Fortuna Mining Corp (FSM) 6-K, filed Mar 24, 2022

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2022

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.

3
	Fortuna Silver Mines Inc.
	(Registrant)

Date: March 24, 2022	By:	/s/ "Jorge Ganoza Durant"
		Jorge Ganoza Durant
		President and CEO

Exhibits:

99.1****Annual Audited Consolidated Financial Statements for the year ended December 31, 2021.

99.2****Management’s Discussion and Analysis for the year ended December 31, 2021.

99.3****News release dated March 23, 2022.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended

December 31, 2021 and 2020

MANAGEMENT’S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

Management of Fortuna Silver Mines Inc. (the “Company”) (“we”, “us” or “our”) have prepared the consolidated financial statements in accordance with International Financial Reporting Standards (“IFRS”) and the accompanying Management’s Discussion and Analysis (“MD&A”) and are responsible for their content. The financial information presented in the MD&A is consistent with the information that is contained in the consolidated financial statements. The consolidated financial statements include, where necessary, amounts based on our estimates and judgement.

In order to discharge our responsibility for the integrity of the financial statements, the Company maintains a system of Internal Control over Financial Reporting and Disclosure Controls and Procedures. These controls are designed to provide reasonable assurance that the Company’s assets are safeguarded, transactions are executed and recorded in accordance with our authorization, proper records are maintained and relevant and reliable financial information is produced. These controls include maintaining quality standards in the hiring and training of employees, policies and procedures manuals, a corporate code of conduct and ensuring that there is proper accountability for performance within appropriate and well defined areas of responsibility.

The Board of Directors is responsible for overseeing the performance of our responsibilities for financial reporting and internal control over Financial Reporting and Disclosure Controls and Procedures. The Audit Committee, which is composed of non-executive directors, meets with us as well as the external auditors to ensure that we are properly fulfilling our financial reporting responsibilities to the Directors who approve the consolidated financial statements. The external auditors have full and unrestricted access to the Audit Committee to discuss the scope of their audits, and the adequacy of the system of internal controls, and to review financial reporting issues.

The consolidated financial statements have been audited by KPMG LLP, the Company’s independent registered public accounting firm, in accordance with the standards of the Public Company Accounting Oversight Board (United States).



/s/ Jorge Ganoza Durant	/s /Luis Ganoza Durant
President and Chief Executive Officer	Chief Financial Officer

Vancouver, Canada

March 23, 2022



KPMG LLP<br><br>Chartered Professional Accountants<br><br>PO Box 10426 777 Dunsmuir Street<br><br>Vancouver BC V7Y 1K3<br><br>Canada		Telephone(604) 691-3000<br><br>Fax(604) 691-3031<br><br>Internetwww.kpmg.ca

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Fortuna Silver Mines Inc.

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated statements of financial position of Fortuna Silver Mines Inc. (the Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the years then ended, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years then ended, in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission”, and our report dated March 23, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the Audit Committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Fair value of the mineral properties and exploration and evaluation assets acquired as part of the Roxgold Inc. acquisition

As discussed in Note 6 to the consolidated financial statements, on July 2, 2021, the Company acquired 100% of the issued and outstanding shares of Roxgold Inc. (Roxgold) with an acquisition date fair value of $655,295 thousand. The transaction was accounted for as a business combination. In allocating the purchase consideration to the acquired assets and liabilities, $810,000 thousand was allocated to mineral properties and exploration and evaluation assets. To determine the fair value of mineral properties and exploration and evaluation assets, the Company used a discounted cash flow model.

We identified the evaluation of the fair value of mineral properties and exploration and evaluation assets acquired in the Roxgold acquisition as a critical audit matter. Significant auditor judgment was required because there was a high degree of measurement uncertainty associated with the key inputs to the discounted cash flow model, which included the estimated quantities of mineral reserves and mineral resources and the life of mine plans, long-term gold prices, expected future production costs and capital expenditures, and discount rates. Changes in any of these assumptions could have had a significant effect on the determination of the fair value of the mineral properties and exploration and evaluation assets acquired.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the Company’s valuation of the mineral properties and exploration and evaluation assets acquired and the determination of the forecasted cash flow assumptions. We evaluated the competence, capabilities, and objectivity of the Company’s personnel who determined the mineral reserves and mineral resources and the life of mine plans. We compared the amount of mineral reserves and mineral resources in the discounted cash flow model to the life of mine plan and to the mineral reserve and mineral resource estimates. We compared expected future production costs and capital expenditures in the discounted cash flow model to the life of mine plan and to historical expenditures. We involved valuation professionals with specialized skills and knowledge, who assisted in (a) assessing the long-term gold prices by comparing to third party data; and (b) evaluating the discount rates used by comparing them to independently calculated ranges of discount rates using internal and external independent sources.

Recoverable amount of the Lindero cash-generating unit

As discussed in Note 10 to the consolidated financial statements, the carrying value of the Company’s mineral properties, plant and equipment is $1,712,354 thousand as at December 31, 2021, which includes the carrying amount of the Lindero cash-generating unit (CGU). As discussed in Note 5(b)(ii) to the consolidated financial statements, the Company determined there were indicators of impairment associated with the Lindero CGU. As discussed in note 3(i) to the consolidated financial statements, when an indicator of impairment exists, the Company is required to determine the recoverable amount of the CGU to determine whether an impairment should be recognized. To determine the recoverable amount of the CGU, the Company used a discounted cash flow model. Based on the outcome of the impairment testing performed, the Company determined that there was no impairment of the Lindero CGU as of December 31, 2021.

We identified the assessment of the recoverable amount of the Lindero CGU to be a critical audit matter. A high degree of auditor judgment was required to evaluate the inputs used to estimate the recoverable amount. Significant assumptions used in the determination of the recoverable amount included the estimated quantities of mineral reserves and mineral resources and the life of mine plan, long-term gold prices, expected future production costs and capital expenditures, and the discount rate. Changes in any of these assumptions could have had a significant effect on the determination of the estimated recoverable amount.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls over the Company's process to determine the recoverable amount of the CGU. This included controls over the Company’s development of the significant assumptions used to estimate the recoverable amount of the Lindero CGU. We assessed the competence, capabilities and objectivity of the Company’s personnel who determined the mineral reserves and mineral resources and the life of mine plan. We compared the amount of mineral reserves and mineral resources in the discounted cash flow model to the life of mine plan and to the mineral reserve and mineral resource estimates. We compared the Company’s historical estimates of mineral reserves and resources, life of mine plan and operating results to actual results to assess the accuracy of the Company’s forecasting process. We compared expected future production costs and capital expenditures in the discounted cash flow model to the life of mine plan and to historical expenditures. We involved valuations professionals with specialized skills and knowledge, who assisted in (a) assessing the long-term gold prices by comparing to third party data; and (b) evaluating the discount rate used by comparing it to an independently calculated range of discount rates using internal and external independent sources.

Inferred resources used in the Caylloma and San Jose life of mine plans

As discussed in Note 10 to the consolidated financial statements, the carrying value of the Company’s mineral properties, plant and equipment is $1,712,354 thousand as at December 31, 2021. These amounts include the carrying amounts of the Caylloma and San Jose mines. Estimates of the quantities of the mineral reserves and mineral resources form the basis for the Company’s life of mine plans, which are used for the calculation of depletion expense under the units of production method and in impairment tests. The Company’s estimates of the life of its mines includes the portion of inferred resources expected to be extracted economically. The decision to use inferred resources, and the portion of inferred resources to be included in the life of mine, varies for each operation and is based on the geological characteristics of the ore body, the quality and predictability of inferred resources, and the conversion of inferred resources into measured and indicated resources that the Company has historically achieved.

We identified the determination of the portion of inferred resources included in the life of mine plans for the Caylloma and San Jose mines as a critical audit matter. A high degree of auditor judgment was required to evaluate the significant assumptions that were developed by the Company’s personnel to determine the portion of inferred resources included in the life of mine plans. Significant assumptions include the accessibility of resources from existing mining infrastructure and the determination of the percentage of available inferred resources expected to be converted to measured and indicated resources in future periods.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating effectiveness of certain internal controls related to the critical audit matter. This included controls related to the estimation of the portion of inferred resources included in the life of mine plans for the Caylloma and San Jose mines. We assessed the competence, capabilities and objectivity of the Company’s personnel who determined the portion of available inferred resources to be included in the Caylloma and San Jose life of mine plans, including the accessibility of resources from existing mining infrastructure. We evaluated the ability of the Company to estimate the portion of inferred resources included in the life of mine plans by comparing historical estimates of inferred resources to the actual conversion of inferred resources to measured and indicated resources.

//s// KPMG LLP

Chartered Professional Accountants

We have served as the Company’s auditor since 2017.

Vancouver, Canada March 23, 2022



KPMG LLP<br><br>Chartered Professional Accountants<br><br>PO Box 10426 777 Dunsmuir Street<br><br>Vancouver BC V7Y 1K3<br><br>Canada		Telephone(604) 691-3000<br><br>Fax(604) 691-3031<br><br>Internetwww.kpmg.ca

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors

Fortuna Silver Mines Inc.

Opinion on Internal Control Over Financial Reporting

We have audited Fortuna Silver Mines Inc.’s (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated statements of financial position of the Company as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive income, cash flows, and changes in equity for each of the years then ended, and the related notes (collectively, the consolidated financial statements), and our report dated March 23, 2022 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Roxgold Inc. during 2021, and, except for controls over purchase price adjustments related to the acquisition, management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Roxgold Inc.’s internal control over financial reporting associated with 50% of total assets (inclusive of the purchase price adjustments) and 17% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021. Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Roxgold Inc.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, which appears under the heading Management’s Report on Internal Control Over Financial Reporting in the accompanying Management’s Discussion and Analysis. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based

on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

//s// KPMG LLP

Chartered Professional Accountants

Vancouver, Canada March 23, 2022

Fortuna Silver Mines Inc.

Consolidated Income Statements

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


			Years ended December 31,
	Note	2021		2020
Sales	21	$	599,853	$	278,966
Cost of sales	22		394,376		168,745
Mine operating income			205,477		110,221

General and administration	23		45,360		35,086
Exploration and evaluation			1,012		1,196
Foreign exchange loss			6,092		12,197
Other expenses	24		16,134		4,504
			68,598		52,983

Operating income			136,879		57,238

Investment gains			-		3,306
Interest and finance costs, net	25		(12,863)		(1,413)
Gain on derivatives			(2,751)		(176)
Roxgold transaction costs	6		(14,085)		-
			(29,699)		1,717

Income before income taxes			107,180		58,955

Income taxes
Current income tax expense	26		51,651		38,818
Deferred income tax recovery	26		(3,870)		(1,416)
			47,781		37,402
Net income for the year		$	59,399	$	21,553

Net income attributable to:
Fortuna shareholders		$	57,877	$	21,553
Non-controlling interest	31		1,522		-
		$	59,399	$	21,553

Earnings per share	20
Basic		$	0.24	$	0.12
Diluted		$	0.23	$	0.12

Weighted average number of common shares outstanding (000's)
Basic			237,998		174,993
Diluted			249,443		186,073

The accompanying notes are an integral part of these financial statements.

Page | 1

Fortuna Silver Mines Inc.

Consolidated Statements of Comprehensive Income

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


		Years ended December 31,
	Note	2021		2020
Net income for the year		$	59,399	$	21,553

Items that will remain permanently in other comprehensive income:
Changes in fair value of investments in equity securities, net of $nil tax			(272)		(382)
Items that may in the future be reclassified to profit or loss:
Currency translation adjustment, net of $179 tax			(4,022)		-
Changes in fair value of hedging instruments, net of $nil tax			1,006		(204)
Total other comprehensive loss for the year			(3,288)		(586)
Comprehensive income for the year		$	56,111	$	20,967

Comprehensive income attributable to:
Fortuna shareholders			54,589		20,967
Non-controlling interest	31		1,522		-
		$	56,111	$	20,967

The accompanying notes are an integral part of these financial statements.

Page | 2

Fortuna Silver Mines Inc.

Consolidated Statements of Financial Position

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


As at	Note	****	December 31, 2021		****	December 31, 2020
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$	107,097		$	131,898
Trade and other receivables	7			76,487			76,555
Inventories	8			85,819			35,274
Other current assets	9			11,679			4,340
				281,082			248,067
NON-CURRENT ASSETS
Restricted cash				2,056			-
Mineral properties and property, plant and equipment	10			1,712,354			791,127
Other assets	11			26,430			16,144
Total assets			$	2,021,922		$	1,055,338

LIABILITIES
CURRENT LIABILITIES
Trade and other payables	12		$	133,805		$	65,275
Income taxes payable				20,563			23,808
Current portion of lease obligations	14			10,523			6,978
Current portion of closure and reclamation provisions	17			1,882			380
				166,773			96,441
NON-CURRENT LIABILITIES
Debt	15			157,489			158,616
Deferred tax liabilities	26			191,668			19,499
Closure and reclamation provisions	17			54,230			39,970
Lease obligations	14			18,882			12,519
Other liabilities	16			3,310			2,523
Total liabilities				592,352			329,568

SHAREHOLDERS' EQUITY
Share capital	19			1,079,746			492,306
Reserves				28,785			24,724
Retained earnings				266,617			208,740
Equity attributable to Fortuna shareholders				1,375,148			725,770
Equity attributable to non-controlling interest	31			54,422			-
Total equity				1,429,570			725,770

Total liabilities and shareholders' equity			$	2,021,922		$	1,055,338

Contingencies and Capital Commitments (Note 32); Subsequent Events (Note 33)

/s/ Jorge Ganoza Durant		/s/ Kylie Dickson
Jorge Ganoza Durant		Kylie Dickson
Director		Director

The accompanying notes are an integral part of these financial statements.

Page | 3

Fortuna Silver Mines Inc.

Consolidated Statements of Cash Flows

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


		Years ended December 31,
	Note	2021		2020

Operating activities:
Net income for the year		$	59,399	$	21,553
Items not involving cash
Depletion and depreciation			122,272		45,408
Accretion expense			3,799		751
Income taxes			47,781		37,401
Interest expense, net			8,469		662
Loss on extinguishment of debt facility	15		595		-
Share based payments (recovery) expense, net of cash settlements			(3,079)		12,284
Write-off of inventories			7,035		(5)
Unrealized foreign exchange loss			4,304		14,656
Investment gains			-		(3,306)
Unrealized loss on derivatives			1,260		178
Other			3,360		1,680
Closure and reclamation payments			(354)		(341)
Changes in working capital	30		(39,314)		(9,118)
Cash provided by operating activities			215,526		121,803
Income taxes paid			(62,677)		(28,186)
Interest paid			(7,420)		(547)
Interest received			1,708		315
Net cash provided by operating activities			147,138		93,385

Investing activities:
Cash consideration for acquistion of Roxgold	6		(25,333)		-
Cash acquired through acquisition of Roxgold	6		65,622		-
Promissory note receivable	6		(35,296)		-
Additions to mineral properties, plant and equipment			(152,289)		(93,033)
Purchases of investments			-		(17,844)
Proceeds from sale of investments			14		10,575
Proceeds from sale of assets			12		72
Recoveries of (additions to) Lindero construction VAT			28,771		(13,419)
Cash used in investing activities			(118,499)		(113,649)

Financing activities:
Transaction costs on credit facility	15(a)		(3,036)		-
Proceeds from credit facility	15(a)		-		65,000
Repayment of credit facility	15(a)		(32,288)		(55,000)
Proceeds from issuance of common shares			313		70,011
Share issuance costs			-		(3,358)
Payments of lease obligations			(11,928)		(7,747)
Dividend payment to non-controlling interest			(4,483)		-
Cash (used in) provided by financing activities			(51,422)		68,906
Effect of exchange rate changes on cash and cash equivalents			(2,018)		(148)
(Decrease) increase in cash and cash equivalents during the year			(24,801)		48,494
Cash and cash equivalents, beginning of the year			131,898		83,404
Cash and cash equivalents, end of the year		$	107,097	$	131,898

Cash and cash equivalents consist of:
Cash		$	64,096	$	52,130
Cash equivalents			43,001		79,768
Cash and cash equivalents, end of the year		$	107,097	$	131,898
Supplemental cash flow information (Note 30)

The accompanying notes are an integral part of these financial statements

Page | 4

Fortuna Silver Mines Inc.

Consolidated Statements of Changes in Equity

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


			Share capital					Reserves
	Note	****	Number of common shares	Amount		****	Equityreserve		****	Hedgingreserve		****	Fair valuereserve			Equity component of convertible debentures	****	Foreigncurrencyreserve		****	Retainedearnings		****	Non-controlling interest		****	Total equity
Balance at January 1, 2021			184,195,727	$	492,306		$	20,086		$	(878)		$	(424)	$	4,825		$	1,115		$	208,740		$	-		$	725,770
Total comprehensive income for the year
Net income for the year			-		-			-			-			-		-			-			57,877			1,522			59,399
Other comprehensive loss for the year			-		-			-			1,006			(272)		-			(4,022)			-			-			(3,288)
Total comprehensive income for the year			-		-			-			1,006			(272)		-			(4,022)			57,877			1,522			56,111

Transactions with owners of the Company
Acquisition of Roxgold	6		106,106,224		582,523			7,332			-			-		-			-			-			52,900			642,755
Exercise of stock options			68,927		389			(136)			-			-		-			-			-			-			253
Shares issued on vesting of share units			1,146,452		4,468			(4,468)			-			-		-			-			-			-			-
Convertible debenture conversion			12,000		60			-			-			-		-			-			-			-			60
Share-based payments	18		-		-			4,621			-			-		-			-			-			-			4,621
			107,333,603		587,440			7,349			-			-		-			-			-			52,900			647,689

Balance at December 31, 2021			291,529,330	$	1,079,746		$	27,435		$	128		$	(696)	$	4,825		$	(2,907)		$	266,617		$	54,422		$	1,429,570

Balance at January 1, 2020			160,291,553	$	422,145		$	20,870		$	(674)		$	(42)	$	4,825		$	1,115		$	187,187		$	-		$	635,426
Total comprehensive income for the year
Net income for the year			-		-			-			-			-		-			-			21,553			-			21,553
Other comprehensive loss for the year			-		-			-			(204)			(382)		-			-			-			-			(586)
Total comprehensive income for the year			-		-			-			(204)			(382)		-			-			21,553			-			656,393

Transactions with owners of the Company
Issuance of common shares			23,000,000		69,000			-			-			-		-			-			-			-			69,000
Share issuance costs			-		(3,358)			-			-			-		-			-			-			-			(3,358)
Exercise of stock options			211,626		1,438			(427)			-			-		-			-			-			-			1,011
Shares issued on vesting of share units			692,548		3,081			(3,081)			-			-		-			-			-			-			-
Share-based payments	18		-		-			2,724			-			-		-			-			-			-			2,724
			23,904,174		70,161			(784)			-			-		-			-			-			-			69,377

Balance at Decemer 31, 2020			184,195,727	$	492,306		$	20,086		$	(878)		$	(424)	$	4,825		$	1,115		$	208,740		$	-		$	725,770

The accompanying notes are an integral part of these financial statements.

Page | 5

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

1. NATURE OF OPERATIONS

Fortuna Silver Mines Inc. and its subsidiaries (the “Company”) is a publicly traded company incorporated and domiciled in British Columbia, Canada.

The Company is engaged in precious and base metal mining and related activities in Argentina, Burkina Faso, Mexico, Peru, and Côte d’Ivoire. The Company operates the open pit Lindero gold mine (“Lindero”) in northern Argentina, the underground Yaramoko mine (“Yaramoko”) in south western Burkina Faso, the underground San Jose silver and gold mine (“San Jose”) in southern Mexico, the underground Caylloma silver, lead, and zinc mine (“Caylloma”) in southern Peru, and is developing the open pit Séguéla gold mine (“Séguéla”) in south western Côte d’Ivoire.

On July 2, 2021, the Company acquired all of the issued and outstanding common shares of Roxgold Inc. (“Roxgold”) (see Note 6). Through the completion of the acquisition, the Company acquired the Yaramoko mine and the Séguéla advanced exploration project.

The Company’s common shares are listed on the New York Stock Exchange under the trading symbol FSM and on the Toronto Stock Exchange under the trading symbol FVI.

The Company’s registered office is located at Suite 650 - 200 Burrard Street, Vancouver, Canada, V6C 3L6.

2. COVID-19 UNCERTAINTIES

In March 2020, the World Health Organization declared COVID-19 as a pandemic. In response to the pandemic, Governments implemented measures to curb the spread of COVID-19. Government mandated measures in Argentina, Mexico, and Peru included among others, the closure of international borders, the temporary suspension of all non-essential business, including mining and the declaration of mandatory quarantine periods. These measures resulted in the temporary suspension of operations at our operations in Argentina, Mexico and Peru, which impacted our production and costs in 2020.

During 2021, there were no Government mandated suspensions of operations at any of our operations in Latin America. However, operations in Latin America were affected by waves of COVID-19 during the year, which resulted in reduced workforces and quarantine periods for those affected. The pandemic continued to cause difficulties and hardship in the communities where we operate. The Company has, however, been able to continue operations in West Africa largely unaffected since the outbreak of COVID-19.

Health protocols are in place at each mine site for control, isolation and quarantine, as necessary, and these continue to be reviewed and adjusted accordingly based on the circumstances at each location. The Company’s focus is the health and safety of the workforce and on measures to prevent and manage the transmission of COVID-19 amongst the workforce and the communities in which the Company operates.

The Company’s operations and financial performance are dependent on it being able to operate at each of its mines and projects. Given the fast-changing situation with respect to the COVID-19 pandemic, including further waves of the virus and the emergence of variant forms of the virus, it is difficult to predict the exact nature and extent of the impact the pandemic may have on the Company’s operations and its business. Outbreaks of COVID-19 in areas where the Company operates or restrictive directives of government and public health authorities could cause delays or disruptions in the Company’s supply chain, restrict access to its mine sites, restrict its ability to transport and ship gold doré and/or metal concentrates, restrict access to processing and refinery facilities, or impediments to market logistics. Suspensions of operations or curtailment of commissioning activities at the Company’s mines remains a significant risk to its business and operations. Page | 6

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

3. BASIS OF PRESENTATION

Statement of Compliance

These consolidated financial statements (“financial statements”) have been prepared by management of the Company in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) effective as of December 31, 2021.

Certain comparative figures have been reclassified to conform to the presentation adopted for the year ended December 31, 2021.

On March 23, 2022, the Company's Board of Directors approved these financial statements for issuance.

Basis of Measurement

These financial statements have been prepared on a historical cost basis, except for those assets and liabilities that are measured at fair value (Note 28) at the end of each reporting period.

4. SIGNIFICANT ACCOUNTING POLICES

The Company has consistently applied the following accounting policies to all periods presented in these financial statements.

(a) Basis of Consolidation

These financial statements include the accounts of the Company. All significant intercompany transactions, balances, revenues, and expenses have been eliminated upon consolidation.

Subsidiaries are included in the consolidated financial results of the Company from the effective date of acquisition or control and up to the effective date of disposition or loss of control. Control is achieved when the Company has power over the investee, is exposed to or has rights to variable returns from its involvement with an investee, and had the ability to affect those returns through its power over the investee.

Fortuna Silver Mines Inc. is the ultimate parent entity of the group. At December 31, 2021, the principal subsidiaries of the Company, their geographic locations, and the ownership interests held by the Company, were as follows:


Name	****	Location	****	Ownership	****	Principal Activity
Minera Bateas S.A.C. ("Bateas")		Peru		100%		Caylloma Mine
Compania Minera Cuzcatlan S.A. de C.V. ("Cuzcatlan")		Mexico		100%		San Jose Mine
Mansfield Minera S.A. ("Mansfield")		Argentina		100%		Lindero Mine
Roxgold SANU S.A. (“Sanu”)		Burkina Faso		90%		Yaramoko Mine
Roxgold SANGO S.A. (“Sango”)		Côte d’Ivoire		90%		Séguéla Exploration Project

(b) Business Combination

A business combination is an acquisition of assets and liabilities that constitute a business. A business is an integrated set of activities and assets that consist of inputs and processes, including operational processes that, when applied to those inputs, have the ability to create outputs that provide a return to the Company and its shareholders. A Page | 7

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

business also includes those assets and liabilities that do not necessarily have all the inputs and processes required to produce outputs, but can be integrated with the inputs and processes of the Company to create outputs.

When acquiring a set of activities or assets in the exploration and development stage, which may not have outputs, the Company considers other factors to determine whether the set of activities or assets is a business.

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is allocated to the identifiable assets acquired and liabilities assumed based on the acquisition-date fair value. The excess of the cost of acquisition over the fair value of the Company’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets acquired, the difference, or gain, is recognized directly in the consolidated statement of operations. The results of businesses acquired during the period are included in the financial statements from the date of acquisition. Acquisition-related costs are expensed as incurred. Provisional fair values are finalized within 12 months of the acquisition date. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed at the acquisition date.

Non-controlling interest represents equity interests in subsidiaries owned by outside parties. Non-controlling interests are recorded at their proportionate share of the fair value of identifiable net assets acquired on initial recognition. The share of net assets of subsidiaries attributable to non-controlling interests is presented as a component of equity. Their share of net income and other comprehensive income is recognized directly in equity even if the results of the non-controlling interest have a deficit balance.

The Company recognises transactions with non-controlling interest as transactions with equity shareholders. Changes in the Company’s ownership interest in subsidiaries that do not result in loss of control are accounted for as equity transactions.

(d) Consolidation, Functional and Presentation Currency

These financial statements are presented in United States Dollars (“$” or “US$” or “US dollars”), which is the functional currency of the Company. Reference to C$ are to Canadian dollars. All amounts in these financial statements have been rounded to the nearest thousand US dollars, unless otherwise stated.

The functional currency for each entity consolidated within the Company's financial statements is determined by the currency of the primary economic environment in which it operates. The functional currency of subsidiaries acquired in the year are identified in the table below.

Page | 8

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

Name of Subsidiary	Place of Incorporation	Beneficial Common Share Ownership Interest	Principal Activity	Functional Currency
Roxgold SANU S.A.	Burkina Faso	90%	Mining	USD
Roxgold SANGO S.A.	Côte d’Ivoire	90%	Exploration	USD
Roxgold Burkina Faso S.A.R.L.	Burkina Faso	100%	Exploration	USD
Roxgold Exploration S.A.R.L.	Burkina Faso	100%	Exploration	USD
Roxgold Boussoura S.A.R.L.	Burkina Faso	100%	Exploration	USD
FR Mining Limited	British Virgin Islands	100%	Holding	USD
FR Gold Limited	British Virgin Islands	100%	Holding	USD
Roxgold CI Limited	Cayman Islands	100%	Holding	USD
Roxgold Boussoura	Cayman Islands	100%	Holding	USD
Roxgold Inc.	Canada	100%	Holding	CAD
FR Gold Mining Inc.	Canada	100%	Holding	CAD
Fortuna Silver Mines Australia Pty Ltd.	Australia	100%	Corporate	AUD
LGL Exploration Côte d’Ivoire SA	Côte d’Ivoire	100%	Exploration	XOF
LGL Resources Côte d’Ivoire SA	Côte d’Ivoire	100%	Exploration	XOF

Assets and liabilities of the subsidiaries that have a functional currency other than the US dollars are translated into US dollars at the exchange rate in effect on the consolidated statements of financial position date and revenues and expenses are translated at the average rate over the reporting period. Gains and losses from these translations are recognized in other comprehensive income.

Transactions in foreign currencies are initially recorded in the functional currency at the exchange rate at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange at each financial position date. Foreign exchange gains or losses on translation to the functional currency of an entity are recorded in profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rate as at the date of the initial transaction.

(e) Cash, Cash Equivalents and Short-Term Investments

Cash and cash equivalents include cash on hand, demand deposits, and money market instruments with maturities from the date of acquisition of 90 days or less, which are readily convertible to known amounts of cash and are subject to insignificant changes in value. Short-term investments consist of term deposits with original maturities in excess of three months but less than twelve months. Cash, cash equivalents and short-term investments are designated as amortized cost.

(f) Inventories

Inventories include mineral concentrates, doré, leach pad, gold in-circuit, stockpiled ore, materials and supplies, and are valued at the lower of average production cost and estimated net realizable value. Production costs allocated to metal inventories include direct mining costs, direct labor and material costs, mine site overhead, depletion and amortization. Stockpiled ore that is not expected to be processed within the next twelve months is classified as non-current. Costs allocated to materials and supplies are based on weighted average costs and include all costs of purchase and other costs in bringing these inventories to their existing location and condition.

In the heap leaching process, ore is stacked on the leach pad and treated with a chemical solution that dissolves the gold contained within the ore. The resulting pregnant solution is further processed in a plant where the gold is recovered. The cost of leach pad inventory is based on cost of mining, crushing and leaching, including applicable depletion and amortization, and is removed as ounces of gold are recovered at the weighted average cost per recoverable ounce of gold on the leach pad. Estimates of recoverable gold in the leach pad are calculated based on Page | 9

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

the quantities of ore placed on the leach pad (measured tonnes added to the leach pad), the estimated grade of ore placed on the leach pad (based on assay data), and an estimated recovery percentage (based on estimated recovery assumptions from metallurgical testing). The nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, estimates are refined based on actual results and engineering studies over a period of time. The final recovery of gold from leach pad will not be known until the leaching process is concluded at the end of the mine life.

If the carrying value exceeds the net realizable amount, a write-down is recognized. The write-down may be reversed in a subsequent period if the circumstances which caused the write-down no longer exist, to the extent that the related inventory has not been sold. Net realizable value is calculated as the estimated price at the time of sale based on prevailing metal prices less estimated future costs to convert the inventories into saleable form and estimated costs to sell.

(g) Exploration and Evaluation Assets

Exploration expenditures on properties for which the Company does not have title or rights to are expensed when incurred. Significant payments related to the acquisition of land and mineral rights and the costs to conduct a preliminary evaluation to determine that the property has potential to develop an economic ore body are capitalized as incurred. The time between initial acquisition and a full evaluation of a property’s potential is dependent on many factors including, but not limited to, location relative to existing infrastructure, the property’s stage of development, geological controls and metal prices.

The Company capitalizes the cost of acquiring, maintaining its interest and exploring mineral properties as exploration and evaluation assets until such time as the properties are placed into development, abandoned, sold, or considered to be impaired in value.

If a mineable ore body is discovered, exploration and evaluation costs are reclassified to mining properties. The Company uses the following criteria in its assessment:

●	the property has mineral reserves as referred to in Canadian National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”), and
●	when legal, permitting and social matters have been resolved sufficiently to allow mining of the ore body.
---	---

Exploration and evaluation assets are tested for impairment when an indicator of impairment is identified and upon reclassification to mining properties.

If no mineable ore body is discovered, all previously capitalized costs are expensed in the period in which it is determined the property has no economic value.

Proceeds received from the sale of interests in exploration and evaluation assets are credited to the carrying value of the mineral properties, plant and equipment. Exploration costs that do not relate to any specific property are expensed as incurred.

(h) Mineral Properties, and Property, Plant and Equipment

i. Mineral Properties and Development Costs

For operating mines, all mineral property expenditures are capitalized and amortized based on a unit-of-production method considering the expected production to be obtained over the life of the mineral property. The expected Page | 10

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

production includes proven and probable reserves and for the San Jose, Caylloma and Yaramoko mines the portion of inferred resources expected to be extracted economically as part of the production cost.

Capitalized costs of producing properties are amortized on a unit-of-production basis over proven and probable reserves and the portion of inferred resources where it is considered highly probable that those resources are expected to be extracted economically.

The expected production to be obtained over the life of the mineral property is based on our life-of-mine production plans which for San Jose, Caylloma and Yaramoko include a portion of inferred resources, and therefore differ from the life-of-mine plans we publish as part of our NI 43-101 compliant technical reports which are based on reserves only. The decision to use inferred resources, and the portion of inferred resources to be included varies for each operation and is based on the geological characteristics of the ore body, the quality and predictability of inferred resources, and the conversion of inferred resources into measured and indicated (“M&I”) that we have historically achieved in the past.

Many factors are taken into account during resource classification including; the quality of drilling and sampling, drill/sample spacing, sample preparation and analysis, geological logging and modelling, database construction, geological interpretation and modelling, statistical/geostatistical analysis, interpolation method, local estimation, engineering studies, economic parameters, and reconciliation with actual results.

Once the integrity of the data has been established, two important considerations around classification of resources are geologic continuity and possible variation of thickness and grade between samples. For our inferred resources at San Jose, Caylloma and Yaramoko we are able to achieve a significant level of confidence on the existence of mineable material as geological continuity has been established by consistent drill hole intercepts both along strike and down-dip which provides us with reasonable confidence in the location of the structures. The vast majority of the inferred resources are interpolated, estimated between existing drill hole intercepts, as opposed to extrapolated where the grades are estimated beyond the furthest sample point, adding to our confidence in the geologic continuity of the veins. Furthermore, San Jose, Caylloma and Yaramoko are not structurally complex deposits where faulting has disrupted geologic continuity.

With regards to the variation of thickness and grade between samples, we use statistical means to calculate the probability that tonnage and grade content falls within a certain accuracy over a given timeframe. If the potential variation is estimated to be within ± 25% at 90 percent confidence globally, we classify it as an inferred resource. This is equivalent to stating that we have 95 percent confidence that greater than 75% of the inferred tonnes, grade, and metal content will ultimately be recovered by the mine and hence that the same percentage or higher will be converted from an inferred resource to an indicated resource through infill drilling as per our policy of upgrading prior to production.

As part of our process to include inferred resources into our life-of-mine production plans, we apply an economic cut-off to identify only the material that can be considered profitable to mine within our mine designs, and at this time we apply a conversion or “risk” factor to the mining blocks comprised of inferred resources that we include in such mine production plans. This conversion factor is based on the predictability of conversion derived from statistical estimates of confidence as described above and the support from historic conversion rates of inferred resources into M&I at each of our mines. The conversion factors used in our 2021 and 2020 life-of-mine plans were 90% at San Jose, 80% at Caylloma and 100% at Yaramoko.

The percentage of inferred resources included as a component of the total mineable inventory (reserve + resource) considered in the 2021 life-of-mine evaluation for each operation as of December 31, 2020, was San Jose 35% (2020: 35%), Caylloma 31% (2020: 52%), and Yaramoko 11%. Page | 11

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The Company reviews the conversion factors including past experience in assessing the future expected conversion of inferred resources to be used in the life-of-mine plans for inclusion of inferred resources once a year in light of new geologic information and conversion data and when events or circumstances indicate that a review should be made. The Company continually monitors expected conversion and any changes in estimates that arise from this review are accounted for prospectively.

Significant estimation is involved in determining resources and in determining the percentage of resources ultimately expected to be converted to reserves, which we determine based on careful consideration of both internal and external technical and economic data. Estimation of future conversion of resources is inherently uncertain and involves significant judgment and actual outcomes may vary from these judgments and estimates and such outcomes may have a material impact on the results. Revisions to these estimates are accounted for in the period in which the change in the estimate arises.

ii. Property, Plant and Equipment

Property, plant and equipment are recorded at cost, net of accumulated depreciation and impairments. Costs directly related to construction projects are capitalized to work in progress until the asset is available for use in the manner intended by management. Assets, other than capital works in progress, are depreciated to their residual values over their estimated useful lives as follows:



Land and buildings
Land	Not depreciated
Mineral properties	Units of production	Declining balance
Buildings, located at the mine	Units of production	Declining balance
Buildings, others ^(1)^	6-10 years	Straight line
Leasehold improvements ^(1)^	4-8 years	Straight line
Plant and equipment
Processing plant	Units of production	Declining balance
Machinery and equipment ^(1)^	3-12 years	Straight line
Furniture and other equipment ^(1)^	2-12 years	Straight line
Transport units	4-5 years	Straight line
Capital work in progress	Not depreciated

(1)	The lesser of useful life or life of mine.

Equipment under finance lease is initially recorded at the present value of minimum lease payments at the inception of the lease and depreciated over the shorter of the lease term or useful life.

Spare parts and components included in machinery and equipment are depreciated over the shorter of the useful life of the component or the related machinery and equipment.

Borrowing costs attributed to the construction of qualifying assets are capitalized to mineral properties, plant and equipment, and are included in the carrying amounts of related assets until the asset is available for use in the manner intended by management.

The sales proceeds and associated production costs incurred during commissioning of qualifying assets under capital works in progress are recognized in profit or loss.

On an annual basis, the depreciation method, useful economic life, and residual value of each component asset is reviewed with any changes recognized prospectively over its remaining useful economic life.

Page | 12

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

iii. Stripping cost

Pre-production stripping costs are generally capitalized and amortized over the production life of the mine using the unit-of-production method.

Stripping costs incurred during the production stage are incurred in order to produce inventory or to improve access to ore which will be mined in the future. Where the costs are incurred to produce inventory, the production stripping costs are accounted for as a cost of producing those inventories. Where the costs are incurred to improve access to ore which will be mined in the future, the costs are deferred and capitalized to the statement of financial position as a stripping activity asset (included in mining interest) if the following criteria are met:

●	improved access to the ore body is probable;
●	the component of the ore body can be accurately identified; and
---	---
●	the costs relating to the stripping activity associated with the component can be reliably measured.
---	---

If these criteria are not met, the costs are expensed in the period in which they are incurred.

The stripping activity asset is subsequently depleted using the units-of-production depletion method over the life of the identified component of the ore body to which access has been improved as a result of the stripping activity.

(i) Asset Impairment

At the end of each reporting period, the Company assesses for impairment indicators and if there are such indicators, then the Company performs a test of impairment.

For the purpose of assessing impairment, assets are grouped at the lowest level for which there are separately identifiable cash inflows or cash generating units. These are typically individual mines or development projects. Brownfields exploration projects, located close to existing mine infrastructure, are assessed for impairment as part of the associated mine cash generating unit.

An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less cost of disposal (“FVLCD”) and value in use.

When the recoverable amount is assessed using pre-tax discounted cash flow techniques, the resulting estimates are based on detailed mine and/or production plans. For value in use, recent cost levels are considered, together with expected changes in costs compatible with the current condition of the business. The cash flow forecasts are based on best estimates of the expected future revenues and costs, including the future cash costs of production, sustaining capital expenditures, and reclamation and closure costs.

Where a FVLCD model is used, the cash flow forecast includes net cash flows expected to be realized from extraction, processing, and sale of mineral resources that do not currently qualify for inclusion in proven or probable reserves and the portion of resources expected to be extracted economically.

Where an impairment loss subsequently reverses, the carrying amount of the asset or cash-generating unit is increased to the revised estimate of recoverable amount but not beyond the carrying amount that would have been determined had no impairment loss been recognized for the asset or cash-generating unit in prior years. A reversal of an impairment loss is recognized into earnings immediately.

Page | 13

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(j) Borrowing Costs

Interest and other financing costs incurred that are attributable to acquiring and developing exploration and development stage mining properties and constructing new facilities (“qualifying assets”), are capitalized and included in the carrying amounts of qualifying assets until those qualifying assets are capable of operating in the manner intended by management.

The capitalization of borrowing costs incurred commences on the date when the following three conditions are met:

●	expenditures for the qualifying asset are being incurred;
●	borrowing costs are being incurred; and,
---	---
●	activities that are necessary to prepare the qualifying asset for its intended use are being undertaken.
---	---

Borrowing costs incurred after the qualifying assets are substantially complete are expensed.

Transaction costs, including legal, upfront commitment fees and other costs of issuance, associated with debt are recorded against the debt and are amortized over the term of the credit facility using the effective interest rate method.

All other borrowing costs are expensed in the period in which they are incurred.

(k) Assets Held for Sale

A non-current asset is classified as held for sale when it meets the following criteria:

●	The non-current asset is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets; and,
●	the sale of the non-current asset is highly probable. For the sale to be highly probable:
---	---
o	the appropriate level of management must be committed to a plan to sell the asset;
---	---
o	an active program to locate a buyer and complete the plan must have been initiated;
---	---
o	the non-current asset or disposal group must be actively marketed for sale at a price that is reasonable in relation to its current fair value;
---	---
o	the sale should be expected to qualify for recognition as a completed sale within one year from the date of classification as held for sale (with certain exceptions); and
---	---
o	actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.
---	---

Assets held for sale are not depreciated and are recorded at the lower of their carrying amount and fair value less costs to sell.

(l) Income Taxes

Income tax expense consists of current and deferred tax expense.

Current tax expense is the expected tax payable on the taxable income for the year using tax rates enacted or substantively enacted at period end adjusted for amendments to tax payable with regards to previous years.

Deferred tax assets and liabilities are recognized for deferred tax consequences attributable to unused tax loss carry forwards, unused tax credits, and differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis (“temporary differences”). Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized, or the liability is settled. Page | 14

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The effect on deferred tax assets and liabilities of a change in tax rates is recognized in profit or loss in the period that substantive enactment occurs.

A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized. To the extent that the Company does not consider it probable that a deferred tax asset will be recovered, the deferred tax asset is reduced.

The following temporary differences do not result in deferred tax assets or liabilities:

●	the initial recognition of assets or liabilities, not arising in a business combination, that does not affect accounting or taxable income;
●	goodwill; and
---	---
●	investments in subsidiaries, associates and jointly controlled entities where the timing of reversal of the temporary differences can be controlled and reversal in the foreseeable future is not probable.
---	---

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities, and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(m) Provisions

i. Closure and Reclamation Provisions

Future obligations to retire an asset, including dismantling, remediation and ongoing treatment and monitoring of the site related to normal operation are initially recognized and recorded as a liability based on estimated future cash flows discounted at the risk-free rate.

The closure and reclamation provision (“CRP”) is adjusted at each reporting period for changes to the expected amount of cash flows required to discharge the liability, the timing of such cash flows and the risk-free discount rate.

The liability is accreted to full value over time through periodic charges to profit or loss.

The amount of the CRP initially recognized is capitalized as part of the related asset’s carrying value and amortized to profit or loss. The method of amortization follows that of the underlying asset. The costs related to a CRP are only capitalized to the extent that the amount meets the definition of an asset and can bring about future economic benefit. For a closed site or where the asset which generated a CRP no longer exists, there is no longer a future benefit related to the costs and as such, the amounts are expensed. Revisions in estimates or new disturbances result in an adjustment to the CRP with an offsetting adjustment to the asset, unless there is no future benefit, in which case they are expensed.

Due to uncertainties inherent in environmental remediation, the ultimate cost of future site closure and reclamation could differ from the amounts provided. The estimate of future site closure and reclamation costs is subject to change based on amendments to laws and regulations, changes in technologies, price increases and changes in interest rates, and as new information concerning the Company’s closure and reclamation obligations becomes available. Such changes are reflected prospectively in the determination of the provision.

Page | 15

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

ii. Environmental Disturbance Restoration Provisions

During the operating life of an asset, events such as infractions of environmental laws or regulations may occur. These events are not related to the normal operation of the asset and are referred to as environmental disturbance restoration provisions (“EDRP”). The costs associated with an EDRP are accrued and charged to earnings in the period in which the event giving rise to the liability occurs. Any subsequent adjustments to an EDRP due to changes in estimates are also charged to earnings in the period of adjustment. These costs are not capitalized as part of the long-lived asset’s carrying value.

iii. Other Provisions

Provisions are recognized when a present legal or constructive obligation exists as a result of past events, and it is probable that an outflow of resources that can be reliably estimated will be required to settle the obligation. Where the effect of the time value of money is material the provision is discounted using an appropriate current market based pre-tax discount rate.

(n) Common Share Capital

Shares are classified as equity. Costs directly attributable to the issuance of common shares are shown in equity as a deduction from the proceeds.

(o) Share-Based Payments

The fair value method of accounting is used for share-based payment transactions. Under this method, the cost of stock options and other equity-settled share-based payment arrangements are recorded based on the estimated fair value at the grant date and charged to earnings over the vesting period. Where awards are forfeited because non-market based vesting conditions were not satisfied, the expense previously recognized is reversed in the period the forfeiture occurs.

Share-based payment expenses relating to cash-settled awards, including deferred and restricted share units are accrued and expensed over the vesting period based on the quoted market value of the Company’s common shares. As these awards will be settled in cash, the expense and liability are adjusted at each reporting period for any changes in the underlying share price.

Equity settled share-based payment transactions with parties other than employees are measured at the fair value of the goods or services received, except where that fair value cannot be estimated reliably, in which case they are measured at the fair value of the equity instruments granted, measured at the date the Company obtains the goods or the counter party renders the services.

i. Stock Option Plan

The Company applies the fair value method of accounting for all stock option awards. Under this method, the Company recognizes a compensation expense for all stock options awarded to employees, based on the fair value of the options on the date of grant which is determined by using the Black-Scholes option pricing model. The fair value of the options is expensed over the graded vesting period of the options.

Page | 16

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

ii. Deferred Share Unit Plan

Deferred share units (“DSU”) are typically granted to non-executive directors of the Company. They are payable in cash upon resignation, retirement, removal, failure to achieve re-election, or upon a change of control of the Company. The DSU compensation liability is accounted for based on the number of DSUs outstanding and the quoted market value of the Company’s common shares at the financial position date. The year-over-year change in the DSU compensation liability is recognized in profit or loss.

iii. Share Unit Plans

The Company’s amended and restated share unit plan (the “SU Plan”) covers all restricted share units (“RSUs”) and performance share units (“PSUs”) granted by the Company on and after March 1, 2015.

Restricted Share Units

The Company’s RSUs are settled in either cash or equity, as determined by the Company’s Board of Directors at the grant date and typically vest over three years.

For cash settled RSUs, the share-based payment expense is adjusted at each reporting period to reflect any change in the quoted market price of the Company’s common shares and the vesting of each RSU grant, with a corresponding amount recorded in Trade and Other Payables and Other Liabilities.

For equity-settled RSUs, the fair value is determined based on the quoted market price of the Company’s common shares at the date of grant, and the fair value is recognized as a share-based payment expense over the vesting period with a corresponding amount recorded in equity reserves.

Performance Share Units

The Company’s PSUs are performance-based awards for the achievement of specified performance metrics by specified deadlines and are settled in either cash or equity, as determined by the Company’s Board of Directors at the grant date and typically vest over three years.

For cash settled PSUs, the share-based payment expense is adjusted at each reporting period to reflect any change in the quoted market price of the Company’s common shares, the vesting of each PSU grant and the expected performance factors with a corresponding amount recorded in Trade and Other Payables.

For equity-settled PSUs, the fair value is determined based on the quoted market price of the Company’s common shares at the date of grant and the number of PSUs expected to vest based on the performance factors. The fair value is recognized as a share-based payment expense over the vesting period with a corresponding amount recorded in equity reserves.

(p) Related Party Transactions

Parties are related if one party has the ability directly, or indirectly, to control the other party or exercise significant influence over the other party in making financial and operating decisions. Parties are also considered to be related if they are subject to common control. Related parties may be individuals or corporate entities, and include key management personnel of the Company. A transaction is a related party transaction when there is a transfer of resources or obligations between related parties. Page | 17

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(q) Earnings per Share

Basic earnings per share (“EPS”) is computed by dividing the net income for the year by the weighted average number of common shares outstanding during the year.

The diluted earnings per share calculation is based on the weighted average number of common shares outstanding during the year, adjusted for the effects of dilutive common share equivalents. This method requires that the dilutive effect of outstanding options and equity settled units issued should be calculated using the treasury stock method. This method assumes that all common share equivalents have been exercised at the beginning of the year (or at the time of issuance, if later), and that the funds obtained thereby were used to purchase common shares of the Company at the average trading price of the common shares during the year, but only if dilutive.

Dilution from convertible debentures is calculated using the if-converted method, based on the number of shares to be issued upon conversion of the convertible debentures, with a corresponding adjustment to net income for the after-tax interest expense related to the convertible debentures.

(r) Financial Instruments

i Classification and measurement of financial assets and financial liabilities

Financial assets are measured as either: amortized cost; fair value through other comprehensive income (“FVOCI”) or fair value through profit or loss (“FVTPL”). All non-derivative financial liabilities are measured at amortized cost. The classification of financial assets is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Derivatives embedded in contracts where the host is a financial asset in the scope of the standard are never separated, and instead the hybrid financial instrument is assessed for classification.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as at FVTPL:

●	it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
●	its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
---	---

A debt investment is measured at FVOCI if it meets both of the following conditions and is not designated as at FVTPL:

●	it is held within a business model whose objective is achieved by both collecting contractual cash flows and selling financial assets; and
●	its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
---	---

On initial recognition of an equity investment that is not held for trading, the Company may irrevocably elect to present subsequent changes in the investment’s fair value in other comprehensive income (OCI). This election is made on an investment-by-investment basis. All financial assets not classified as measured at amortized cost or FVOCI as described above are measured at FVTPL.

Components of compound financial instruments are separately classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an Page | 18

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

equity instrument. The financial liability is initially recognized at fair value, net of an allocation of issuance costs, and is subsequently measured at amortized cost. The equity component is initially measured based on the residual amount, net of an allocation of issuance costs, and is not subsequently remeasured.

Equity instruments issued by the Company are recognized at the proceeds received, net of direct issue costs. Repurchase of the Company’s own equity instruments is recognized and deducted directly in equity. No gain or loss is recognized in profit or loss on the purchase, sale, or cancellation of our own equity instruments. No gain or loss is recognized on the issue of our own equity instruments, unless the equity is issued to settle a liability.

Financial Liabilities at Amortized Cost – Financial liabilities are measured at amortized cost using the effective interest method, unless they are required to be measured at fair value through profit or loss, or the Company has opted to measure them at FVTPL. Debt and accounts payable and accrued liabilities are recognized initially at fair value, net of any transaction costs incurred, and subsequently at amortized cost using the effective interest method.

The following accounting policies apply to the subsequent measurement of financial assets:

●	Financial assets at FVTPL - These assets are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognized in profit or loss.
●	Financial assets at amortized cost - These assets are subsequently measured at amortized cost using the effective interest method. The amortized cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognized in profit or loss. Any gain or loss on derecognition is recognized in profit or loss.
---	---
●	Equity investments at FVOCI - These assets are subsequently measured at fair value. Dividends are recognized as income in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. Gains or losses recognized on the sale of the equity investment are recognized in OCI and are never reclassified to profit or loss.
---	---

ii Impairment of Financial Assets

An entity is required to recognize expected credit losses when financial instruments are initially recognized and to update the amount of expected credit losses recognized at each reporting date to reflect changes in the credit risk of the financial instruments.

For the Company’s trade receivables, it determines the lifetime expected losses for all of its trade receivables. The expected lifetime credit loss provision for the Company’s trade receivables is based on historical counterparty default rates and adjusted for relevant forward-looking information, when required.

iii Hedge Accounting

The Company has established a strategy, in accordance with its current risk management policies, to use interest rate swaps to hedge against the variability in cash flows arising from changes in USD LIBOR based floating interest rate borrowing relating to its credit facility.

Page | 19

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

Management qualitatively assess that the changes in value of the hedging instrument and the hedged item will move in opposite directions and will be perfectly offset. As both counterparties to the derivative are investment grade, the effect of credit risk is considered as neither material nor dominant in the economic relationship. The portion of the gain or loss on the hedging instrument that is determined to be effective will be recognized directly in other comprehensive income while the amount that is determined to be ineffective, if any, will be recorded in the profit or loss during the life of the hedging relationship.

(s) Revenue Recognition

The Company earns revenue from contracts with customers related to its concentrate and doré sales. Revenue from contracts with customers is recognized when a customer obtains control of the concentrate or the doré and the Company satisfies its performance obligation. The Company considers the terms of the contract in determining the transaction price, which is the amount the entity expects to be entitled to in exchange for the transferring of the concentrates. The transaction price of a contract is allocated to each performance obligation based on its stand-alone selling price.

The Company satisfies its performance obligations for its concentrate sales based upon specified contract terms which are generally upon delivery to the customer at a specified warehouse or upon loading of the concentrate onto a vessel. The Company typically receives payment within one to four weeks of delivery.

Doré sales are recognized when the Company satisfies its performance obligation and control is transferred to the customer upon payment. Final weights and assays are adjusted on final settlement which is approximately one month after delivery.

Revenue from concentrate sales is recorded based upon forward market price of the expected final sales price date. IFRS 15 Revenue from Contracts with Customers (“IFRS 15”) does not consider provisional price adjustments associated with concentrate sales to be revenue from contracts with customers as they arise from changes in market pricing for silver, gold, lead and zinc between the delivery date and settlement date. As such, the provisional price adjustments are accounted for as derivatives and presented separately in Note 21 of these financial statements.

(t) Segment Reporting

The Company’s operating segments are based on the reports reviewed by the senior management group that are used to make strategic decisions. The Chief Executive Officer, as chief operating decision maker, considers the business from a geographic perspective considering the performance of the Company’s business units.

A geographical segment is a distinguishable component of the entity that is engaged in providing products or services within a particular economic environment and is subject to risks and returns that are different than those of segments operating in other economic environments.

The business operations comprise the mining and processing of gold, silver-lead, zinc, and silver-gold and the sale of these products.

(u) Adoption of New Accounting Standards, Interpretation or Amendments

In 2020, the IASB published Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16) (“Phase 2 amendments”) to address the financial reporting impacts of replacing one benchmark interest rate with an alternative rate and became effective January 1, 2021. The adoption of these amounts did not have a material effect on the Company’s financial statements. Page | 20

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(v) New Accounting Standards Issued but not yet Effective

A number of new standards are effective for annual periods beginning after January 1, 2022 and earlier application is permitted; however, the Company has not early adopted other new or amended standards in preparing these financial statements.

The following amended standards and interpretations are not expected to have a significant impact on the Company’s consolidated financial statements:

●	Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37) ; and
●	Classification of Liabilities as Current or Non-current (Amendments to IAS 1).
---	---

5. USE OF ESTIMATES, ASSUMPTIONS, AND JUDGEMENTS

The preparation of these financial statements requires management to make estimates and judgements that affect the reported amounts of assets and liabilities at the period end date and reported amounts of expenses during the reporting period. Such judgements and estimates are, by their nature, uncertain. Actual outcomes could differ from these estimates.

The impact of such judgements and estimates are pervasive throughout the financial statements, and may require accounting adjustments based on future occurrences. These judgements and estimates are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. Revisions to accounting estimates are recognized in the period in which the estimate is revised and are accounted for prospectively.

In preparing these consolidated financial statements for the year ended December 31, 2021, the Company applied the critical estimates, assumptions and judgements as disclosed below.

(a) Critical Accounting Estimates and Assumptions

Areas where critical accounting estimates and assumptions have the most significant effect on the amounts recognized in the consolidated financial statements include:

i. Mineral Reserves and Resources and the Life of Mine Plan

The Company estimates its mineral reserves and mineral resources in accordance with the requirements of NI 43-101. Estimates of the quantities of the mineral reserves and mineral resources form the basis for the Company’s life of mine plans, which are used for the calculation of depletion expense under the units of production method, impairment tests, and forecasting the timing of the payments related to the environmental reclamation provision.

Significant estimation is involved in determining the reserves and resources included within the Company’s life of mine plans. Changes in forecast prices of commodities, exchange rates, production costs or recovery rates may result in the Company’s life of mine plan being revised and such changes could impact depletion rates, asset carrying values and our environmental reclamation provision. As at December 31, 2021, the Company used the following long-term prices for our reserve and resource estimations: gold $1,600/oz for all mines except Séguéla which used $1,500/oz, silver $21/oz, lead $2,000/t and zinc $2,500/t.

In addition to the estimates above, estimation is involved in determining the percentage of resources ultimately expected to be converted to reserves and hence included in the Company’s life of mine plans. The Company’s life of mine plans include a portion of inferred resources as the Company believes this provides a better estimate of the expected life of mine for certain types of deposits, in particular for vein type structures. The percentage of inferred Page | 21

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

resources out of the total tonnage included in the life of mine plans is based on site specific geological, technical, and economic considerations. Estimation of future conversion of resources is inherently uncertain and involves judgement, and actual outcomes may vary from these judgements and estimates and such changes could have a material impact on the financial results. Some of the key assumptions in the estimation process include geological continuity, stationarity in the grades within defined domains, reasonable geotechnical and metallurgical conditions, treatment of outlier (extreme) values, cut-off grade determination and the establishment of geostatistical and search parameters. Revisions to these estimates are accounted for prospectively in the period in which the change in estimate arises.

ii. Valuation of Mineral Properties and Exploration Properties

The Company carries its mineral properties at cost less accumulated depletion and any accumulated provision for impairment. The costs of each property and related capitalized expenditures are depleted over the economic life of the property on a units-of-production basis. When a property is abandoned or when there is an impairment, costs are charged to profit or loss.

In undertaking this review, management of the Company is required to make significant estimates of, amongst other things, future production and sales volumes, metal prices, foreign exchange rates, mineral resource and reserve quantities, future operating and capital costs to the end of the mine’s life, and reclamation costs. These estimates are subject to various risks and uncertainties which may ultimately have an effect on the expected recoverability of the carrying values of the mining properties and related expenditures.

The Company, from time to time, acquires exploration and development properties. When properties are acquired, the Company must determine the fair value attributable to each of the properties. When the Company conducts exploration on a mineral property and the results from the exploration do not support the carrying value, the property is written down to its new fair value which could have a material effect on the consolidated statement of financial position and the consolidated income statement.

iii. Deferred stripping costs

In determining whether stripping costs incurred during the production phase of a mining property relate to mineral reserves that will be mined in a future period and therefore should be capitalized, the Company makes estimates of the proportion of stripping activity which relates to extracting ore in the current period versus the proportion which relates to obtaining access to ore reserves which will be mined in the future.

iv. Inventory

Finished goods, work-in-process, heap leach ore and stockpile ore are valued at the lower of the average production costs or net realizable value. The assumptions used in the valuation of work-in process inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of gold stacked that is expected to be recovered from the leach pads, the amount of gold in the mill circuits and assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-process inventories, which would reduce the Company's earnings and working capital.

Page | 22

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

v. Reclamation and Other Closure Provisions

Because the obligations are dependent on the laws and regulations of the countries in which the mines operate, the requirements could change as a result of amendments in the laws and regulations relating to environmental protection and other legislation affecting resource companies. As the estimate of the obligations is based on future expectations, a number of estimates and assumptions are made by management in the determination of closure provisions.

vi. Revenue from metal in concentrate

The Company’s sales of metal in concentrates allow for price adjustments based on the market price at the end of the relevant quotational period (“QP”) stipulated in the contract. These are referred to as provisional pricing arrangements and are such that the selling price for metal in concentrate is based on the prevailing spot price on a specified future date. At each balance sheet date, the Company estimates the value of the trade receivable using forward metal prices.

Adjustments to the sale price occurs based on movements in quoted market prices up to the end of the QP. The period between provisional invoicing and the end of the QP is generally between one and three months. Any future changes over the QP are embedded within the provisionally priced trade receivables and are, therefore, within the scope of IFRS 9 and not within the scope of IFRS 15. As such, the provisional price adjustments are accounted for as derivatives and presented separately in Note 21 of these financial statements.

vii. Contingencies

Contingencies can be either possible assets or possible liabilities arising from past events which, by their nature, will only be resolved when one or more future events not within our control occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgement and estimates of the outcome of future events. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings or regulatory or government actions that may negatively impact our business or operations, the Company with assistance from its legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims or actions.

A liability is recognized in the consolidated financial statements when the outcome of the legal proceedings is probable and the estimated settlement amount can be estimated reliably. Contingent assets are not recognized in the consolidated financial statements until virtually certain.

viii. Fair Value Estimates in the Acquisition of Roxgold (Note 6)

Accounting for acquisitions requires estimates with respect to the fair value of the assets acquired and liabilities assumed. The determination of fair value requires management to use valuation methods including discounted cash flow models, comparable transactions and other market-based information, and to make assumptions and estimates about future events, such as production, future metal prices, production costs, capital expenditures, discount rates and other assumptions. Changes in these assumptions or estimates could affect the fair values assigned to assets acquired and liabilities assumed.

Page | 23

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Company reports provisional amounts for the items for which the accounting is incomplete. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognized, to reflect new information obtained about facts and circumstances that existed as of the acquisition date and, if known, would have affected the measurement of the amounts recognized as of that date. The measurement period ends as soon as the Company receives the information it was seeking about facts and circumstances that existed as of the acquisition date or learns that more information is not obtainable and shall not exceed one year from the acquisition date.

(b) Critical Accounting Judgements in Applying the Entity’s Accounting Policies

Judgements that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

i. Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases and losses carried forward. The determination of the ability of the Company to utilize tax loss carryforwards to offset deferred tax liabilities requires management to exercise judgement and make certain assumptions about the future performance of the Company.

Management is required to assess whether it is “probable” that the Company will benefit from these prior losses and other deferred tax assets. Changes in economic conditions, metal prices and other factors could result in revisions to the estimates of the benefits to be realized or the timing of utilization of the losses.

ii. Assessment of Impairment and Reversal of Impairment Indicators

Management applies significant judgement in assessing whether indicators of impairment or reversal of impairment exist for an asset or a group of assets which could result in a testing for impairment. Internal and external factors such as significant changes in the use of the asset, commodity prices, life of mines, tax laws or regulations in the countries that our mines operate in and interest rates are used by management in determining whether there are any indicators of impairment or reversal of previous impairments.

As of December 31, 2021, the company determined there were indicators of impairment at the Lindero Mine due to a decrease in operating performance relative to management’s expectations. In determining the recoverable amounts of the Company’s mining interests, the Company makes estimates of the discounted future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining properties and the appropriate discount rate. The projected cash flows are significantly affected by changes in assumptions related to long-term metal prices, changes in the amount of recoverable reserves and resources, production cost estimates, future capital expenditures, discount rates and exchange rates. The Company performed a test of impairment using a discount rate of 6.25% and a long-term gold price of $1,650/oz. As a result, management estimated the recoverable amount of the Lindero Mine as at December 31, 2021, determined on a fair value less cost of disposal basis, and concluded no impairment charge was required. However, adverse changes in any of these assumptions in future periods may result in an impairment.

iii. Functional Currency

The functional currency for the Company and its subsidiaries is the currency of the primary economic environment in which each operates. The determination of functional currency may require certain judgements to determine the Page | 24

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

primary economic environment. The Company reconsiders the functional currency used when there is a change in the events and conditions which determined the primary economic environment.

iv. Leases

Significant judgments made by management in the accounting for leases primarily included whether the lease conveys the right to use a specific asset, whether the Company obtains substantially all of the economic benefits from the use of the asset, whether the Company has the right to direct the use of the asset, evaluating the appropriate discount rate to use to discount the lease liability for each lease or groups of assets, and to determine the lease term where a contract includes renewal options. Significant judgments over these factors would affect the present value of the lease liabilities, as well as the associated amount of the right-of-use (“ROU”) asset.

v. Value-added tax (“VAT”) receivable

Timing of collection of VAT receivables is uncertain as VAT refund procedures require a significant amount of information and follow-up. The Company assesses the recoverability of the amounts receivable at each reporting date and the expected timing of the recovery, which are impacted by several factors, including the status of discussions with the tax authorities, and current interpretation of relevant VAT legislation and regulation. Changes in these judgements can materially affect the amount recognized as VAT receivable and could result in an increase in other expenses recognized in profit or loss and the presentation of current and non-current VAT receivable.

6. ACQUISITION OF SUBSIDIARY

On July 2, 2021 (the “Closing Date"), the Company completed the acquisition of Roxgold (the "Transaction") and its underground producing Yaramoko mine in Burkina Faso, the Séguéla development project in Côte d’Ivoire, and the Boussoura exploration property in Burkina Faso. The Transaction was completed by way of a court-approved plan of arrangement (the "Arrangement") under the Business Corporations Act (British Columbia) pursuant to the terms of an Arrangement agreement between Fortuna and Roxgold dated effective April 26, 2021. Under the terms of the Transaction, the Company acquired all of the issued and outstanding common shares ("Roxgold Shares") of Roxgold in exchange for 0.283 of a common share of Fortuna and C$0.001 in cash for each Roxgold Share. Upon completion of the Transaction, Roxgold became a wholly-owned subsidiary of Fortuna. The Company began consolidating the operating results, cash flows, and net assets of Roxgold from July 2, 2021.

On the closing of the Transaction, the Company issued 106,106,224 common shares and paid $0.3 million in cash in exchange for all of the issued and outstanding Roxgold Shares. In addition, the Company made the following cash payments:

●	$5.6 million in change of control payments to non-continuing executives of Roxgold;
●	$14.5 million on the accelerated vesting of RSUs and PSUs upon the change of control of Roxgold to non-continuing executives which has been determined to form part of the consideration;
---	---
●	$9.2 million on the accelerated vesting of DSUs upon the change of control of Roxgold to directors of Roxgold which has been determined to form part of the consideration; and
---	---
●	$4.6 million on the accelerated vesting of RSUs and PSUs upon the change of control of Roxgold to continuing executives and directors of Roxgold, $1.3 million of which has been determined to form part of the consideration and $3.3 million was expensed as Roxgold transaction costs.
---	---

Under the terms of the Arrangement, all Roxgold stock options, RSUs and PSUs issued in 2018, 2019, and 2020 to continuing employees and executives outstanding as at the effective time of the Arrangement were assumed by the Company having the same terms and conditions as the original respective Roxgold long-term incentive plans (including with respect to vesting and settlement), except that on settlement thereof the holder will receive 0.283 Page | 25

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

of a Fortuna common share or the cash equivalent at the time of settlement. Following the acquisition of Roxgold, the Company assumed 405,240 options, 1,023,696 PSUs and 1,419,649 RSUs. The Company recorded $8.2 million to equity reserve and $4.0 million to other liabilities. During the year ended December 31, 2021, $0.8 million of the equity settled units assumed were settled in cash.

The Company advanced a promissory note of $35.3 million to Roxgold on June 29, 2021 in advance of closing of the Transaction, to cover expected cash consideration, transaction costs, and liabilities in relation to the Transaction. The promissory note was effectively settled upon closing of the Transaction.

The Company has determined that the Transaction represents a business combination, with the Company identified as the acquirer. Based on the share price of the Company’s common shares immediately prior to the Closing Date, the estimated fair value of the of the Options, RSUs, and PSUs assumed, the cash consideration paid, and settlement of the pre-existing promissory note between Roxgold and Fortuna, the total consideration of the acquisition was determined to be $655.3 million.


Consideration paid:
Fortuna shares issued to Roxgold shareholders	$	582,523
Options, RSUs, and PSUs assumed by Fortuna		12,143
Settlement of promissory note due from Roxgold		35,296
Cash consideration paid to Roxgold shareholders, PSU, RSU, and DSU holders		25,333
Total consideration	$	655,295

In accordance with the acquisition method of accounting, the acquisition cost was allocated to the underlying assets acquired and liabilities assumed, based upon their estimated fair values at the date of acquisition. The Company retained an independent appraiser to assist with determination of the fair value of certain assets acquired and liabilities assumed. The consideration paid has been allocated to the assets acquired and liabilities assumed based on their estimated fair values on the Closing Date.

Page | 26

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

During the year ended December 31, 2021, the Company completed the analysis to assign fair values to all assets acquired and liabilities assumed. Figures previously presented have been updated to reflect the measurement period adjustments detailed below. The following table summarizes the final purchase price allocation:


Allocation of consideration:(Expressed in '000 rounded)	Reported as ofSeptember 30, 2021		****	Adjustments		****	Final Allocation
Cash and cash equivalents	$	65,600		$	—		$	65,600
Trade and other receivables		18,800			—			18,800
Other current assets		3,000			—			3,000
Inventory (1)		23,300			1,200			24,500
Restricted cash		2,100			—			2,100
Mineral properties and exploration and evaluation assets (2)		789,200			20,800			810,000
Property, plant and equipment		85,500			—			85,500
Trade and other payables (4)		(56,400)			(3,300)			(59,700)
Income taxes payable		(5,400)			—			(5,400)
Lease liabilities		(13,600)			—			(13,600)
Debt		(31,700)			—			(31,700)
Closure and reclamation provision (3)		(3,300)			(7,800)			(11,100)
Deferred tax liabilities (5)		(162,600)			(13,400)			(176,000)
Other labilities (4)		(6,405)			2,600			(3,805)
Non controlling interest		(52,800)			(100)			(52,900)
Net assets acquired	$	655,295		$	—		$	655,295

All values are in US Dollars.

(1)	The fair value of inventory was adjusted to reflect an update to the mine plan and expected timing of processing stockpiled ore.
(2)	Measurement period adjustments to mineral properties were a result of updates to the mineral reserve and resource statement and refinments to the timing of cash flows used in the discounted cash flow models used to value mineral properties.
---	---
(3)	Adjustments to the fair value of closure and reclamation provisions were the result of management reviewing site closure plans during the measurement period and making adjustments and refinements to the cost estimates.
---	---
(4)	Relates to adustments to the opening balance sheet as of July 2, 2021 based on refinements to the treatment of executive payments.
---	---
(5)	The deferred tax liabilities were updated to reflect the change in temporary differences which resulted from the changes to the fair value of assests and liabilities acquired.
---	---

The fair value of mineral properties and exploration and evaluation assets (Level 3), debt (Level 2), and lease liabilities (Level 2) were estimated using discounted cash flow models, comparable transactions and other market-based information. The fair value of property, plant, and equipment (Level 3) was estimated using either market or cost approaches. Expected future cash flows are based on estimates of future gold prices and projected revenues, estimated quantities of mineral reserves and mineral resources, expected future production costs and capital expenditures based on life-of-mine plans. The fair value of inventory (Level 3) was based on forward gold prices and the cost to complete.

The non-controlling interest represents a 10% interest in the legal entities that own the Yaramoko and Séguéla properties, by the Burkina Faso and Côte d’Ivoire governments, respectively. The non-controlling interest was determined based on the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s identifiable net assets.

For the year ended December 31, 2021, transaction and integration costs in the form of continuing employee payouts, advisory, legal and other professional fees of $14.1 million were expensed as incurred and included in Roxgold transaction costs in the Consolidated Income Statement.

Consolidated revenue for the year ended December 31, 2021 includes revenue from the properties acquired in the Transaction of $101.3 million. Consolidated net income for the year ended December 31, 2021 includes net income before tax from Roxgold of $9.4 million. Had the transaction occurred on January 1, 2021, pro-forma unaudited Page | 27

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

consolidated revenue and net income before tax for the year ended December 31, 2021 would have been approximately $704.7 million and $115.2 million, respectively.

7. TRADE AND OTHER RECEIVABLES


As at	December 31, 2021		December 31, 2020
Trade receivables from doré and concentrate sales	$	25,718	$	26,309
Advances and other receivables		4,424		4,108
Value added taxes recoverable - operations		46,345		13,432
Value added taxes recoverable - Lindero construction		-		32,706
Trade and other receivables	$	76,487	$	76,555

The Company’s trade receivables from concentrate and doré sales are expected to be collected in accordance with the terms of the existing concentrate and doré sales contracts with its customers. No amounts were past due as at December 31, 2021 and 2020.

During the year ended Deember 31, 2021, all of the Lindero construction value added taxes were recovered.

During the year ended December 31, 2021, the Company sold VAT receivables in the amount of $5.5 million at a factor rate of 5% to a commercial bank in Burkina Faso, and recognized a provision of $0.9 million related to estimated VAT receivables anticipated to be sold in the next twelve months.

8. INVENTORIES


As at	Note	December 31, 2021		December 31, 2020
Concentrate stockpiles		$	1,711	$	1,682
Doré bars			3,456		1,796
Leach pad and gold-in-circuit			30,321		7,851
Ore stockpiles			39,292		11,640
Materials and supplies			31,437		22,020
Total inventories		$	106,217	$	44,989
Less: non-current portion	11		(20,398)		(9,715)
Current inventories		$	85,819	$	35,274

During the year ended December 31, 2021, the Company expensed $346.4 million (December 31, 2020 – $160.1 million) of inventories to cost of sales. During the year ended December 31, 2021, charges of $7.0 million, including $2.8 million related to depreciation, were recognized in cost of sales to reduce low grade stockpiles at Lindero and Yaramoko to net realizeable value.

9. OTHER CURRENT ASSETS


As at	December 31, 2021		December 31, 2020
Derivatives	$	1,490	$	-
Prepaid expenses		8,060		2,622
Investments in equity securities		416		1,059
Assets held for sale		-		659
Income tax recoverable		1,713		-
Other current assets	$	11,679	$	4,340

Page | 28

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

Investments in equity securities are classified as fair value through other comprehensive income, and any changes in the fair value of the investments are recorded in Other Comprehensive Income.

10. MINERAL PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT


	Note		Mineral Properties - Depletable		Mineral Properties - Non depletable		Construction in Progress		Property, Plant & Equipment		Total
COST
Balance at December 31, 2020		$	327,414	$	250,145	$	188,960	$	378,754	$	1,145,273
Acquisiton of Roxgold	6		112,499		697,537		15,047		70,453		895,536
Additions			54,882		59,600		34,210		23,433		172,125
Changes in closure and reclamation provision			2,262		1,552		-		(85)		3,729
Disposals			-		-		-		(5,643)		(5,643)
Transfers			261,055		(242,038)		(227,591)		208,574		-
Balance at December 31, 2021		$	758,112	$	766,796	$	10,626	$	675,486	$	2,211,020

ACCUMULATED DEPLETION
Balance at December 31, 2020		$	191,842	$	-	$	-	$	162,304	$	354,146
Disposals			-		-		-		(4,319)		(4,319)
Depletion and depreciation			83,618		-		-		65,221		148,839
Balance at December 31, 2021		$	275,460	$	-	$	-	$	223,206	$	498,666

Net Book Value at December 31, 2021		$	482,652	$	766,796	$	10,626	$	452,280	$	1,712,354


		Mineral<br> Properties - <br>Depletable		Mineral<br> Properties - <br>Non depletable		Construction in Progress		Property, Plant & Equipment		Total
COST
Balance at December 31, 2019	$	312,577	$	211,799	$	222,906	$	286,732	$	1,034,014
Additions		12,143		33,804		49,333		9,805		105,085
Changes in closure and reclamation provision		3,927		4,730		-		682		9,339
Disposals		(1,233)		(188)		-		(1,744)		(3,165)
Transfers		-		-		(83,279)		83,279		-
Balance at December 31, 2020	$	327,414	$	250,145	$	188,960	$	378,754	$	1,145,273

ACCUMULATED DEPLETION
Balance at December 31, 2019	$	170,857	$	-	$	-	$	133,982	$	304,839
Disposals		(543)		-		-		(1,126)		(1,669)
Depletion and depreciation		21,528		-		-		29,448		50,976
Balance at December 31, 2020	$	191,842	$	-	$	-	$	162,304	$	354,146

Net Book Value at December 31, 2020	$	135,572	$	250,145	$	188,960	$	216,450	$	791,127

Non-depletable mineral properties include $22.0 million of exploration and evaluation assets (December 31, 2020 - $9.0 million).

On November 4, 2021, the Company entered into a fourth amended and restated credit agreement, effective November 5, 2021. The Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso, and their respective direct and indirect holding companies, have guaranteed the obligations of the Company contemplated by the Amended Credit Facility. The Company has pledged all of its assets to secure the payment of its obligations contemplated by the Amended Credit Facility and the Company’s principal operating subsidiaries in Mexico and Peru, as well as the direct and indirect holding companies of the Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso, have pledged all of their respective assets to secure their respective guarantees of such payment, including the shares of the Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso. The Company’s principal operating subsidiary in Burkina Faso has pledged its bank accounts to secure the obligations under its guarantee. (Note 15 (a)).

Page | 29

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

11. OTHER ASSETS


As at	Note	December 31, 2021		December 31, 2020
Ore stockpiles	8	$	20,398	$	9,715
Value added tax recoverable			3,426		3,386
Income tax recoverable	33(d)		1,087		1,199
Deferred income tax recoverable			22		-
Derivatives			129		-
Other long-term assets			1,368		1,844
Total other assets		$	26,430	$	16,144

12. TRADE AND OTHER PAYABLES


As at	Note	December 31, 2021		December 31, 2020
Trade accounts payable		$	82,533	$	31,573
Payroll and related payables			23,311		15,878
Mining royalty payable			2,416		1,094
Other payables			12,161		3,103
Derivative liabilities			3,077		1,260
Share units payable	18(a)(b)		10,307		12,367
Total trade and other payables		$	133,805	$	65,275

13. RELATED PARTY TRANSACTIONS

In addition to the related party transactions and balances disclosed elsewhere in these financial statements, the Company entered into the following related party transactions during the years ended December 31, 2021, and 2020:

(a) Purchase of Goods and Services

During the years ended December 31, 2021, the Company was charged $5 thousand (2020: $157 thousand) for general and administrative services pursuant to a shared services agreement with Gold Group Management Inc., a company of which Simon Ridgway, the Company’s former Chairman, is a director. Effective February 2, 2021, Mr. Ridgway resigned as director and Chairman of the Board, and costs associated with the shared services agreement with Gold Group Management Inc. are no longer reported as related party transactions.

As at December 31, 2021, the Company had $nil outstanding balances payable to Gold Group Management Inc. (December 31, 2020 - $9 thousand). Amounts due to related parties are due on demand and are unsecured.

Page | 30

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(b) Key Management Personnel

During the year ended December 31, 2021 and 2020, the Company was charged for consulting services by Mario Szotlender, a director of the Company and by Mill Street Services Ltd., a company of which Mr. Ridgway, the Company’s former Chairman, is a director. Effective February 2, 2021, Mr. Ridgway resigned as director and Chairman of the Board, and costs associated incurred with Mill Street Services Ltd. are no longer reported as related party transactions. Such amounts, along with other amounts paid to key management personnel were as follows:


		Years ended December 31,
	2021		2020
Salaries and benefits	$	7,639	$	4,266
Directors fees		658		707
Consulting fees		78		134
Share-based payments		2,565		11,115
	$	10,940	$	16,222

14. LEASE OBLIGATIONS


	Minimum lease payments
As at	December 31, 2021		December 31, 2020
Less than one year	$	12,292	$	7,367
Between one and five years		13,380		10,209
More than five years		15,983		14,127
		41,655		31,703
Less: future finance charges		(12,250)		(12,206)
Present value of minimum lease payments		29,405		19,497
Less: current portion		(10,523)		(6,978)
Non-current portion	$	18,882	$	12,519

As at December 31, 2021, there were $29.3 million of lease obligations related to mining equipment and $0.1 million of other leases.

15. DEBT

The following table summarizes the changes in debt:


	Note		Credit <br>Facilities		Convertible debentures		Total
Balance at December 31, 2019		$	109,430	$	37,105	$	146,535
Amortization of discount			420		1,661		2,081
Drawdowns			65,000		-		65,000
Payments			(55,000)		-		(55,000)
Balance at December 31, 2020			119,850		38,766		158,616
Transaction costs			(3,036)		-		(3,036)
Acquisition of Roxgold	6		31,711		-		31,711
Amortization of discount			242		1,641		1,883
Extinguishment of debt			603		-		603
Payments			(32,288)		-		(32,288)
Balance at December 31, 2021		$	117,082	$	40,407	$	157,489
Non-current portion		$	117,082	$	40,407	$	157,489

Page | 31

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(a)	Credit Facilities

The Company had two credit facilities comprising of a $40.0 million non-revolving credit facility and an $80.0 million revolving credit facility, which both had a maturity date of January 26, 2022. Following the acquisition of Roxgold on July 2, 2021, the Company assumed Roxgold’s credit facility, comprising a $60.0 million term loan and a $20.0 million revolving credit facility with an interest rate of LIBOR plus 4%, which both had a maturity date of December 30, 2022. The Company repaid the outstanding Roxgold credit facility on November 5, 2021.

On November 4, 2021, the Company entered into a fourth amended and restated credit agreement (the “Amended Credit Facility”) effective November 5, 2021, with a syndicate of banks led by BNP Paribas, and including The Bank of Nova Scotia, Bank of Montreal and Société Générale, which converted the Company’s prior non-revolving and revolving facilities with the Bank of Nova Scotia and BNP Paribas (the “Scotiabank Facility”) into a revolving term credit facility and increased the amount of the facility from $120.0 million to $200.0 million, subject to the conditions described below. The facility has a term of four years and steps down to $150.0 million after three years. Interest accrues on LIBOR loans under the facility at LIBOR plus an applicable margin of between two and three percent, which varies according to the consolidated leverage levels of the Company, as defined in the Amended Credit Facility.

On closing of the Amended Credit Facility, $120.0 million was available for drawdown and was drawn down in full. The total Amended Credit Facility of up to $200.0 million became available to the Company upon its receipt of the extension of the San Jose environmental impact authorization (“EIA”) on December 17, 2021. The Company evaluated the Amended Credit Facility and concluded that it was an extinguishment of debt rather than a modification as a result of the change in counter parties, increase in available credit and the posting of the Roxgold assets as security.

On repayment of the Roxgold credit facility and closing of the Amended Credit Facility, the unamortized balance of transaction costs in connection with the credit facitlities was $0.6 million, and this balance was written off and recorded as loss on extinguishment of debt.

The Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso, and their respective direct and indirect holding companies, have guaranteed the obligations of the Company contemplated by the Amended Credit Facility. The Company has pledged all of its assets to secure the payment of its obligations contemplated by the Amended Credit Facility and the Company’s principal operating subsidiaries in Mexico and Peru, as well as the direct and indirect holding companies of the Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso, have pledged all of their respective assets to secure their respective guarantees of such payment, including the shares of the Company’s principal operating subsidiaries in Mexico, Peru, Côte d’Ivoire and Burkina Faso. The Company’s principal operating subsidiary in Burkina Faso has pledged its bank accounts to secure the obligations under its guarantee.

The Amended Credit Facility includes covenants customary for a facility of this nature including, among other matters, reporting requirements, and positive, negative, and financial covenants set out in therein. As at December 31, 2021, the Company was in compliance with all of the covenants under the Amended Credit Facility.

(b) Convertible Debentures

On October 2 and 6, 2019, the Company completed a bought deal public offering of senior subordinated unsecured convertible debentures with an aggregate principal amount of $46.0 million (the “Debentures”).

Page | 32

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The 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, commencing on April 30, 2020. For the year ended December 31, 2021, the Company paid $2.1 million in interest on the Debentures.

The Debentures are convertible at the holder’s option into common shares in the capital of the Company at a conversion price of $5.00 per share (the “Conversion Price”), representing a conversion rate of 200 Common Shares per $1 thousand principal amount of Debentures, subject to adjustment in certain circumstances.

On or after October 31, 2022 and prior to October 31, 2023, the 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 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.

Subject to applicable securities laws and regulatory approval and provided that no event of default has occurred and is continuing, the Company may, at its option, elect to satisfy its obligation to pay the principal amount of the Debentures and accrued and unpaid interest on the redemption date and the maturity date, in whole or in part, through the issuance of Common Shares, by issuing and delivering that number of Common Shares, obtained by dividing the principal amount of the Debentures and all accrued and unpaid interest thereon by 95% of the current market price (as defined in the Debenture Indenture) on such redemption date or maturity date, as applicable.

During the year ended December 31, 2021, $0.1 milion of the Debentures were converted.

16. OTHER LIABILITIES


As at	Note	December 31, 2021		December 31, 2020
Restricted share units	18(b)	$	1,437	$	2,264
Other non-current liabilities			1,873		259
		$	3,310	$	2,523

Page | 33

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

17. CLOSURE AND RECLAMATION PROVISIONS

The following table summarizes the changes in closure and reclamation provisions:


			Closure and Reclamation Provisions
	Note	****	CayllomaMine		****	San JoseMine		LinderoMine		****	YaramokoMine		SéguélaProject		Total
Balance at December 31, 2020			$	14,761		$	5,905	$	19,684	$	-	$	-	$	40,350
Acquisition of Roxgold	6			-			-		-		11,122		-		11,122
Changes in estimate				(152)			1,142		(422)		1,609		1,552		3,729
Reclamation expenditures				(180)			(173)		-		-		-		(353)
Accretion				469			439		377		164		-		1,449
Effect of changes in foreign exchange rates				-			(185)		-		-		-		(185)
Balance at December 31, 2021				14,898			7,128		19,639		12,895		1,552		56,112
Less: Current portion				(1,230)			(652)		-		-		-		(1,882)
Non-current portion			$	13,668		$	6,476	$	19,639	$	12,895	$	1,552	$	54,230

			Closure and Reclamation Provisions
			Caylloma<br>Mine			San Jose<br>Mine		Lindero<br>Project			Yaramoko Mine		Séguéla<br>Project		Total
Balance at December 31, 2019			$	11,324		$	4,848	$	14,953	$	-	$	-		31,125
Changes in estimate				3,288			1,328		4,482		-		-		9,098
Reclamation expenditures				(114)			(227)		-		-		-		(341)
Accretion				256			249		249		-		-		754
Effect of changes in foreign exchange rates				7			(293)		-		-		-		(286)
Balance at December 31, 2020				14,761			5,905		19,684		-		-		40,350
Less: Current portion				(142)			(238)		-		-		-		(380)
Non-current portion			$	14,619		$	5,667	$	19,684	$	-	$	-		39,970

Closure and reclamation provisions represent the present value of reclamation costs related to mine and development sites. For the year ended December 31, 2021 the Company recognized an initial obligation at Séguéla related to the disturbance created from construction activities.


	Closure and Reclamation Provisions
	Caylloma<br>Mine		San Jose<br>Mine		Lindero<br>Mine			Yaramoko<br>Mine		Séguéla<br>Project	Total
Undiscounted uninflated estimated cash flow	$	15,816	$	7,846	$	18,772	$	12,634	$	1,489	56,557
Discount rate		3.22%		7.56%		1.94%		2.08%		2.08%
Inflation rate		2.00%		5.55%		4.00%		2.60%		2.50%

The Company is expecting to incur progressive reclamation costs throughout the life of its mines.

18. SHARE BASED PAYMENTS

During the year ended December 31, 2021, the Company recognized share-based payments of $3.8 million (December 31, 2020 - $12.4 million) related to the amortization of deferred, restricted and performance share units and $nil (December 31, 2020 – $0.1 million) related to amortization of stock options.

Page | 34

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(a)	Deferred Share Units (DSUs)


		Cash Settled
	Number of DSUs		Fair Value
Outstanding, December 31, 2019		961,871	$	3,918
Granted		162,648		383
Changes in fair value		-		4,938
Outstanding, December 31, 2020		1,124,519		9,239
Granted		55,245		347
Units paid out in cash		(374,709)		(3,436)
Changes in fair value		-		(3,013)
Outstanding, December 31, 2021		805,055	$	3,137

(b)	Restricted Share Units (RSUs)


		Cash Settled				Equity Settled
	Number of RSUs		Fair Value		Number of RSUs
Outstanding, December 31, 2019		392,435	$	1,157		1,166,912
Granted		1,056,207		2,489		815,220
Units paid out in cash		(81,152)		(257)		-
Vested and paid out in shares		-		-		(448,766)
Changes in fair value and vesting		-		2,003		-
Outstanding, December 31, 2020		1,367,490		5,392		1,533,366
Granted		677,250		4,111		-
Units paid out in cash		(618,357)		(2,484)		-
Assumed on acquisition		328,254		1,590		1,091,395
Vested and paid out in shares		-		-		(655,267)
Transferred from equity to cash settled		260,444		-		(260,444)
Forfeited or cancelled		(155,942)		(54)		(64,589)
Changes in fair value and vesting		-		(3,052)		-
Outstanding, December 31, 2021		1,859,139		5,503		1,644,461
Less: current portion				(4,066)
Non-current portion			$	1,437


		Cash Settled			Equity Settled
	Number of PSUs		Fair Value		Number of PSUs
Outstanding, December 31, 2019		-		-	1,274,450
Forfeited or cancelled		-		-	(191,498)
Vested and paid out in shares		-		-	(243,782)
Outstanding, December 31, 2020		-		-	839,170
Assumed on acquisition		515,008		2,390	508,688
Granted		-		-	1,196,012
Forfeited or cancelled		-		-	(206,798)
Vested and paid out in shares		-		-	(491,185)
Change in fair value and vesting		-		714	-
Outstanding, December 31, 2021		515,008		3,104	1,845,887

Page | 35

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(d) Stock Options

The Company’s Stock Option Plan, as amended and approved from time to time, permits the Company to issue up to 12,200,000 stock options. As at December 31, 2021, a total of 2,092,236 stock options are available for issuance under the plan.


	Number of stock options	Weighted average<br>exercise price
		Canadian dollars
Outstanding, December 31, 2019	1,784,029	$	5.85
Exercised	(211,626)		6.28
Expired unexercised	(517,833)		4.79
Outstanding, December 31, 2020	1,054,570		6.28
Exercised	(68,927)		4.99
Assumed on acquisition	405,240		3.77
Expired unexercised	(141,500)		3.22
Outstanding, December 31, 2021	1,249,383	$	5.88
Vested and exercisable, December 31, 2020	1,054,570	$	6.28
Vested and exercisable, December 31, 2021	1,249,383	$	5.88

19. SHARE CAPITAL

(a) Authorized Share Capital

The Company has an unlimited number of common shares without par value authorized for issue.

(b) Share Issuances


	Note	Number of common shares	Amount
Balance at January 1, 2020		160,291,553	$	422,145
Issuance of common shares (i)		23,000,000		69,000
Share issuance costs		-		(3,358)
Exercise of stock options		211,626		1,438
Shares issued on vesting of share units		692,548		3,081
Balance at December 31, 2020		184,195,727	$	492,306
Acquisition of Roxgold	6	106,106,224		582,523
Exercise of stock options		68,927		389
Shares issued on vesting of share units		1,146,452		4,468
Convertible debenture conversion		12,000		60
Balance December 31, 2021		291,529,330	$	1,079,746

^(i)^ On May 20, 2020, the Company completed a bought deal public equity offering and issued an aggregate of 23,000,000 common shares at a price of $3.00 per share for gross proceeds of $69.0 million, which included the exercise, in full, of the over-allotment option. The Company incurred transaction costs of $3.4 million related to this financing.

Page | 36

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

20. EARNINGS PER SHARE


		Years ended December 31
	2021		2020
Basic:
Net income for the period attributable to Fortuna shareholders	$	57,877	$	21,553
Weighted average number of shares (000's)		237,998		174,993
Earnings per share - basic	$	0.24	$	0.12


		Years ended December 31
	2021		2020
Diluted:
Net income for the period attributable to Fortuna shareholders	$	57,877	$	21,553
Add: finance costs on convertible debt, net of $nil tax		3,779		-
Diluted net income for the period	$	61,656	$	21,553

Weighted average number of shares (000's)		237,998		174,993
Incremental shares from dilutive potential shares		11,445		11,080
Weighted average diluted number of shares (000's)		249,443		186,073
Earnings per share - diluted	$	0.23	$	0.12

As at December 31, 2021, there were 7,551 out of the money options that were excluded from the diluted earnings per share calculation as their effect would have been anti-dilutive (December 31, 2020 –7,551).

21. SALES

The Company’s geographical analysis of revenue from contracts with customers attributed to the location of the products produced, is as follows:


	Year ended December 31, 2021
		Peru		Mexico		Argentina		Burkina Faso		Total
Silver-gold concentrates	$	-	$	219,663	$	-	$	-	$	219,663
Silver-lead concentrates		59,755		-		-		-		59,755
Zinc concentrates		42,990		-		-		-		42,990
Gold doré		-		-		178,999		101,256		280,255
Provisional pricing adjustments		799		(3,609)		-		-		(2,810)
Sales to external customers	$	103,544	$	216,054	$	178,999	$	101,256	$	599,853

	Year ended December 31, 2020
		Peru		Mexico		Argentina		Burkina Faso		Total
Silver-gold concentrates	$	-	$	188,327	$	-	$	-	$	188,327
Silver-lead concentrates		43,055		-		-		-		43,055
Zinc concentrates		23,980		-		-		-		23,980
Gold doré		-		-		20,297		-		20,297
Provisional pricing adjustments		608		2,699		-		-		3,307
Sales to external customers	$	67,643	$	191,026	$	20,297	$	-	$	278,966

Page | 37

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


	Years ended December 31
	2021		2020
Customer 1	$	178,999	$	191,026
Customer 2		103,544		67,643
Customer 3		101,256		-
Customer 4		91,950		20,297
Customer 5		48,032		-
Customer 6		47,212		-
Customer 7		28,860		-
	$	599,853	$	278,966

From time to time, the Company mitigates the price risk associated with its base metal production by entering into forward sale and collar contracts for some of its forecasted base metal production and non-metal commodities.

During December 2020, the Company entered into the following contracts:

●	zero-cost collar for 12,300 tonnes of zinc with a floor price of $2,600 per tonne and a cap of $2,900 per tonne, maturing monthly from January 1, 2021 to December 31, 2021;
●	zero-cost collar for 720,000 gallons of heating oil with a floor price of $1.40 per gallon and a cap of $1.6150 per gallon, maturing monthly from January 1, 2021 to December 31, 2021;
---	---
●	zero-cost collar for 1,680,000 gallons of jet fuel with a floor price of $1.30 per gallon and a cap of $1.4775 per gallon, maturing monthly from January 1, 2021 to December 31, 2021;
---	---
●	forward-swap for 720,000 gallons of heating oil with a price of $1.52 per gallon, maturing monthly from January 1, 2022 to December 31, 2022; and
---	---
●	forward-swap for 1,680,000 gallons of jet fuel with a price of $1.438 per gallon, maturing monthly from January 1, 2022 to December 31, 2022.
---	---

On February 11, 2021, the Company entered into a zero-cost collar for 6,237 tonnes of lead with a floor price of $2,000 per tonne and a cap of $2,125 per tonne, maturing monthly from February 1, 2021 to December 31, 2022.

During October 2021, the Company entered into the following contracts:

●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,500 per tonne, maturing from January 1, 2022 to March 31, 2022;
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,400 per tonne, maturing from April 1, 2022 to June 30, 2022;
---	---
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,290 per tonne, maturing from July 1, 2022 to September 30, 2022;
---	---
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,100 per tonne and a cap of $3,225 per tonne, maturing from October 1, 2022 to December 31, 2022;
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,300 per tonne, maturing quarterly from January 1, 2022 to March 31, 2022;
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,256 per tonne, maturing quarterly from April 1, 2022 to June 30, 2022;
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,256 per tonne, maturing quarterly from July 1, 2022 to September 30, 2022; and
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,175 per tonne, maturing quarterly from October 1, 2022 to December 31, 2022.
---	---

The zinc, lead and fuel contracts are derivative financial instruments and are not accounted for as designated hedges. They were initially recognized at fair value on the date on which the related derivative contracts were entered into Page | 38

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

and are subsequently re-measured to estimated fair value. Any gains or losses arising from changes in the fair value of the derivatives are credited or charged to profit or loss.

During the year ended December 30, 2021 the Company recognized $1.5 million of realized loss on settlement of swaps, and $1.3 million of unrealized loss, from changes in the fair value of the open positions (December 31, 2020 – $nil).

22. COST OF SALES


	Years ended December 31,
	2021		2020
Direct mining costs	$	198,141	$	94,609
Salaries and benefits		34,773		16,586
Workers' participation		7,647		7,459
Depletion and depreciation		121,077		43,778
Royalties and other taxes		25,703		6,318
Impairment (recovery) of inventories		7,035		(5)
Cost of Sales	$	394,376	$	168,745

For the year ended December 31, 2021, depletion and depreciation includes $6.3 million (December 31, 2020 - $2.5 million) of depreciation relating to right-of-use assets.

23. GENERAL AND ADMINISTRATION


	Years ended December 31,
	2021		2020
General and administration	$	39,386	$	20,834
Workers' participation		1,813		1,808
		41,199		22,642
Share-based payments		4,161		12,444
General and Administration	$	45,360	$	35,086

24. OTHER EXPENSES


		Years ended December 31,
	Note	2021		2020
Write-down (recovery) of investment in associates		$	327	$	(194)
Loss on disposal of assets and other write-downs			818		878
Provision for accounts receivable			659		484
SGM Royalty settlement	33 (e)		9,600		447
Other expenses (income)			4,730		(308)
Care and maintenance costs related to COVID-19			-		3,121
Share of loss from associates			-		76
		$	16,134	$	4,504

Page | 39

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

25. INTEREST AND FINANCE COSTS, NET


	Years ended December 31,
	2021		2020
Interest income	$	1,846	$	1,217
Interest expense		(10,246)		(1,510)
Bank stand-by and commitment fees		(69)		(369)
Accretion expense		(3,799)		(751)
Loss on extinguishment of credit facility		(595)		-
	$	(12,863)	$	(1,413)

26. INCOME TAX

(a)	Reconciliation of Effective Tax Rate

Income tax expense differs from the amount that would be computed by applying the applicable Canadian statutory

income tax rate to income before income taxes. The significant reasons for the differences are as follows:


	Years ended December 31,
	2021		2020
Net income before tax	$	107,180	$	58,955
Statutory tax rate		27.0%		27.0%
Anticipated income tax at statutory rates		28,939		15,918
Non-deductible expenditures (deductible expenditures)		(5,535)		1,326
Differences between Canadian and foreign tax rates		4,392		1,284
Changes in estimate		(93)		(192)
Effect of change in tax rates		(1,919)		436
Inflation adjustment		(24,873)		(10,634)
Impact of foreign exchange		14,865		15,081
Changes in deferred tax assets not recognized		18,692		5,909
Mining taxes		7,636		4,656
Withholding taxes		8,148		3,670
Other items		(2,471)		(52)
Total income tax expense	$	47,781	$	37,402

Total income tax represented by:
Current income tax expense	$	51,651	$	38,818
Deferred tax recovery		(3,870)		(1,416)
	$	47,781	$	37,402

Page | 40

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(b)	Tax Amounts Recognized in Profit or Loss


	Years ended December 31,
	2021		2020
Current tax expense
Current taxes on profit for the year	$	51,106	$	38,603
Changes in estimates related to prior years		545		215
	$	51,651	$	38,818

Deferred tax expense
Origination and reversal of temporary differences and foreign exchange rate	$	(985)	$	(1,500)
Changes in estimates related to prior years		(638)		(396)
Effect of differences in tax rates		(328)		44
Effect of changes in tax rates		(1,919)		436
	$	(3,870)	$	(1,416)

Total tax expense	$	47,781	$	37,402

Page | 41

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(c)	Deferred Tax Balances

The significant components of the recognized deferred tax assets and liabilities are:


	December 31,		December 31,
	2021		2020
Deferred tax assets:
Reclamation and closure cost obligation	$	15,872	$	13,080
Carried forward tax loss		4,192		17,729
Equipment and buildings		23,989		-
Accounts payable and accrued liabilities		19,370		16,437
Deductibility of resource taxes		3,085		3,414
Lease obligations		8,270		5,769
Other		1,153		127
Total deferred tax assets	$	75,931	$	56,556

Deferred tax liabilities:
Mineral properties	$	(244,296)	$	(55,134)
Mining and foreign withholding taxes		(4,523)		(4,862)
Equipment and buildings		-		(1,928)
Convertible debenture		(1,198)		(1,544)
Inflation		(10,163)		(11,210)
Inventory and other		(7,419)		(1,377)
Total deferred tax liabilities	$	(267,599)	$	(76,055)

Net deferred tax liabilities	$	(191,668)	$	(19,499)

	2021		2020
Classification:
Deferred tax assets	$	-	$	-
Deferred tax liabilities		(191,668)		(19,499)
Net deferred tax liabilities	$	(191,668)	$	(19,499)

The Company's movement of net deferred tax liabilities is described below:


	2021		2020
At January 1	$	19,499	$	20,915
Deferred income tax (recovery) expense through income statement		(3,870)		(1,416)
Deferred income tax expense through equity		176,039		-
At December 31	$	191,668	$	19,499

Page | 42

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

(d)	Unrecognized Deferred Tax Assets and Liabilities

The Company recognizes tax benefits on losses or other deductible amounts where it is more likely than not that the deferred tax asset will be realized. The Company’s unrecognized deductible temporary differences and unused tax losses for which no deferred tax asset is recognized consists of the following amounts:


	December 31,		December 31,
	2021		2020
Unrecognized deductible temporary differences and unused tax losses:
Non capital losses	$	136,072	$	90,192
Provisions		11,657		14,488
Share issue costs		1,711		3,894
Mineral properties, plant and equipment		12,705		-
Lease obligation		863		555
Derivative liabilities		-		1,111
Capital losses		4,204		255
Investments in equity securities and associates		901		1,534
Unrecognized deductible temporary differences	$	168,114	$	112,029

As at December 31, 2021, the Company has temporary differences associated with investments in subsidiaries for which an income tax liability has not been recognized as the Company can control the timing of the reversal of the temporary differences and the Company plans to reinvest in its foreign subsidiaries. The temporary difference associated with investments in subsidiaries aggregate as follow:


	December 31,		December 31,
	2021		2020
Mexico	$	204,283	$	248,880
Peru		59,976		62,414
West Africa		114,559		-

(e)	Tax Loss Carry Forwards

Tax losses have the following expiry dates:


		December 31,			December 31,
	Year of expiry	2021		Year of expiry	2020
Canada	2026 - 2041	$	150,015	2026 - 2039	$	90,300
Argentina			-	2020 - 2024		68,900
Mexico	2021 - 2030		378	2021 - 2029		367
Peru			-			-

In addition, as at December 31, 2021, the Company has accumulated Canadian resource related expenses of $8.5 million (December 31, 2020- $8.5 million) for which the deferred tax benefit has not been recognized.

Page | 43

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

27. SEGMENTED INFORMATION

The following summary describes the operations of each reportable segment:

●	Mansfield Minera S.A. (“Mansfield”) – operates the Lindero gold mine
●	Roxgold SANU S.A. (“Sanu”) – operates the Yaramoko gold mine
---	---
●	Roxgold SANGO S.A. (“Sango”) – construction of the Séguéla mine
---	---
●	Compania Minera Cuzcatlan S.A. de C.V. (“Cuzcatlan”) – operates the San Jose silver-gold mine
---	---
●	Minera Bateas S.A.C. (“Bateas”) – operates the Caylloma silver, lead and zinc mine
---	---
●	Corporate – corporate stewardship
---	---


	Years ended December 31, 2021
		Mansfield		Sanu		Sango		Cuzcatlan	****		Bateas		Corporate	****		Total
Revenues from external customers	$	178,999	$	101,256	$	-	$	216,054		$	103,544	$	-		$	599,853
Cost of sales before depreciation and depletion		(79,224)		(51,839)		-		(90,499)			(51,737)		-			(273,299)
Depreciation and depletion in cost of sales		(43,665)		(28,973)		-		(32,257)			(16,182)		-			(121,077)
General and administration		(5,793)		(953)		-		(10,007)			(4,127)		(24,480)			(45,360)
Other (expenses) income		(5,069)		(2,536)		(472)		(15,793)			632		-			(23,238)
Finance items		(972)		(2,664)		(96)		(882)			(5,034)		(20,051)			(29,699)
Segment income (loss) before taxes		44,276		14,291		(568)		66,616			27,096		(44,531)			107,180
Income taxes		(3,242)		(2,749)		(499)		(23,586)			(9,415)		(8,290)			(47,781)
Segment income (loss) after taxes	$	41,034	$	11,542	$	(1,067)	$	43,030		$	17,681	$	(52,821)		$	59,399

	Years ended December 31, 2020
		Mansfield		Sanu		Sango		Cuzcatlan			Bateas		Corporate			Total
Revenues from external customers	$	20,297	$	-	$	-	$	191,026		$	67,643	$	-		$	278,966
Cost of sales before depreciation and depletion		(10,073)		-		-		(76,459)			(40,056)		-			(126,588)
Depreciation and depletion in cost of sales		-		-		-		(27,856)			(14,301)		-			(42,157)
General and administration		-		-		-		(8,054)			(3,891)		(23,141)			(35,086)
Other (expenses) income		(12,982)		-		-		(3,742)			(1,214)		41			(17,897)
Finance items		4,208		-		-		(104)			(698)		(1,689)			1,717
Segment income (loss) before taxes		1,450		-		-		74,811			7,483		(24,789)			58,955
Income taxes		(323)						(28,926)			(4,312)		(3,841)			(37,402)
Segment income (loss) after taxes	$	1,127	$	-	$	-		45,885		$	3,171	$	(28,630)		$	21,553



As at December 31, 2021		Mansfield	****		Sanu	****		Sango		Cuzcatlan	****		Bateas		Corporate	****		Total
Total assets	$	613,584		$	249,153		$	760,220	$	239,448		$	128,012	$	31,505		$	2,021,922
Total liabilities	$	51,544		$	228,929		$	25,281	$	48,094		$	54,863	$	183,641		$	592,352
Capital expenditures^1^	$	40,845		$	22,856		$	56,614	$	26,962		$	24,848	$	-		$	172,125
^1^Capital expenditures are on an accrual basis for the year ended December 31, 2021

As at December 31, 2020		Mansfield			Sanu			Sango		Cuzcatlan			Bateas		Corporate			Total
Total assets	$	622,122		$	-		$	-	$	280,602		$	125,286	$	27,328		$	1,055,338
Total liabilities	$	50,650		$	-		$	-	$	49,500		$	42,710	$	186,708		$	329,568
Capital expenditures^1^	$	79,686		$	-		$	-	$	15,801		$	9,476	$	122		$	105,085
^1^Capital expenditures are on an accrual basis for the year ended December 31, 2020

28. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal (or most advantageous) market at the measurement date under current market conditions (an exit price) regardless of whether that price is directly observable or estimated using another valuation technique.

The fair value hierarchy establishes three levels to classify the inputs to valuation techniques used to measure fair value. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs Page | 44

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

are quoted prices in markets that are not active, quoted prices for similar assets or liabilities in active markets, inputs other than quoted prices that are observable for the asset or liability (interest rate, yield curves), or inputs that are derived principally from or corroborated observable market data or other means. Level 3 inputs are unobservable (supported by little or no market activity). The fair value hierarchy gives the highest priority to Level 1 inputs and the lowest priority to Level 3 inputs.

The following sets up the methods and assumptions used to estimate the fair value of Level 2 and Level 3 financial instruments.

Financial asset or liability	Methods and assumptions used to estimate fair value
Trade receivables	Trade receivables arising from the sales of metal concentrates are subject to provisional pricing, and the final selling price is adjusted at the end of a quotational period. These are marked to market at each reporting date based on the forward price corresponding to the expected settlement date.
Investments in equity securities	Investments in equity securities are recorded at fair value based on the quoted market price at the end of each reporting period with changes in fair value through other comprehensive income.
Interest rate swap, metal, fuel and foreign exchange contracts	Fair value is calculated as the present value of the estimated contractual cash flows. Estimates of future cash flows are based on quoted swap rates, futures prices and interbank borrowing rates. These are discounted using a yield curve, and adjusted for credit risk of the Company or the counterparty.
Convertible Debentures	The fair value of the convertible debentures represents both the debt and equity components of the convertible debentures and has been determined with reference to the quoted market price of the convertible debentures.

During the years ended December 31, 2021, and 2020, there were no transfers of amounts between Level 1, Level 2, and Level 3 of the fair value hierarchy. The following tables show the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. Fair value information for financial assets and financial liabilities not measured at fair value is not presented if the carrying amount is a reasonable approximation of fair value.

Page | 45

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


		Carrying value									Fair value
December 31, 2021	****	Fair Value through OCI		****	Fair valuethroughprofit or loss		Amortizedcost		Total		Level 1		****	Level 2		****	Level 3		****	Carrying valueapproximatesFair Value
Financial assets measured at Fair Value
Investments in equity securities		$	496		$	-	$	-	$	496	$	496		$	-		$	-		$	-
Trade receivables concentrate sales			-			23,298		-		23,298		-			23,298			-			-
Fuel hedge contracts asset			-			1,619		-		1,619		-			1,619			-			-
		$	496		$	24,917	$	-	$	25,413	$	496		$	24,917		$	-		$	-
****
Financial assets not measured at Fair Value
Cash and cash equivalents		$	-		$	-	$	107,097	$	107,097	$	-		$	-		$	-		$	107,097
Trade receivables doré sales			-			-		2,420		2,420		-			-			-			2,420
Other receivables			-			-		4,424		4,424		-			-			-			4,424
		$	-		$	-	$	113,941	$	113,941	$	-		$	-		$	-		$	113,941
****
Financial liabilities measured at Fair Value
Interest rate swap liability		$	(78)		$	-	$	-	$	(78)	$	-		$	(78)		$	-		$	-
Metal forward sales contracts liability			-			(2,547)		-		(2,547)		-			(2,547)			-			-
Foreign exchange forward contracts liability			-			(508)		-		(508)		-			(508)			-			-
		$	(78)		$	(3,055)	$	-	$	(3,133)	$	-		$	(3,133)		$	-		$	-
****
Financial liabilities not measured at Fair Value
Trade payables		$	-		$	-	$	(80,925)	$	(80,925)	$	-		$	-		$	-		$	(80,925)
Payroll payable			-			-		(23,311)		(23,311)		-			-			-			(23,311)
Credit facilities			-			-		(117,082)		(117,082)		-			(120,000)			-			-
Convertible debentures			-			-		(40,407)		(40,407)		-			(50,614)			-			-
Other payables			-			-		(44,427)		(44,427)		-			-			-			(44,427)
		$	-		$	-	$	(306,152)	$	(306,152)	$	-		$	(170,614)		$	-		$	(148,663)

Page | 46

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)


	Carrying value								Fair value
December 31, 2020	Fair Value through OCI		Fair value<br>through<br>profit or loss		Amortized<br>cost		Total		Level 1		Level 2		Level 3		Carrying value<br>approximates<br>Fair Value
Financial assets measured at Fair Value
Investments in equity securities	$	1,059	$	-	$	-	$	1,059	$	1,059	$	-	$	-	$	-
Trade receivables concentrate sales		-		22,361		-		22,361		-		22,361		-		-
	$	1,059	$	22,361	$	-	$	23,420	$	1,059	$	22,361	$	-	$	-

Financial assets not measured at Fair Value
Cash and cash equivalents	$	-	$	-	$	131,898	$	131,898	$	-	$	-	$	-	$	131,898
Trade receivables doré sales		-		-		3,948		3,948		-		-		-		3,948
Other receivables		-		-		4,108		4,108		-		-		-		4,108
	$	-	$	-	$	139,954	$	139,954	$	-	$	-	$	-	$	139,954

Financial liabilities measured at Fair Value
Interest rate swap liability	$	(1,084)	$	-	$	-	$	(1,084)	$	-	$	(1,084)	$	-	$	-
Metal forward sales contracts liability		-		(124)		-		(124)		-		(124)		-		-
Fuel forward contracts liability		-		(52)		-		(52)		-		(52)		-		-
	$	(1,084)	$	(176)	$	-	$	(1,260)	$	-	$	(1,260)	$	-	$	-

Financial liabilities not measured at Fair Value
Trade payables	$	-	$	-	$	(26,140)	$	(26,140)	$	-	$	-	$	-	$	(26,140)
Payroll payable		-		-		(17,676)		(17,676)		-		-		-		(17,676)
Credit facilities		-		-		(119,850)		(119,850)		-		(120,000)		-		-
Convertible debentures		-		-		(38,766)		(38,766)		-		(78,315)		-		-
Other payables		-		-		(22,784)		(22,784)		-		-		-		(22,784)
	$	-	$	-	$	(225,216)	$	(225,216)	$	-	$	(198,315)	$	-	$	(66,600)

Page | 47

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

29. MANGEMENT OF FINACIAL RISK

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework and reviews the Company’s policies on an ongoing basis.

The Company is exposed to certain financial risks, including credit risk, liquidity risk, currency risk, metal price risk, and interest rate risk.

(a) Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. All our trade accounts receivables from concentrate sales are held with large international metals trading companies.

The Company’s cash and cash equivalents and short-term investments are held through large financial institutions.

These investments mature at various dates within three months.

The Company’s maximum exposure to credit risk as at December 31, 2021 and 2020 is as follows:



As at	December 31, 2021		December 31, 2020
Cash and cash equivalents	$	107,097	$	131,898
Derivative assets		1,619		-
Trade and other receivables		76,487		76,555
Income tax receivable		1,713		-
Other non-current receivables		5,903		6,429
	$	192,819	$	214,882

The carrying amount of financial assets recorded in the financial statements represents the Company’s maximum exposure to credit risk. We limit our exposure to counterparty credit risk on cash and term deposits by only dealing with financial institutions with high credit ratings and through our investment policy of purchasing only instruments with a high credit rating. Almost all of our concentrate are sold to large well-known concentrate buyers.

(c)	Liquidity Risk

Liquidity risk is the risk that we will not be able to meet our financial obligations as they come due. We manage our liquidity risk by continually monitoring forecasted and actual cash flows. We have in place a planning and budgeting process to help determine the funds required to support our normal operating requirements and our development plans. We aim to maintain sufficient liquidity to meet our short term business requirements, taking into account our

anticipated cash flows from operations, our holdings of cash and cash equivalents, and our committed and anticipated liabilities.

The Company had $187.1 million of liquidity comprised of cash and cash equivalents as at December 31, 2021, and believes that its cash and cash equivalents will provide sufficient liquidity to meet the Company’s minimum obligations for at least the next 12 months from December 31, 2021. On November 4, 2021, the Company entered into a fourth amended and restated credit agreement, effective as of November 5, 2021, which converted the Company’s existing non-revolving and revolving facility into a revolving term credit facility in the amount of $200.0 million, with a term of four years and a step down to $150.0 million after three years. On closing of the amended credit facility, $120.0 million was available for drawdown and was drawn down in full. The total amended credit facility of up to $200.0 million became available to the Company upon its receipt of the extension of the San Jose environmental impact authorization on December 17, 2021. Page | 48

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The Company manages its liquidity risk by continuously monitoring forecasted and actual cashflows. A rigorous reporting, planning and budgeting process are in place to help facilitate forecasting funding requirements, to support operations on an ongoing basis and expansion plans, if any.

As at December 31, 2021, the Company expects the following maturities of its financial liabilities, lease obligations, and other contractual commitments, excluding payments relating to interest:


	Expected payments due by year as at December 31, 2021
		Less than								After
		1 year	****		1 - 3 years	****		4 - 5 years		5 years		Total
Trade and other payables	$	133,805		$	-		$	-	$	-	$	133,805
Debt		-			46,000			120,000		-		166,000
Income taxes payable		20,563			-			-		-		20,563
Lease obligations		12,292			11,315			2,065		15,983		41,655
Other liabilities		-			3,310			-		-		3,310
Capital commitments, Séguéla		66,542			5,217			-		-		71,759
Closure and reclamation provisions		1,883			5,561			23,954		24,714		56,112
	$	235,085		$	71,403		$	146,019	$	40,697	$	493,204



	Expected payments due by year as at December 31, 2020
		Less than						After
		1 year		1 - 3 years		4 - 5 years		5 years		Total
Trade and other payables	$	65,275	$	-	$	-	$	-	$	65,275
Debt		-		120,000		46,000		-		166,000
Income taxes payable		23,808		-		-		-		23,808
Lease obligations		7,367		6,166		4,043		14,127		31,703
Other liabilities		-		2,523		-		-		2,523
Capital commitments, Lindero		558		-		-		-		558
Closure and reclamation provisions		433		5,444		10,692		23,781		40,350
	$	97,441	$	134,133	$	60,735	$	37,908	$	330,217

Operating leases includes leases for office premises, computer equipment and other equipment used in the normal course of business.

(d)	Currency risk

The Company is exposed to fluctuations in foreign exchange rates as a portion of our expenses are incurred in Canadian dollars, Peruvian soles, Argentine peso, Mexican peso, West Africa CFA Franc and Australian dollars. A significant change in the foreign exchange rates between the United States dollar relative to the other currencies could have a material effect on the Company’s profit or loss, financial position, or cash flows.

During October 2021, the Company entered into a forward contract for $18.5 million Euros with a fixed rate of 1.173 maturing monthly from January 31, 2022 to April 28, 2023, related to the construction of Séguéla.

Page | 49

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

As at December 31, 2021 and 2020, the Company was exposed to currency risk through the following assets and liabilities denominated in foreign currencies:


		December 31, 2021
	****	CanadianDollars	****	PeruvianSoles	****	MexicanPesos	****	ArgentinePesos	****	West African CFA Franc	****	Australian Dollars	****	Euro
Cash and cash equivalents		1,660		5,508		18,126		4,319		11,494,909		5		28
Marketable securities		527		-		-		-		-		-		-
Restricted cash		-		-		-		-		1,166,963		-		-
Trade and VAT receivables		690		2,144		174,229		1,526,506		13,433,368		-		-
Income tax receivable		-		20,707		-		-		-		-		-
VAT - long term receivable		-		-		70,520		-		-		-		-
Trade and other payables		(3,839)		(17,496)		(400,697)		(1,174,033)		(10,094,158)		(939)		(1,431)
Provisions, current		-		(4,413)		(13,534)		(95,353)		-		-		-
Income tax payable		-		-		(87,881)		-		-		-		-
Other liabilities		-		-		(6,178)		-		-		-		-
Provisions, non current		-		-		(87,305)		-		-		-		-
Total foreign currency exposure		(962)		6,450		(332,720)		261,439		16,001,082		(934)		(1,403)
US$ equivalent of foreign currency exposure		(755)		1,668		(16,802)		2,734		28,548		(804)		(1,207)


	December 31, 2020
	Canadian<br>Dollars	Peruvian<br>Soles	Mexican<br>Pesos	Argentine<br>Pesos	West <br> African <br> CFA <br>Franc	Australian <br>Dollars	Euro
Cash and cash equivalents	1,402	9,658	3,117	2,326	-	-	-
Marketable securities	1,348	-	-	-	-	-	-
Trade and VAT receivables	53	3,563	108,569	3,281,760	-	-	-
Income tax receivable	-	6,915	-	-	-	-	-
VAT - long term receivable	-	-	67,542	-	-	-	-
Trade and other payables	(17,838)	(28,046)	(311,747)	(764,331)	-	-	-
Provisions, current	-	100	(4,871)	(77,549)	-	-	-
Income tax payable	-	(275)	(297,083)	-	-	-	-
Other liabilities	(207)	-	(5,160)	-	-	-	-
Provisions, non current	-	(754)	(67,102)	-	-	-	-
Total foreign currency exposure	(15,254)	(8,839)	(506,735)	2,442,206	-	-	-
US$ equivalent of foreign currency exposure	(11,981)	(2,439)	(25,402)	29,091	-	-	-

Sensitivity as to change in foreign currency exchange rates on our foreign currency exposure as at December 31, 2021 is provided below:


		Effect on foreign
		denominated
Currency	Change	items
Mexican pesos	+/- 10%	$	1,527
Peruvian soles	+/- 10%	$	152
Argentinian pesos	+/- 10%	$	249
Canadian Dollar	+/- 10%	$	69
West African CFA franc	+/- 10%	$	2,595
Australian Dollar	+/- 10%	$	61
Euro	+/- 10%	$	110

Page | 50

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

Due to the volatility of the exchange rate for Argentine Peso, the Company is applying additional measures in cash management to minimize potential losses arising from the conversion of funds. As discussed in note 30(g), with the capital controls in effect, the Company is required to convert the equivalent value of foreign currency received from the proceeds of the sale of all gold doré from the Lindero Mine.

(e)	Metal Price Risk

The Company is exposed to metal price risk with respect to the sales of silver, gold, lead, and zinc concentrates. The following table summarizes the effect on provisionally priced sales and accounts receivables of a 10% change in metal prices from the prices used at December 31, 2021:


Metal	****	Change	****	Effect on Sales
Silver		+/- 10%		$	1,154
Gold		+/- 10%		$	562
Lead		+/- 10%		$	343
Zinc		+/- 10%		$	318

During the year ended December 31, 2021, the Company recognized negative sales adjustments of $2.8 million (December 31, 2020 – positive $3.3 million) as a result of changes in metal prices on the final settlement or during the quotational period.

(f)	Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Currently, the Company’s interest rate exposure mainly relates to interest earned on its cash, cash equivalent, and short-term investment balances, interest paid on its LIBOR-based debt, and the mark-to-market value of derivative instruments which depend on interest rates.

(g)	Capital Management

The Company’s objective when managing its capital is to maintain its ability to continue as a going concern while at the same time maximizing the growth of its business and providing returns to its shareholders. The Company manages its capital structure and makes adjustments based on changes to its economic environment and the risk characteristics of the Company’s assets.

Effective December 23, 2019, changes to Argentina’s tax laws proposed by the new Argentine Government were implemented. The changes ratified and extended legislation which was to expire on December 31, 2019 and allow the Argentine Central Bank to regulate funds coming into and flowing out of Argentina in order to maintain stability and support the economic recovery of the country. These capital controls have the effect of: requiring exporters to convert the equivalent value of foreign currency received from the export into Argentine Pesos; requiring the prior consent of the Argentine Central Bank to the payment of cash dividends and distributions of currency out of Argentina; requiring Argentine companies to convert foreign currency loans received from abroad into Argentine Pesos; and restricting the sale of Argentine Pesos for foreign currency.

Page | 51

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The Company’s capital requirement is effectively managed based on the Company having a thorough reporting, planning and forecasting process to help identify the funds required to ensure the Company is able to meet its operating and growth objectives.

The Company’s capital structure consists of equity comprising of share capital, reserves and retained earnings as well as debt facilities, equipment financing obligations less cash, cash equivalents and short-term investments.



	December 31, 2021		December 31, 2020
Equity	$	1,375,148	$	725,770
Debt		157,489		158,616
Lease obligations		29,405		19,497
Less: cash and cash equivalents		(107,097)		(131,898)
	$	1,454,945	$	771,985

As discussed above, the Company operates in Argentina where the new Argentine government has ratified and extended legislation to December 31, 2025 to allow the Argentine Central Bank to regulate funds coming into and flowing out of Argentina. Other than the restrictions related to these capital controls and complying with the debt covenants under the Company’s credit facility, the Company is not subject to any externally imposed capital requirements. As at December 31, 2021 and 2020, the Company was in compliance with its debt covenants.

30. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital for the years ended December 31, 2021 and 2020 are as follows:


	Years ended December 31,
	2021		2020
Trade and other receivables	$	(16,897)	$	10,258
Prepaid expenses		(2,149)		161
Inventories		(23,824)		(25,659)
Trade and other payables		3,556		6,122
Total changes in working capital	$	(39,314)	$	(9,118)

Page | 52

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

The changes in liabilities arising from financing activities, including both changes arising from cash flows and non-cash changes for the years as set out below are as follows:


	Note	Bank loan		Convertible debentures		Lease<br>obligations		Derivatives
As at December 31, 2019		$	109,430	$	37,105	$	23,879	$	894
Additions			65,000		-		2,684		176
Terminations			-		-		(497)		-
Interest			420		1,661		1,920		563
Payments			(55,000)		-		(8,438)		(560)
Foreign exchange			-		-		(51)		-
Changes in fair value			-		-		-		187
As at December 31, 2020			119,850		38,766		19,497		1,260
Additions			-		-		7,397		508
Terminations			-		-		(1,203)		-
Acquisition of Roxgold	6		31,711		-		13,597		-
Interest			845		1,641		2,336		1,018
Payments			(32,288)		-		(11,928)		(2,105)
Transaction costs			(3,036)		-		-		-
Foreign exchange			-		-		(291)		-
Changes in fair value			-		-		-		777
As at December 31, 2021		$	117,082	$	40,407	$	29,405	$	1,458

The significant non-cash financing and investing transactions during the years ended December 31, 2021 and 2020 are as follows:



		Years ended December 31,
	Note	2021		2020
Acquisition of Roxgold	6	$	594,666	$	-
Mineral properties, plant and equipment changes in closure <br>and reclamation provision		$	(3,729)	$	(9,339)
Stock options allocated to share capital upon exercise		$	136	$	427
Additions on right of use assets		$	(2,551)	$	(2,715)
Share units allocated to share capital upon settlement		$	4,468	$	3,081

Page | 53

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

31. NON-CONTROLLING INTEREST

As at December 31, 2021, the non-controlling interest (“NCI”) of the Government of Burkina Faso, which represents 10% in Roxgold SANU S.A. totalled $12.1 million. The income attributable to the NCI for the six months ended December 31, 2021, totalling $1.5 million is based on the net income for Yaramoko.

As at December 31, 2021, the NCI of the Government of Côte d’Ivoire, which represents 10% in Roxgold Sango S.A. totalled $42.3 million. The loss attributable to the NCI for the six months ended December 31, 2021, totalling $0.1 million is based on the net loss for Séguéla.


Summarized statement of financial position

As of December 31, 2021	Yaramoko		Séguéla
Non-controlling interest percentage		10%		10%
Current assets	$	60,225	$	12,036
Non-current assets		200,406		62,146
Current liabilities		(32,754)		(21,312)
Non-current liabilities		(111,353)		(52,484)
Net assets	$	116,524	$	386

Non-controlling interest	$	12,095	$	42,327

Summarized income statement

For the period ended December 31, 2021	Yaramoko		Séguéla
Revenue	$	101,256	$	-
Net income (loss) and comprehensive income (loss)	$	15,945	$	(729)

Summarized cash flows

For the period ended December 31, 2021	Yaramoko		Séguéla
Cash flows provided by operating activities	$	28,566	$	(144)
Cash flows used in investing activities	$	(28,429)		(25,631)
Cash flows (used in) provided by financing activities	$	(14,804)	$	37,601

32. CONTINGENCIES AND CAPITAL COMMITMENTS

(a) Caylloma Letter of Guarantee

The Caylloma mine closure plan, as amended, that was in effect in January 2021, included total undiscounted closure costs of $11.4 million, which consisted of progressive closure activities of $3.5 million, final closure activities of $7.2 million, and post closure activities of $0.8 million pursuant to the terms of the Mine Closing Law.

Under the terms of the current Mine Closing Law, the Company is required to provide the Peruvian Government with a guarantee in respect of the Caylloma mine closure plan as it relates to final closure activities and post-closure activities and related taxes. In 2021, the Company provided a guarantee of $9.7 million to the Peruvian Government in respect of such closure costs and taxes, by way of a security bond in the amount of $1.5 million and a bank letter of guarantee in the amount of $8.4 million. The security bond and the bank letter of guarantee expired on January 28, 2022. Page | 54

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

On November 17, 2021 the Ministry of Energy and Mining approved a second amendment to the closure plan for the Caylloma mine by Directorate Resolution No. 220-2021/MINEM-DGAAM. As a result, the total undiscounted closure costs for the Caylloma Mine as at November 17, 2021 were $15.4 million, which amounts includes $5.2 million of progressive closure activities, $8.3 million of final closure activities, and $1.9 million of post-closure activities. On January 19, 2022, the Company obtained a new bank letter of guarantee and increased the amount guaranteed to $10.8 million, which guarantee is valid until January 27, 2023.

On August 19, 2021, the Peruvian Government approved Law N° 31347 which modifies the Mine Closing Law. This new law includes, among other things, new criteria for the calculation of guarantee required to be in place for the closing of a mine. As a result, a guarantee will be required to be put in place for the full mine closure plan, to include progressive closure costs, final closure activities and post closure-activities. The effective date for the new Mine Closing Law has not yet been confirmed by the Peruvian Government, but it is expected to be in effect in 2023.

(b) San Jose Letter of Guarantee

The Company has established three letters of guarantee in the aggregate amount of $1.2 million to fulfill its environmental obligations under the terms and conditions of the Environmental Impact Statements issued by the Secretaria de Medio Ambiente y Recursos Naturales (“SEMARNAT”) in 2009 in respect of the construction of the San Jose mine, and in 2017 and 2020 with respect to the expansion of the dry stack tailings facility at the San Jose mine. The letters of guarantee expire on December 31, 2023, June 15, 2022, and September 17, 2022, respectively.

As at December 31, 2021, the Company had capital commitments of $1.3 million and $5.2 million for civil work, equipment purchases and other services at the Lindero and San Jose Mines, respectively, which are expected to be expended within one year.

As of December 31, 2021, the Company had capital commitments of $71.8 million for the construction of the Séguéla Mine, with $66.4 million expected to be expended within one year.

The Company entered into an agreement with a service provider wherein the Company would be required to make an early termination payment, which is reduced monthly over 30 months, if the Company terminates the agreement, and in certain circumstances, could be required to make other payments that will be negotiated between the Company and the service provider. If the Company had terminated the agreement at December 31, 2021 it would have been subject to an early termination payment of $7.8 million.

(d) Tax Contingencies

The Company is, from time to time, involved in various tax assessments arising in the ordinary course of business. The Company cannot reasonably predict the likelihood or outcome of these actions. The Company has recognised tax provisions with respect to current assessments received from the tax authorities in the various jurisdictions in which the Company operates, and from any uncertain tax positions identified. For those amounts recognised related to current tax assessments received, the provision is based on management's best estimate of the outcome of those assessments, based on the validity of the issues in the assessment, management's support for their position, and the expectation with respect to any negotiations to settle the assessment. Management re-evaluates the outstanding tax assessments regularly to update their estimates related to the outcome for those assessments taking into account the criteria above.

Page | 55

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

Peru

The Company was assessed $1.2 million (4.3 million Peruvian soles), including interest and penalties of $0.6 million (2.4 million Peruvian soles), for the 2010 tax year by SUNAT, the Peruvian tax authority, with respect to the deduction of certain losses arising from derivative instruments. The Company has applied to the Peruvian tax court to appeal the assessment.

On January 22, 2019, the Peruvian tax court reaffirmed SUNAT’s position and denied the deduction. The Company believes the assessment is inconsistent with Peruvian tax law and that it is probable the Company will succeed on appeal through the Peruvian legal system. The Company has paid the disputed amount in full and has initiated proceedings through the Peruvian legal system to appeal the decision of the Peruvian tax court.

As at December 31, 2021, the Company has recorded the amount paid of $1.1 million (4.3 million Peruvian soles) in other long-term assets, as the Company believes it is probable that the appeal will be successful (Note 11).

(e) SGM Royalty

In January 2020, the Company received notice from the Dirección General de Minas (“DGM”) seeking to cancel one of the Company’s mining concessions at the San Jose Mine in Oaxaca, Mexico if a disputed royalty, in the Mexican peso equivalent of $30 million plus VAT (being the amount of the claimed royalty from 2011 to 2019), was not paid before March 15, 2020. In early February 2020, the Company began legal proceedings (the “Amparo Proceedings”) to contest the initiation of the cancellation procedure taken by the DGM on the Company’s mining concession, if the royalty claimed by the Mexican Geological Service (the “SGM”) was not paid. Effective May 27, 2021, the DGM provided notice to the Company of the termination of the cancellation procedure, as it had determined that the required cause for the cancellation of the concession was not established. As a result the Company discontinued the Amparo Proceedings in the Collegiate Court in Mexico. Further, on advice received from Mexican counsel, the Company withdrew the administrative and legal proceedings that it had initiated in the Mexican Federal Administrative Court to remove reference to the royalty on the title register.

On October 7, 2021, the Company and the SGM entered into a settlement agreement, pursuant to which the Company paid to the SGM the amount of $9.6 million, plus value added tax (which is included in Other Expenses) to end any prior dispute, and agreed to pay to the SGM a three percent royalty on the billing value of minerals obtained from the concession from May 1, 2021 on an ongoing basis. The terms of the royalty are set out in a royalty agreement between the parties dated March 18, 2022. The remaining terms of the settlement are confidential and the Company has not admitted any liability.

(f) Other Contingencies

The Company is subject to various investigations and other claims, legal, labor, and tax proceedings covering matters that arise in the ordinary course of business activities. Each of these matters is subject to various uncertainties, and it is possible that some of these matters may be resolved unfavorably for the Company. Certain conditions may exist as of the date these financial statements are issued that may result in a loss to the Company. None of these matters is expected to have a material effect on the results of operations or financial conditions of the Company.

33. SUBSEQUENT EVENTS

On January 28, 2022, the Company received a notice (the “Notice”) from the Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) which advised that SEMARNAT has made a typographical error in the extension to the term of the environmental impact authorization (“EIA”) for the San Jose Mine, located in Oaxaca, Mexico. Page | 56

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Tabular amounts presented in thousands of US dollars, except share and per share amounts)

On December 17, 2021, SEMARNAT granted the Company a 12 year extension to the EIA for the San Jose Mine which expires in October 2033. However, the Notice states that SEMARNAT has made a typographical error in the EIA Extension and that the correct term is two years. The Company is of the view that the Notice was issued by the local office of SEMARNAT in error.

Fortuna’s Mexican subsidiary, Cuzcatlan is working with authorities to resolve this matter. In addition, Minera Cuzcatlan has initiated legal proceedings to challenge and revoke said typographical error and to reconfirm the 12 year extension period granted by SEMARNAT in December 2021. Page | 57

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Description automatically generated with low confidence

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the year ended December 31, 2021

As of March 23, 2022

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021

This Management’s Discussion and Analysis (“MD&A”) of the financial position and results of operations for Fortuna Silver Mines Inc. (the “Company” or “Fortuna”) (TSX: FVI and NYSE: FSM) should be read in conjunction with the audited consolidated financial statements of the Company for the years ended December 31, 2021 and 2020 (the “2021 Financial Statements”) and the related notes thereto. The 2021 Financial Statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. For further information on the Company, reference should be made to its public filings on SEDAR at www.sedar.com and on EDGAR at www.sec.gov/edgar.

This MD&A is prepared by management and approved by the Board of Directors as of March 23, 2022. The information and discussion provided in this MD&A covers the year ended December 31, 2021, and where applicable, the subsequent period up to the date of issuance of this MD&A. Unless otherwise noted, all dollar amounts in this MD&A are expressed in United States (“US”) dollars. References to "$" or "US$" in this MD&A are to US dollars and references to C$ are Canadian dollars.

Fortuna Silver Mines Inc. has a number of direct and indirect subsidiaries which own and operate assets and conduct activities in different jurisdictions. The terms "Fortuna" or the "Company" are used in this MD&A for simplicity of the discussion provided herein and may include references to subsidiaries that have an affiliation with Fortuna Silver Mines Inc., without necessarily identifying the specific nature of such affiliation.

This MD&A contains forward-looking statements. Readers are cautioned as to the risks and uncertainties related to the forward-looking statements, the risks and uncertainties associated with investing in the Company’s securities and the technical and scientific information under National Instrument 43-101 – Standards for Disclosure of Mineral Projects (“NI 43-101”) concerning the Company’s material properties, including information about mineral reserves and resources, which classifications differ significantly from the requirements required by the SEC as set out in the cautionary note 60 of this MD&A. All forward-looking statements are qualified by cautionary notes in this MD&A as well as risks and uncertainties discussed in the Company’s Annual Information Form for fiscal 2020 dated March 29, 2021 and its Management Information Circular dated May 26, 2021, which are filed on SEDAR and EDGAR.

This MD&A uses certain Non-IFRS financial measures and ratios that are not defined under IFRS, including but not limited to: production cash cost per tonne; cash cost per payable ounce; all-in sustaining cash cost per payable ounce sold; all-in cash cost per payable ounce sold; free cash flow and free cash flow from ongoing operations; net cash provided by operating activities, adjusted net income; adjusted EBITDA and working capital which are used by the Company to manage and evaluate operating performance at each of the Company’s mines and are widely reported in the mining industry as benchmarks for performance. Non-IFRS financial measures and non-IFRS ratios do not have a standard meaning under IFRS, and and may not be comparable to similar financial measures disclosed by other issuers. Non-IFRS measures are further discussed in the “Non-IFRS Measures” section 34 of this MD&A.

Throughout this MD&A, the operational and financial results of the assets acquired in the acquisition of Roxgold Inc. are included from July 2, 2021 onward.

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

CONTENTS


Business Overview	4
Corporate Developments	4
Highlights	5
Financial Results	10
2022 Guidance and Outlook	15
Results of Operations	19
Projects & Exploration	24
Quarterly Information	27
Liquidity and Capital Resources	29
Financial Instruments	32
Share Position & Outstanding Options & Equity Based Share Units	32
Related Party Transactions	33
Non-IFRS Financial Measures	34
Amendments to Accounting Standards That Have Been Issued	44
Risks and Uncertainties	44
Critical Accounting Estimates, Assumptions, and Judgements	55
Controls and Procedures	59
Cautionary Statement on Forward-Looking Statements	60
Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources	64

Fortuna | 3

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

BUSINESS OVERVIEW

Fortuna is a growth focused Canadian precious metals mining company with operations and projects in Argentina, Burkina Faso, Mexico, Peru, and Côte d’Ivoire. The Company produces silver, gold and base metals and generates shared value over the long-term through efficient production, environmental protection, and social responsibility.

The Company operates the open pit Lindero gold mine (“Lindero” or the “Lindero Mine”) located in northern Argentina, the underground Yaramoko gold mine (“Yaramoko” or the “Yaramoko Mine”) located in south western Burkina Faso, the underground San Jose silver and gold mine (“San Jose” or the “San Jose Mine”) located in southern Mexico, the underground Caylloma silver, lead, and zinc mine (“Caylloma” or the “Caylloma Mine”) located in southern Peru, and is developing and constructing the open pit Séguéla gold mine (“Séguéla” or the "Séguéla Project") located in south western Côte d’Ivoire. Each of the Company's producing mines is generally considered to be a separate reportable segment, along with the Company's corporate stewardship segment.

Fortuna is a publicly traded company incorporated and domiciled in British Columbia, Canada. Its common shares are listed on the New York Stock Exchange under the trading symbol FSM and on the Toronto Stock Exchange under the trading symbol FVI.

CORPORATE DEVELOPMENTS

Roxgold Acquisition

On July 2, 2021, Fortuna completed its acquisition (the "Roxgold Acquisition") of all of the issued and outstanding common shares ("Roxgold Shares") of Roxgold Inc. (“Roxgold”). Under the terms of the Roxgold Acquisition, holders of Roxgold Shares received 0.283 of a common share of Fortuna and C$0.001 in cash for each Roxgold Share held. Upon completion of the Roxgold Acquisition, Fortuna issued an aggregate of 106,106,225 common shares of Fortuna and CAD$374,934 in cash and Roxgold became a wholly-owned subsidiary of Fortuna. As a result of the Roxgold Acquisition, the Company acquired the producing Yaramoko Mine in Burkina Faso, the Séguéla Project in Côte d’Ivoire, and the Boussoura exploration property in Burkina Faso. All production, operating and financial results in respect of the Yaramoko Mine included in this MD&A reflect only those results from July 2, 2021 to December 31, 2021, unless indicated otherwise. For additional details regarding the Roxgold Acquisition, see Note 6 to the 2021 Financial Statements.

As part of the Roxgold Transaction, Kate Harcourt was appointed a director of the Company and a member of the Sustainability Committee on July 2, 2021, and various changes in the executive officers were made during the second half of 2021 to reflect the expansion of the Company’s operations in West Africa.

Séguéla Construction Decision

On September 29, 2021, Fortuna announced the decision to proceed with the construction of the open pit gold mine at the Séguéla project in Côte d’Ivoire. The updated total initial capital investment for the mine is estimated to be $173.5 million, the anticipated construction schedule is approximately 20 months, with ramp-up to name plate capacity expected in the third quarter of 2023.

SGM Royalty

On October 7, 2021, the Company and the Mexican Geological Service (the “SGM”) entered into a settlement agreement, pursuant to which the Company paid to the SGM the amount of $9.6 million, plus value added tax (which is included in Other Expenses) to end any prior dispute, and agreed to pay to the SGM a three percent royalty on the billing value of minerals obtained from the concession from May 1, 2021 on an ongoing basis. The terms of the royalty are set out in a Fortuna | 4

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

royalty agreement between the parties dated March 18, 2022. The remaining terms of the settlement are confidential and the Company has not admitted any liability.

Amended Credit Facility

On November 4, 2021, the Company entered into a fourth amended and restated credit agreement (the “Amended Credit Facility”) effective November 5, 2021, with a syndicate of banks led by BNP Paribas, and including The Bank of Nova Scotia, Bank of Montreal and Société Générale, which converted the Company’s existing non-revolving and revolving facility into a revolving term credit facility and increased the amount of the facility from $120.0 million to $200.0 million, subject to certain terms and conditions. See “Capital Resources” for further information. The Amended Credit Facility has a term of four years and steps down to $150.0 million after three years. Interest accrues on LIBOR loans under the Amended Credit Facility at LIBOR plus the applicable margin of between two and three percent, which varies according to the consolidated leverage levels of the Company. The Company repaid the outstanding Roxgold credit facility on November 5, 2021.

On December 20, 2021 the Company resolved an outstanding permit issue at the San Jose mine and received approval for the extension of its Environmental Impact Authorization (“EIA”). The extension of the EIA provided the Company with access to the full $200.0 million of the Amended Credit Facility.

HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2021

Financial

●	Sales were $599.9 million, an increase of 115% from the $279.0 million reported in the year ended December 31, 2020 (“2020”).
●	Mine operating income was $205.5 million, an increase of 86% from the $110.2 million reported in 2020.
---	---
●	Operating income was $136.9 million, an increase of 139% from the $57.2 million reported in 2020.
---	---
●	Net income was $59.4 million or $0.24 per share, a 100% increase from the $21.6 million or $0.12 per share reported in 2020.
---	---
●	Adjusted net income (refer to Non-IFRS Financial Measures) was $100.6 million compared to $31.8 million in 2020, representing a 216% year-over-year increase.^1^
---	---
●	Adjusted EBITDA^1^ (refer to Non-IFRS Financial Measures) was $280.7 million compared to $112.6 million reported in 2020, representing a 149% year-over-year increase.^1^
---	---
●	Free cash flow from ongoing operations (refer to Non-IFRS Financial Measures) was $97.0 million compared to $78.9 million reported in 2020, representing a 23% year-over-year increase.^1^
---	---
●	Net cash provided by operating activities was $147.1 million, an increase of 57% from the $93.4 million reported in 2020.
---	---

Operating

●	Gold production of 207,192 ounces, an increase of 274% from 2020
●	Silver production of 7,498,701 ounces, an increase of 5% from 2020
---	---
●	Lead production of 32,989,973 pounds, an increase of 11% from 2020
---	---
●	Zinc production of 47,549,301 pounds, an increase of 4% from 2020
---	---

^1^ Refer to "Non-IFRS Measures" section. Fortuna | 5

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

COVID-19

Health & Safety

In the fourth quarter of 2021, the Company recorded no fatal accidents, no lost-time injuries (“LTI”) and six medical treatment injuries (“MTI”), in over 2.7 million hours worked at its four mining operations and corporate offices. For the 12-months of 2021, the LTI frequency rate (“LTIFR”) was 1.57 lost time injuries per million hours worked, which is lower than the performance targeted for 2021 at 1.50. The total recordable injury frequency rate (“TRIFR”), which includes the LTIs and MTIs in 2021 was 3.36 total recordable injuries per million hours worked which is an important improvement from 2020 (TRIFR at 5.99). The Company is working to improve its prevention programs to reduce the injuries in all mine sites. The Company is in the process of implementing a Critical Controls Management Program based on the ICMM Health and Safety Critical Control Management good practice guidance, which involves training for safety leaders, identifying critical controls for incident’s scenarios, creating verification tools, and preparing implementation plans on site. The Company began a bowtie analysis and developed inspections tools of the critical controls identified. The next step will be to identify additional critical controls. The Company also implemented the Risk Factor program by “Dupont” in its Latin American operations, targeting employees and contractors, with an emphasis on persuasive leadership and preventive field activities by supervisors and operators.

The ongoing COVID-19 pandemic has continued to present additional health and safety challenges. The Company took early precautionary measures at all of its operations to manage issues related to the COVID-19 pandemic with the primary goal of protecting the health, safety, and economic wellbeing of the Company’s workforce and local communities. The Company continues with routine COVID-19 testing at all of its mine sites with the objective of identifying carriers early so Fortuna | 6

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

they can self-isolate before inadvertently spreading the virus to others. The Company carried out awareness campaigns to promote vaccination among the Company’s employees and facilitated access to vaccines in partnership with the national health authorities. In Latin America, 97% of the total workforce has received at least one dose of a COVID-19 vaccine. 100% of the workers in Caylloma, 85% of San Jose and 88% of Lindero were fully vaccinated. In Yaramoko, at least 90% of the workers are fully vaccinated.

Environment

No environmental incidents with a significant impact or fines were recorded during the last quarter of 2021, as for the whole of 2021. However, a total of 13 minor environmental incidents have been reported internally during the three months ended December 31, 2021, for which remediative measures have been implemented as needed. Site controls by local authorities and participatory monitoring were conducted in accordance with health protocols. The energy use per tonne of processed ore intensity for the quarter was 0.19 GJ/t and the GHG Greenhouse gas (“GHG”) emissions intensity per thousands of tonne of processed ore 16.29 tCO2eq/kt, using Fortuna Carbon Footprint methodology. The volume of freshwater consumed per tonne of processed ore intensity was 0.23 m^3^/t for the reporting period.

On December 20, 2021, the Company announced that the Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) had granted a 12 year extension to the Environmental Impact Authorization (the “EIA”) for the San Jose Mine. Subsequently on January 28, 2022, the Company announced that it had received a notice from SEMARNAT which advised that SEMARNAT had made a typographical error in the extension to the term of the EIA for the San Jose Mine and that the correct term is two years. CMC has initiated legal proceedings to challenge and revoke said typographical error and to reconfirm the 12 year extension granted by SEMARNAT in December 2021. There can be no assurance that the Company will be successful in its legal proceedings to challenge and revoke the notice from SEAMRANT and be able to reconfirm the 12 year extension of the EIA.

During the third quarter ended September 30, 2021, the San Jose mine began to generate clean energy through the installation of 72 solar panels with a system capacity of 30 kWh, to supply electricity to the administrative facilities for use in office equipment, lighting, and systems. This initiative contributed to the reduction of 121 tonnes of CO2e during the fourth quarter.

At the Yaramoko mine, the annual reforestation program, part of the biodiversity management plan, included the planting of over twelve thousand trees locally, leading to a total of more than 146 thousand trees planted since 2014 in the villages near the mine site.

Community Engagement

The Company seeks to maintain good constructive relations with the communities where it operates, based on dialogue, transparency, and respect, and to be a catalyst for social development. At each of the Company’s operations, it maintains open and ongoing channels of communication with the people in the communities within its direct and indirect areas of influence. The Company has established mechanisms at each operation for addressing complaints or grievances with local and other stakeholders. The Company also takes part in consultations and participatory meetings to identify and prioritize community development needs.

Since the COVID-19 pandemic, the Company has adapted its community engagement and investment programs at all of its operations. It has developed strategies to share health and safety protocols adopted by its sites with local authorities and communities. The Company has modified some of its social investment programs to take into account the “new normal” way of working with COVID-19 restrictions in place, and has collaborated to identify new ways to support both the health and economic wellbeing of the local communities.

Fortuna | 7

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

In Peru, the Company signed an inter-institutional cooperation agreement with the Arequipa-Caylloma Health Network to support the comprehensive vaccination plan in the district of Caylloma, committing to provide the logistics and human resources necessary to immunize the entire population over 18. In order to reach this goal, the vaccination process was complemented with three communication campaigns. On October 16, 2021, the Company signed a community support agreement with the Municipality of Caylloma, which includes a voluntary financial contribution by the Company of 2.2 million Peruvian soles per year over the four-year term of agreement, with the first payment being made in the fourth quarter of 2021. The funds will be administered by a joint committee, comprised of a representative from the community of Caylloma, a representative of the Municipality of Caylloma and a representative of the Company. The funds are to be invested in education, infrastructure and health projects within the Caylloma district. The Agreement also promotes: employment from the local workforce, increased procurement from local goods and services, and the creation of a joint participatory environmental surveillance committee.

The San Jose mine contributed funding toward medical services (doctors and paramedics), maintenance of ambulances, donated food, cleaning, and medical supplies to local health centers, and has provided access to COVID-19 testing.

In Argentina, the Company has signed a support agreement with the municipality of Tolar Grande to expand and remodel its health center, and to provide the center with oxygen, masks, medical equipment, disinfectant, food, COVID-19 tests, and an ultrasound scanner. During the third quarter of 2021, the Company purchased medicine for Tolar Grande people hospitalized in the city of Salta, and sanitizers were provided to the communities of San Antonio de los Cobres and Salar de Pocitos.

As part of the West Africa community investment program at the Yaramoko mine, the COVID-19 PCR testing equipment previously donated to Boromo Medical Centre has been accredited and commissioned. This will improve the capacity of local health services to confirm COVID-19 cases and will also allow the diagnosis of other diseases that would otherwise have required patients to travel to urban centers.

Climate Change

In alignment with the Task Force on Climate-related Financial Disclosures (“TCFD”) approach and following a materiality assessment of climate-related risks and opportunities related to its operations, the Company finalized a climate strategy focusing on analyzing the risks and opportunities of climate change on the Company’s business activities, integrating climate change factors into the Company’s long-term strategic planning and developing short-term tactical climate change action plans.

The implementation of comprehensive and credible climate change targets and actions is an ongoing journey. The Company developed a multi-year climate change roadmap, which focuses on addressing gaps between existing practices and climate change best practices. Climate change specific actions have been planned for 2022.

Environmental, Social & Governance Reporting

The Company has conducted a detailed assessment of climate-related risks and opportunities related to its operations and is finalizing a climate strategy plan to focus on the areas that represent the greatest value to our stakeholders and business. The Company plans to develop action plans to mitigate risks and capture opportunities, enhance the integration of climate-related topics into risk management processes, set climate-related targets, and increase transparency through disclosure aligned with the Task Force on Climate-related Financial Disclosures.

The Company released its 2020 Sustainability Report on April 12, 2021 which is available on its website. The report discloses the Company’s sustainability performance, and includes an assessment of its climate change risks, using the guidelines provided by the Global Reporting Initiative Standards: Core option and the Sustainability Accounting Standards Fortuna | 8

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Board Metals and Mining Standard. In addition, for the first time, the report includes disclosure to align its climate change performance with the Task Force on Climate-related Financial Disclosures.

Also, the Company reported through the Carbon Disclosure Project’s Climate Change and Water Security questionnaires. The objective is to identify and tackle growing risks, and finding new opportunities for action.

After the completion of the business combination with Roxgold, the Company began consolidating sustainability measures and is developing a work plan to redefine the Company’s sustainability commitments and targets.

Operating and Financial Highlights

A summary of the Company’s consolidated financial and operating results for the three and twelve months ended December 31, 2021 are presented below:


	Three months ended December 31,			Years ended December 31,
Consolidated Metrics	2021	2020	% Change	2021	2020	% Change
Selected highlights
Silver
Metal produced (oz)	1,980,243	1,912,737	4%	7,498,701	7,133,717	5%
Metal sold (oz)	1,976,380	1,985,783	(0)%	7,518,857	7,194,362	5%
Realized price ($/oz)	23.39	24.43	(4)%	25.16	21.18	19%
Gold
Metal produced (oz)	76,162	25,357	200%	207,192	55,349	274%
Metal sold (oz)	76,746	23,297	229%	202,293	53,375	279%
Realized price ($/oz)	1,801	1,864	(3)%	1,789	1,805	(1)%
Lead
Metal produced (000's lbs)	8,419	8,426	(0)%	32,990	29,628	11%
Metal sold (000's lbs)	7,945	8,386	(5)%	33,299	29,582	13%
Zinc
Metal produced (000's lbs)	11,380	12,434	(8)%	47,549	45,545	4%
Metal sold (000's lbs)	11,053	12,154	(9)%	47,828	45,154	6%

Adjusted net income^1^	29.1	23.0	27%	100.6	31.8	216%
Adjusted EBITDA^1^	89.6	44.8	100%	280.7	112.6	149%
Net cash provided by operating activities	57.1	31.3	82%	147.1	93.4	57%
Free cash flow from ongoing operations^1^	30.9	34.5	(10)%	97.0	78.9	23%
Capital Expenditures^2^
Sustaining	31.6	7.4	328%	77.2	18.1	326%
Non-sustaining^3^	2.6	0.6	354%	9.5	1.1	734%
Lindero construction	—	20.4	(100)%	12.8	68.9	(81)%
Séguéla construction	19.8	—	100%	34.2	—	100%
Brownfields	8.2	1.8	351%	18.9	4.9	284%
^1^Refer to Non-IFRS financial measures
^2^Capital expenditures are presented on a cash basis
^3^ Non-sustaining expenditures include greenfields exploration
Figures may not add due to rounding

Fortuna | 9

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Selected Financial Information


	Three months ended December 31,			Years ended December 31,
(Expressed in $ millions except per share information)	2021	2020	% Change	2021	2020	2019
Selected Financial Information
Sales	198.9	103.5	92%	599.9	279.0	257.2
Mine operating income	58.3	46.9	24%	205.5	110.2	84.6
Operating income	38.9	28.2	38%	136.9	57.2	34.2
Net income	16.6	18.6	(11)%	59.4	21.6	23.8
Earnings per share - basic	0.05	0.10	(48)%	0.24	0.12	0.15

As at				December 31, 2021	December 31, 2020	December 31, 2019
Cash and cash equivalents				107.1	131.9	83.4
Total assets				2,021.9	1,055.3	936.1
Debt				157.5	158.6	146.5
Shareholder's equity attributable to Fortuna shareholders				1,375.1	725.8	635.4
Figures may not add due to rounding

Mine operating income for the three months ended December 31, 2021 was $58.3 million, an increase of $11.4 million over the same period in 2020. The increase was primarily due to:

◾	Higher sales at Lindero from a full quarter of operations. The Lindero mine was under construction in the fourth quarter of 2020 and poured first gold in October 2020.
◾	Contributions from the Yaramoko mine which was acquired in the Roxgold transaction.
---	---
◾	Partially offset by lower mine operating income at San Jose related to lower sales and the recognition of a $2.1 million accrual related to a new agreement with the local communities a Caylloma.
---	---

Mine operating income for the year ended December 31, 2021 was $205.5 million, an increase of $95.3 million compared to the same period in 2020. The increase was primarily due to:

◾	The contribution of a full year of operations from the Lindero mine which was under construction during 2020.
◾	Contributions from a half year of production at the Yaramoko mine.
---	---
◾	Higher operating income at Caylloma as a result of higher volumes of metal sold and higher realized metal prices.
---	---
◾	Higher sales at San Jose from higher volumes of metal sold and higher silver prices.
---	---

Net income for the three months ended December 31, 2021 was $16.6 million, a decrease of $2.0 million over the same period in 2020. The decrease was primarily due to:

◾	$1.4 million in realized and $3.0 million in unrealized losses on financial derivatives.
◾	An increase in costs of $2.8 million related to higher interest expenses and costs associated with the extinguishment of the previous Fortuna and Roxgold credit facilities.
---	---
◾	An increase in income taxes of $4.5 million primarily related to withholding taxes paid on an intercompany dividend in Q4 2021.
---	---
◾	Partially offset by a full quarter of operations at Lindero and contributions from the Yaramoko mine.
---	---

Net income for the year ended December 31, 2021 was $59.4 million, an increase of $37.8 million compared to the same period in 2020. The increase was primarily due to:

◾	A full year of operations at the Lindero mine which was under construction in 2020.
◾	Contributions from the Yaramoko mine wich was acquired in the Roxgold transaction.
---	---
◾	Higher net income at Caylloma due to higher volumes of metal sold and higher realized prices.
---	---
◾	Partially offset by $14.1 million in transaction costs related to the acquisition of Roxgold and $9.6 million in costs related to settling the SGM royalty at San Jose.
---	---

Fortuna | 10

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Net income for the year ended December 31, 2020 was $21.6 million, a $2.2 million decrease from the $23.8 million reported in 2019. The decrease was due primarily to lower investment gains and lower deferred tax recoveries of $7.8 million and $11.0 million, respectively.

A discussion on sales and operating income is presented below.

FINANCIAL RESULTS

Sales


	Three months ended December 31,			Years ended December 31,
	2021	2020	% Change	2021	2020	% Change
Provisional sales $
Lindero	65.9	20.3	225%	177.5	20.30	774%
Yaramoko^4^	52.2	-	100%	101.2	-	100%
San Jose	54.9	58.0	(5)%	219.9	188.3	17%
Caylloma	24.5	22.2	10%	104.3	67.0	56%
Adjustments^1^	1.4	3.0	(53)%	(3.0)	3.4	(188)%
Total Sales $	198.9	103.5	92%	599.9	279.0	115%
Silver
Metal produced (oz)	1,980,243	1,912,737	4%	7,498,701	7,133,717	5%
Provisional sales (oz)	1,976,380	1,985,783	(0)%	7,518,857	7,194,362	5%
Provisional sales $	43.1	45.0	(4)%	176.4	140.9	25%
Realized price ($/oz)^2^	23.39	24.43	(4)%	25.16	21.18	19%
Net realized price ($/oz)^3^	23.29	22.65	3%	22.24	19.58	14%
Gold
Metal produced (oz)	76,162	25,357	200%	207,192	55,349	274%
Provisional sales (oz)	76,746	23,297	229%	202,293	53,375	279%
Provisional sales $	136.9	41.7	228%	355.6	91.1	290%
Realized price ($/oz)^2^	1,801	1,864	(3)%	1,789	1,805	(1)%
Earnings per share - basic	1,776	1,791	(1)%	1,758	1,707	3%
Lead
Metal produced (000's lbs)	8,419	8,426	(0)%	32,990	29,628	11%
Provisional sales (000's lbs)	7,945	8,386	(5)%	33,299	29,582	13%
Provisional sales $	6.8	6.0	13%	27.8	19.7	41%
Realized price ($/lb)^2^	1.06	0.86	23%	1.00	0.83	20%
Net realized price ($/lb)^3^	0.85	0.72	18%	0.83	0.67	24%
Zinc
Metal produced (000's lbs)	11,380	12,434	(8)%	47,549	45,545	4%
Provisional sales (000's lbs)	11,053	12,154	(9)%	47,828	45,154	6%
Provisional sales $	10.7	7.7	39%	43.1	24.0	80%
Realized price ($/lb)^2^	1.51	1.18	28%	1.36	1.03	32%
Net realized price ($/lb)^3^	0.97	0.64	52%	0.90	0.53	70%
^1^ Adjustments consists of mark to market, final price and assay adjustments
^2^ Based on provisional sales before final price adjustments. Net after payable metal deductions, treatment, and refining charges
^3^ Treatment charges are allocated to base metals at Caylloma and to gold at San Jose
^4^The Yaramoko Mine was acquired as part of the Transaction with Roxgold. As such comparative figures for previous quarters and years are not presented. Operating and financial results for the year ended December 31, 2021 are for the period from July 2, 2021 to December 31, 2021.

Consolidated Sales for the three months ended December 31, 2021 were $198.9 million, a 92% increase from the $103.5 million reported in the same period in 2020. Sales by reportable segment in the three months ended December 2021 were as follows:

◾	Lindero recognized adjusted sales of $65.6 million from the sale of 36,389 ounces of gold sold. The Lindero Mine was under construction in in 2020, with first gold poured in October 2020. See "Results of Operations – Lindero Mine, Argentina" for additional information.

Fortuna | 11

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

◾	Yaramoko recognized adjusted sales of $52.2 million from the sale of 29,077 ounces of gold sold. See "Results of Operations – Yaramoko Mine, Burkina Faso" for additional information.
◾	San Jose recognized adjusted sales of $56.7 million, a 6% decrease from the $60.5 million reported in the same period in 2020. Lower sales were driven by a 6% decrease in the volume of gold ounces sold and lower realized metal prices. See "Results of Operations – San Jose Mine, Mexico" for additional information.
---	---
◾	Caylloma recognized adjusted sales of $24.4 million, a 7% increase from the $22.7 million reported in the same period in 2020. The increased sales were driven by higher lead and zinc prices offsetting lower volumes of metal sold. See "Results of Operations – Caylloma Mine, Peru" for additional information.
---	---

Consolidated sales for the twelve months ended December 31, 2021 increased 115% to $599.9 million compared to $279.0 million for the same period in 2020. Sales by reportable segment in the twelve months ended December 2021 were as follows:

◾	Lindero recognized $179.0 million of gold doré sales from the sale of 100,177 ounces of gold as operating output improved as the mind continued it’s ramp up through 2021.
◾	As a result of acquiring the Yaramoko Mine on July 2, 2021, Yaramoko recognized $101.3 million of gold doré sales from the sale of 56,571 ounces of gold sold sold during the period from the completion of the Roxgold Acquisition, from July 2, 2021 to December 31, 2021.
---	---
◾	Sales at San Jose increased 13% to $216.1 million as silver and gold prices increased 18% and 1%, respectively, along with a 3% increase in the volume of silver and gold ounces sold.
---	---
◾	Sales at Caylloma increased 53% to $103.5 million due primarily to an increase in the volume of metals sold and increases in the prices of lead and zinc of 20% and 32%, respectively.
---	---

Subsequent to the completion of the acquisition of Roxgold on July 2, 2021, the Company provided updated full-year consolidated silver and gold guidance of 6.8 to 7.6 million ounces and 194 to 223 thousand ounces respectively (see Fortuna news release dated July 19, 2021 “Fortuna reports production of 55,953 gold equivalent ounces for the second quarter and issued updated guidance for 2021). The Yaramoko Mine production, costs and capital expenditures during the first and second quarters of 2021 were under Roxgold prior to the closing of the Transaction on July 2, 2021.

Operating Income (Loss) and Adjusted EBITDA


	Three months ended December 31, 2021						Years ended December 31,
	2021		%^1^	2020		%^1^	2021		%^1^	2020		%^1^
Operating income (loss)
Lindero		16.1	25%		6.2	30%		45.2	25%		(2.8)	(14)%
Yaramoko		6.9	13%		-	0%		17.0	17%		-	0%
San Jose		20.1	35%		24.4	40%		67.5	31%		74.9	39%
Caylloma		5.1	21%		5.9	26%		32.1	31%		8.2	12%
Corporate		(9.3)			(8.3)			(24.9)			(23.1)
Total		38.9	20%		28.2	27%		136.9	23%		57.2	21%

Adjusted EBITDA^2^
Lindero		36.1	55%		11.3	56%		93.6	52%		11.1	54%
Yaramoko		24.9	48%		-	0%		50.7	50%		-	0%
San Jose		28.6	50%		33.3	55%		114.0	53%		105.7	55%
Caylloma		8.9	36%		8.4	37%		45.5	44%		19.2	28%
Corporate		(8.9)			(8.2)			(23.1)			(23.4)
Total		89.6	45%		44.8	43%		280.7	47%		112.6	40%
^1^ As a Percentage of Sales
^2^ Refer to Non-IFRS Financial Measures
Figures may not add due to rounding

Fortuna | 12

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Operating income for the three months ended December 31, 2021 was $38.9 million, an increase of $10.7 million over the same period in 2020. The increase was primarily the result of:

◾	Higher sales at Lindero from a full quarter of operations. The Lindero mine was under construction in the fourth quarter of 2020 and poured first gold in October 2020.
◾	Contributions from the Yaramoko mine which was acquired in the Roxgold transaction.
---	---
◾	Operating income at Caylloma in the fourth quarter of 2021 remained consistent with the previous year due to the recognition of an accrual of $2.1 million related to a new agreement signed with the local communities and higher mining costs which offset higher metal prices for the quarter.
---	---
◾	Lower operating income at San Jose related to lower sales.
---	---

Operating income for the year ended December 31, 2021 was $136.9 million, an increase of $79.7 million over 2020. The increase was primarily the result of:

◾	The contribution of a full year of operations from the Lindero mine which was under construction during 2020.
◾	Higher operating income at Caylloma as a result of higher volumes of metal sold and higher realized metal prices.
---	---
◾	Contributions from a half year of production at the Yaramoko mine.
---	---
◾	Lower operating income at San Jose primarily related to the settlement of the SGM royalty for $9.6 million.
---	---

Adjusted EBITDA (refer to Non-IFRS Financial Measures) was $89.6 million for the three months ended December 31, 2021, an increase of $44.8 million over the same period in 2020. As explained above this was primarily due a full quarter of operations at Lindero and contributions from the Yaramoko mine acquired in the Roxgold transaction.

Adjusted EBITDA (refer to Non-IFRS Financial Measures) for the year ended December 31, 2021 was $280.7 million, an increase of $168.1 million over the same period in 2020. As explained above this was primarily due to a full year of operations at Lindero, contributions from the Yaramoko mine acquired in the Roxgold transaction and high income at Caylloma from high voulmes of metal sold and realized prices.

The most comparable IFRS measure to the Non-IFRS measure adjusted EBITDA is net income. Net income for the three months ended December 31, 2021 was $17.0 million and $59.8 million for the year ended December 31, 2021. Refer to the discussion above.

General and Administrative (“G&A”) Expenses


	Three months ended December 31,					Years ended December 31,
	2021		2020		% Change	2021		2020		% Change
Mine G&A		6.4		3.4	88%		19.1		10.1	89%
Corporate G&A		6.6		3.7	78%		20.3		10.8	88%
Share-based payments		3.0		4.6	(35)%		4.2		12.4	(66)%
Workers' participation		0.4		0.5	(20)%		1.8		1.8	0%
Total		16.4		12.2	34%		45.4		35.1	29%

General and administrative expenses for the three months ended December 31, 2021 increased 34% to $16.4 million compared to $12.2 **** million reported in the same period in 2020, which was due primarily to an increase in Corporate G&A of $2.9 million and an increase of $3.0 million in Mine G&A partially offset by a decrease of $1.9 million from lower share-based payments. The increase in Mine G&A was the result of Lindero’s costs which was undergoing construction in 2020, higher San Jose costs related to the extension of the EIA, and the inclusion of Yaramoko costs from the acquisition of Roxgold. The increase in Corporate G&A in the fourth quarter of 2021 was due to the acquisition of Roxgold and associated personnel, and increased travel costs.

Fortuna | 13

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

General and administrative expenses for the year ended December 31, 2021 increased 29% to $45.4 million compared to $35.1 million reported in 2020. The increase was due primarily to an increase of $9.0 million in Mine G&A related to Lindero’s first full year of operations, higher San Jose mine G&A related to the resolution of the litigation related to the Progresso disputed royalty, costs related to the extension of the EIA, and the inclusion of Yaramoko G&A in the second half of the year. The $9.5 million increase in Corporate G&A is related to the acquisition of Roxgold and associated personnel, and increased travel costs. Share-based payments decreased by $8.2 million.

Foreign Exchange Loss

Foreign exchange loss for the three months ended December 31, 2021 decreased $3.6 million to $1.1 million compared to $4.7 million reported in the same period in 2020. The decrease was primarily due to the collection of outstanding value added tax receivables over 2021 at Lindero which decreased the Company’s exposure to the devaluation of the Argentine Peso.

Foreign exchange loss **** for the twelve months ended December 31, 2021 decreased $6.1 million to $6.1 million compared to $12.2 million reported in the same period in 2020. The main driver was the reduction in the valued added tax receivables at Lindero to $13.3 million as of December 31, 2021 compared $37.2 million at the end of 2020 which decreased the Company’s exposure to the devaluation of the Argentine Peso.

Income Tax Expense

Income tax expense for the three months ended December 31, 2021 was $13.5 million or $4.4 million higher than the $9.1 million reported in the same period in 2020. The increase of $4.4 million was primarily related to the payment of $4.3 million in withholding taxes related to an intercompany dividend in Q4.

The effective tax rate (“ETR”) for the three months ended December 31, 2021 was 45.0% compared to 32.9% for the same period in 2020. The increase of 12.1% is primarily related to the withholding tax item described above.

Income tax expense for the year ended December 31, 2021 was $47.8 million or $10.4 million higher than the $37.4 million reported in the same period in 2020. The increase of $10.4 million was primarily the result of:

◾	Mining royalty tax increased by $3.0 million related to higher revenue in Peru and Argentina
◾	Payment of the withholding taxes described above
---	---
◾	Payment of taxes in Burkina Faso related to the operations acquired in the Roxgold transaction on July 2, 2021
---	---

The effective tax rate was 44.6% compared to 63.4% for the same period in 2020. The decrease of 18.9% in the ETR was primarily due to the impact of foreign exchange fluctuations (11.7%) on the translation of local currency denominated non-monetary assets and the impact of inflation adjustments for Mexico and Argentina (5.2%)

The Company is subject to tax in various jurisdictions, including Peru, Mexico, Argentina, Côte d’Ivoire, Burkina Faso, Australia and Canada. There are a number of factors that can significantly impact the Company’s effective tax rate including the geographic distribution of income, variations in our income before income taxes, varying rates in different jurisdictions, the non-recognition of tax assets, local inflation rates, fluctuation in the value of the United States dollar and foreign currencies, changes in tax laws and the impact of specific transactions and assessments. As a result of the number of factors that can potentially impact the effective tax rate and the sensitivity of the tax provision to these factors, the effective tax rate will fluctuate, sometimes significantly. This trend is expected to continue in future periods.

Fortuna | 14

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

2022 GUIDANCE AND OUTLOOK

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.


Mine		Gold	Lead	Zinc	Cash Cost^1,2^	AISC^1,3,4,5^
		(koz)	(Mlbs)	(Mlbs)
SILVER					(US$/t)	(US$/oz Ag Eq)
San Jose, Mexico		32 - 36	-	-	67.5 - 74.6	13.7 - 16.1
Caylloma, Peru		1.8 - 2.0	29 - 32	41 - 45	86.6 - 95.7	17.8 - 21.1
GOLD					(US$/oz Au)	(US$/oz Au)
Lindero, Argentina		115 - 127	-	-	567 - 714	900 - 1,100
Yaramoko, Burkina Faso^7^		95 - 115	-	-	760 - 1,006	1,300 - 1,650
CONSOLIDATED TOTAL		244 - 280	29 - 32	41 - 45
Notes:
^1.^	Cash Cost and all-in sustaining cost (AISC) are non-IFRS financial measures. Refer to "Non-IFRS Financial Measures" section.
^2.^	The most comparable financial measure to cash costs is cost of sales. Please see the consolidated financial statements of the Company for the year ended December 31, 2021 and the "Non-IFRS Financial Measures" section of this MD&A for a reconciliation.
^3.^	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 US1,700/oz Au, US22/oz Ag, US2,100/t Pb, and US2,700/t Zn. AISC excludes government mining royalty recognized as income tax within the scope of IAS-12.
^4.^	The most comparable financial measure to AISC is cost of sales. Please see the consolidated financial statements of the Company for the year ended December 31, 2021 and the "Non-IFRS Financial Measures" section of this MD&A for a reconciliation.
^5.^	Totals may not add due to rounding.
^6.^	The following table provides the cash costs and AISC for the four operating mines for the year ended December 31, 2021 as follows:
	Mine	AISC^(a)(b)(c)^

	SILVER	(US$/oz Ag Eq)
	San Jose, Mexico	14.38
	Caylloma, Peru	18.94
	GOLD	(US$/oz Au)
	Lindero, Argentina	1,116
	Yaramoko, Burkina Faso	1,317
	CONSOLIDATED TOTAL
	(a) Cash Cost and AISC are non-IFRS financial measures. Refer to "Non-IFRS Financial Measures" section. (b) Presented on a cash basis(c) Silver equivalent was calculated using the realized prices for gold (US1,783 per ounce), silver (US25.80 per ounce), lead (US0.98 per pound) and zinc (US1.31 per pound) for the year ended December 31, 2021(d) Further details on the cash costs and AISC for the year ended December 31, 2021 are disclosed in the "Non-IFRS Financial Measures" section(e) The estimated increase in all in sustaining costs at Yaramoko for 2022 is 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
^7.^	The Yaramoko Mine was acquired as part of the Transaction with Roxgold. Operating and financial results for the year ended December 31, 2021 are for the period from July 2, 2021 to December 31, 2021.

All values are in US Dollars.

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 $26.3 million, including $17.7 million for sustaining capital, $7.3 million of capitalized stripping, and $1.3 million for Brownfields exploration programs.

Fortuna | 15

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Major sustaining capital investment projects include:

●	Engineering and procurement for the leach pad expansion (phase 2): $4.4 million
●	Mine fleet maintenance and acquisition: $6.4 million
---	---
●	Maintenance of crushing, SART, and ADR plants: $1.8 million
---	---

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 $45.9 million for sustaining capital expenditures and $2.5 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

●	Mine development extending depth at the 55 Zone: $32.6 million
●	Ventilation and refrigeration plant upgrade: $3.8 million
---	---
●	Underground pumping station: $0.9 million
---	---

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 $20.8 million, including $13.4 million for sustaining capital expenditures and $7.4 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

●	Underground fleet equipment acquisition: $3.7 million
●	Underground mine development: $5.7 million
---	---
●	Infill drilling: $1.3 million
---	---

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 $17.7 million, including $16.3 million for sustaining capital expenditures and $1.4 million for Brownfields exploration programs.

Major sustaining capital investment projects include:

●	Mine underground developments: $5.7 million
●	Mine backfill system: $4.3 million
---	---
●	Maintenance and energy projects: $3.5 million
---	---

Séguéla Gold Project, Côte d’Ivoire

At the end of 2021, the Séguéla Project was 29% 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 were 30% complete at year end 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, mobilized to site in the first quarter of 2022. Similarly, in the second Fortuna | 16

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

quarter of 2022, the Mining Services Contract is scheduled to be awarded and mobilization is anticipated to commence ahead of mining operations which is scheduled to start in the first quarter of 2023. See the section of this MD&A entitled “Projects & Exploration - Séguéla Gold Project Update”.

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 $20.0 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 $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 $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 $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 $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 $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 $8.8 million. Fortuna | 17

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

2022 COVID-19 Outlook

During 2021, there were no Government mandated suspensions of operations at any of our operations in Latin America. However, operations in Latin America were affected by waves of COVID-19 during the year, which resulted in reduced workforces and quarantine periods for those affected. The pandemic continued to cause difficulties and hardship in the communities where we operate. The Company has been able to continue operations in West Africa largely unaffected since the outbreak of COVID-19.

The impacts of the COVID-19 crisis that may have an effect on the Company include: a further decrease in short-term and/or long-term demand and/or pricing for the metals that we produce; reductions in production levels; further increased costs resulting from our efforts to mitigate the impact of COVID-19; deterioration of worldwide credit and financial markets that could limit our ability to obtain external financing to fund our operations and capital expenditures and result in losses on our holdings of cash and investments due to failures of financial institutions and other parties and a higher rate of losses on our accounts receivable due to credit defaults; restrictions may impact access to our mine sites and affect our ability to transport and ship gold doré and or metal concentrates, restrict access to processing and refinery facilities; cause disruptions to our supply chain; impairments and/or write-downs of assets; and adverse impacts on our information technology systems and our internal control systems as a result of the need to increase remote work arrangements. A material adverse effect on our employees, customers, suppliers and/or logistics providers could have a material adverse effect on the Company.

The overall severity and duration of COVID-19-related adverse impacts on the Company’s business will depend on future developments which cannot be predicted. Even after the COVID-19 outbreak has subsided, the Company may continue to experience material adverse impacts to its business as a result of the global economic impact, including any related recession, as well as lingering impacts on demand for our products.

Fortuna | 18

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

RESULTS OF OPERATIONS

Lindero Mine, Argentina

The Lindero Mine is an open pit gold mine located in Salta Province in northern Argentina. Its commercial product is gold doré. The table below shows the key metrics used to measure the operating performance of the mine: tonnes placed on the leach pad, grade, production and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes placed on the leach pad		1,459,513	950,000	6,453,647	1,610,000

Gold
Grade (g/t)		1.04	1.13	0.96	1.00
Production (oz)		36,072	13,435	104,161	13,435
Metal sold (oz)		36,389	10,935	100,177	10,935
Realized price ($/oz)		1,802	1,853	1,785	1,853

Unit Costs^2^
Cash cost ($/oz Au)^1^		585	657	617	657
All-in sustaining cash cost ($/oz Au)^1^		994	-	1,116	-

Capital expenditures ($000's)
Sustaining		7,214	1,410	27,522	1,410
Non-sustaining		233	-	323	-
Brownfields		389	-	875	-
^1^Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
^2^ First gold was poured at Lindero in October 2020.

Quarterly and Annual Operating and Financial Highlights

During the fourth quarter of 2021 the onsite impact of COVID-19 continued to be minimal at the Lindero Mine as the site reported 60 positive cases with no disruptions to operations. Travel restrictions were also 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 1,459,513 tonnes of ore were placed on the heap leach pad averaging 1.04 g/t gold, containing an estimated 48,900 ounces of gold. Total gold production was 36,072 ounces of gold. 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 issued on July 19, 2021.

All processing areas performed according to plan:

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

Cash cost per ounce of gold for the three and twelve months ended December 31, 2021 was $585 and $617 per ounce, respectively. Fortuna | 19

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

All-in sustaining cash costs per gold ounce sold was $994 during Q4 2021 and $1,116 in 2021 in line with the Company’s updated guidance.

Total sustaining capital expenditures of $7.2 million during the quarter were primarily related to the completion of the ADR plant expansion ($4.2 million) and capitalized striping ($2.0 million).

Yaramoko Mine , Burkina Faso

Fortuna acquired the Yaramoko Mine on July 2, 2021 as part of the Transaction with Roxgold. The Yaramoko Mine is located in south western Burkina Faso, and began commercial production in 2016. The operation consists of two underground mines feeding ore to a traditional gold processing facility where the ore is crushed, milled and subject to carbon-in-leach extraction processes, prior to electrowinning and refining where gold is poured to doré bars.


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes milled		132,188	-	258,866	-

Gold
Grade (g/t)		6.99	-	7.13	-
Production (oz)		28,787	-	57,538	-
Metal sold (oz)		29,077	-	56,571	-
Realized price ($/oz)		1,796	-	1,789	-

Unit Costs
Cash cost ($/oz Au)^1^		754	-	739	-
All-in sustaining cash cost ($/oz Au)^1^		1,436	-	1,317	-

Capital expenditures ($000's)
Sustaining		13,520	-	21,387	-
Non-sustaining		–	–	—	-
Brownfields		47	-	138	-
^1^Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
^2^The Yaramoko Mine was acquired as part of the Transaction with Roxgold. As such comparative figures for previous quarters and years are not presented. Operating and financial results for the year ended December 31, 2021 are for the period from July 2, 2021 to December 31, 2021.

Quarterly and Annual Operating and Financial Highlights

The Yaramoko Mine produced 28,787 ounces of gold in the fourth quarter of 2021 with an average gold head grade of 6.99g/t; below the plan for the quarter. Total gold production for the second semester of 2021 totaled 57,538 ounces of gold which was below guidance for the period. The production shortfall was the result of lower than planned mill feed grade in the fourth quarter of 2021, caused by the delay in mining of several high-grade stopes and some localized grade variability in the 55 Zone. The unmined stopes has been resequenced into the mine plan in the first quarter of 2022.

Cash cost per gold ounce sold was $754, which was above plan, primarily due to lower production during Q4 2021 and $739 for the second semester of 2021 due to mine sequencing issues noted above.

All-in sustaining cash cost per gold ounce sold was $1,436 for Q4 2021 and $1,317 for the second semester of 2021, which were above the Company’s updated guidance. Higher all-in sustaining cash costs were the result of lower ounces sold due to the mine sequencing issue described.

Fortuna | 20

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Sustaining capital expenditures of $21.5 million during the second half of the year was related primarily to underground mine development costs and construction of a ventilation raise.

San Jose Mine, Mexico

The San Jose Mine is an underground silver-gold mine located in the state of Oaxaca in southern Mexico. The following table shows the key metrics used to measure the operating performance of the mine: throughput, head grade, recovery, gold and silver production and unit costs:


		Three months ended December 31,				Years ended December 31,
	****	2021	****	2020	****	2021	****	2020
Mine Production
Tonnes milled		262,802		272,179		1,041,154		934,381
Average tonnes milled per day		2,920		3,024		2,964		2,647

Silver
Grade (g/t)		219		206		209		224
Recovery (%)		93		91		92		92
Production (oz)		1,717,533		1,648,816		6,425,029		6,165,606
Metal sold (oz)		1,729,152		1,721,697		6,433,808		6,225,433
Realized price ($/oz)		23.39		24.45		25.15		21.26

Gold
Grade (g/t)		1.27		1.26		1.29		1.38
Recovery (%)		92		91		91		91
Production (oz)		9,929		10,095		39,406		37,805
Metal sold (oz)		9,983		10,594		39,404		38,391
Realized price ($/oz)		1,797		1,875		1,798		1,786

Unit Costs
Production cash cost ($/t)^2^		79.66		71.48		75.80		68.79
Production cash cost ($/oz Ag Eq)^1,2^		9.35		8.75		9.30		7.63
Net smelter return ($/t)		207.57		203.80		210.99		199.22
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		14.92		13.33		14.38		11.56

Capital expenditures ($000's)
Sustaining		5,137		4,022		14,492		10,787
Non-sustaining		518		568		2,294		942
Brownfields		2,176		1,643		8,784		4,406
^1^ Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively
^2^Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS Financial Measures

Quarterly and Annual Operating and Financial Highlights

The San Jose Mine produced 1,717,533 ounces of silver and 9,929 ounces of gold during the three months ended December 31, 2021, which represents an 4% increase and 2% decrease over the same period in 2020. The decrease in gold production was due to lower tonnes milled.

Annual production of silver and gold totaled 6,425,029 ounces and 39,406 ounces, an increase of 4% and 4% respectively from 2020 which was in line with the updated guidance.

Fortuna | 21

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The cash cost per tonne for the three months ended December 31, 2021 was $79.66 per tonne compared to $71.48 per tonne in the same period in 2020 primarily due to higher indirect costs. Cash cost per tonne for the full year 2021 increased to $75.80 per tonne compared to $68.79 per tonne for 2020 due to higher mine preparation and support and higher indirect costs.

The all-in sustaining cash cost of payable silver equivalent for the full year 2021 increased 24% to $14.38 per ounce compared to $11.56 for the same period in 2020. The increase was primarily as a result of additional sustaining capital expenditures and brownfields exploration costs incurred in fiscal year 2021, as production and exploration activities which were limited in 2020 due to COVID-19. All-in sustaining cash costs for the year was in line with guidance.

Fortuna | 22

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Caylloma Mine, Peru

Caylloma is an underground silver, lead and zinc mine located in the Arequipa Department in southern Peru. Its commercial products are silver-lead and zinc concentrates. The table below shows the key metrics used to measure the operating performance of the mine: throughput, head grade, recovery, silver, lead and zinc production and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes milled		137,838	136,132	539,779	510,047
Average tonnes milled per day		1,549	1,530	1,525	1,433

Silver
Grade (g/t)		73	73	76	72
Recovery (%)		81	82	82	82
Production (oz)		262,710	263,921	1,073,672	968,111
Metal sold (oz)		243,869	262,356	1,074,364	967,199
Realized price ($/oz)		23.39	24.30	25.25	20.63

Gold
Grade (g/t)		0.44	0.60	0.49	0.41
Recovery (%)		70	69	71	61
Production (oz)		1,374	1,827	6,086	4,109
Metal sold (oz)		1,297	1,768	6,140	4,049
Realized price ($/oz)		1,798	1,865	1,792	1,861

Lead
Grade (%)		3.20	3.16	3.16	3.00
Recovery (%)		87	89	88	88
Production (000's lbs)		8,419	8,426	32,990	29,628
Metal sold (000's lbs)		7,945	8,386	33,299	29,582
Realized price ($/lb)		1.06	0.86	1.00	0.83

Zinc
Grade (%)		4.25	4.69	4.56	4.61
Recovery (%)		87	88	88	88
Production (000's lbs)		11,380	12,434	47,549	45,545
Metal sold (000's lbs)		11,053	12,154	47,828	45,154
Realized price ($/lb)		1.51	1.18	1.36	1.03

Unit Costs
Production cash cost ($/t)^2^		97.87	81.65	88.41	77.19
Production cash cost ($/oz Ag Eq)^1,2^		13.83	14.61	13.46	14.06
Net smelter return ($/t)		186.71	163.57	192.02	131.40
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		20.71	18.69	18.94	17.37

Capital expenditures ($000's)
Sustaining		5,755	1,950	13,758	5,909
Brownfields		1,027	170	3,731	514
^1^ Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively
^2^ Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are Non-IFRS Financial Measures, refer to Non-IFRS Financial Measures

Fortuna | 23

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Quarterly and Annual Operating and Financial Highlights

The Caylloma Mine produced 262,710 ounces of silver, 8.4 million pounds of lead and 11.4 million pounds of zinc during the three months ended December 31, 2021, which was inline with the same period in 2020 except for zinc which was lower by 8% due to a lower head grade. Gold production totaled 1,374 ounces with an average head grade of 0.44 g/t.

Annual production of silver, lead and zinc for the fiscal year 2021 totaled 1,073,672 ounces, 33.0 million pounds of lead, and 47.5 million pounds of zinc, which represent an 11% increase in silver, 11% increase in lead, and a 4% increase in zinc production compared to 2020. Gold production for the full year 2021 totaled 6,086 ounces, which was an increase of 48% over 2020, with an average head grade of 0.49 g/t. Production for the year was in line with guidance.

The cash cost per tonne of processed ore for the three months ended December 31, 2021 increased 20% to $97.87 compared to $81.65 in the same period in 2020. The increase was the result of higher mining costs related to shotcrete and transportation and higher energy costs at the plant. Cash cost per tonne for the full year 2021 increased to $88.41 per tonne compared to $76.59 per tonne for 2020 due to higher mine preparation and support and higher indirect costs related to administration and energy.

The all-in sustaining cash cost for the three months ended December 31, 2021 increased 11% to $20.71 per ounce compared to $18.69 per ounce for the same period in 2020. The increase was driven by higher sustaining capital expenditures and brownfields exploration.

The all-in sustaining cash cost for the full year 2021 increased 9% to $18.94 per ounce compared to $17.37 per ounce in 2020 due to higher sustaining capital expenditures and brownfields exploration. The increase was primarily due to the significantly decreased capital expenditures in 2020 due to COVID-19. The Caylloma Mine finished 2021 slightly below cost guidance as a result of higher silver equivalent metal sales.

PROJECTS & EXPLORATION

Séguéla Gold Project Update

On September 29, 2021, Fortuna announced the decision to proceed with the construction of the open pit mine at the Séguéla Gold Project in Côte d’Ivoire. The updated total initial capital investment for the project is estimated to be $173.5 million, including $11.5 million previously approved by the Board for early works items, an anticipated construction schedule of approximately 20 months, with ramp up to name plate capacity expected in the third quarter of 2023. The development of the Séguéla Gold Project, including the milestones noted below is based on the technical report filed under NI 43-101 entitled “NI 43-101 Technical Report Séguéla Project, Feasibility Study, Worodougou Region, Cote d’Ivoire”, dated May 26, 2021 with an effective April 19, 2021.

At the end of February 28, 2022, the overall project was 42% complete. The following provides an update on project activities for the fourth quarter of 2021.

Construction Highlights

●	The overall project is 42% complete as of February 28, 2022
●	Approximately $66.5 million of the $173.5 million initial capital budget accrued as of February 28, 2022
---	---
●	Approximately $129.2 million committed consisting of $66.5 million accrued and $62.7 million in construction and G&A commitments as of February 28, 2022
---	---
●	Major equipment packages secured
---	---
●	Major construction contracts executed
---	---
●	Tender process and selection of the preferred mining contractor completed and contract negotiations are ongoing
---	---

Fortuna | 24

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

●	First gold pour remains on target for mid-2023

Accommodation camp

A 156-person accommodation camp is complete and ready for occupancy. Initially, this camp will support the project’s development and house the owner’s and contractors’ construction personnel with surplus personnel residing in the nearby town of Séguéla. The camp is approximately two kilometers from the processing plant area and is complete with kitchen and mess, recreational facilities, water and sewage treatment plants, laundry services and high-speed internet. The camp management contract has been tendered and awarded to Allterrain Services.

Processing plant

De Simone was awarded the process plant bulk earthworks contract and activities are ongoing with excavation for ground improvement in the mill/carbon-in-leach circuit, thickener and crusher areas complete. Rock backfill in these areas was completed prior to the mobilization of the engineering procurement and construction contractor on February 28, 2022.

Lycopodium was awarded the guaranteed maximum price contract for the engineering, procurement and construction of the gold processing facility. As of December 31, 2021, engineering activities were 55% complete, procurement activities 44% complete and construction activities are on-track to commence early in the second quarter of 2022. Of note, the SAG mill purchase order has been placed and remains on-track to be delivered to site in the third quarter of 2022. Detailed engineering for the SAG mill is complete and manufacturing of core components such as shell, heads and trunnions and gear and pinion has commenced.

Site Bulk Earthworks

Contracts have been awarded for the site bulk earthworks contract for the construction of the tailings storage facility (TSF), water storage dam (WSD) and sediment control structure (SCS). Bush clearing and topsoil stripping of the TSF footprint has been completed. Bush clearing of the WSD commenced in early January and is on-track to be completed by the middle of the second quarter of 2022, ahead of the upcoming wet season and will be capable of storing raw water for the commissioning, ramp-up and operation of the processing plant. Procurement of materials required for the TSF, WSD and SCS construction is underway with the TSF high density polyethylene liner already secured and expected to be delivered to site by the end of the first quarter of 2022.

Grid Connection

Contracts for the supply and installation of the 90 kV grid connection transmission line and 33 kV transmission line diversion have been awarded. Likewise, contracts for the supply and construction of the substation have been awarded. Delivery of the transmission lines tower steel started in March. **** Similarly, civil works for the substation also started in March. Transformers were ready to be shipped to site in March 2022. Work is on-track to provide power to the site by the end of the fourth quarter of 2022 ahead of commissioning activities at the processing plant.

Mining

Contract negotiations with a preferred bidder are ongoing, targeting contract execution and the placement of orders for long lead equipment in early April 2022.

Fortuna | 25

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Cost

For the fourth quarter of 2021 the Company incurred and expended of $31.5 million and $10.9 million respectively and $48.8 million and $26.0 million since the project early works began in the third quarter of 2021. Capital expenditures are summarized in the table below.

<br><br><br><br>
(Expressed in millions)	Q4 2021	2021
Expended Capital Costs^1^	19.8	34.2
Working Capital Adjustment^2^	11.7	14.6
Incurred Capital Costs^3^	31.5	48.8

1 Cash basis. Excludes exploration costs.

2 Primarily consists of work performed not yet invoiced and increases in the accounts payable balance offset by increases in the VAT receivable balance.

3 Accrual basis.

As of December 31, 2021, $124.5 million of the total approved budget of $173.5 million, including $8.9 million contingency, has been committed. Approximately $108.0 million of total commitments to date include contracts for a guaranteed maximum price for $87.0 million, fixed price contract for $7.5 million and earthworks bill of quantity/schedule of rates for $13.5 million, mitigating risk to volatile market conditions and price escalations. Remaining commitments include the onboarding of key operational personnel, pre-production mining, equipment first fills and spare parts, mobile equipment and the implementation of livelihood restoration programs.

Upcoming Milestones and Schedule

Selected upcoming milestones of the current construction schedule include:

2022 Q1

◾	Commence construction of the processing plant
◾	Commence construction of the power grid
---	---

2022 Q2

◾	Award mining contract
◾	Agree upon terms and sign Mining Convention with the State of Cote d’Ivoire
---	---
◾	Completion of the construction of the water storage dam
---	---

2022 Q4

◾	Power on high voltage substation
◾	Mining contractor mobilizes to size
---	---
◾	Completion of the construction of the tailings storage facility
---	---
◾	Commence pre-strip of the Antenna deposit
---	---

2023 Q1

◾	Processing plant practical completion

Mid 2023

◾	First gold pour

Sunbird Discovery at Séguéla (refer to Company News Release dated March 15, 2022)

On March 15th, 2022 the Company announced a maiden Inferred Mineral Resource estimate for the Sunbird discovery located at its Séguéla gold Project in Côte d´Ivoire. Fortuna estimates the Sunbird deposit contains an Inferred Mineral Resource of 3.4 million tonnes at an average grade of 3.16 g/t Au containing 350,000 gold ounces. The Inferred Fortuna | 26

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Mineral Resource will not materially change the existing Mineral Resource estimate at the Séguéla gold Project or impact its current construction plan.

Séguéla Exploration Update (refer to Company News Releases dated December 9, 2021 and January 26, 2022)

Exploration drilling at the Séguéla Gold Project continued to advance the Sunbird Prospect with a 13 hole, 3,059 meter program completed testing the continuity and tenor of mineralization at depth and along grade to the south. A follow-up 7-hole, 1,887 meter program was also completed along strike to the south to provide greater resolution of the extent of the high grade core previously identified. With the receipt of these results, work has commenced on the preparation of a maiden Mineral Inferred Resource for the Sunbird Prospect which is expected to be completed in the first quarter of 2022.

Boussoura Exploration Update (refer to Company News Release dated September 7, 2021)

At the Boussoura exploration project a 47-hole, 5,958-meter program has continued to advance Fofora Main infill and extension drilling has increased the confidence in the structural controls of mineralization, with several additional high-grade intervals returned. Scout drilling at the adjacent vein corridors to the west continues to highlight the regional potential, with drilling on vein corridors VC4 and VC5 intersecting extensive zones of alteration and associated quartz veining and mineralization.

Further south at Galgouli, a 12-hole, 3,419-meter program depth extension drilling on the central zone testing the structural controls and concluded in July was successful in identifying extensions to the high-grade shoots at depth. A 32-hole, 4,022-meter scout drilling program was also successful in identifying high-grade mineralization approximately 1 kilometer to the south and south-east of the central Galgouli zone, testing interpreted parallel structures and a possible regional scale cross-structure.

QUARTERLY INFORMATION

The following table provides information for the last eight fiscal quarters up to December 31, 2021:


	Q4 2021	Q3 2021	Q2 2021	Q1 2021	Q4 2020	Q3 2020	Q2 2020	Q1 2020
Sales	198.9	162.6	120.5	117.8	103.5	83.4	44.5	47.5
Mine operating income	58.3	47.3	48.5	51.3	46.7	42.1	13.8	7.5
Operating income (loss)	38.9	21.8	35.9	40.4	28.2	28.5	(1.3)	1.8
Net income (loss)	16.6	0.2	16.2	26.4	18.6	13.1	(5.7)	(4.5)

Basic earnings (loss) per share	0.05	—	0.09	0.14	0.10	0.07	(0.03)	(0.03)
Diluted earnings (loss) per share	0.05	—	0.09	0.14	0.09	0.07	(0.03)	(0.03)

Total assets	2,021.9	2,002.1	1,083.2	1,069.1	1,055.3	987.8	959.4	957.7
Debt	157.5	187.7	159.5	159.0	158.6	133.1	132.6	187.1

Figures may not add due to rounding

Sales increased 22% in the fourth quarter of 2021 to $198.9 million compared to $162.6 million in the third quarter of 2021 due primarily to higher sales at Lindero and San Jose. Sales at Lindero increased to $65.6 million from $41.6 million, and sales from San Jose increased to $56.7 million from $48.0 million. Operating income was 78% higher in the fourth quarter of 2021 due primarily to an increase in gold ounces sold at Lindero and higher metal prices and the impact of the SGM royalty settlement in the third quarter of 2021.

Sales increased 35% in the third quarter of 2021 to $162.6 million compared to $120.5 million in the second quarter of 2021 due primarily to the $49.0 million of sales from Yaramoko, higher sales at Lindero, which increased to $41.6 million from $34.0 million, higher sales at Caylloma, which increased to $28.1 million from $26.0 million, offset partly by lower Fortuna | 27

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

sales at San Jose, which decreased to $48.0 million from $59.0 million. Mine operating income decreased 2% in the third quarter of 2021 due primarily to the contributions from Yaramoko, partly offset by the payment of the settlement related to the disputed SGM royalty claim.

Sales increased 2% in the second quarter of 2021 to $120.5 million compared to $117.8 million in the first quarter of 2021 due to favorable price and assay adjustments of $1.5 million compared to unfavorable adjustments of $2.5 million during the first quarter, higher sales at San Jose, which increased to $59.0 million from $58.0 million, higher sales at Caylloma, which increased to $26.0 million from $25.4 million, offset partly by lower sales at Lindero, which decreased to $34.0 million from $36.9 million. Mine operating income decreased 6% in the second quarter of 2021 due primarily to San Jose, where operating income increased to $29.0 million from $26.6 million in the first quarter of 2021.

Sales increased 14% in the first quarter of 2021 to $117.8 million compared to $103.5 million in the fourth quarter of 2020 due primarily to higher sales at Lindero, which increased to $36.9 million from $20.3 million, and sales at Caylloma, which increased to $25.4 million from $22.2 million, offset partly by provisional pricing adjustments. Mine operating income increased 10% in the first quarter of 2021 due primarily to Lindero, which increased to $15.2 million from $10.2 million in the fourth quarter of 2020.

Sales increased 24% in the fourth quarter of 2020 to $103.5 million compared to $83.4 million in the third quarter of 2020 due primarily to the recognition of $20.3 million of gold sales and $10.1 million of cost of sales from commissioning activities at Lindero Mine as the Company elected to early adopt the amendments to IAS 16, Property, Plant and Equipment – Proceeds before Intended Use. Sales at San Jose decreased $4.2 million to $60.5 million quarter-over-quarter due to lower volume of silver and gold sold while sales at Caylloma increased $3.9 million. Share-based payments increased 24% to $4.5 million as the result of a 23% increase in the Company’s share price which impacts the cash-settled share units. With construction of the Lindero Mine substantially complete, the Company ceased capitalization of interest at the end of November 2020 and expensed $0.7 million of borrowing costs. Net income increased $5.5 million to $18.6 million over the prior quarter.

Sales increased 87% in the third quarter of 2020 to $83.4 million compared to $44.5 million in the second quarter of 2020 due to increases in the prices of silver and gold and the resumption of operations at the San Jose Mine after a 54-day temporary suspension of the mine in the second quarter. Mine operating income more than tripled to $42.1 million despite a 21-day temporary suspension of the Caylloma mine in July. The costs incurred during the suspension of operations totaled $0.9 million and are reported as care and maintenance costs. Income tax expense also increased $8.8 million over the second quarter to $15.0 million due primarily to higher pre-tax profit from the San Jose Mine, which impacted net income for the period.

Sales decreased 6% in the second quarter of 2020 to $44.5 million compared to $47.5 million in the first quarter of 2020. The primary reason for the decrease was the 54-day government mandated temporary suspension of the San Jose Mine as part of the Mexican Government’s response to curb the spread of COVID-19 which severely curtailed silver and gold production by 34% and 31% despite higher silver and gold prices. The net loss included $2.0 million of care and maintenance costs incurred during the 54-day suspension of the San Jose Mine and higher share-based payment expense, which were partially offset by $2.2 million of investment gains from cross-border bond trades.

Fortuna | 28

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Precious Metal Prices Trends

For the year ended December 31, 2021, the sale of silver and gold ounces represents approximately 88% of the Company’s sales revenue while lead and zinc make up the remaining 12%. Therefore, the prices of silver and gold are the most dominant factors in determining the Company’s profitability and cash flow from operations. The prices of gold and silver are subject to volatile fluctuations over short periods of time and can be affected by numerous macroeconomic conditions, including supply and demand factors, value of the U.S. dollar, interest rates and global economic and political issues. The Company’s financial performance is expected to continue to be closely linked to the prices of silver and gold.

The metal price environment for silver and gold has evolved during the COVID-19 pandemic. Since the start of 2021, the gold price has decreased from a high of $1,943 per ounce in January, to a low of $1,684 in March. Following the start of vaccinations against COVID-19 by many of the major industrialized countries in December of 2020 and continuing into 2021, the price of gold has retreated from the previous high of $2,067 per ounce reached in August 2020.

Since the start of 2021, the silver price has remained relatively stable, opening the year at $26.50 per ounce, and trading within a range of $29.60 - $21.50 per ounce during the year.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

The Company had cash and cash equivalents of $107.1 million as at December 31, 2021, a decrease of $24.8 million since the beginning of the year. The decrease was due primarily to $147.1 million of net cash generated from operations, offset by $118.5 million of net cash used in investing activities, primarily expenditures on mineral properties, plant and equipment offset by collections of long term VAT, and $51.4 million in financing activities related to payments of lease obligations, repayment of debt, and the dividend payment to the Burkina Faso government from Yaramoko. Fortuna | 29

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The Company’s investment objectives for its cash balances, in order of priority, are to preserve capital, to ensure liquidity, and to maximize returns. The Company’s strategy to achieve these objectives is to invest its excess cash balance in a portfolio of primarily fixed income instruments with specified credit rating targets established by the Board of Directors of the Company. The Company does not own any asset-based commercial paper or other similar at-risk investments in its investment portfolios.

Working Capital

Working capital at December 31, 2021 decreased $37.3 million during the year to $114.3 million, due primarily to a $24.8 million decrease in cash and cash equivalents, a $68.5 million increase in trade and other payables, a $3.5 million increase in current lease obligations, and $1.5 million increase in current reclamation provisions, offset by a $50.5 million increase in inventories, a $7.3 million increase in other current assets and a $3.2 million decrease in current income taxes payable.

Capital Resources

On November 4, 2021, the Company entered into a fourth amended and restated credit agreement (the “Amended Credit Facility”) effective November 5, 2021, with a syndicate of Banks led by BNP Paribas, and including The Bank of Nova Scotia, Bank of Montreal and Société Générale, which converted the Company’s prior non-revolving and revolving facilities with the Bank of Nova Scotia and BNP Paribas (the “Scotiabank Facility”) into a revolving term credit facility and increased the amount of the facility from $120.0 million to $200.0 million, subject to the conditions described below. The facility has a term of four years and steps down to $150.0 million after three years. Interest accrues on LIBOR loans under the facility at LIBOR plus an applicable margin of between two and three percent which varies according to the consolidated leverage levels of the Company.

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Following the acquisition of Roxgold, the Company also assumed its credit facility, with an interest rate of LIBOR plus 4% maturing on December 30, 2022. The Company repaid the outstanding Roxgold credit facility in the amount of $28.4 million on November 5, 2021.


As at	December 31, 2021		December 31, 2020		Change
Cash and cash equivalents		107.1		131.9		(24.8)
Credit facility		200.0		120.0		80.0
Total liquidity available		307.1		251.9		55.2
Amount drawn on credit facility		(120.0)		(120.0)		-
Net liquidity position		187.1		131.9		55.2

Figures may not add due to rounding

Given the ever evolving nature of the COVID-19 pandemic, it is difficult to predict the extent of the impact of the COVID-19 pandemic (or any other disease, epidemic or pandemic) on the Company and its business, which will depend on future developments, including: the duration, severity and geographic spread of the COVID-19 virus (or other communicable disease); further actions that may be taken by governmental authorities, which could include travel restrictions and the suspension of business activities, including mining; the effectiveness and timing of actions taken to contain and treat the COVID-19 virus and variants or mutations thereof, including the effectiveness and uptake of vaccines; and how quickly and to what extent normal economic conditions and operating conditions can resume. In the event of additional waves of the virus for an unexpectedly prolonged duration, or in the event that more rigorous capital controls are implemented in Argentina, the Company may be required to raise additional debt or equity. There is no assurance that the lenders will agree to such a request or that financing will be available to the Company on terms acceptable to it.

The Company does not have unlimited financial resources and there is no assurance that sufficient additional funding or financing will be available when needed by the Company or its direct and indirect subsidiaries on acceptable terms, or at all, to further explore or develop its properties or to fulfill its obligations under any applicable agreements. Fortuna is a multinational company and relies on financial institutions worldwide to fund corporate and project needs. Instability of large financial institutions may impact the ability of the Company to obtain equity or debt financings in the future and, if obtained, on terms that may not be favorable to the Company. Disruptions in the capital and credit markets as a result of uncertainty, geo-political events, changing or increased regulations of financial institutions, reduced alternatives or failures of significant financial institutions could adversely affect the Company’s access to the liquidity needed for the business in the longer term.

The Company may incur substantial debt from time to time to finance working capital, capital expenditures, investments or acquisitions or for other purposes. If the Company does so, the risks related to the Company’s indebtedness could intensify, including: (i) increased difficulty in satisfying existing debt obligations (ii) limitations on the ability to obtain additional financings, or imposed requirements to make non-strategic divestures (iii) impose hedging requirements (iv) imposed restrictions on the Company’s cash flows, for debt repayments or capital expenditures (v) increased vulnerability to general adverse economic and industry conditions (vi) interest rate risk exposure as borrowings may be at variable rates of interest (vii) decreased flexibility in planning for and reacting to changes in the mining industry (viii) reduced competitiveness versus less leveraged competitors, and (ix) increased cost of borrowings.

Subject to the various risks and uncertainties, as explained in the Risks and Uncertainties section, management believes the Company’s mining operations will generate sufficient cash flows and the Company has sufficient available credit lines and cash on hand to fund planned capital and exploration programs.

Fortuna | 31

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The Company has contingencies and capital commitments as described in Note 32 “Contingencies and Capital Commitments” in the Company’s 2021 Financial Statements. From time to time, the Company may also be involved in legal proceedings that arise in the ordinary course of its business.

Off-Balance Sheet Arrangements

The Company does not have any off-balance sheet arrangements or commitments that are expected to have a current or future effect on the financial condition, results of operations, liquidity, capital expenditures, or capital resources that are material to investors.

FINANCIAL INSTRUMENTS

The Company does not utilize complex financial instruments in hedging foreign exchange or interest exposure. Any hedging activity requires approval of the Company’s Board of Directors. The Company will not hold or issue derivative instruments for speculative or trading purposes.

Provisional priced trade receivables of $23.3 million, an interest rate swap (notional amount of $40.0 million), forward sales, and forward foreign exchange contracts liability totaling $3.1 million, and a forward fuel contract asset of $1.6 million are the Company’s only level 2 fair valued instruments and no level 3 instruments are held.

Provisionally priced trade receivables are valued using forward London Metal Exchange prices until final prices are settled at a future date. The interest rate swap, forward sales, and forward foreign exchange contracts liabilities are valued based on the present value of the estimated contractual cash flows. Estimates of future cash flows are based on quoted swap rates, futures prices and interbank borrowing rates. These are discounted using a yield curve, and adjusted for credit risk of the Company or the counterparty.

Refer to the Risks and Uncertainties section of this MD&A for a discussion on credit risk, metal price risk, currency risk, and interest rate risk related to these financial instruments. See note 4 (section r) and Note 30 of the 2021 Financial Statements for a discussion of the Company’s use of financial instruments, including a description of liquidity risks associated with such instruments.

SHARE POSITION & OUTSTANDING OPTIONS & EQUITY BASED SHARE UNITS ****

The Company has 291,879,557 common shares outstanding as at March 23, 2022. In addition, there were 4,012,306 outstanding equity-settled share-based awards as follows:

Incentive stock options1,141,293

Restricted share units1,368,692

Performance share units 1,502,321

Total 4,012,306

936,911 share-settled performance units issued by the Company in 2021 are subject to a multiplier ranging from 50% to 200% depending on the achievement level of certain performance targets.

As at December 31, 2021 the Company has $46.0 million of Debentures that are convertible at the holder’s option into common shares in the capital of the Company at a conversion price of $5.00 per share, representing a conversion rate of 200 Common Shares per $1,000 principal amount of Debentures, subject to adjustment in certain circumstances. Subject to certain exceptions in connection with a change of control of the Company, the Debentures cannot be redeemed by the Company prior to October 31, 2022. Between November 1, 2022 and prior to October 31, 2023, the 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 Fortuna | 32

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

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 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 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, commencing on April 30, 2020. During October 2021, 12,000 Common Shares were issued for a debenture in the aggregate principal amount of $60 thousand (sixty thousand dollars).

RELATED PARTY TRANSACTIONS ****

The Company has entered into the following related party transactions during the years ended December 31, 2021 and 2020:

(a) Purchase of Goods and Services

During the years ended December 31, 2021, and 2020, the Company was charged $5 thousand (2020: $157 thousand) for general and administrative services pursuant to a shared services agreement with Gold Group Management Inc., a company of which Simon Ridgway, the Company’s former Chairman, is a director. Effective February 2, 2021, Mr. Ridgway resigned as director and Chairman of the Board, and costs associated with the shared services agreement with Gold Group Management Inc. are no longer reported as related party transactions.

(b) Key Management Personnel

During the year ended December 31, 2021 and 2020, the Company was charged for consulting services by Mario Szotlender, a director of the Company and by Mill Street Services Ltd., a company of which Simon Ridgway, the Company’s former Chairman, is a director. Effective February 2, 2021, Mr. Ridgway resigned as director and Chairman of the Board, and costs associated incurred with Mill Street Services Ltd. are no longer reported as related party transactions. Such amounts, along with other amounts paid to key management personnel were as follows:


	Three months ended December 31,				Years ended December 31,
(Expressed in $ thousands)	2021		2020		2021		2020
Salaries and benefits		1,609		1,869		7,639		4,266
Directors fees		222		176		658		707
Consulting fees		24		34		78		134
Share-based payments		2,052		3,944		2,565		11,115
		3,907		6,023		10,940		16,222

Fortuna | 33

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

NON-IFRS FINANCIAL MEASURES ****

The Company has disclosed certain financial measures and ratios in this MD&A which are not defined under IFRS and are not disclosed in the 2021 Financial Statements, including but not limited to: cash cost per ounce of gold; all-in sustaining cash cost per ounce of gold sold; all-in cash cost per ounce of gold sold; total production cash cost per tonne; cash cost per payable ounce of silver equivalent; all-in sustaining cash cost per payable ounce of silver equivalent sold; all-in cash cost per payable ounce of silver equivalent sold; free cash flow and free cashflow from ongoing operations; adjusted net income; adjusted EBITDA and working capital.

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. The Company has calculated these measures consistently for all periods presented.

Equivalent Ounces Sold

At our San Jose and Caylloma mines, production and sales of other metals are treated as a silver equivalent in determining a combined precious metal production or sales unit, commonly referred to as silver equivalent ounces. Silver equivalent ounces are calculated by converting other metal production to its silver equivalent using relative metal/silver metal prices at realized prices and adding the converted metal production expressed in silver ounces to the ounces of silver production.

The Lindero and Yaramoko mines do not make use of an equivalent ounce sold measure as all material production is gold.

Cash Cost, All-in Sustaining Cost and All-in Cash Cost

In this MD&A, the Company has disclosed certain cash cost, AISC and all-in cash cost figures on a per unit basis, each of which constitutes a non-IFRS measure.

Cash cost **** is a non-IFRS measure that is an industry-standard method of comparing certain costs on a per unit basis. Cash costs include all direct and indirect operating cash costs related directly to the physical activities of producing metals, including mining and processing costs, third-party refining and treatment charges, on-site general and administrative expenses, applicable production taxes and royalties which are not based on sales or taxable income calculations , net of by-product credits, but are exclusive of the impact of non-cash items that are included as part of the cost of sales that is calculated in the consolidated Income Statement including depreciation and depletion, reclamation, capital, development and exploration costs.

The most directly comparable financial measure to cash cost that is defined in IFRS and disclosed in the Company's 2021 Financial Statements is cost of sales. Unit based cash cost ratios contained in this MD&A include:

◾	cash cost per ounce of gold sold;
◾	total production cash cost per tonne; and
---	---
◾	cash cost per payable ounce of silver equivalent.
---	---

All -in sustaining cost is a non-IFRS measure that includes total production cash costs incurred at the applicable mining operation but excludes mining royalty recognized as income tax within the scope of IAS-12, as well as non-sustaining capital expenditures. Sustaining capital expenditures, corporate selling, general and administrative expenses, and brownfield exploration expenditures are added to the cash cost. AISC is estimated at realized metal prices. The most Fortuna | 34

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

directly comparable financial measure to AISC that is defined in IFRS and disclosed in the Company's 2021 Financial Statements is cost of sales. Unit based AISC ratios contained in this MD&A include:

◾	All-in sustaining cash cost per ounce of gold sold; and
◾	All-in sustaining cash cost per ounce of payable silver equivalent sold.
---	---

In 2020 the Company reported silver AISC on a payable silver equivalent ounce produced basis. In 2021 the Company changed the reporting of this measure to a silver equivalent ounce sold basis.

All -in cash cost is a non-IFRS measures that is calculated consistently with AISC but is inclusive of non-sustaining capital expenditures. The most directly comparable financial measure to AISC that is defined in IFRS and disclosed in the Company's 2021 Financial Statements is cost of sales. Unit based AISC ratios contained in this MD&A include:

◾	all-in cash cost per ounce of gold sold; and
◾	all-in cash cost per payable ounce of silver equivalent sold.
---	---

In 2020 the Company reported silver AISC on a payable silver equivalent ounce produced basis. In 2021 the Company changed the reporting of this measure to a silver equivalent ounce sold basis. The change was to better align with the World Gold Council standard on all-in sustaining costs.

The Company, in conjunction with an initiative undertaken within the gold mining industry, has adopted AISC and all-in sustaining cost measures based on guidance published by World Gold Council ("WGC"). The Company conforms its AISC and all-in cash cost definitions to that set out in the guidance and the Company has presented the cash cost figures on a sold ounce basis for all periods presented and excluded royalties that are under the scope of IAS 12 – Income Taxes, with the change from the previously presented figures being applied retrospectively to prior periods.

Management believes that cash cost and AISC measures provide useful information regarding the Company's ability to generate operating earnings and cash flows from its mining operations, and uses such measures to monitor the performance of the Company's mining operations. In addition, the Company believes that each measure provides useful information to investors in comparing, on a mine-by-mine basis, our operations relative performance on a period-by-period basis, against our competitors operations.

To facilitate a better understanding of these measures as calculated by the Company, descriptions and reconciliations are provided here.

Fortuna | 35

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Cash Cost per Ounce of Gold Sold

The following tables presents a reconciliation of cash cost per ounce of gold sold to the cost of sales in the 2021 Financial Statements for the three and twelve months ended December 31, 2021 and 2020:


Lindero Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		46,915	-	122,889	-
Changes in doré inventory		353	-	2,066	-
Inventory adjustment		(1,072)	-	(2,815)	-
Export duties		(4,891)	-	(13,410)	-
Depletion and depreciation		(19,154)	-	(43,665)	-
By product credits		(77)	-	(260)	-
Production cash cost		22,074	-	64,805	-
Changes in doré inventory		(353)	-	(2,066)	-
Realized gain in diesel hedge		(438)	-	(963)	-
Cash cost applicable per gold ounce sold	A	21,283	-	61,776	-
Ounces of gold sold	B	36,375	-	100,137	-
Cash cost per ounce of gold sold ($/oz)	=A/B	585	-	617	-


Yaramoko Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		42,381	-	80,812	-
Changes in doré inventory		719	-	1,542	-
Inventory adjustment		(4,153)	-	(4,153)	-
Export duties		(3,018)	-	(5,993)	-
Depletion and depreciation		(13,235)	-	(28,974)	-
By product credits		(195)	-	(134)	-
Production cash cost		22,499	-	43,100	-
Changes in doré inventory		(719)	-	(1,542)	-
Refining charges		133	-	271	-
Cash cost applicable per gold ounce sold	A	21,913	-	41,829	-
Ounces of gold sold	B	29,077	-	56,571	-
Cash cost per ounce of gold sold ($/oz)	=A/B	754	-	739	-

Fortuna | 36

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

All-in Sustaining Cash Cost and All-in Cash Cost per Ounce of Gold Sold

The following tables shows a breakdown of the all-in sustaining cash cost per ounce of gold sold and all-in cash cost per ounce of gold sold for the three and twelve months ended December 31, 2021:


Lindero Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	21,283	-	61,776	-
Export duties and mining taxes	4,891	-	13,410	-
General and administrative expenses (operations)	1,640	-	5,643	-
Adjusted operating cash cost	27,814	-	80,829	-
Sustaining leases	752	-	2,548	-
Sustaining capital expenditures^1^	7,214	-	27,522	-
Brownfields exploration expenditures^1^	389	-	875	-
All-in sustaining cash cost	36,169	-	111,774	-
Non-sustaining capital expenditures^1^	233	-	323	-
All-in cash cost	36,402	-	112,097	-
Ounces of gold sold	36,375	-	100,137	-
All-in sustaining cash cost per ounce of gold sold	994	-	1,116	-
All-in cash cost per ounce of gold sold	1,001	-	1,119	-
^1^ Presented on a cash basis


Yaramoko Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	21,913	-	41,829	-
Inventory net realizable value adjustment	1,285	-	1,285	-
Export duties and mining taxes	3,018	-	5,993	-
General and administrative expenses (operations)	514	-	953	-
Adjusted operating cash cost	26,730	-	50,060	-
Sustaining leases	1,467	-	2,934	-
Sustaining capital expenditures^1^	13,520	-	21,387	-
Brownfields exploration expenditures^1^	47	-	138	-
All-in sustaining cash cost	41,764	-	74,519	-
All-in cash cost	41,764	-	74,519	-
Ounces of gold sold	29,077	-	56,571	-
All-in sustaining cash cost per ounce of gold sold	1,436	-	1,317	-
All-in cash cost per ounce of gold sold	1,436	-	1,317	-
^1^ Presented on a cash basis
^2^ Adjustment related to current stockpile

Fortuna | 37

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Production Cash Cost per Tonne and Cash Cost per Payable Ounce of Silver Equivalent Sold for the Three and Twelve Months Ended December 31, 2021 and 2020

The following tables present a reconciliation of production cash cost per tonne and cash cost per payable ounce of silver equivalent sold to the cost of sales in the 2021 Financial Statements for the three and twelve months ended December 31, 2021 and 2020:


San Jose Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		32,705	31,027	122,756	104,315
Changes in concentrate inventory		(118)	(1,477)	163	(1,200)
Depletion and depreciation in concentrate inventory		11	967	32	380
Inventory adjustment		(52)	16	(6)	18
Royalties and mining taxes		(1,587)	(1,411)	(5,955)	(4,289)
Workers participation		(1,236)	(1,501)	(5,809)	(6,560)
Depletion and depreciation		(8,789)	(8,165)	(32,257)	(28,387)
Cash cost	A	20,934	19,456	78,924	64,277
Total processed ore (tonnes)	B	262,802	272,179	1,041,154	934,382
Production cash cost per tonne ($/t)	=A/B	79.66	71.48	75.80	68.79
Cash cost	A	20,934	19,456	78,924	64,277
Changes in concentrate inventory		118	1,477	(163)	1,200
Depletion and depreciation in concentrate inventory		(11)	(967)	(32)	(380)
Inventory adjustment		52	(16)	6	(18)
Treatment charges		190	303	(251)	406
Refining charges		1,157	976	4,318	3,530
Cash cost applicable per payable ounce sold	C	22,440	21,229	82,802	69,015
Payable ounces of silver equivalent sold^1^	D	2,400,989	2,425,395	8,902,680	9,044,605
Cash cost per ounce of payable silver equivalent sold^2^ ($/oz)	=C/D	9.35	8.75	9.30	7.63
Mining cost per tonne		37.90	36.67	38.74	35.43
Milling cost per tonne		16.56	16.02	16.68	16.31
Indirect cost per tonne		16.84	11.56	13.72	9.69
Community relations cost per tonne		5.15	0.87	4.79	0.97
Distribution cost per tonne		3.20	6.36	1.88	6.39
Production cash cost per tonne ($/t)		79.66	71.48	75.80	68.79
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)
^2^ Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results – Sales and Realized Prices

Fortuna | 38

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)


Caylloma Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		18,585	15,475	67,917	54,357
Changes in concentrate inventory		939	318	297	345
Depletion and depreciation in concentrate inventory		165	(229)	61	(2)
Inventory adjustment		(61)	(13)	(61)	(13)
Royalties and mining taxes		(188)	(133)	(345)	(523)
Provision for community support		(2,125)	-	(2,125)	101
Workers participation		(214)	(488)	(1,838)	(899)
Depletion and depreciation		(3,607)	(3,815)	(16,182)	(13,994)
Cash cost	A	13,494	11,115	47,724	39,372
Total processed ore (tonnes)	B	137,838	136,132	539,779	510,048
Production cash cost per tonne ($/t)	=A/B	97.89	81.65	88.41	77.19
Cash cost	A	13,494	11,115	47,724	39,372
Changes in concentrate inventory		(939)	(318)	(297)	(345)
Depletion and depreciation in concentrate inventory		(165)	229	(61)	2
Inventory adjustment		61	13	61	13
Treatment charges		4,629	5,357	15,754	19,334
Refining charges		378	410	1,670	1,493
Cash cost applicable per payable ounce sold	C	17,458	16,806	64,851	59,869
Payable ounces of silver equivalent sold^1^	D	1,261,967	1,150,047	4,819,365	4,258,979
Cash cost per ounce of payable silver equivalent sold^2^ ($/oz)	=C/D	13.83	14.61	13.46	14.06
Mining cost per tonne		42.02	34.89	34.71	33.85
Milling cost per tonne		16.27	15.62	15.34	14.39
Indirect cost per tonne		29.45	23.21	29.49	21.62
Community relations cost per tonne		7.96	1.57	7.77	0.78
Distribution cost per tonne		2.18	6.36	1.10	6.55
Production cash cost per tonne ($/t)		97.87	81.65	88.41	77.19
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1), silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices

Fortuna | 39

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

All-in Sustaining Cash Cost and All-in Cash Cost per Payable Ounce of Silver Equivalent Sold

The following tables show a breakdown of the all-in sustaining cash cost per silver equivalent ounce payable for the three and twelve months ended December 31, 2021 and 2020:


San Jose Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	22,440	21,229	82,802	69,015
Royalties and mining taxes	1,587	1,411	5,955	4,289
Workers' participation	1,545	1,876	7,261	8,200
General and administrative expenses (operations)	2,779	2,086	8,111	6,027
Adjusted operating cash cost	28,351	26,602	104,129	87,531
Care and maintenance costs (impact of COVID-19)	-	-	-	1,568
Sustaining leases	161	63	608	251
Sustaining capital expenditures^3^	5,137	4,022	14,492	10,787
Brownfields exploration expenditures^3^	2,176	1,643	8,784	4,406
All-in sustaining cash cost	35,825	32,330	128,013	104,543
Non-sustaining capital expenditures^3^	518	568	2,294	942
All-in cash cost	36,343	32,898	130,307	105,485
Payable ounces of silver equivalent sold^1^	2,400,989	2,425,395	8,902,680	9,044,605
All-in sustaining cash cost per ounce of payable silver equivalent sold^2^	14.92	13.33	14.38	11.56
All-in cash cost per ounce of payable silver equivalent sold^2^	15.14	13.56	14.64	11.66
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)
^2^ Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results - Sales and Realized Prices
^3^Presented on a cash basis


Caylloma Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	17,458	16,806	64,851	59,869
Royalties and mining taxes	188	133	345	523
Workers' participation	244	559	2,129	1,036
General and administrative expenses (operations)	786	1,182	3,625	3,520
Adjusted operating cash cost	18,676	18,680	70,950	64,948
Sustaining leases	681	696	2,851	2,626
Sustaining capital expenditures^3^	5,755	1,950	13,758	5,909
Brownfields exploration expenditures^3^	1,027	170	3,731	514
All-in sustaining cash cost	26,139	21,496	91,290	73,997
All-in cash cost	26,139	21,496	91,290	73,997
Payable ounces of silver equivalent sold^1^	1,261,967	1,150,047	4,819,365	4,258,979
All-in sustaining cash cost per ounce of payable silver equivalent sold^2^	20.71	18.69	18.94	17.37
All-in cash cost per ounce of payable silver equivalent sold^2^	20.71	18.69	18.94	17.37
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1) , silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)
^2^Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices
^3^ Presented on a cash basis

Free Cash Flow from Ongoing Operations

The Company uses the non-IFRS financial measure of “free cash flow from ongoing operations” to supplement information in its consolidated financial statements. Fortuna | 40

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Free cash flow from ongoing operations is defined as net cash provided by operating activities, including Lindero commissioning, less sustaining capital expenditures and current income tax expense and adding back income taxes paid, changes in long-term receivable sustaining capital expenditures, one time transaction costs, payments of lease liabilities and other non-recurring items.

This non-IFRS measure is used by the Company and investors to measure the cash flow available to fund the Company’s growth through investments and capital expenditures. These performance measures are intended to provide additional information only and do not have standardized definitions under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. These non-IFRS measures are not necessarily indicative of operating profits or cash flow from operations as determined under IFRS.

The following table presents a reconciliation of free cash flow from ongoing operations to net cash provided by operating activities, the most directly comparable IFRS measure, for the three and twelve months ended December 31, 2021 and 2020:


		Three months ended December 31,				Years ended December 31,
	2021		2020		2021		****	2020
Net cash provided by operating activities		57.1		31.3		147.1			93.4
Adjustments
Roxgold transaction costs		-		-		27.9			-
Change in long term receivables and assets		0.0		0.9		0.0			(0.1)
Additions to mineral properties, plant and equipment		(35.3)		(9.2)		(90.7)			(23.0)
Impact of adoption in IAS 16 and Production costs		-		21.9		-			21.9
Current income tax expense		(16.5)		(13.3)		(51.7)			(38.8)
Income taxes paid		19.1		5.6		62.7			28.2
Other adjustments		6.4		(2.7)		1.6			(2.7)
Free cash flow from ongoing operations		30.9		34.5		97.0			78.9

Figures may not add due to rounding

Adjusted Net Income

The Company uses the non-IFRS measure of “adjusted net income” to supplement information in its consolidated financial statements.

Adjusted net income excludes the after-tax impact of specific items that are significant, which the Company believes are not reflective of the Company’s underlying performance for the reporting period, such as foreign exchange gains (losses) related to the construction of the Lindero Mine, gains and losses and other one-time costs related to acquisitions, impairment charges (reversals), and certain non-recurring items. Although some of the items are recurring, such as; loss on disposal of assets and non-hedge derivative gains and losses, the Company believes that they are not reflective of the underlying operating performance of its current business and are not necessarily indicative of future operating results.

Management believes that in addition to conventional measures prepared in accordance with IFRS, the Company and certain investors and analysts use this information and information obtained from conventional IFRS measures to evaluate the Company’s performance. However, adjusted net income does not have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies.

Fortuna | 41

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The following table presents a reconciliation of the adjusted net income from net income, the most directly comparable IFRS measure, for the three and twelve months ended December 31, 2021 and 2020:


		Three months ended December 31,				Years ended December 31,
	2021		2020		2021		2020
Net income		16.6		18.6		59.4		21.6
Adjustments, net of tax:
Community support provision and accruals^1^		1.3		0.2		1.4		0.2
Foreign exchange loss, Lindero Mine^2^		0.3		3.2		4.1		11.8
Share of loss from associates		-		-		-		0.1
Investment income		-		-		-		(3.3)
Roxgold transaction costs		-		-		14.1		-
SGM Royalty settlement		1.0		-		9.8		-
Inventory adjustment		4.6		-		6.3		-
Accretion on right of use assets		1.0		-		2.2		-
Other non-cash/non-recurring items		4.3		1.0		3.3		1.4
Adjusted net income		29.1		23.0		100.6		31.8
^1^Amounts are recorded in Cost of sales
^2^Amounts are recorded in General and Administration

Figures may not add due to rounding

Fortuna | 42

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Adjusted EBITDA

Adjusted EBITDA is a non-IFRS measure which is calculated as net income before interest, taxes, depreciation, and amortization, adjusted to exclude specific items that are significant, but not reflective of the Company's underlying operations, such as foreign exchange gains (losses) related to the construction of the Lindero Mine, gains and losses and other one-time costs related to acquisitions, impairment charges (reversals), unrealized gains (losses) on derivatives and certain non-recurring items, included in “Other expenses” on the Consolidated Income Statement. Other companies may calculate Adjusted EBITDA differently.

Management believes that adjusted EBITDA provides valuable information as an indicator of the Company’s ability to generate operating cash flow to fund working capital needs, service debt obligations and fund capital expenditures. Adjusted EBITDA 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 adjusted EBITDA and market value. Adjusted EBITDA 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 Adjusted EBITDA from net income, the most directly comparable IFRS measure, for the three and twelve months ended December 31, 2021 and 2020:


	Three months ended December 31,					Years ended December 31,
	2021		2020		2021		2020
Net income		16.6		18.6		59.4		21.6
Adjustments:
Community support provision and accruals		2.1		(0.4)		1.9		(0.4)
Inventory adjustment		5.3		-		7.0		-
Foreign exchange loss, Lindero Mine		0.3		3.2		4.1		11.8
Foreign exchange loss, Séguéla Project		0.2		-		0.2		-
Net finance items		3.7		0.2		12.3		1.2
Depreciation, depletion, and amortization		44.8		13.9		122.3		45.7
Income taxes		13.5		9.1		47.7		37.4
Share of loss from associates		-		-		-		0.1
Investment income		-		-		-		(3.3)
Roxgold transaction costs		-		-		14.1		-
SGM Royalty settlement		-		-		9.6		-
Other non-cash/non-recurring items		3.1		0.2		2.1		(1.5)
Adjusted EBITDA		89.6		44.8		280.7		112.6

Figures may not add due to rounding

Qualified Person

Eric Chapman, P.Geo (APEGBC #36328) is the Senior Vice-President of Technical Services for the Company and is the Company’s Qualified Person (as defined by National Instrument 43-101–Standards of Disclosure for Mineral Projects). Mr. Chapman has reviewed and approved the scientific and technical information contained in this MD&A and has verified the underlying data except as noted below.

Paul Criddle, FAusIMM, Chief Operating Officer - West Africa for the Company is a Qualified Person as defined by National Instrument 43-101-Standards of Disclosure for Mineral Projects, has reviewed and approved the scientific and technical information pertaining to the Séguéla Project contained in this MD&A and has verified the underlying data.

Paul Weedon, Senior Vice President of Exploration for the Company, is a Qualified Person as defined by National Instruments 43-101-Standards of Disclosure for Mineral Projects, being a member of the Australian Institute for Fortuna | 43

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Geoscientists (Membership #6001). Mr. Weedon has reviewed and approved the scientific and technical information pertaining to exploration results contained in this MD&A. Mr. Weedon has verified the data disclosed, and the sampling, analytical, and test data underlying the information or opinions contained herein by reviewing geochemical and geological databases and reviewing diamond drill core. There were no limitations to the verification process.

Other Information, Risks and Uncertainties

For further information regarding the Company’s operational risks, please refer to the section entitled “Description of the Business - Risk Factors” in the Company’s most recent Annual Information Form that is available at www.sedar.com and www.sec.gov/edgar.shtml.

AMENDMENTS TO ACCOUNTING STANDARDS THAT HAVE BEEN ISSUED

In 2020, the IASB published Interest Rate Benchmark Reform - Phase 2 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4, and IFRS 16) (“Phase 2 amendments”) to address the financial reporting impacts of replacing one benchmark interest rate with an alternative rate and became effective January 1, 2021. The adoption of these amounts did not have a significant effect on the Company’s 2021 Financial Statements.

RISKS AND UNCERTAINTIES

The Company is exposed to many risks in conducting its business, including but not limited to metal price risk as the Company derives its revenue from the sale of silver, gold, lead and zinc; credit risk in the normal course of business; foreign exchange risk as the Company reports its financial statements in U.S. dollars whereas the Company operates in jurisdictions that conducts its business in other currencies; the inherent risks of uncertainties in estimating mineral reserves and mineral resources; the risks related to the construction of an open pit gold mine at the Séguéla Gold Project and the anticipated timing of production at the mine; operational risks related to the spread of the COVID-19 pandemic; political risks, exchange rate and capital controls risk, environmental risks; risks related to the ability of the Company to obtain permits for its operations, including the reconfirmation of the 12 year extension of the EIA at the San Jose mine; and risks related to its relations with employees. These and other risks are described below and in the Company’s audited consolidated financial statements for 2021, its Annual Information Form which is available on SEDAR at www.sedar.com, and its Form 40-F filed with the SEC. Readers are encouraged to refer to these documents for a more detailed description of some of the risks and uncertainties inherent to the Company’s business. Subsequent to the filing of the Annual Information Form, the Company completed the business combination of Roxgold on July 2, 2021. While many of the risks and uncertainties in the Company’s Annual Information Form also apply to Roxgold’s business, additional material risks and uncertainties specific to Roxgold’s business are set out below under the sub-heading “Risks Associated with the Roxgold Transaction”.

Foreign Jurisdiction Risk

As at the date of the MD&A, the Company currently conducts its operations in Argentina, Burkina Faso, Côte d'Ivoire, Mexico, and Peru. All these jurisdictions are potentially subject to a number of political and economic risks, including those described in the following section. The Company is unable to determine the impact of these risks or its future financial position or results of operations and the Company’s exploration, development, and production activities may be substantially affected by factors outside of the Company’s control. These potential factors include but are not limited to royalty and tax increases or claims by governmental bodies, expropriation or nationalization, lack of an independent judiciary, foreign exchange controls, capital and currency controls, import and export regulations, cancellation or renegotiation of contracts, and environmental and permitting regulations. The Company has no political risk insurance coverage against these risks

Fortuna | 44

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The majority of the Company’s production and revenue to December 31, 2021 was derived from its operations in Argentina, Mexico, Burkina Faso and Peru. As the Company’s business is carried on in a number of developing countries, it is exposed to a number of risks and uncertainties, including the following: expropriation or nationalization without adequate compensation especially in Argentina which has a history of expropriation where the Company operates the Lindero Mine; changing political and fiscal regime, including the military coup in Burkina Faso in January 2022, and economic and regulatory instability; unanticipated changes to royalty and tax regulations; unreliable and undeveloped infrastructure, labour unrest, and labour scarcity; difficulty procuring key equipment and components for equipment; import and export regulation and restrictions; the imposition of capital controls which may affect the repatriation of funds; high rates of inflation; extreme fluctuations in foreign exchange rates and the imposition of currency controls; inability to obtain fair dispute resolution or judicial determination because of bias, corruption or abuse of power; difficulties enforcing judgments; difficulties understanding and complying with regulatory and legal framework with respect to ownership and maintenance of mineral properties, mines and mining operations, local opposition to mine development projects, which include the potential for violence, property damage and frivolous or vexatious claims; terrorism and hostage taking; military repression and increased likelihood of international conflicts or aggression; increased public health concerns. Certain of these risks and uncertainties are prevalent in the jurisdictions where the Company operates.

There can be no assurance that these measures will not be extended or that more restrictive measures will be put in place in the countries in which the Company operates, which may result in the suspension of operations or construction at the Company’s mines on a short or long-term basis.

Peru has recently undergone a period of heightened political instability. A general presidential election was held on April 11, 2021 which resulted in a run-off election on June 6, 2021 between the top two candidates. Pedro Castillo was declared President elect on July 19, 2021 and took office on July 28, 2021. The risk exists that the new government could make changes to the constitution or government policies that alter laws regulating the mining industry. A change in government policy or the modification of existing laws and regulations that affect the Company’s operations could have a material adverse impact on the Caylloma mine.

Estimating Mineral Resources and Mineral Reserves

There is a degree of uncertainty attributable to the estimation of Mineral Resources, Mineral Reserves, and expected mineral grades. Until mineral deposits are actually mined and processed, Mineral Resources and Mineral Reserves must be considered as estimates only. Any such estimates are expressions of judgment based on knowledge, mining experience, analysis of drilling results and industry practices.

Mineral Resources and Mineral Reserves may require revision based on actual production experience. Market fluctuations in the price of metals, as well as increased production costs and reduced metallurgical recovery rates, may render certain Mineral Reserves uneconomic and may ultimately result in a restatement of Mineral Resources and/or Mineral Reserves. Short-term operating factors relating to the Mineral Resources and Mineral Reserves, such as the need for sequential development of ore bodies, may adversely affect the Company’s profitability in any accounting period. Estimates of operating costs are based on assumptions including those relating to inflation and currency exchange, which may prove incorrect. Estimates of mineralization can be imprecise and depend upon geological interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. In addition, the grade and/or Fortuna | 45

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

quantity of precious metals ultimately recovered may differ from that indicated by drilling results. There can be no assurance that precious metals recovered in small scale tests will be duplicated in large scale tests under onsite conditions or in production scale. Amendments to mine plans and production profiles may be required as the amount of Mineral Resources changes or upon receipt of further information during the implementation phase of the project. Extended declines in market prices for gold, silver and other metals may render portions of the Company’s mineralization uneconomic and result in reduced reported mineralization. Any material reduction in estimates of mineralization, or in the Company’s ability to develop its properties and extract and sell such minerals, could have a material adverse effect on the Company's results of operations or financial condition.

Mining Operations

The capital costs required by the Company’s projects may be significantly higher than anticipated. Capital and operating costs, production and economic returns, and other estimates contained in the Company’s current technical reports, may differ significantly from those provided for in future studies and estimates and from management guidance, and there can be no assurance that the Company’s actual capital and operating costs will not be higher than currently anticipated. In addition, delays to construction and exploration schedules may negatively impact the net present value and internal rates of return of the Company’s mineral properties as set forth in the applicable technical report. Similarly, there can be no assurance that historical rates of production, grades of ore processed, rates of recoveries or mining cash costs will not experience fluctuations or differ significantly from current levels over the course of the mining operations. In addition, there can be no assurance that the Company will be able to continue to extend the production from its current operations through exploration and drilling programs.

Uncertainties related to new mining operations

Without limiting the generality of the foregoing, Fortuna is in the process of the development and construction of an open pit mine at the Séguéla Project. Any such development or expansion project which is progressed to commercial operations will face a number of risks inherent in new mining operations.

The successful completion of the Company’s development and expansion projects requires the construction and operation of mines, processing plants and related infrastructure. As a result, the Company is and will continue to be subject to all of the risks associated with establishing new mining operations, including:

●	the timing and cost, which can be considerable, of the construction of mining and processing facilities;
●	the availability and cost of skilled labour, mining equipment and principal supplies needed for operations;
---	---
●	the availability and cost of appropriate smelting and refining arrangements;
---	---
●	the need to maintain necessary environmental and other governmental approvals and permits;
---	---
●	the availability of funds to finance construction and development activities;
---	---
●	potential opposition from governments, non-governmental organizations, environmental groups, local groups or other stakeholders, which may delay or prevent development activities; and
---	---
●	potential increases in construction and operating costs due to changes in the cost of labour, fuel, power, materials and supplies.
---	---

It is not unusual in the mining industry for new mining operations to experience unexpected difficulties during the start-up phase or the initial production phase, resulting in production suspensions, delays and requiring more capital than anticipated. It is also common in new mining operations to experience unexpected problems, delays and costs during mine development and ramp-up to full production capacity. Such factors can add to the costs of the mine development, production and operations and/or impair production and mining activities, thereby affecting the Company’s cashflows and profitability. Any unexpected complications and delays in the completion and successful functioning of these operational elements may result in additional costs being incurred by the Company beyond those already incurred and budgeted. Fortuna | 46

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

There can be no assurance that current or future development and expansion plans in respect of the Yaramoko Mine and the Séguéla Project will be successful or completed on time or on budget.

Environmental Uncertainties

All phases of the Company’s operations are subject to environmental regulation in the various jurisdictions in which it operates. These laws address emissions into the air, discharges into water, management of waste, management of hazardous substances, protection of natural resources, antiquities and endangered species, and reclamation of lands disturbed by mining operations. The Company’s operations generate chemical and metals depositions in the form of tailings. The Company’s ability to obtain, maintain and renew permits and approvals, and to successfully develop and operate mines may be adversely affected by real or perceived impacts associated with the Company’s activities or of other mining companies that affect the environment, human health and safety. Environmental hazards may exist on the Company’s properties which are unknown to the Company at present and were caused by previous or existing owners or operators of the properties, for which the Company could be held liable. ****

Environmental legislation is evolving in a manner which is imposing stricter standards and enforcement, increased fines and penalties for non-compliance, in addition to more stringent environmental assessments of proposed projects and a heightened degree of responsibility for companies and their officers, directors and employees. Compliance with environmental laws and regulations may require significant capital outlays on behalf of the Company and may cause material changes or delays in the Company’s intended activities. Failure to comply with applicable environmental laws, regulations and permitting requirements may result in enforcement actions thereunder, including orders issued by regulatory or judicial authorities, causing operations to cease or be curtailed. Such enforcement actions may include the imposition of corrective measures requiring capital expenditure, installation of new equipment or remedial action. There is no assurance that future changes in environmental regulation, if any, will not adversely affect the Company’s operations.

The activities of the Company require licences and permits from various governmental authorities. The Company currently has been granted the requisite licences and permits to enable it to carry on its existing business and operations. On December 20, 2021, the Company announced that SEMARNAT had granted a 12 year extension to the EIA for the San Jose Mine. Subsequently on January 28, 2022, the Company announced that it had received a notice from SEMARNAT which advised that SEMARNAT had made a typographical error in the extension to the term of the EIA for the San Jose Mine and that the correct term is two years. CMC is working with authorities to resolve this matter and has initiated legal proceedings to challenge the asserted typographical error and reconfirm the 12-year extension period for the San Jose EIA granted by SEMARNAT. The results of the legal challenge cannot be predicted with certainty due to the uncertainty inherent in litigation, including the difficulty of predicting decisions and the timing required to render decisions. The process of challenging the asserted typographical error could, as a result, take away from the time and effort of the Company’s management and could force the Company to pay substantial legal fees or penalties. Further, there can be no assurances that the resolutions of any such matters will not have a material adverse effect on the Company’s business, financial condition and results of operations.

In addition, there can be no assurance that the Company will be able to obtain all the necessary licences and permits which may be required to carry out exploration, development and mining operations for its projects in the future. The Company might find itself in situations where the state of compliance with regulation and permits can be subject to interpretation and challenge from authorities that could carry risk of fines or temporary stoppage.

Diseases, epidemics and pandemics (including the COVID-19 pandemic) may adversely impact the Company’s operations, financial condition and share price.

The outbreak of the COVID-19 virus was declared a global pandemic by the World Health Organization in March 2020 and resulted in a widespread global health crisis. The international response to the spread of the COVID-19 virus has led to Fortuna | 47

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

significant restrictions on travel, temporary business closures, mandatory quarantines, global stock market volatility, operating and supply chain delays and disruptions, and a general reduction in consumer activity. Although a number of restrictions are in the process of being removed, the possibility of a resurgence of the COVID-19 virus, spread of new variants or mutations thereof, or outbreak of other communicable disease in areas in which Fortuna operates may result in the re-imposition of certain of the foregoing restrictions and/or may result in further restrictions.

The Company’s business and operations have been and may continue to be materially affected by the COVID-19 pandemic (or any other disease, epidemic or pandemic), including ongoing uncertainty as to the extent and duration of the pandemic. During the year ended December 31, 2021, our operations in Latin America were impacted by the spread of the COVID-19 virus, including variants and mutations thereof which resulted in a reduced workforce at times and quarantine periods for those affected.

Even though the Company has and continues to implement business continuity measures to mitigate and reduce any potential impacts of the COVID-19 pandemic, future outbreaks of the COVID-19 virus (or any other disease, epidemic or pandemic) in the countries in which the Company operates could materially and adversely affect the domestic labour supply, the Company’s ability to maintain a skilled workforce and the operations of the Company’s suppliers, any of which would have an effect on the Company’s financial condition. In particular, the materialization of one or more such risks could have a material adverse impact on the Company's producing mines or construction and development activities at the Séguéla Project, the continued operation of the Company’s mines and exploration projects, and the Company’s ability to transport and sell concentrates and doré.

In addition, the COVID-19 pandemic has and may continue to heighten many of the other risks described in this AIF, including: volatility in commodity prices (including gold, silver, lead and zinc); volatility in the stock markets on which the Company’s Common Shares and Debentures are listed; and in the price of the Company’s securities, any of which could impact the Company’s ability to raise capital or refinance the Company’s debt obligations in the future, which may have a material adverse effect on the business, operations and financial condition of Company. Additionally, inflationary pressures relating to global financial support measures taken in response to the COVID-19 pandemic, as well as the impact of current supply chain challenges related to the COVID-19 pandemic, are and may continue to have both direct and indirect impacts on the Company’s operating costs, which could have a material impact on the Company’s financial condition and results of operations.

The Company remains focused on ensuring the health and safety of the workforce and in continuing measures to prevent and manage transmission of COVID-19 amongst the workforce and the wider community, however there can be no assurance that such measures will continue to be successful.

Risks Associated with the Integration of the Company and Roxgold

The completion of the business combination of Roxgold is expected to result in among other benefits, a combination of quality assets resulting in increased gold production; a complementary and diversified portfolio of assets in West Africa and the Americas; multiple brownfields and greenfields options across the Americas and West Africa, and a low-cost platform of precious metals production and growth. The ability of the Company to realize the benefits of the acquisition will depend in part on successfully consolidating functions and integrating operations, procedures and personnel in a Fortuna | 48

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

timely and efficient manner, as well as the Company’s ability to realize the anticipated growth opportunities and synergies from integrating Roxgold's business. This integration will require the dedication of management effort, time and resources which may divert management's focus and resources from other strategic opportunities available to the Company, and from operational matters during this process.

In addition, the integration process could result in the disruption of existing relationships with suppliers, employees, customers and other constituencies of Fortuna and Roxgold. There can be no assurance that management will be able to integrate the operations of each of the businesses successfully or achieve any of the synergies or other benefits that are anticipated to result from the acquisition. It is possible that the integration process could result in the loss of key employees, the disruption of the respective ongoing businesses or inconsistencies in standards, controls, procedures and policies that adversely affect the ability of management to maintain relationships with customers, suppliers, employees or to achieve the anticipated benefits of the acquisition. Any inability of management to successfully integrate the operations could have a material adverse effect on the Company’s business, financial condition and results of operations.

Risks of Operating in West Africa

Certain of our operations are currently conducted in West Africa, with the Yaramoko Mine in Burkina Faso and the Séguéla Project in Côte d’Ivoire, and as such as is common in other mining jurisdictions, the Company’s operations are exposed to various political, economic, and other risks and uncertainties. The Company is subject to risks associated with operating in West Africa with its Yaramoko Mine in Burkina Faso and the Séguéla Project in Côte d’Ivoire. These risks and uncertainties include but are not limited to: civil and ethnic unrest, war (including in neighbouring countries), terrorist actions, hostage taking or detainment of personnel, military repression, criminal activity, nationalization, invalidation of governmental orders, failure to enforce existing laws, labour disputes, corruption, sovereign risk, political instability, the failure of foreign parties, courts or governments to honour or enforce contractual relations or uphold property rights, changing government regulations with respect to mining (including royalties, environmental requirements, labour, taxation, land tenure, foreign investments, income repatriation and capital recovery), fluctuations in currency exchange and inflation rates, import and export restrictions, the expropriation of property interests, as well as by laws and policies of Canada affecting foreign trade, investment and taxation.

Following instability in recent years in several West African countries, the prevailing security environment in these countries has deteriorated due to the presence of various militant secessionist and Islamist paramilitary groups, as well as a result of the January 2022 military coupe in Burkina Faso. While the Company has implemented additional measures in response to ensure the security of its various assets, personnel and contractors, and continues to cooperate with regional governments, their security forces and applicable third parties, there can be no assurance that these measures will be successful. Any failure to maintain the security of its assets, personnel and contractors may have a material adverse effect on Company’s business, prospects, financial condition and results of operations. To date, neither our employees nor our operations have been impacted by the security situation in Burkina Faso.

As African governments continue to struggle with deficits and depressed economies, the strength of commodity prices has resulted in the gold mining sector being targeted as a source of revenue. Governments are continually assessing the terms for a mining company to exploit resources in their country.

Operations may also be impacted to varying degrees by the lack of certainty with respect to foreign legal systems, which may not be immune from the influence of political pressure, corruption, or other factors that are inconsistent with the rule of law. Businesses can become involved in lengthy court cases over simple issues when rulings are not clearly defined, and the poor drafting of laws and excessive delays in the legal process for resolving issues or disputes compound such problems.

Any of the above events could delay or prevent the Company from operating, developing, or exploring its properties even if economic quantities of minerals are found and could have a material adverse impact upon the Company’s operations. Fortuna | 49

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Safety and Security

The Company’s Yaramoko Mine is located in Burkina Faso and the advanced exploration Séguéla Gold Project is located in in Côte d’Ivoire. Following instability in recent years in several West African countries, the prevailing security environment in these countries has deteriorated due to the presence of various militant secessionist and Islamist paramilitary groups. While additional measures have been implemented in response to ensure the security of its various assets, personnel and contractors, and the Company continues to cooperate with regional governments, their security forces and third parties, there can be no assurance that these measures will be successful. Any failure to maintain the security of its assets, personnel and contractors may have a material adverse effect on the Company’s business, prospects, financial condition, and results of operations. To date, neither employees nor operations have been impacted by the security situation in Burkina Faso.

While there is no reason to believe that the Company’s employees or operations will be targeted by criminal and/or terrorist activities in the countries in which we operate, risks associated with conducting business in the region, along with the increased perception that such incidents are likely to occur, may disrupt the Company’s operations, limit its ability to hire and keep qualified personnel, and impair its access to sources of capital or insurance on terms and at rates that are commercially viable. Furthermore, although the Company has developed procedures regarding the mitigation of such risks, due to the unpredictable nature of criminal and/or terrorist activities, there is no assurance that its efforts will be able to effectively mitigate such risks and safeguard the Company’s personnel and assets.

Political Risk in Burkina Faso

Credit Risk

Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. All of our trade receivables from concentrate sales are held with large international metals trading companies.

The Company’s cash and cash equivalents and short-term investments are held through large financial institutions. These investments mature at various dates within one year.

The Company’s maximum exposure to credit risk as at December 31, 2021 and 2020 is as follows


As at	December 31, 2021		December 31, 2020
Cash and cash equivalents		107.1		131.9
Derivative assets		1.6		-
Trade and other receivables		76.5		76.6
Income tax receivable		1.7		-
Other non-current receivables		5.9		6.4
		192.8		214.9

Figures may not add due to rounding Fortuna | 50

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Metal Price Risk

The Company derives its revenue from the sale of silver, gold, lead, and zinc. The Company’s sales are directly dependent on metal prices, and metal prices have historically shown significant volatility that is beyond the Company’s control.

The following table illustrates the sensitivity to a +/-10% change in metal prices on the Company’s outstanding trade receivables as at December 31, 2021:


Metal	Change	Effect on Sales
Silver	+/- 10%	1.2
Gold	+/- 10%	0.6
Lead	+/- 10%	0.3
Zinc	+/- 10%	0.3

During December 2020, the Company entered into the following contracts:

●	zero-cost collars for 12,300 tonnes of zinc with a floor price of $2,600 per tonne and a cap of $2,900 per tonne, maturing monthly from January 1, 2021 to December 31, 2021;
●	zero-cost collars for 720,000 gallons of heating oil with a floor price of $1.40 per gallon and a cap of $1.6150 per gallon, maturing monthly from January 1, 2021 to December 31, 2021;
---	---
●	zero-cost collars for 1,680,000 gallons of jet fuel with a floor price of $1.30 per gallon and a cap of $1.4775 per gallon, maturing monthly from January 1, 2021 to December 31, 2021;
---	---
●	forward swaps for 720,000 gallons of heating oil with a price of $1.52 per gallon, maturing monthly from January 1, 2022 to December 31, 2022; and
---	---
●	forward swaps for 1,680,000 gallons of jet fuel with a price of $1.438 per gallon, maturing monthly from January 1, 2022 to December 31, 2022.
---	---

On February 11, 2021, the Company entered into a zero-cost collars for 6,237 tonnes of lead with a floor price of $2,000 per tonne and a cap of $2,125 per tonne, maturing monthly beginning on February 1, 2021 to December 31, 2022.

During October 2021, the Company entered into the following contracts:

●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,500 per tonne, maturing from January 1, 2022 to March 31, 2022;
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,400 per tonne, maturing from April 1, 2022 to June 30, 2022;
---	---
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,200 per tonne and a cap of $3,290 per tonne, maturing from July 1, 2022 to September 30, 2022;
---	---
●	zero-cost collar for 1,200 tonnes of zinc with a floor price of $3,100 per tonne and a cap of $3,225 per tonne, maturing from October 1, 2022 to December 31, 2022;
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,300 per tonne, maturing quarterly from January 1, 2022 to March 31, 2022;
---	---

Fortuna | 51

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

●	forward-swap for 1,200 tonnes of zinc with a price of $3,256 per tonne, maturing quarterly from April 1, 2022 to June 30, 2022;
●	forward-swap for 1,200 tonnes of zinc with a price of $3,256 per tonne, maturing quarterly from July 1, 2022 to September 30, 2022; and
---	---
●	forward-swap for 1,200 tonnes of zinc with a price of $3,175 per tonne, maturing quarterly from October 1, 2022 to December 31, 2022.
---	---

The zinc, lead, and fuel contracts are derivative financial instruments and are not accounted for as designated hedges. They were initially recognized at fair value on the date on which the related derivative contracts were entered into and are subsequently re-measured to estimated fair value. Any gains or losses arising from changes in the fair value of the derivatives are credited or charged to profit or loss.

Currency Risk

The Company is exposed to fluctuations in foreign exchange rates as a portion of our expenses are incurred in Canadian dollars, Peruvian soles, Argentine pesos, Mexican pesos, Euro, Australian dollar, and West African CFA francs. A significant change in the foreign exchange rates between the United States dollar relative to the other currencies could have a material effect on the Company’s profit or loss, financial position, or cash flows.

The following table summarizes the sensitivity to a +/-10% change in foreign currency exchange rates on the Company’s foreign currency exposure as at December 31, 2021:


Currency of foreign denominated items	Change	Effect
Mexican pesos	+/- 10%	1.5
Peruvian soles	+/- 10%	0.2
Argentine pesos	+/- 10%	0.2
Canadian dollars	+/- 10%	0.1
West African CFA franc	+/- 10%	2.6
Australian Dollar	+/- 10%	0.1
Euro	+/- 10%	0.1

Due to the volatility of the exchange rate for Argentine peso, the Company is applying additional measures in cash management to minimize potential losses arising from the conversion of funds. As discussed below in the capital management section, the Company is required to convert the equivalent value into Argentine peso from the export sale of all gold doré from the Lindero Mine. In addition, the Company would be required to obtain the prior consent of the Argentine Central Bank for the payment of cash dividends and distributions of profits out of Argentina. Fortuna | 52

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The following tables summarizes the Company’s exposure to currency risk through the following assets and liabilities denominated in foreign currencies:


As at December 31, 2021 (In millions of local currency)	Canadian<br>dollars	Peruvian<br>soles	Mexican<br>pesos	Argentine<br>pesos	West African CFA Franc	Australian <br>Dollars	Euro
Cash and cash equivalents	1.7	5.5	18.1	4.3	11,494.9	-	-
Marketable securities	0.5	-	-	-	-	-	-
Restricted cash	-	-	-	-	1,167.0	-	-
Trade and VAT receivables	0.7	2.1	174.2	1,526.5	13,433.4	-	-
Income tax receivable	-	20.7	-	-	-	-	-
VAT - long term receivable	-	-	70.5	-	-	-	-
Trade and other payables	(3.8)	(17.5)	(400.7)	(1,174.0)	(10,094.2)	(0.9)	(1.4)
Provisions, current	-	(4.4)	(13.5)	(95.4)	-	-	-
Income tax payable	-	-	(87.9)	-	-	-	-
Other liabilities	-	-	(6.2)	-	-	-	-
Provisions, non current	-	-	(87.3)	-	-	-	-
Total foreign currency exposure	(0.9)	6.4	(332.8)	261.4	16,001.1	(0.9)	(1.4)
US$ equivalent of foreign currency exposure	(0.8)	1.7	(16.8)	2.7	28.5	(0.8)	(1.2)
Figures may not add due to rounding


As at December 31, 2020 (In millions of local currency)	Canadian<br>dollars	Peruvian<br>soles	Mexican<br>pesos	Argentine<br>pesos	West African CFA Franc	Australian <br>Dollars	Euro
Cash and cash equivalents	1.4	9.7	3.1	2.3	-	-	-
Marketable securities	1.3	-	-	-	-	-	-
Trade and VAT receivables	0.1	3.6	108.6	3,281.8	-	-	-
Income tax receivable	-	6.9	-	-	-	-	-
VAT - long term receivable	-	-	67.5	-	-	-	-
Trade and other payables	(17.8)	(28.0)	(311.7)	(764.3)	-	-	-
Provisions, current	(0.1)	0.1	(4.9)	(77.5)	-	-	-
Income tax payable	-	(0.3)	(297.1)	-	-	-	-
Other liabilities	(0.2)	-	(5.2)	-	-	-	-
Provisions, non current	-	(0.8)	(67.1)	-	-	-	-
Total foreign currency exposure	(15.3)	(8.8)	(506.8)	2,442.3	-	-	-
US$ equivalent of foreign currency exposure	(12.0)	(2.4)	(25.4)	29.1	-	-	-
Figures may not add due to rounding

Liquidity Risk

The Company manages its liquidity risk by continuously monitoring forecasted and actual cashflows. A rigorous reporting, planning, and budgeting process are in place to help facilitate forecasting funding requirements, to support operations on an ongoing basis and with expansion plans, if any. See also Liquidity and Capital Resources.

Fortuna | 53

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

As at December 31, 2021, the Company expects the following maturities of its financial liabilities, lease obligations, and other contractual commitments, excluding payments relating to interest:


	Expected payments due by year as at December 31, 2021
	Less than			After
	1 year	1 - 3 years	4 - 5 years	5 years	Total
Trade and other payables	133.8	-	-	-	133.8
Debt	-	46.0	120.0	-	166.0
Income taxes payable	20.6	-	-	-	20.6
Lease obligations	12.3	11.3	2.1	16.0	41.7
Other liabilities	-	3.3	-	-	3.3
Capital commitments, Séguéla	66.5	5.2	-	-	71.7
Closure and reclamation provisions	1.9	5.6	24.0	24.7	56.2
Total	235.1	71.4	146.1	40.7	493.3
Figures may not add due to rounding

Capital Management

Effective December 23, 2019, changes to Argentina’s tax laws proposed by the new Argentine Government were implemented. The changes ratified and extended legislation which was to expire on December 31, 2019 and allow the Argentine Central Bank to regulate funds coming into and flowing out of Argentina in order to maintain stability and support the economic recovery of the country. The Argentine Government has not set an expiry date for these restrictions, and they currently remain in place. These capital controls together with additional temporary controls enacted on May 29, 2020, have the effect of: requiring exporters to convert the equivalent value of foreign currency received from the export into Argentine Pesos; requiring the prior consent of the Argentine Central Bank to the payment of cash dividends and distributions of currency out of Argentina; requiring Argentine companies to convert foreign currency loans received from abroad into Argentine Pesos; and restricting the sale of Argentine Pesos for foreign currency.

The Argentine Central Bank has also issued a temporary measure in effect until June 30, 2022, which requires the consent of the Central Bank to the repayment of certain types of intercompany loans. There can be no assurance that the temporary measure will not be extended.

The Company’s capital requirement is effectively managed based on the Company having a thorough reporting, planning, and forecasting process to help identify the funds required to ensure the Company is able to meet its operating and growth objectives.

Fortuna | 54

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

The Company’s capital structure consists of equity comprising of share capital, reserves, and retained earnings as well as debt consisting of credit facilities and convertible debentures, lease obligations less cash and cash equivalents.


As at	December 31, 2021		December 31, 2020
Equity		1,375.1		725.8
Debt		157.5		158.6
Lease obligations		29.4		19.5
Less: cash and cash equivalents		(107.1)		(131.9)
		1,454.9		772.0
Figures may not add due to rounding

As discussed above, the Company operates in Argentina where the new Argentine government has ratified and extended legislation to allow the Argentine Central Bank to regulate funds coming into and flowing out of Argentina. Other than the restrictions related to these capital controls and complying with the debt covenants under the credit facilities, the Company is not subject to any externally imposed capital requirements. As at December 31, 2021, the Company was in compliance with its debt covenants. See also Liquidity and Capital Resources.

Interest Rate Risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Currently, our interest rate exposure mainly relates to interest earned on our cash and cash equivalents balances, interest paid on its LIBOR-based debt, and the mark-to-market value of derivative instruments which depend on interest rates.

Key Personnel

The Company is dependent on a number of key management and employee personnel. The Company’s ability to manage its exploration, development, construction, and operating activities, and hence its success, will depend in large part on the ability to retain current personnel and attract and retain new personnel, including management, technical, and unskilled employees. The loss of the services of one or more key management personnel, as well as a prolonged labor disruption, could have a material adverse effect on the Company’s ability to successfully manage and expand its affairs.

Claims and Legal Proceedings

The Company is subject to various claims and legal proceedings covering a wide range of matters that arise in the normal course of business. The Company may be subject to claims by local communities, indigenous groups, or private land owners relating to land and mineral rights and such claimants may seek sizable monetary damages or seek the return of surface or mineral rights that may be valuable to the Company which may significantly impact operations and profitability, if lost. These matters are subject to various uncertainties and it is possible that some of these matters may be resolved with an unfavorable outcome to the Company. The Company does carry liability insurance coverage, but such coverage does not cover all risks to which the Company may be exposed to.

CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Many of the amounts included in the consolidated financial statements require management to make estimates, assumptions, and judgements. These estimates, assumptions, and judgements are continuously evaluated and are based on management’s experience and knowledge of the relevant facts and circumstances. Areas where critical accounting estimates and assumptions have the most significant effect on the amounts recognized in the consolidated financial statements include:

Fortuna | 55

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Mineral Reserves and Resources and the Life of Mine Plan

The Company estimates its mineral reserves and mineral resources in accordance with the requirements of National Instrument 43-101 Standards of Disclosure for Mineral Projects published by the Canadian Securities Administrators. Estimates of the quantities of the mineral reserves and mineral resources form the basis for the Company’s life of mine plans, which are used for the calculation of depletion expense under the units of production method, impairment tests, and forecasting the timing of the payments related to the environmental rehabilitation provision.

Significant estimation is involved in determining the reserves and resources included within the Company’s life of mine plans. Changes in forecast prices of commodities, exchange rates, production costs, or metallurgical recovery rates may result in the Company’s life of mine plan being revised and such changes could impact depletion rates, asset carrying values and our environmental rehabilitation provision. As at December 31, 2021, the Company used the following long-term prices for our reserve and resource estimations: gold $1,600/oz for all mines except Séguéla which used $1,500/oz, silver $21/oz, lead $2,000/t and zinc $2,500/t.

In addition to the estimates above, estimation is involved in determining the percentage of mineral resources ultimately expected to be converted to mineral reserves and hence included in the Company’s life of mine plans. The Company’s life of mine plans include a portion of inferred mineral resources as the Company believes this provides a better estimate of the expected life of mine for certain types of deposits, in particular for vein type structures. The percentage of inferred resources of the total tonnage included in the life of mine plans is based on site specific geological, technical, and economic considerations. Estimation of future conversion of resources is inherently uncertain and involves judgment and actual outcomes may vary from these judgments and estimates and such changes could have a material impact on the financial results. Some of the key judgments of the estimation process include geological continuity, stationarity in the grades within defined domains, reasonable geotechnical and metallurgical conditions, treatment of outlier (extreme) values, cut-off grade determination and the establishment of geostatistical and search parameters. Revisions to these estimates are accounted for prospectively in the period in which the change in estimate arises.

Valuation of Mineral Properties and Exploration Properties

The Company carries its mineral properties at cost less accumulated depletion and any accumulated provision for impairment. The costs of each property and related capitalized expenditures are depleted over the economic life of the property on a units-of-production basis. Costs are charged to the consolidated statement of income (loss) when a property is abandoned or when there is an impairment.

The Company undertakes a review of the carrying values of mining properties and related expenditures whenever events or changes in circumstances indicate that their carrying values may exceed their estimated net recoverable amounts determined by reference to estimated future operating results and discounted net cash flows. Where previous impairment has been recorded the Company analyzes any impairment reversal indicators. An impairment loss is recognized when the carrying value of those assets is not recoverable. In undertaking this review, management of the Company is required to make significant estimates of, amongst other things, future production and sales volumes, metal prices, foreign exchange rates, mineral resource and reserve quantities, future operating and capital costs to the end of the mine’s life, and reclamation costs. These estimates are subject to various risks and uncertainties which may ultimately have an effect on the expected recoverability of the carrying values of the mining properties and related expenditures.

Fortuna | 56

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Deferred stripping costs

Inventory

Finished goods, work-in-process, heap leach ore, and stockpile ore are valued at the lower of the average production costs or net realizable value. The assumptions used in the valuation of work-in process inventories include estimates of gold contained in the ore stacked on leach pads, assumptions of the amount of gold stacked that is expected to be recovered from the leach pads, the amount of gold in the mill circuits and assumption of the gold price expected to be realized when the gold is recovered. If these estimates or assumptions prove to be inaccurate, the Company could be required to write-down the recorded value of its work-in-process inventories, which would reduce the Company’s earnings and working capital.

Reclamation and Other Closure Provisions

The Company has obligations for reclamation and other closure activities related to its mining properties. The future obligations for mine closure activities are estimated by the Company using mine closure plans or other similar studies which outline the requirements that will be carried out to meet the obligations. Because the obligations are dependent on the laws and regulations of the countries in which the mines operate, the requirements could change as a result of amendments in the laws and regulations relating to environmental protection and other legislation affecting resource companies. As the estimate of the obligations is based on future expectations, a number of estimates and assumptions are made by management in the determination of closure provisions.

Revenue Recognition

Revenue from the sale of concentrate to customer is recognized when the customer obtains control of the concentrate. A provisional invoice is issued to the customer based on the monthly average metal prices on the expected date of final settlement at which time the final sale prices will be fixed. Variations between the prices at initial recognition and final settlement may occur due to changes in the market metal prices and result in an embedded derivative in the accounts receivable. The embedded derivative is recorded at fair value each period until final settlement occurs with changes in the fair value classified as revenue. For changes in metal quantities upon receipt of new information and assays, the provisional sale quantities are adjusted.

Contingencies

Contingencies can be either possible assets or possible liabilities arising from past events which, by their nature, will only be resolved when one or more future events not within our control occur or fail to occur. The assessment of such contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. In assessing loss contingencies related to legal proceedings that are pending against the Company or unasserted claims that may result in such proceedings or regulatory or government actions that may negatively impact our business or operations, the Company with assistance from its legal counsel evaluates the perceived merits of any legal proceedings or unasserted claims or actions.

A liability is recognized in the consolidated financial statements when the outcome of the legal proceedings is probable, and the estimated settlement amount can be estimated reliably. Contingent assets are not recognized in the consolidated financial statements until virtually certain. Fortuna | 57

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Fair Value Estimates in the Acquisition of Roxgold

CRITICAL ACCOUNTING JUDGEMENTS IN APPLYING THE ENTITY’S ACCOUNTING POLICIES

Judgements that have the most significant effect on the amounts recognized in the Company’s consolidated financial statements are as follows:

Income Taxes

Deferred tax assets and liabilities are determined based on differences between the financial statement carrying values of assets and liabilities and their respective income tax bases (“temporary differences”) and losses carried forward. The determination of the ability of the Company to utilize tax loss carry-forwards to offset deferred tax liabilities requires management to exercise judgment and make certain assumptions about the future performance of the Company.

Assessment of Impairment and Reversal of Impairment Indicators

Management applies significant judgment in assessing whether indicators of impairment or reversal of impairment exist for an asset or a group of assets which could result in a testing for impairment. Internal and external factors such as significant changes in the use of the asset, commodity prices, life of mines, tax laws or regulations in the countries that our mines operate in and interest rates are used by management in determining whether there are any indicators of impairment or reversal of previous impairments.

As of December 31, 2021, the company determined there were indicators of impairment at the Lindero Mine due to a decrease in operating performance relative to management’s expectations. In determining the recoverable amounts of the Company’s mining interests, the Company makes estimates of the discounted future after-tax cash flows expected to be derived from the Company’s mining properties, costs to sell the mining properties and the appropriate discount rate. The projected cash flows are significantly affected by changes in assumptions related to metal selling prices, changes in the amount of recoverable reserves, resources, and exploration potential, production cost estimates, future capital expenditures, discount rates and exchange rates. The Company performed a test of impairment using a discount rate of 6.25% and long-term gold and copper prices of $1,650/oz and $9,356/tonne. As a result, management estimated the recoverable amount of the Lindero Mine as at December 31, 2021, determined on a fair value less cost of disposal basis, and concluded no impairment charge was required. However, adverse changes in any of these assumptions in future periods may result in an impairment.

Functional Currency

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

economic environment. The Company reconsiders the functional currency used when there is a change in the events and conditions which determined the primary economic environment.

Leases

Value-added tax (“VAT”) receivable

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures have been designed to provide reasonable assurance that all material information related to the Company is identified and communicated to management on a timely basis. Management of the Company, under the supervision of the President and Chief Executive Officer and the Chief Financial Officer, is responsible for the design and operation of disclosure controls and procedures in accordance with the requirements of National Instrument 52-109 of the Canadian Securities Administrators (“National Instrument 52-109”) and as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the U.S. Exchange Act).

Management’s Report on Internal Control over Financial Reporting

The Company’s internal control over financial reporting (“ICFR”) is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external reporting purposes in accordance with IFRS as issued by the International Accounting Standards Board. However, due to its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements and fraud.

Management assesses the effectiveness of the Company’s internal control over financial reporting using the Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organization of the Treadway Commission (“COSO”). Management conducted an evaluation of the effectiveness of ICFR and concluded that it was effective as at December 31, 2021.

Except for the controls over purchase price adjustments related to the acquisition, the company has limited the scope of its ICFR and disclosure controls and procedures to exclude the controls and policies and procedures of Roxgold as allowed by the United States Securities and Exchange Commission and Canadian Securities Administrators. The assets and revenues of Roxgold represent 50% (inclusive of the purchase price adjustments) and 17%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

Fortuna | 59

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

Changes in Internal Control over Financial Reporting

During the year ended December 31, 2021, the Company implemented internal controls over financial reporting in relation to the accounting for and fair value of the business combination with Roxgold.

There have been no other changes in the Company’s internal control over financial reporting during the year ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS ****

This MD&A and any documents incorporated by reference into this MD&A contain forward-looking statements which constitute forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Section 21E of the United States Securities Exchange Act of 1934, as amended, and forward-looking information within the meaning of applicable Canadian securities legislation (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 MD&A include, without limitation, statements relating to:

●	mineral “reserves” and “resources” as they involve the implied assessment, based on estimates and assumptions that the reserves and resources described exist in the quantities predicted or estimated and can be profitably produced in the future;
●	production rates and forecasted production for 2022 at the Company’s properties;
---	---
●	cash cost estimates;
---	---
●	forecasted cash costs and all-in sustaining costs estimates at the Company’s mines;
---	---
●	timing for delivery of materials and equipment for the Company’s properties;
---	---
●	the sufficiency of the Company’s cash position and its ability to raise equity capital or access debt facilities;
---	---
●	the Company’s planned Greenfields exploration programs including related activities and the costs and timing thereof;
---	---
●	the Company’s planned capital expenditures and brownfields exploration at each of the Company’s mines;
---	---
●	the Company’s construction of the open pit gold mine and processing plant at the Séguéla Project (as defined herein), and the estimated initial capital investment for the construction of the mine, the duration of the construction schedule and the timing for the ramp up to name plate capacity;
---	---
●	the ability to successfully integrate the acquisition of Roxgold into the operations of the Company, and risks that the anticipated benefits of the Roxgold acquisition will not be realized or fully realized;
---	---
●	undisclosed risks and liabilities relating to the acquisition of Roxgold and the loss of key employees related to same;
---	---
●	the Company’s ability to manage challenges presented by COVID-19 and the impact of COVID-19 on the Company’s business and operations, and financial condition, including the Company’s ability to operate or to continue operating at its sites;
---	---
●	the effectiveness of the preventative measures and safety protocols put in place by the Company to curb the spread of COVID-19;
---	---
●	maturities of the Company’s financial liabilities, finance leases and other contractual commitments;
---	---
●	expiry dates of bank letters of guarantee;
---	---
●	the effectiveness and impact of, and Fortuna’s commitment to, the Sustainability Framework and related disclosure, ESG policies and targets and other operational and governance policies;
---	---
●	complying with anti-corruption laws and internal controls;
---	---
●	litigation matters;
---	---

Fortuna | 60

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

●	estimated mine closure costs and timing; and
●	the Company's plans and expectations for its material properties and future exploration, development and operating activities including, without limitation, capital expenditure and production estimates, exploration activities and budgets, forecasts and schedule estimates, as well as their impact on the results of operations or financial condition of the Company.
---	---

Often, but not always, these Forward-looking Statements can be identified by the use of words such as “anticipates”, “believes”, “plans”, “estimates”, “expects”, “forecasts”, “scheduled”, “targets”, “possible”, “strategy”, “potential”, “intends”, “advance”, “goal”, “objective”, “projects”, “budget”, “calculates” or statements that events, “will”, “may”, “could” or “should” occur or be achieved and similar expressions, including negative variations.

The forward-looking statements in this MD&A also include financial outlooks and other forward-looking metrics relating to Fortuna and its business, including references to financial and business prospects and future results of operations, including production, and cost guidance and anticipated future financial performance. Such information, which may be considered future oriented financial information or financial outlooks within the meaning of applicable Canadian securities legislation (collectively, “FOFI”), has been approved by management of the Company and is based on assumptions which management believes were reasonable on the date such FOFI was prepared, having regard to the industry, business, financial conditions, plans and prospects of Fortuna and its business and properties. These projections are provided to describe the prospective performance of the Company's business. Nevertheless, readers are cautioned that such information is highly subjective and should not be relied on as necessarily indicative of future results and that actual results may differ significantly from such projections. FOFI constitutes forward-looking statements and is subject to the same assumptions, uncertainties, risk factors and qualifications as set forth below.

•	operational risks relating to 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;
---	---
•	uncertainty relating to new mining operations and development projects such as the Lindero Mine and the Séguéla Gold Project, including the possibility that actual capital and operating costs and economic returns will differ significantly from those estimated for such projects prior to production;
---	---
•	uncertainty relating to the costs of the construction, the financing of construction and timing for the completion of the Séguéla Project;
---	---
•	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 maintaining, 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;
---	---

Fortuna | 61

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

•	risks relating to the termination of the Company’s mining concessions in certain circumstances;
•	risks related to International Labor Organization (“ILO”) Convention 169 compliance;
---	---
•	developing and maintaining good 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;
---	---
•	substantial reliance on the Lindero Mine, the Yaramoko Mine and the San Jose Mine for revenues;
---	---
•	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;
---	---
•	uncertainty relating to potential conflicts of interest involving the Company’s directors and officers;
---	---
•	risks associated with the Company’s reliance on local counsel and advisors and the experience of its management and board of directors in foreign jurisdictions;
---	---
•	adequacy of insurance coverage;
---	---
•	operational safety and security risks;
---	---
•	risks related to the Company’s compliance with the United States Sarbanes-Oxley Act;
---	---
•	risks related to the foreign corrupt practices regulations and anti-bribery laws;
---	---
•	legal proceedings and potential legal proceedings;
---	---
•	uncertainties relating to general economic conditions;
---	---
•	risks relating to a global pandemic, which until contained could continue to cause a slowdown in global economic growth and impact the Company’s business, operations, financial condition and share price;
---	---
•	the duration of the COVID-19 pandemic and the impact of COVID-19 on the Company’s business, operations and financial condition, including the Company’s ability operate or continue to operate at its sites in light of government restrictions, and possible future suspensions of operations at the mine sites related to COVID-19;
---	---
•	the Company’s ability to manage the various challenges (both anticipated and not) presented by COVID-19 to its business, operations and financial condition;
---	---
•	competition;
---	---
•	fluctuations in metal prices;
---	---
•	risks associated with entering into commodity forward and option contracts for base metals production;
---	---
•	fluctuations in currency exchange rates;
---	---
•	failure to meet covenants under its Credit Facilities, or an event of default which may reduce the Company’s liquidity and adversely affect its business;
---	---
•	tax audits and reassessments;
---	---
•	risks relating 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;
---	---
•	our ability to manage physical and transition risks related to climate change and successfully adapt our business strategy to a low carbon global economy;
---	---

Fortuna | 62

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

•	our plan to release climate-related goals in 2022 and the anticipated nature and effect of climate related risks;
•	risks related to the volatility of the trading price of the Company’s common shares and the Company’s Debentures (as defined herein);
---	---
•	dilution from further equity or convertible debenture financings; and
---	---
•	risks related to future insufficient liquidity resulting from a decline in the price of the Common Shares or Debentures;
---	---
•	uncertainty relating to the Company’s ability to pay dividends in the future;
---	---
•	risks relating to the market for the Company’s securities;
---	---
•	risks relating to the Debentures of the Company; and
---	---
•	uncertainty relating to the enforcement of U.S. judgments against the Company.
---	---

as well as those factors referred to in the “Risks and Uncertainties” section in this MD&A and in the “Risk Factors” section in our Annual Information Form filed with the Canadian Securities Administrators and available at www.sedar.com and filed with the U.S. Securities and Exchange Commission as part of the Company’s Form 40-F and available at www.sec.gov/edgar.shtml. 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 not to be as anticipated, estimated or intended.

Forward-looking Statements contained in this MD&A are based on the assumptions, beliefs, expectations and opinions of management, including but not limited to:

●	all required third party contractual, regulatory and governmental approvals will be obtained and maintained for the exploration, development, construction and production of its properties;
●	the ability to successfully integrate the operations of Roxgold into the operations of the Company;
---	---
●	there being no significant disruptions affecting operations, whether relating to labour, supply, power, damage to equipment or other matter;
---	---
●	the world-wide economic and social impact of COVID-19 is managed, and the duration and extent of the coronavirus pandemic is minimized or not long-term;
---	---
●	there being no material and negative impact to the various contractors, suppliers and subcontractors at the Company’s mine sites as a result of the Ukrainian – Russian conflict, COVID-19 or otherwise that would impair their ability to provide goods and services;
---	---
●	permitting, construction, development, expansion, and production continuing on a basis consistent with the Company’s current expectations;
---	---
●	expected trends and specific assumptions regarding metal prices and currency exchange rates;
---	---
●	prices for and availability of fuel, electricity, parts and equipment and other key supplies remaining consistent with current levels;
---	---
●	production forecasts meeting expectations;
---	---
●	management’s expectation that any investigations, claims, and legal, labor and tax proceedings arising in the ordinary course of business will not have a material effect on the results of operations or financial condition of the Company; and
---	---
●	the accuracy of the Company’s current mineral resource and reserve estimates.
---	---

These Forward-looking Statements are made as of the date of this MD&A. 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, readers are cautioned not to place undue reliance on Forward-looking Statements. Except as required by law, the Company does not assume the obligation to revise or update these forward looking-statements after the date of this document or to revise them to reflect the occurrence of future unanticipated events. Fortuna | 63

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2021 (in US Dollars, tabular amounts in millions, except where noted)

CAUTIONARY NOTE TO UNITED STATES INVESTORS CONCERNING ESTIMATES OF RESERVES AND RESOURCES ****

The Company is a Canadian “foreign private issuer” as defined in Rule 3b-4 under the United States Securities Exchange Act of 1934, as amended, and is permitted to prepare the technical information contained herein in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of the securities laws currently in effect in the United States.

Technical disclosure regarding the Company’s properties included herein was prepared in accordance with National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. NI 43-101 differs significantly from the disclosure requirements of the Securities and Exchange Commission (the “SEC”) generally applicable to U.S. companies. Accordingly, information contained herein is not comparable to similar information made public by U.S. companies reporting pursuant to SEC disclosure requirements. Fortuna | 64

NEWS RELEASE

Fortuna Reports Results for Fourth Quarter and Full Year 2021

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

Vancouver, March 23, 2022: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (“Fortuna” or the “Company”) today reported its consolidated financial and operating results for the fourth quarter and full year 2021.

Fourth Quarter 2021 Highlights

●Record sales of $198.9 million, an increase of 92% from the $103.5 million reported in Q4 2020, due primarily to the contribution of gold sales from the Yaramoko Mine of $52.2 million and from the Lindero Mine of $65.6 million

●Cost of sales of $140.6 million compared to $56.6 million reported in Q4 2020

●Net income of $16.6 million or $0.05 per share, compared to $18.6 million or $0.1 net income per share reported in Q4 2020

●Adjusted net income^1^ of $29.1 million compared to $23.0 million reported in Q4 2020

●Adjusted EBITDA^1^ of $89.6 million compared to $44.8 million reported in Q4 2020

●Net cash provided by operating activities of $57.1 million, compared to $31.3 million reported in Q4 2020

●Free cash flow from ongoing operations^1^ of $30.9 million compared to $34.5 million reported in Q4 2020

Full Year 2021 Highlights

•Sales of $599.9 million, compared to $279.0 million in 2020

•Cost of sales of $394.4 million, compared to $168.7 million in 2020

•Net income of $59.4 million, compared to $21.6 million in 2020

•Adjusted net income^1^ of $100.6 million, compared to $31.8 million in 2020

•Adjusted EBITDA^1^ of $280.7 million, compared to $112.6 million in 2020

●Net cash provided by operating activities of $147.1 million, compared to $93.4 million reported in Q4 2020

•Free cash flow^1^ from ongoing operations^1^ of $97.0 million, compared to $78.9 million in 2020

•Cash and cash equivalents as at December 31, 2021 was $107.1 million, compared to $131.9 million in 2020

•Silver and gold production of 7,498,701 ounces and 207,192 ounces, respectively, compared to 7,133,717 ounces and 55,349 ounces in 2020, respectively

•AISC^1^ per ounce of gold sold of $1,116 and $1,317 for the Lindero and Yaramoko mines, respectively

•AISC^1,2^ per silver equivalent ounce of payable silver sold of $14.38 and $18.94 for the San Jose and Caylloma mines, respectively, compared to $11.56 and $17.37 in 2020, respectively

Jorge A. Ganoza, President and CEO , commented, “Fortuna´s record sales and adjusted EBITDA in the fourth quarter of approximately $199 million and $90 million respectively, reflect strong operating results across our four mines in Latin America and West Africa. Lindero´s solid performance in the quarter is particularly worth highlighting as the mine delivered 36,072 ounces of gold, in line with expectations and 37% above its gold production for the third quarter.” Mr. Ganoza added, “With free cash flow generation from operations^1^ of $33 million in the quarter and the expansion of our corporate revolving credit facility to $200 million, we closed 2021 with a strong liquidity position of $187 million, $51 million over the third quarter considering $20 million in funding for the construction of the Séguéla Mine.” Mr. Ganoza concluded, “Throughout 2022, we expect to spend $110 million in Séguéla and $20 million in Brownfields exploration, which includes $7.4 million at San Jose and $7.2 million at Séguéla.”

Notes:

1.Refer to the Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description of the calculation of these measures.

2.AISC ($/oz Ag Eq) is calculated at realized metal prices, refer to mine site results for realized prices and to the Non-IFRS Financial Measures section for silver equivalent ratio

Fortuna | 1

Fourth Quarter 2021 and Full Year 2021 Consolidated Results


	Three months ended December 31			Years ended December 31
	2021	2020	% Change	2021	2020	% Change
Sales	198.9	103.5	92%	599.9	279.0	115%
Mine operating income	58.3	46.9	24%	205.5	110.2	86%
Operating income	38.9	28.2	38%	136.9	57.2	139%
Net income	16.6	18.6	(11)%	59.4	21.6	175%
Earnings (loss) per share - basic	0.05	0.10	(48)%	0.24	0.12	100%
Adjusted net income^1^	29.1	23.0	27%	100.6	31.8	216%
Adjusted EBITDA^1^	89.6	44.8	100%	280.7	112.6	149%
Net cash provided by operating activities	57.1	31.3	82%	147.1	93.4	57%
Free cash flow from ongoing operations^1^	30.9	34.5	(10)%	97.0	78.9	23%
Capital expenditures^2^
Sustaining	31.6	7.4	328%	77.2	18.1	326%
Non-sustaining^3^	2.6	0.6	354%	9.5	1.1	734%
Lindero construction	-	20.4	(100)%	12.8	68.9	(81)%
Séguéla construction	19.8	-	100%	34.2	-	100%
Brownfields	8.2	1.8	351%	18.9	4.9	284%
As at				December 31, 2021	December 31, 2020	% Change
Cash and cash equivalents				107.1	131.9	(19)%
^1^Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description of the calculation of these measures.
^2^Capital expenditures are presented on a cash basis
^3^ Non-sustaining expenditures include greenfields exploration
Figures may not add due to rounding

Fourth Quarter 2021 Results

Sales for the quarter were $198.9 million, a 92% increase from the $103.5 million reported in the same period in 2020. The increase was driven by the contribution from the Lindero and Yaramoko mines. Lindero recognized adjusted sales of $65.6 million from the sale of 36,389 ounces of gold. Yaramoko recognized adjusted sales of $52.2 million from the sale of 29,077 ounces of gold. The San Jose Mine recognized adjusted sales of $56.7 million, a 6% decrease from the $60.5 million reported in the same period in 2020. Lower sales at San Jose were driven by a 6% decrease in the volume of gold ounces sold. The Caylloma Mine recognized adjusted sales of $24.4 million, a 7% increase from the $22.7 million reported in the same period in 2020. The increased sales at Caylloma were driven by higher lead and zinc prices, partially offset by lower volumes of metal sold.

Operating income for the quarter was $38.9 million, a $10.7 million increase from the $28.2 million reported in the same period in 2020. The higher operating income was driven by the contribution of Lindero and Yaramoko, partially offset by lower operating income at San Jose and low-grade inventory write-downs in the current quarter of $5.3 million (Yaramoko: $4.2 million; Lindero: $1.1 million).

Net income for the quarter was $16.6 million, a $2.0 million decrease from the $18.6 million reported in the same period in 2020. The lower net income was due to a $4.2 million loss on derivative contracts, higher interest expense of $2.7 million, and a higher effective tax rate (Q4 2021: 45%; Q4 2020: 34%).

Adjusted net income for the quarter was $29.1 million compared to $23.0 million reported in the same period in 2020.

Adjusted EBITDA for the quarter was $89.6 million, a margin of 45% over sales, compared to $44.8 million reported in the same period in 2020, a margin of 43% over sales.

Fortuna | 2

Full Year 2021 Results

Consolidated sales for the year ended December 31, 2021 increased 115% to $599.9 million compared to $279.0 million for the same period in 2020. The increase was driven by the contribution of Yaramoko and Lindero as well as higher silver prices in 2021 compared to 2020. Lindero recognized $179.0 million in gold doré sales comprising 100,177 ounces of gold. Yaramoko recognized $101.3 million of gold doré sales comprising 56,571 ounces of gold. Sales at San Jose increased 13% to $216.1 million as realized silver price increased 18% compared to 2020, along with a 3% increase in the volume of silver and gold ounces sold. Sales at Caylloma increased 53% to $103.5 million due primarily to an increase in the volume of metals sold and increases in the realized prices of lead and zinc of 20% and 32%, respectively, compared to realized prices in 2020.

Operating income for the the year ended December 31, 2021 was $136.9 million, a $79.7 million increase from the $57.2 million reported in the same period in 2020. The higher operating income was driven mainly by the contribution of Lindero of $45.2 million and Yaramoko of $17.0 million, and higher operating income at Caylloma of $23.9 million. This was partially offset by the San Jose Progreso royalty settlement of $14.3 million, and low-grade inventory write-downs amounting $7.0 million of which, Yaramoko and Lindero accounted for $4.2 million and $2.8 million, respectively.

Net income for the year ended December 31, 2021 was $59.4 million, a $37.8 million increase from the $21.6 million reported in 2020. The higher net income was offset by $14.1 million in transaction costs associated with the Company's acquisition (the "Roxgold Acquisition") of all of the issued and outstanding common shares of Roxgold Inc., as well as higher interest expenses of $10.2 million. Interest expense was $8.7 million higher in 2021 compared to 2020 as $9.4 million was capitalized in 2020 related to the construction of the Lindero Mine.

Adjusted net income for the year ended December 31, 2021 was $100.6 million compared to $31.8 million in 2020.

Adjusted EBITDA for the year ended December 31, 2021 was $280.7 million compared to $112.6 million in 2020.

Liquidity

Free cash flow from ongoing operations for the three months ended December 31, 2021 was $30.9 million compared to $34.5 million in the same period in 2020. Free cash flow from ongoing operations for the year ended December 31, 2021 was $97.0 million compared to $78.9 million in 2020.

Total liquidity available to the Company as at December 31, 2021 was $187.1 million. The Company’s $200.0 million revolving credit facilitiy was fully available as at the end of December 2021 and $80.0 million remained undrawn.

Fortuna | 3

Lindero Mine, Argentina

The table below shows the key metrics used to measure the operating performance of the Lindero Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, and gold production. The Lindero Mine was under construction during a portion of the fourth quarter of 2020, with first gold poured in October 2020.


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes placed on the leach pad		1,459,513	950,000	6,453,647	1,610,000

Gold
Grade (g/t)		1.04	1.13	0.96	1.00
Production (oz)		36,072	13,435	104,161	13,435
Metal sold (oz)		36,389	10,935	100,177	10,935
Realized price ($/oz)		1,802	1,853	1,785	1,853

Unit Costs^2^
Cash cost ($/oz Au)^1^		585	657	617	657
All-in sustaining cash cost ($/oz Au)^1^		994	-	1,116	-

Capital expenditures ($000's)
Sustaining		7,214	1,410	27,522	1,410
Non-sustaining		233	-	323	-
Brownfields		389	-	875	-
^1^Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description of the calculation of these measures.
^2^ First gold was poured at Lindero in October 2020.

During the fourth quarter of 2021, the onsite impact of COVID-19 continued to be minimal as the site reported 60 positive cases with no disruptions to operations. Travel restrictions in Argentina were also lifted in November 2021 which led to an improvement in lead times and onsite technical assistance from foreign vendors.

All processing areas performed according to plan:

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

Cash cost per ounce of gold for the three and twelve months ended December 31, 2021 was $585 and $617 per ounce, respectively.

All-in sustaining cash costs per gold ounce sold was $994 during Q4 2021 and $1,116 in 2021 in line with the Company’s updated cost guidance.

Fortuna | 4

Total sustaining capital expenditures of $7.2 million during the quarter were primarily related to the completion of the ADR plant expansion, $4.2 million, and capitalized stripping, $2.0 million.

Yaramoko Mine, Burkina Faso

The table below shows the key metrics used to measure the operating performance of the Yaramoko Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, and gold production. The Company acquired the Yaramoko Mine in connection with the Roxgold Acquisition, which closed on July 2, 2021. Accordingly, all production, operating and financial results in respect of the Yaramoko Mine for the year ended December 31, 2021 included in this news release reflect only those results from July 2, 2021 to December 31, 2021, unless indicated otherwise.


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes milled		132,188	-	258,866	-

Gold
Grade (g/t)		6.99	-	7.13	-
Production (oz)		28,787	-	57,538	-
Metal sold (oz)		29,077	-	56,571	-
Realized price ($/oz)		1,796	-	1,789	-

Unit Costs
Cash cost ($/oz Au)^1^		754	-	739	-
All-in sustaining cash cost ($/oz Au)^1^		1,436	-	1,317	-

Capital expenditures ($000's)
Sustaining		13,520	-	21,387	-
Non-sustaining		–	–	—	-
Brownfields		47	-	138	-
^1^Cash cost and AISC are non-IFRS financial measures. Refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description on the calculation of these measures.
^2^The Yaramoko Mine was acquired as part of the Roxgold Acquisition. As such comparative figures for previous quarters and years are not presented. Operating and financial results for the year ended December 31, 2021 are for the period from July 2, 2021 to December 31, 2021.

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; below the plan for the quarter. Total gold production for the second semester of 2021 totaled 57,538 ounces of gold which was below guidance for the period. The production shortfall was the result of lower than planned mill feed grade in the fourth quarter of 2021, caused by the delay in mining of several high-grade stopes and some localized grade variability in the 55 Zone. The unmined stopes was resequenced into the mine plan in the first quarter of 2022.

Cash cost per gold ounce sold was $754, which was above plan, primarily due to lower production during Q4 2021 and $739 for the second semester of 2021.

All-in sustaining cash cost per gold ounce sold was $1,436 and $1,317 for Q4 2021 and for the second semester of 2021, respectively, which were above the Company’s guidance. Higher all-in sustaining cash costs were the result of lower ounces sold due to the mine sequencing issue described.

Sustaining capital expenditures of $21.5 million during the second half of the year were related primarily to underground mine development costs and construction of a ventilation raise.

Fortuna | 5

San Jose Mine, Mexico

The following table shows the key metrics used to measure the operating performance of the San Jose Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, gold and silver production and unit costs:


		Three months ended December 31,				Years ended December 31,
	****	2021	****	2020	****	2021	****	2020
Mine Production
Tonnes milled		262,802		272,179		1,041,154		934,381
Average tonnes milled per day		2,920		3,024		2,964		2,647

Silver
Grade (g/t)		219		206		209		224
Recovery (%)		93		91		92		92
Production (oz)		1,717,533		1,648,816		6,425,029		6,165,606
Metal sold (oz)		1,729,152		1,721,697		6,433,808		6,225,433
Realized price ($/oz)		23.39		24.45		25.15		21.26

Gold
Grade (g/t)		1.27		1.26		1.29		1.38
Recovery (%)		92		91		91		91
Production (oz)		9,929		10,095		39,406		37,805
Metal sold (oz)		9,983		10,594		39,404		38,391
Realized price ($/oz)		1,797		1,875		1,798		1,786

Unit Costs
Production cash cost ($/t)^2^		79.66		71.48		75.80		68.79
Production cash cost ($/oz Ag Eq)^1,2^		9.35		8.75		9.30		7.63
Net smelter return ($/t)		207.57		203.80		210.99		199.22
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		14.92		13.33		14.38		11.56

Capital expenditures ($000's)
Sustaining		5,137		4,022		14,492		10,787
Non-sustaining		518		568		2,294		942
Brownfields		2,176		1,643		8,784		4,406
^1^ Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively
^2^Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are non-IFRS financial measures, refer to Non-IFRS Financial Measures section at the end of this news release, and the to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description of the calculation of these measures.

The San Jose Mine produced 1,717,533 ounces of silver and 9,929 ounces of gold during the three months ended December 31, 2021, which represents an 4% increase and 2% decrease over the same period in 2020, respectively. The decrease in gold production was due to lower tonnes milled.

Annual production of silver and gold totaled 6,425,029 ounces and 39,406 ounces, an increase of 4% for both from 2020 annual production, respectively, which was in line with guidance.

The cash cost per tonne for the three months ended December 31, 2021 was $79.66 per tonne compared to $71.48 per tonne in the same period in 2020 primarily due to higher indirect costs. Cash cost per tonne for the full year 2021 increased to $75.80 compared to $68.79 for 2020 due to higher mine preparation and support and higher indirect costs.

The all-in sustaining cash cost of payable silver equivalent for the full year 2021 increased 24% to $14.38 per ounce compared to $11.56 for the same period in 2020. The increase was primarily as a result of additional sustaining capital expenditures and brownfields exploration which were limited in 2020 due to the impacts of business restrictions relating to the COVID-19 pandemic. All-in sustaining cash costs for the year were in line with guidance.

Fortuna | 6

Caylloma Mine, Peru

The following table shows the key metrics used to measure the operating performance of the Caylloma Mine for the fourth quarter of 2021 and for the year ended December 31, 2021: throughput, head grade, recovery, silver, lead and zinc production and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2021	2020	2021	2020
Mine Production
Tonnes milled		137,838	136,132	539,779	510,047
Average tonnes milled per day		1,549	1,530	1,525	1,433

Silver
Grade (g/t)		73	73	76	72
Recovery (%)		81	82	82	82
Production (oz)		262,710	263,921	1,073,672	968,111
Metal sold (oz)		243,869	262,356	1,074,364	967,199
Realized price ($/oz)		23.39	24.30	25.25	20.63

Gold
Grade (g/t)		0.44	0.60	0.49	0.41
Recovery (%)		70	69	71	61
Production (oz)		1,374	1,827	6,086	4,109
Metal sold (oz)		1,297	1,768	6,140	4,049
Realized price ($/oz)		1,798	1,865	1,792	1,861

Lead
Grade (%)		3.20	3.16	3.16	3.00
Recovery (%)		87	89	88	88
Production (000's lbs)		8,419	8,426	32,990	29,628
Metal sold (000's lbs)		7,945	8,386	33,299	29,582
Realized price ($/lb)		1.06	0.86	1.00	0.83

Zinc
Grade (%)		4.25	4.69	4.56	4.61
Recovery (%)		87	88	88	88
Production (000's lbs)		11,380	12,434	47,549	45,545
Metal sold (000's lbs)		11,053	12,154	47,828	45,154
Realized price ($/lb)		1.51	1.18	1.36	1.03

Unit Costs
Production cash cost ($/t)^2^		97.87	81.65	88.41	77.19
Production cash cost ($/oz Ag Eq)^1,2^		13.83	14.61	13.46	14.06
Net smelter return ($/t)		186.71	163.57	192.02	131.40
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		20.71	18.69	18.94	17.37

Capital expenditures ($000's)
Sustaining		5,755	1,950	13,758	5,909
Brownfields		1,027	170	3,731	514
^1^ Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively
^2^ Production cash cost, Production cash cost silver equivalent, and All-in sustaining cash cost silver equivalent are non-IFRS financial measures, refer to Non-IFRS Financial Measures section at the end of this news release and to the MD&A accompanying the Company’s financial statements on SEDAR at www.sedar.com for a description on the calculation of these measures.

The Caylloma Mine produced 262,710 ounces of silver, 8.4 million pounds of lead and 11.4 million pounds of zinc during the three months ended December 31, 2021, which was in line with the same period in 2020 except for zinc which was lower by 8% due to a lower head grade. Gold production totaled 1,374 ounces with an average head grade of 0.44 g/t.

Fortuna | 7

Annual production of silver, lead and zinc totaled 1,073,672 ounces of silver, 33.0 million pounds of lead, and 47.5 million pounds of zinc, which represent an 11% increase in silver, 11% increase in lead, and a 4% increase in zinc production compared to 2020. Gold production for the full year 2021 totaled 6,086 ounces, which was an increase of 48% over 2020, with an average head grade of 0.49 g/t. Production for the year was in line with guidance.

The cash cost per tonne of processed ore for the three months ended December 31, 2021 increased 20% to $97.87 compared to $81.65 in the same period in 2020. The increase was the result of higher mining costs related to shotcrete and transportation and higher energy costs at the plant. Cash cost per tonne for the full year 2021 increased to $88.41 compared to $76.59 for 2020 due to higher mine preparation and support and higher indirect costs related to administration and energy.

The all-in sustaining cash cost for the full year 2021 increased 9% to $18.94 per ounce compared to $17.37 per ounce in 2020 due to higher sustaining capital expenditures and brownfields exploration. The increase was primarily due to the significantly decreased capital expenditures in 2020 due to the impacts of business restrictions relating to COVID-19 pandemic. The Caylloma Mine finished 2021 slightly below cost guidance as a result of higher silver equivalent metal sales.

Qualified Person

Eric N. Chapman, Senior Vice President of Technical Services of Fortuna, is a Professional Geoscientist of the Association of Professional Engineers and Geoscientists of the Province of British Columbia (Registration Number 36328), and is the Company’s Qualified Person (as defined by National Instrument 43-101). Mr. Chapman has reviewed and approved the scientific and technical information contained in this news release and has verified the underlying data.

Non-IFRS Financial Measures

The Company has disclosed certain financial measures and ratios in this news release which are not defined under the International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board, and are not disclosed in the Company's financial statements, including but not limited to: cash cost per ounce of gold sold; all-in sustaining cash cost per ounce of gold sold; all-in cash cost per ounce of gold sold; total production cash cost per tonne; cash cost per payable ounce of silver equivalent sold; all-in sustaining cash cost per payable ounce of silver equivalent sold; all-in cash cost per payable ounce of silver equivalent sold; free cash flow from ongoing operations; adjusted net income; and adjusted EBITDA.

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 Companys performance prepared in accordance with IFRS. The Company has calculated these measures consistently for all periods presented.

To facilitate a better understanding of these measures and ratios as calculated by the Company, descriptions are provided below. In addition, see “Non-IFRS Financial Measures” in the Company’s management’s discussion and analysis for the fiscal year ended December 31, 2021 (“2021 MD&A”), which section is incorporated by reference in this news release, for additional information regarding each non-IFRS financial measure and non-IFRS ratio disclosed in this news release, including an explanation of their composition; an explanation of how such measures and ratios provide useful information

Fortuna | 8

to an investor and the additional purposes, if any, for which management of Fortuna uses such measures and ratio. The 2021 MD&A may be accessed on SEDAR at www.sedar.com under the Company’s profile, Fortuna Silver Mines Inc.

Except as otherwise described in the 2021 MD&A, the Company has calculated these measures consistently for all periods presented.

Reconciliation to Adjusted Net Income for the three and twelve months ended December 31, 2021 and 2020


	Three months ended December 31,		Years ended December 31,
Consolidated	2021	2020	2021	2020
Net income	16.6	18.6	59.4	21.6
Adjustments, net of tax:
Community support provision and accruals^1^	1.3	0.2	1.4	0.2
Foreign exchange loss, Lindero Mine^2^	0.3	3.2	4.1	11.8
Share of loss from associates	-	-	-	0.1
Investment income	-	-	-	(3.3)
Roxgold transaction costs	-	-	14.1	-
SGM Royalty settlement	1.0	-	9.8	-
Inventory adjustment	4.6	-	6.3	-
Accretion on right of use assets	1.0	-	2.2	-
Other non-cash/non-recurring items	4.3	1.0	3.3	1.4
Adjusted Net Income (loss)	29.1	23.0	100.6	31.8
^1^Amounts are recorded in Cost of sales
^2^Amounts are recorded in General and Administration

Reconciliation to Adjusted EBITDA for the three and twelve months ended December 31, 2021 and 2020


	Three months ended December 31,		Years ended December 31,
	2021	2020	2021	2020
Net income	16.6	18.6	59.4	21.6
Adjustments:
Community support provision and accruals	2.1	(0.4)	1.9	(0.4)
Inventory adjustment	5.3	-	7.0	-
Foreign exchange loss, Lindero Mine	0.3	3.2	4.1	11.8
Foreign exchange loss, Séguéla Project	0.2	-	0.2	-
Net finance items	3.7	0.2	12.3	1.2
Depreciation, depletion, and amortization	44.8	13.9	122.3	45.7
Income taxes	13.5	9.1	47.7	37.4
Share of loss from associates	-	-	-	0.1
Investment income	-	-	-	(3.3)
SGM Royalty settlement	-	-	9.6	-
Roxgold transaction costs	-	-	14.1	-
Other non-cash/non-recurring items	3.1	0.2	2.1	(1.5)
Adjusted EBITDA	89.6	44.8	280.7	112.6

Reconciliation of free cash flow from ongoing operations for three and twelve months ended December 31, 2021 and 2020


	Three months ended December 31,		Years ended December 31,
Consolidated	2021	2020	2021	2020
		(Restated)		(Restated)
Net cash provided by operating activities	57.1	31.3	147.1	93.4
Adjustments
Roxgold Acquisition transaction costs	-	-	27.9	-
Change in long term receivables and assets	0.0	0.9	0.0	(0.1)
Additions to mineral properties, plant and equipment	(35.3)	(9.2)	(90.7)	(23.0)
Impact of adoption in IAS 16 and Production costs	-	21.9	-	21.9
Current income tax expense	(16.5)	(13.3)	(51.7)	(38.8)
Income taxes paid	19.1	5.6	62.7	28.2
Other adjustments	6.4	(2.7)	1.6	(2.7)
Free cash flow from ongoing operations	30.9	34.5	97.0	78.9

Fortuna | 9

Reconciliation of cash cost per ounce of gold sold for the three and twelve months ended December 31, 2021 and 2020


Lindero Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		46,915	-	122,889	-
Changes in doré inventory		353	-	2,066	-
Inventory adjustment		(1,072)	-	(2,815)	-
Export duties		(4,891)	-	(13,410)	-
Depletion and depreciation		(19,154)	-	(43,665)	-
By product credits		(77)	-	(260)	-
Production cash cost		22,074	-	64,805	-
Changes in doré inventory		(353)	-	(2,066)	-
Realized gain in diesel hedge		(438)	-	(963)	-
Cash cost applicable per gold ounce sold	A	21,283	-	61,776	-
Ounces of gold sold	B	36,375	-	100,137	-
Cash cost per ounce of gold sold ($/oz)	=A/B	585	-	617	-


Yaramoko Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		42,381	-	80,812	-
Changes in doré inventory		719	-	1,542	-
Inventory adjustment		(4,153)	-	(4,153)	-
Export duties		(3,018)	-	(5,993)	-
Depletion and depreciation		(13,235)	-	(28,974)	-
By product credits		(195)	-	(134)	-
Production cash cost		22,499	-	43,100	-
Changes in doré inventory		(719)	-	(1,542)	-
Refining charges		133	-	271	-
Cash cost applicable per gold ounce sold	A	21,913	-	41,829	-
Ounces of gold sold	B	29,077	-	56,571	-
Cash cost per ounce of gold sold ($/oz)	=A/B	754	-	739	-

Reconciliation of all-in sustaining cash cost per ounce of gold sold for the three and twelve months ended December 31, 2021 and 2020


Lindero Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	21,283	-	61,776	-
Export duties and mining taxes	4,891	-	13,410	-
General and administrative expenses (operations)	1,640	-	5,643	-
Adjusted operating cash cost	27,814	-	80,829	-
Sustaining leases	752	-	2,548	-
Sustaining capital expenditures^1^	7,214	-	27,522	-
Brownfields exploration expenditures^1^	389	-	875	-
All-in sustaining cash cost	36,169	-	111,774	-
Non-sustaining capital expenditures^1^	233	-	323	-
All-in cash cost	36,402	-	112,097	-
Ounces of gold sold	36,375	-	100,137	-
All-in sustaining cash cost per ounce of gold sold	994	-	1,116	-
All-in cash cost per ounce of gold sold	1,001	-	1,119	-
^1^ Presented on a cash basis

Fortuna | 10


Yaramoko Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	21,913	-	41,829	-
Inventory net realizable value adjustment	1,285	-	1,285	-
Export duties and mining taxes	3,018	-	5,993	-
General and administrative expenses (operations)	514	-	953	-
Adjusted operating cash cost	26,730	-	50,060	-
Sustaining leases	1,467	-	2,934	-
Sustaining capital expenditures^1^	13,520	-	21,387	-
Brownfields exploration expenditures^1^	47	-	138	-
All-in sustaining cash cost	41,764	-	74,519	-
All-in cash cost	41,764	-	74,519	-
Ounces of gold sold	29,077	-	56,571	-
All-in sustaining cash cost per ounce of gold sold	1,436	-	1,317	-
All-in cash cost per ounce of gold sold	1,436	-	1,317	-
^1^ Presented on a cash basis
^2^ Adjustment related to current stockpile

Reconciliation of production cash cost per tonne and cash cost per payable ounce of silver equivalent sold for the three and twelve months ended December 31, 2021 and 2020


San Jose Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		32,705	31,027	122,756	104,315
Changes in concentrate inventory		(118)	(1,477)	163	(1,200)
Depletion and depreciation in concentrate inventory		11	967	32	380
Inventory adjustment		(52)	16	(6)	18
Royalties and mining taxes		(1,587)	(1,411)	(5,955)	(4,289)
Workers participation		(1,236)	(1,501)	(5,809)	(6,560)
Depletion and depreciation		(8,789)	(8,165)	(32,257)	(28,387)
Cash cost	A	20,934	19,456	78,924	64,277
Total processed ore (tonnes)	B	262,802	272,179	1,041,154	934,382
Production cash cost per tonne ($/t)	=A/B	79.66	71.48	75.80	68.79
Cash cost	A	20,934	19,456	78,924	64,277
Changes in concentrate inventory		118	1,477	(163)	1,200
Depletion and depreciation in concentrate inventory		(11)	(967)	(32)	(380)
Inventory adjustment		52	(16)	6	(18)
Treatment charges		190	303	(251)	406
Refining charges		1,157	976	4,318	3,530
Cash cost applicable per payable ounce sold	C	22,440	21,229	82,802	69,015
Payable ounces of silver equivalent sold^1^	D	2,400,989	2,425,395	8,902,680	9,044,605
Cash cost per ounce of payable silver equivalent sold^2^ ($/oz)	=C/D	9.35	8.75	9.30	7.63
Mining cost per tonne		37.90	36.67	38.74	35.43
Milling cost per tonne		16.56	16.02	16.68	16.31
Indirect cost per tonne		16.84	11.56	13.72	9.69
Community relations cost per tonne		5.15	0.87	4.79	0.97
Distribution cost per tonne		3.20	6.36	1.88	6.39
Production cash cost per tonne ($/t)		79.66	71.48	75.80	68.79
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)
^2^ Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results – Sales and Realized Prices

Fortuna | 11


Caylloma Mine		Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)		2021	2020	2021	2020
Cost of sales		18,585	15,475	67,917	54,357
Changes in concentrate inventory		939	318	297	345
Depletion and depreciation in concentrate inventory		165	(229)	61	(2)
Inventory adjustment		(61)	(13)	(61)	(13)
Royalties and mining taxes		(188)	(133)	(345)	(523)
Provision for community support		(2,125)	-	(2,125)	101
Workers participation		(214)	(488)	(1,838)	(899)
Depletion and depreciation		(3,607)	(3,815)	(16,182)	(13,994)
Cash cost	A	13,494	11,115	47,724	39,372
Total processed ore (tonnes)	B	137,838	136,132	539,779	510,048
Production cash cost per tonne ($/t)	=A/B	97.89	81.65	88.41	77.19
Cash cost	A	13,494	11,115	47,724	39,372
Changes in concentrate inventory		(939)	(318)	(297)	(345)
Depletion and depreciation in concentrate inventory		(165)	229	(61)	2
Inventory adjustment		61	13	61	13
Treatment charges		4,629	5,357	15,754	19,334
Refining charges		378	410	1,670	1,493
Cash cost applicable per payable ounce sold	C	17,458	16,806	64,851	59,869
Payable ounces of silver equivalent sold^1^	D	1,261,967	1,150,047	4,819,365	4,258,979
Cash cost per ounce of payable silver equivalent sold^2^ ($/oz)	=C/D	13.83	14.61	13.46	14.06
Mining cost per tonne		42.02	34.89	34.71	33.85
Milling cost per tonne		16.27	15.62	15.34	14.39
Indirect cost per tonne		29.45	23.21	29.49	21.62
Community relations cost per tonne		7.96	1.57	7.77	0.78
Distribution cost per tonne		2.18	6.36	1.10	6.55
Production cash cost per tonne ($/t)		97.87	81.65	88.41	77.19
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1), silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices

Reconciliation of All-in Sustaining Cash Cost and All-in Cash Cost per Payable Ounce of Silver Equivalent Sold for three and twelve months ended December 31, 2021 and 2020


San Jose Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	22,440	21,229	82,802	69,015
Royalties and mining taxes	1,587	1,411	5,955	4,289
Workers' participation	1,545	1,876	7,261	8,200
General and administrative expenses (operations)	2,779	2,086	8,111	6,027
Adjusted operating cash cost	28,351	26,602	104,129	87,531
Care and maintenance costs (impact of COVID-19)	-	-	-	1,568
Sustaining leases	161	63	608	251
Sustaining capital expenditures^3^	5,137	4,022	14,492	10,787
Brownfields exploration expenditures^3^	2,176	1,643	8,784	4,406
All-in sustaining cash cost	35,825	32,330	128,013	104,543
Non-sustaining capital expenditures^3^	518	568	2,294	942
All-in cash cost	36,343	32,898	130,307	105,485
Payable ounces of silver equivalent sold^1^	2,400,989	2,425,395	8,902,680	9,044,605
All-in sustaining cash cost per ounce of payable silver equivalent sold^2^	14.92	13.33	14.38	11.56
All-in cash cost per ounce of payable silver equivalent sold^2^	15.14	13.56	14.64	11.66
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.8:1 (Q4 2020: 76.7:1) and for Year 2021 is calculated using a silver to gold ratio of 71.5:1 (Year 2020: 84.0:1)
^2^ Silver equivalent is calculated using the realized prices for gold and silver. Refer to Financial Results - Sales and Realized Prices
^3^Presented on a cash basis

Fortuna | 12


Caylloma Mine	Three months ended<br>December 31,		Years ended<br>December 31,
(Expressed in $'000's, except unit costs)	2021	2020	2021	2020
Cash cost applicable	17,458	16,806	64,851	59,869
Royalties and mining taxes	188	133	345	523
Workers' participation	244	559	2,129	1,036
General and administrative expenses (operations)	786	1,182	3,625	3,520
Adjusted operating cash cost	18,676	18,680	70,950	64,948
Sustaining leases	681	696	2,851	2,626
Sustaining capital expenditures^3^	5,755	1,950	13,758	5,909
Brownfields exploration expenditures^3^	1,027	170	3,731	514
All-in sustaining cash cost	26,139	21,496	91,290	73,997
All-in cash cost	26,139	21,496	91,290	73,997
Payable ounces of silver equivalent sold^1^	1,261,967	1,150,047	4,819,365	4,258,979
All-in sustaining cash cost per ounce of payable silver equivalent sold^2^	20.71	18.69	18.94	17.37
All-in cash cost per ounce of payable silver equivalent sold^2^	20.71	18.69	18.94	17.37
^1^ Silver equivalent sold for Q4 2021 is calculated using a silver to gold ratio of 76.9:1 (Q4 2020: 76.8:1) , silver to lead ratio of 1:22.2 pounds (Q4 2020: 1:28.2), and silver to zinc ratio of 1:15.4 pounds (Q4 2020: 1:20.6). Year 2021 is calculated using a silver to gold ratio of 70.9:1 (Year 2020: 90.2:1), silver to lead ratio of 1:25.3 pounds (Year 2020: 1:24.9), and silver to zinc ratio of 1:18.6 pounds (Year 2020: 1:20.0)
^2^Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices
^3^ Presented on a cash basis

Additional information regarding the Company’s financial results and activities underway are available in the Company’s audited consolidated financial statements for the year ended December 31, 2021 and accompanying 2021 MD&A, which are available for download on the Company’s website, on SEDAR and on EDGAR.

Conference Call and Webcast

A conference call to discuss the financial and operational results will be held on Thursday, March 24, 2022 at 9:00 a.m. Pacific time | 12:00 p.m. Eastern time. Hosting the call will be Jorge A. Ganoza, President and CEO, Luis D. Ganoza, Chief Financial Officer, Cesar Velasco, Chief Operating Officer - Latin America, and Paul Criddle, Chief Operating Officer - West Africa.

Shareholders, analysts, media and interested investors are invited to listen to the live conference call by logging onto the webcast or over the phone by dialing in just prior to the starting time.

Conference call details:

Date: Thursday, March 24, 2022

Time: 9:00 a.m. Pacific time | 12:00 p.m. Eastern time

Dial in number (Toll Free): +1.888.506.0062

Dial in number (International): +1.973.528.0011

Entry code: 382909

Replay number (Toll Free): +1.877.481.4010

Replay number (International): +1.919.882.2331

Replay Passcode: 44738

Playback of the earnings call will be available until Thursday, April 7, 2022. Playback of the webcast will be available until Saturday, March 25, 2023. In addition, a transcript of the call will be archived on the Company’s website.

Fortuna | 13

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. 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

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 United States 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 anticipated performance in 2022; estimated capital expenditures in 2022 and exploration spending in 2022, including amounts for exploration activities at the Séguéla and San Jose properties; the Company’s plans for the construction of an open pit mine at the Séguéla project in Cote d’Ivoire; the econcomics for the construction of the mine at the Séguéla project as set out in the feasibility study, the estimated construction capital expenditures for the project, the timelines and schedules for the construction and production of gold at the Séguéla project; statements regarding the Company's liquidity; the Company's business strategy, plans and outlook; the merit of the Company's mines and mineral properties; mineral resource and reserve estimates; production costs; timelines; the future financial or operating performance of the Company; anticipated approvals and other matters. 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, changes in general economic conditions and financial markets; the impact of the COVID-19 pandemic on the Company’s mining operations and construction activities; the risks relating to a global pandemic, including the COVID-19 pandmic, as well as risks associated with war or other geo-political hostilities, such as the Ukranian – Russian conflicat, any of which could continue to cause a disruption in global economic activity; the risks associated with the completion of the Roxgold Acquisition, including the ability of the Company to successfully consolidate functions, integrate operations, procedures and personnel; adverse changes in prices for gold, silver and other metals; the ability of the Company to obtain an extension of the San Jose environmental impact authorization ("EIA"), including the Company's success in challenging an alleged typographical error in the San Jose EIA received by the Company in December 2021 and in obtaining a pemanent injunction or equivalent court protection to allow the continued operation of the San Jose mine pending the approval of an extension to the San Jose EIA; fluctuation in currencies and foreign exchange rates; inflation; the imposition of capital controls in countries in which the Company operates; any extension of the currency controls in Argentina; changes in the prices of key supplies; 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; changes to current estimates of mineral reserves and resources; changes to production and cost estimates; changes in the position of regulatory authorities with respect to the granting of approvals or permits; governmental and other approvals; changes in government, 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 the accuracy of the Company’s current mineral resource and reserve estimates; 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

Fortuna | 14

properties or changes to production estimates (which assume accuracy of projected ore 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 impacts of COVID-19 and other geo-political uncertainties on the Company’s production, workforce, business, operations and financial condition; the expected trends in mineral prices and currency exchange rates; that the Company will obtain succeed in challenging the alleged typographical error in the December 2021 extension to the San Jose EIA; 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 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. Fortuna | 15

Fortuna Mining Corp 6-K, filed Mar 24, 2022

About this 6-K