
 ($/oz Ag)1                                                                     
                                                                                
1 Net of by-product credits from gold, lead                                     
 and zinc                                                                       
                                                                                

Silver production at the Caylloma Mine for the third quarter of 2017 was
234,806 ounces, 24% lower than the comparable period in 2016.  Lead and zinc
production were 7.7 million and 11.2 million pounds, respectively; 3%, and 6%
higher than the comparable quarter in 2016.  Lower silver production for the
third quarter was due to lower head grades of 25%.  Higher lead production of
3% was the result of higher head grades of 6% partially offset by lower
recovery of 4%, while higher zinc production of 6% was the result of higher
head grade of 4%.  Compared to plan silver and lead production were 6% and 3%
below budget, while zinc production was 5% above budget. 

Cash cost per tonne of processed ore for the third quarter ended September 30,
2017 was $76.0, which was 6% higher than the $71.8 cash cost for the comparable
quarter in 2016 and 1% higher than budget. The increase over the third quarter
of 2016 was mainly due to higher energy, ground support and labour costs. Cash
cost for full year 2017 is expected to remain within 5% of annual guidance (see
Fortuna news release dated January 11, 2017). 

All-in sustaining cash cost per payable ounce of silver, net of by-product
credits, was a negative $11.2 for the first nine months of the year and was
significantly below the annual guidance of $10.8 due primarily to higher
by-product credits. 

The financial statements and MD&A are available on SEDAR and have also been
posted on the Company's website at
http://www.fortunasilver.com/s/financial_reports.asp. 

Conference call details:

Date:  Thursday, November 9, 2017
Time: 9:00 a.m. Pacific | 12:00 p.m. Eastern

Dial in number (Toll Free): +1.888.567.1603
Dial in number (International): +1.404.267.0368

Replay number (Toll Free): +1.877.481.4010
Replay number (International): +1.919.882.2331
Replay Passcode: 10434

Playback of the conference call will be available until November 23, 2017 at
11:59 p.m. Eastern.  Playback of the webcast will be available until February
9, 2018.  In addition, a transcript of the call will be archived in the
company's website: 
https://www.fortunasilver.com/investors/financials/2017/.

About Fortuna Silver Mines Inc.

Fortuna is a growth oriented, precious metal 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 in Argentina. The Company is selectively pursuing
acquisition opportunities throughout the Americas and in select other areas. 

ON BEHALF OF THE BOARD

Jorge A. Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.

Trading symbols: NYSE: FSM | TSX: FVI

Investor Relations:

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

                           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, 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; and proposed expenditures.
Often, but not always, these Forward looking Statements can be identified by
the use of words such as "estimated", "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. 

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, changes in general economic
conditions and financial markets; changes in prices for silver and other
metals; technological and operational hazards in Fortuna's mining and mine
development activities; risks inherent in mineral exploration; uncertainties
inherent in the estimation of mineral reserves, mineral resources, and metal
recoveries; governmental and other approvals; political unrest or instability
in countries where Fortuna is active; 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 plans for its mines and mineral
properties; mine production costs; expected trends in mineral prices and
currency exchange rates; the accuracy of the Company's current mineral resource
and reserve estimates; that the Company's activities will be in accordance with
the Company's public statements and stated goals; that there will be no
material adverse change affecting the Company or its properties; that all
required approvals will be obtained; that there will be no significant
disruptions affecting operations 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 Forward looking Statements will
prove to be accurate, as actual results and future events could differ
materially from those anticipated in such statements. Accordingly, investors
should not place undue reliance on Forward looking Statements. 

This news release also refers to non-GAAP financial measures, such as cash cost
per tonne of processed ore; cash cost per payable ounce of silver; total
production cost per tonne; all-in sustaining cash cost; all-in cash cost;
adjusted net (loss) income; operating cash flow per share before changes in
working capital, income taxes, and interest income; and adjusted EBITDA.  These
measures do not have a standardized meaning or method of calculation, even
though the descriptions of such measures may be similar.  These performance
measures have no meaning under International Financial Reporting Standards
(IFRS) and therefore, amounts presented may not be comparable to similar data
presented by other mining companies. 

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PhotoExpress.