UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT
TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of October 2023
Commission File Number 001-35297
Fortuna Silver Mines Inc.
(Translation of registrant’s name into English)
200 Burrard Street, Suite 650, Vancouver, British
Columbia, Canada V6C 3L6
(Address of principal executive office)
Indicate by check mark whether the registrant files or will file annual
reports under cover of Form 20-F or Form 40-F.
FORM 20-F ¨ FORM
40-F þ
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K
in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: October 10, 2023 |
Fortuna Silver Mines Inc. |
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(Registrant) |
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By: |
/s/ "Jorge Ganoza Durant" |
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Jorge Ganoza Durant |
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President and CEO |
Exhibits:
Exhibit 99.1
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NEWS RELEASE |
Fortuna pays down $40 million
of debt from increased cash flow
(All amounts expressed in US dollars, tabular
amounts in millions, unless otherwise stated)
Vancouver, October 10, 2023: Fortuna Silver
Mines Inc. (NYSE: FSM) (TSX: FVI) reports that it has paid down $40 million of its revolving credit facility at the end of the third
quarter of 2023, using cash on hand.
As at June 30, 2023, Fortuna reported a leverage
ratio1 of 0.9 times total net debt2 to adjusted EBITDA3. After the payment of $40 million, it is expected
that the Company´s total outstanding debt balance will stand at approximately $206 million on its credit facility (excluding letters
of credit), and approximately $46 million of convertible notes, for an estimated total net debt, after cash and cash equivalents, of $133 million
as at the end of the third quarter of 2023. This represents a reduction of approximately $65 million in total net debt in the period reflecting
increased cash flows from the contribution of the Séguéla Mine in its first full quarter of production.
With operational and financial results weighted
towards the second half of 2023 following the successful completion of a two-year intensive capital investment phase at Séguéla,
the Company intends to shift its capital allocation priorities towards debt repayment, the continued advancement of its high-value exploration
opportunities in the portfolio and will evaluate other initiatives to enhance shareholder value.
The estimated total net debt and liquidity for
Fortuna as at the end of the third quarter of 2023 is preliminary financial information and has been prepared by management and remains
subject to final review by the Company’s audit committee and approval by the Company’s board of directors. Such preliminary
financial information for the third quarter of 2023 is subject to the finalization and closing of Fortuna´s accounting books and
records for the period. Refer to the “Cautionary Statements” section at the end of this news release.
It is expected that the Company will
release its financial statements and management’s discussion and analysis as at and for the three and nine months ended September
30, 2023, as approved by its audit committee and board of directors, on Wednesday, November 8, 2023, after market close.
Notes:
| 1. | Total net debt to adjusted EBITDA is a non-IFRS ratio; refer to the “Non-IFRS Measures” section
at the end of this news release for a description of this non-IFRS ratio and the reconciliation from debt, the most comparable IFRS measure |
| 2. | Total net debt is a non-IFRS measure; refer to the “Non-IFRS Measures” section at the end
of this news release for a description of this non-IFRS measure and a reconciliation to debt, the most comparable IFRS measure |
| 3. | Adjusted EBITDA is a non-IFRS measure; refer to the “Non-IFRS Financial Measures” section
in the Company’s management discussion and analysis for the three and six months ended June 30, 2023 (“Q2 2023 MD&A”),
for a description of the measure on page 27 and for a reconciliation to net income the most directly comparable IFRS measure on page 36,
and which aforementioned sections are incorporated by reference herein. The Q2 2023 MD&A may be accessed on SEDAR+ at www.sedarplus.ca
under the Company’s profile |
About Fortuna Silver Mines Inc.
Fortuna Silver Mines Inc. is a Canadian precious
metals mining company with five operating mines in Argentina, Burkina Faso, Côte d'Ivoire, Mexico, and Peru. 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. For more information, please visit our website.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO, and Director
Fortuna Silver Mines Inc.
Investor Relations:
Carlos Baca | info@fortunasilver.com | www.fortunasilver.com
| X | LinkedIn | YouTube
Cautionary Statements
The estimated total net debt and liquidity
for the Company as at the end of the third quarter of 2023, is preliminary financial information and has been prepared by management and
remains subject to final review by the Company’s audit committee and approval by the Company’s board of directors. Such preliminary
financial information for the third quarter of 2023 is subject to the finalization and closing of our accounting books and records for
the period and should not be viewed as a substitute for full quarterly financial statements prepared in accordance with accounting principles
generally accepted under International Financial Reporting Standards (IFRS). The Company’s auditor has not audited the preliminary
financial information contained in this news release, nor have they expressed any opinion or any other form of assurance on the preliminary
financial information contained herein.
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, the Company’s anticipated financial and operational performance in 2023; preliminary estimated
financial information for the third quarter of 2023; a preliminary estimate of the Company’s liquidity and outstanding debt balance
and total net debt as at September 30, 2023; a preliminary estimate of the reduction in total net debt compared to the second quarter
ended June 30, 2023; the Company’s plans for its allocation of capital for the remainder of 2023 and on an ongoing basis; the economics
for the mine at Séguéla; 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; the anticipated timing for release of the Company’s financial statements and management’s discussion and analysis
as at and for the three and nine months ended September 30, 2023. Often, but not always, these Forward looking Statements can be identified
by the use of words such as "estimated", “expected”, “anticipated”, "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, the preliminary estimated financial information, liquidity and outstanding total debt may not be consistent
with the final quarterly results and statement of liquidity and debt subsequently approved by the Board; operational risks associated
with mining and mineral processing; uncertainty relating to Mineral Resource and Mineral Reserve estimates; uncertainty relating to capital
and operating costs, production schedules and economic returns; uncertainties related to new mining operations such as the Séguéla
Mine; risks relating to the Company’s ability to replace its Mineral Reserves; risks associated with mineral exploration and project
development; uncertainty relating to the repatriation of funds as a result of currency controls; environmental matters including obtaining
or renewing environmental permits and potential liability claims; uncertainty relating to nature and climate conditions; risks associated
with political instability and changes to the regulations governing the Company’s business operations; changes in national and local
government legislation, taxation, controls, regulations and political or economic developments in countries in which the Company does
or may carry on business; risks associated with war, hostilities or other conflicts, such as the Ukrainian - Russian conflict,
and the impact it may have on global economic activity; risks relating to the termination of the Company’s mining concessions in
certain circumstances; developing and maintaining relationships with local communities and stakeholders; risks associated with losing
control of public perception as a result of social media and other web-based applications; potential opposition to the Company’s
exploration, development and operational activities; risks related to the Company’s ability to obtain adequate financing for planned
exploration and development activities; property title matters; risks relating to the integration of businesses and assets acquired by
the Company; impairments; risks associated with climate change legislation; reliance on key personnel; adequacy of insurance coverage;
operational safety and security risks; legal proceedings and potential legal proceedings; the ability of the Company to successfully contest
and revoke the resolution issued by SEMARNAT which annuls the extension of the environmental impact authorization for the San Jose Mine;
temporary restrictions imposed by the Company’s lenders on the Company’s abilities under the Credit Facility; our ability
to access the capital markets; uncertainties relating to general economic conditions; risks relating to a global pandemic, which could
impact the Company’s business, operations, financial condition and share price; competition; fluctuations in metal prices; risks
associated with entering into commodity forward and option contracts for base metals production; fluctuations in currency exchange rates
and interest rates; tax audits and reassessments; risks related to hedging; uncertainty relating to concentrate treatment charges and
transportation costs; sufficiency of monies allotted by the Company for land reclamation; risks associated with dependence upon information
technology systems, which are subject to disruption, damage, failure and risks with implementation and integration; risks associated with
climate change legislation; labour 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 financial performance for the third quarter of 2023; that management’s preliminary financial information for the
third quarter of 2023 will be consistent with the final full quarterly financial results; that the Company’s activities will be
conducted in accordance with the Company’s public statements and stated goals; that there will be no material adverse change affecting
the Company, its properties or its production estimates (which assume accuracy of projected head grade, mining rates, recovery timing,
and recovery rate estimates and may be impacted by unscheduled maintenance, labour and contractor availability and other operating or
technical difficulties); the duration and effect of global and local inflation; geo-political uncertainties on the Company’s production,
workforce, business, operations and financial condition; the expected trends in mineral prices, inflation and currency exchange rates;
that the Company will be successful in challenging the annulment of the extension to the San Jose Mine environmental impact authorization;
that all required approvals and permits will be obtained for the Company’s business and operations on acceptable terms; that there
will be no significant disruptions affecting the Company's operations; the Company’s ability to access the capital markets; the
ability to meet current and future obligations 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 these 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.
The purpose of disclosing the Company's estimated
total outstanding debt balance and estimated total net debt, after cash and cash equivalents is to assist readers in understanding the
impact of cash flows from the contribution of the Company's Séguéla Mine on its outstanding indebtedness. This information may not be appropriate for other purposes.
Non-IFRS Financial Measures
The Company has disclosed certain financial
measures and ratios in this news release which are not defined under IFRS, as issued by the International Accounting Standards Board,
and are not disclosed in the Company's financial statements, including but not limited to total net debt and total net debt to adjusted
EBITDA ratio. These non-IFRS financial measures and non-IFRS ratios are widely reported in the mining industry as benchmarks for performance
and are used by management to monitor and evaluate the Company's operating performance and ability to generate cash. The Company believes
that, in addition to financial measures and ratios prepared in accordance with IFRS, certain investors use these non-IFRS financial measures
and ratios to evaluate the Company’s performance. However, the measures do not have a standardized meaning under IFRS and may not
be comparable to similar financial measures disclosed by other companies. Accordingly, non-IFRS financial measures and non-IFRS ratios
should not be considered in isolation or as a substitute for measures and ratios of the Company’s performance prepared in accordance
with IFRS. Except as otherwise described below, the Company has calculated these non-IFRS financial measures and non-IFRS ratios consistently
for all periods presented. To facilitate a better understanding of these measures as calculated by the Company, descriptions are provided
below.
Total net debt is a non-IFRS measure which
is calculated as debt consisting of credit facilities and convertible debentures less cash and cash equivalents.
Management believes that total net debt provides
valuable information as an indicator of the Company’s liquidity and ability to fund working capital needs fund capital expenditures.
Total net debt is also a common metric that provides additional information used by investors and analysts for valuation purposes based
on an observed or inferred relationship between total net debt and enterprise value. Total net debt is not meant to be a substitute for
other subtotals or totals presented in accordance with IFRS measures, but that rather should be evaluated in conjunction with IFRS measures.
The following table presents a reconciliation
of Total net debt from Debt1, the most directly comparable IFRS measure, as of the date of this news release:
As at |
September 30, 2023 |
Debt |
$255,700,000 |
Less: cash and cash equivalents |
($118,300,000) |
Total net debt |
$137,400,000 |
Note:
| 1. | The debt, cash and cash equivalents, and total net debt figures
for the Company presented in the table above, represent preliminary financial information estimated by management which remains subject
to final review by the Company’s audit committee and approval by the Company’s board of directors. |
Total Net Debt to Adjusted EBITDA Ratio
Total net debt to adjusted EBITDA ratio is
a non-IFRS ratio which is calculated as total net debt divided by adjusted EBITDA. Management believes that total net debt to adjusted
EBITDA provides valuable information as an indicator of the Company’s solvency and ability to fund working capital needs and fund
capital expenditures. Total net debt to adjusted EBITDA ratio is also a common metric that provides additional information used by investors
and analysts for valuation purposes based on an observed or inferred relationship between total net debt to adjusted EBITDA ratio and
enterprise value. Total net debt to adjusted EBITDA ratio is not meant to be a substitute for other subtotals or totals presented in accordance
with IFRS measures, but rather should be evaluated in conjunction with IFRS measures.
The following table presents a reconciliation
of total net debt to adjusted EBITDA ratio from debt, the most directly comparable IFRS measure, as of June 30, 2023:
(Expressed in $ millions, except total net
debt to adjusted EBITDA ratio)
As at |
June 30, 2023 |
Debt |
291.2 |
Less: cash and cash equivalents |
(93.4) |
Total net debt |
197.8 |
Adjusted EBITDA (last four quarters) |
217.1 |
Total net debt to adjusted EBITDA ratio |
0.9:1 |
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