6-K - FSM - Equibles

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of March 2024

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 7, 2024	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, 2023.

99.2****Management’s Discussion and Analysis for the year ended December 31, 2023.

99.3****News release dated March 6, 2024.

CONSOLIDATED FINANCIAL STATEMENTS

For the years ended

December 31, 2023 and 2022

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 independent 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 06, 2024

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, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), 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, 2023 and 2022, and its financial performance 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, 2023, 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 6, 2024 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 Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the Audit Committee and that: (1) relates 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 a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the recoverable amount of the Lindero cash-generating unit

As discussed in Note 9 to the consolidated financial statements, the carrying value of the Company’s mineral properties, plant, and equipment was $1,574,212 thousand as of December 31, 2023. As discussed in Note 32 to the consolidated financial statements, the Company determined that there were indicators of impairment at the Lindero cash-generating unit (CGU) due to an increase in capital costs for the heap leach expansion project and an increase in operating costs as a result of macro-economic factors. The Company estimated the recoverable amount of the Lindero CGU, determined on a fair value less cost of disposal basis, and concluded no impairment charge was required.

We identified the assessment of the recoverable amount of the Lindero CGU as 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 quantities of mineral reserves and mineral resources that form the basis for the life of mine plan, metal 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 Lindero 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 quantities of mineral reserves and mineral resources that form the basis for the life of mine plan for the Lindero CGU. 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 information. We compared the Company’s historical mineral reserve and resource information, 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 (1) assessing the metal prices by comparing to third party data; and (2) evaluating the discount rate by comparing it to an independently calculated range of discount rates using internal and external independent sources.

/s/ KPMG LLP

Chartered Professional Accountants

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

Vancouver, Canada March 6, 2024

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, 2023, 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, 2023, 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, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income (loss), 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 6, 2024 expressed an unqualified opinion on those consolidated financial statements.

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 6, 2024

Fortuna Silver Mines Inc.

Consolidated Statements of Income (Loss)

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


			Years ended December 31,
	Note	2023		2022
Sales	20	$	842,428	$	681,491
Cost of sales	21		652,403		534,695
Mine operating income			190,025		146,796

General and administration	22		64,073		61,456
Foreign exchange loss			10,885		8,866
Impairment of mineral properties, plant and equipment	32		90,615		182,842
Write-off of mineral properties			5,985		5,874
Other (income) expenses	23		18,874		1,310
			190,432		260,348

Operating loss			(407)		(113,552)

Investment gains	5		12,395		-
Interest and finance costs, net	24		(21,790)		(12,057)
(Loss) gain on derivatives	20		(1,249)		500
			(10,644)		(11,557)

Loss before income taxes			(11,051)		(125,109)

Income taxes
Current income tax expense	25		42,636		35,783
Deferred income tax expense (recovery)	25		(10,057)		(24,986)
			32,579		10,797
Net loss for the year		$	(43,630)	$	(135,906)

Net loss attributable to:
Fortuna shareholders		$	(50,836)	$	(128,132)
Non-controlling interest	30		7,206		(7,774)
		$	(43,630)	$	(135,906)

Loss per share	19
Basic		$	(0.17)	$	(0.44)
Diluted		$	(0.17)	$	(0.44)

Weighted average number of common shares outstanding (000's)
Basic			295,067		291,281
Diluted			295,067		291,281

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

Page | 1

Fortuna Silver Mines Inc.

Consolidated Statements of Comprehensive Income (Loss)

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


		Years ended December 31,
	Note	2023		2022
Net loss for the year		$	(43,630)	$	(135,906)

Items that will remain permanently in other comprehensive income (loss):
Changes in fair value of investments in equity securities, net of $nil tax			(22)		(280)
Items that may in the future be reclassified to profit or loss:
Currency translation adjustment, net of tax^1^			(1,859)		(61)
Changes in fair value of hedging instruments, net of $nil tax			-		70
Total other comprehensive income (loss) for the year			(1,881)		(271)
Comprehensive loss for the year		$	(45,511)	$	(136,177)

Comprehensive income (loss) attributable to:
Fortuna shareholders			(52,717)		(128,403)
Non-controlling interest	30		7,206		(7,774)
		$	(45,511)	$	(136,177)

^1^ For the year ended December 31, 2023, the currency translation adjustment is net of tax recovery of $2.2 million (2022 - $1.1 million expense).

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)


Balance at	Note	****	December 31, 2023		****	December 31, 2022
ASSETS
CURRENT ASSETS
Cash and cash equivalents			$	128,148		$	80,493
Trade and other receivables	5			69,529			68,165
Inventories	6			115,825			92,033
Other current assets	7			19,823			12,021
				333,325			252,712
NON-CURRENT ASSETS
Restricted cash				910			3,967
Mineral properties and property, plant and equipment	9			1,574,212			1,567,622
Other non-current assets	10			59,416			51,923
Total assets			$	1,967,863		$	1,876,224

LIABILITIES
CURRENT LIABILITIES
Trade and other payables	11		$	148,084		$	111,896
Current portion of debt	14			43,901			-
Income taxes payable	25			31,779			11,591
Current portion of lease obligations	13			14,941			9,416
Current portion of closure and reclamation provisions	16			5,065			2,177
				243,770			135,080
NON-CURRENT LIABILITIES
Debt	14			162,946			219,175
Deferred tax liabilities	25			159,855			167,619
Closure and reclamation provisions	16			60,738			51,128
Lease obligations	13			42,460			11,930
Other non-current liabilities	15			9,973			2,596
Total liabilities				679,742			587,528

SHAREHOLDERS' EQUITY
Share capital	18			1,125,376			1,076,342
Reserves				25,342			29,929
Retained earnings				87,649			138,485
Equity attributable to Fortuna shareholders				1,238,367			1,244,756
Equity attributable to non-controlling interest	30			49,754			43,940
Total equity				1,288,121			1,288,696

Total liabilities and shareholders' equity			$	1,967,863		$	1,876,224

Contingencies and Capital Commitments (Note 31)

/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	2023		2022

Operating activities:
Net loss for the year		$	(43,630)	$	(135,906)
Items not involving cash
Depletion and depreciation			219,688		172,809
Accretion expense	24		6,773		4,830
Income taxes			32,579		10,797
Interest expense, net	24		15,017		7,227
Share-based payments, net of cash settlements			2,017		(1)
Impairment of mineral properties, plant and equipment	32		90,615		182,841
Inventory net realizable value adjustments	6		6,188		8,898
Inventory obsolescence adjustments	6		10,097		-
Write-off of mineral properties	9		5,985		5,874
Unrealized foreign exchange loss			5,706		4,554
Investment gains	5		(12,395)		-
Unrealized gains on derivatives			(170)		(1,194)
Other	23		5,142		-
Closure and reclamation payments	16		(1,203)		(623)
Changes in working capital	29		(9,737)		(18,021)
Cash provided by operating activities			332,672		242,085
Income taxes paid			(25,872)		(42,222)
Interest paid			(13,545)		(7,465)
Interest received			3,654		1,851
Net cash provided by operating activities			296,909		194,249

Investing activities:
Costs related to Chesser acquisition, net of cash acquired	8		(13,321)		-
Restricted cash			-		(1,911)
Additions to mineral properties and property, plant and equipment			(217,314)		(251,236)
Contractor advances on Séguéla construction			(8)		(2,186)
Purchases of investments	5		(9,359)		-
Proceeds from sale of investments	5		21,754		-
Other investing activities			1,364		-
Cash used in investing activities			(216,884)		(255,333)

Financing activities:
Transaction costs on credit facility	14		-		(688)
Proceeds from credit facility	14		75,500		80,000
Repayment of credit facility	14		(90,500)		(20,000)
Repurchase of common shares	18		-		(5,929)
Issuance of common shares from option exercise			301		-
Payments of lease obligations			(16,625)		(12,209)
Dividend payment to non-controlling interest			(1,392)		(2,708)
Cash (used in) provided by financing activities			(32,716)		38,466
Effect of exchange rate changes on cash and cash equivalents			346		(3,986)
Increase (decrease) in cash and cash equivalents during the year			47,655		(26,604)
Cash and cash equivalents, beginning of the year			80,493		107,097
Cash and cash equivalents, end of the year		$	128,148	$	80,493

Cash and cash equivalents consist of:
Cash		$	106,135	$	65,140
Cash equivalents			22,013		15,353
Cash and cash equivalents, end of the year		$	128,148	$	80,493
Supplemental cash flow information (Note 29)

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		****	Equity reserve		****	Hedging reserve		****	Fair value reserve			Equity component of convertible debentures	****	Foreign currency reserve		****	Retained earnings		****	Non-controlling interest		****	Total equity
Balance at January 1, 2023			290,221,971	$	1,076,342		$	28,850		$	198		$	(976)	$	4,825		$	(2,968)		$	138,485		$	43,940		$	1,288,696
Total comprehensive loss for the year
Net loss for the year			-		-			-			-			-		-			-			(50,836)			7,206			(43,630)
Other comprehensive loss for the year			-		-			-			-			(22)		-			(1,859)			-			-			(1,881)
Total comprehensive loss for the year			-		-			-			-			(22)		-			(1,859)			(50,836)			7,206			(45,511)

Transactions with owners of the Company
Acquisition of Chesser	8		15,545,368		45,548			-			-			-		-			-			-			-			45,548
Dividend payment to non-controlling interest			-		-			-			-			-		-			-			-			(1,392)			(1,392)
Exercise of stock options			127,350		397			(96)			-			-		-			-			-			-			301
Shares issued on vesting of share units			647,941		2,864			(2,864)			-			-		-			-			-			-			-
Convertible debenture conversion			45,000		225			-			-			-		-			-			-			-			225
Share-based payments	17		-		-			254			-			-		-			-			-			-			254
			16,365,659		49,034			(2,706)			-			-		-			-			-			(1,392)			44,936

Balance at December 31, 2023			306,587,630	$	1,125,376		$	26,144		$	198		$	(998)	$	4,825		$	(4,827)		$	87,649		$	49,754		$	1,288,121

Balance at January 1, 2022			291,529,330	$	1,079,746		$	27,435		$	128		$	(696)	$	4,825		$	(2,907)		$	266,617		$	54,422		$	1,429,570
Total comprehensive loss for the year
Net loss for the year			-		-			-			-			-		-			-			(128,132)			(7,774)			(135,906)
Other comprehensive loss for the year			-		-			-			70			(280)		-			(61)			-			-			(271)
Total comprehensive loss for the year			-		-			-			70			(280)		-			(61)			(128,132)			(7,774)			(136,177)

Transactions with owners of the Company
Dividend payment to non-controlling interest			-		-			-			-			-		-			-			-			(2,708)			(2,708)
Repurchase of common shares			(2,201,404)		(5,929)			-			-			-		-			-			-			-			(5,929)
Shares issued on vesting of share units			894,045		2,525			(2,006)			-			-		-			-			-			-			519
Share-based payments	17		-		-			3,421			-			-		-			-			-			-			3,421
			(1,307,359)		(3,404)			1,415			-			-		-			-			-			(2,708)			(4,697)

Balance at December 31, 2022			290,221,971	$	1,076,342		$	28,850		$	198		$	(976)	$	4,825		$	(2,968)		$	138,485		$	43,940		$	1,288,696

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, 2023 and 2022

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

1. NATURE OF OPERATIONS

Fortuna Silver Mines Inc. (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, Côte d’Ivoire, Mexico, and Peru. The Company operates the open pit Lindero gold mine (“Lindero”) in northern Argentina, the underground Yaramoko gold mine (“Yaramoko”) in southwestern Burkina Faso, the open pit Séguéla gold mine (“Séguéla”) in southwestern Côte d’Ivoire, the underground San Jose silver and gold mine (“San Jose”) in southern Mexico, and the underground Caylloma silver, lead, and zinc mine (“Caylloma”) in southern Peru.

The Company’s common shares are listed on the New York Stock Exchange (the “NYSE”) under the trading symbol FSM and on the Toronto Stock Exchange (the “TSX”) under the trading symbol FVI.

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

2. 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 (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) effective as of December 31, 2023.

On March 6, 2024, the Company's Board of Directors approved these financial statements for issuance.

Basis of Measurement

These financial statements have been prepared on a going concern basis under the historical cost basis, except for those assets and liabilities that are measured at fair value (Note 27) at the end of each reporting period.

3. MATERIAL ACCOUNTING POLICIES

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.

Page | 6

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Fortuna Silver Mines Inc. is the ultimate parent entity of the group. At December 31, 2023, 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 Mine

(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 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 interests 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 recognizes 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.

Page | 7

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(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 all subsidiaries is US dollars except for those outlined in the table below.

Name of Subsidiary	Place of Incorporation	Beneficial Common Share Ownership Interest	Principal Activity	Functional Currency
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 US dollar 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) Inventories

Inventories include mineral concentrates, doré, leach pad, gold in-circuit, stockpiled ore, materials and supplies, which 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 labour costs, direct 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 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 Page | 8

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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.

(f) 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.

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

Page | 9

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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 Caylloma, Yaramoko and Séguéla include a portion of inferred resources, and therefore differ from the life-of-mine plans the Company publishes 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 the Company has historically achieved in the past.

As part of the process to include inferred resources into our life-of-mine production plans, the Company applies 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 2023 life-of-mine plans were 0% (2022: 90%) at San Jose, 90% (2022: 90%) at Caylloma, 100% (2022: 100%) at Yaramoko, and 100% at Séguéla.

The percentage of inferred resources included as a component of the total mineable inventory (reserve and resource) considered in the 2023 life-of-mine evaluation for each operation as of December 31, 2023, was San Jose 0% (2022: 31%), Caylloma 50% (2022: 41%), Yaramoko 5% (2022: 8%), Séguéla 1%, and Lindero 0% (2022: 0%).

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.

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: Page | 10

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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




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.

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.

Page | 11

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(h) 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 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, net of depreciation and amortization, 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.

(i) 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.

Page | 12

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(j) 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.

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.

(k) 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 Page | 13

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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.

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.

(l) 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 share units, restricted share units, and performance 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.

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 Page | 14

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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 share unit plan covers all restricted share units (“RSUs”) and performance share units (“PSUs”) granted by the Company.

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 Non-Current 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.

(m) Financial Instruments

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.

Page | 15

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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 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.
---	---

Page | 16

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(n) 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 20 of these financial statements.

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

The Company adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from January 1, 2023. The amendments require the disclosure of 'material', rather than 'significant', accounting policies. Although the amendments did not result in any changes to the accounting policies themselves, they impacted the accounting policy information disclosed in Note 3 in certain instances.

(p) New Accounting Standards Issued but not yet Effective

A number of new standards are effective for annual periods beginning on or after January 1, 2024 and earlier application is permitted; however, the Company has not early adopted any new or amended standards in preparing these financial statements. The Company is currently evaluating the impact of the following amended standard on its financial statements:

●	Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)

These amendments clarify that the classification of liabilities as current or non-current is based on the right to defer settlement in existence at the end of the reporting period, which is unaffected by management’s intentions or expectation. These amendments also introduce a definition of “settlement” to make clear that settlement refers to the transfer to the counterparty of cash, equity instruments, other assets or services.

In addition, the amendments specify that only covenants that a company is required to comply with on or before the reporting date affect the company’s right to defer settlement of a liability, and therefore the classification of current or non-current. Such covenants affect whether the right exists at the end of the reporting period, even if compliance with the covenant is assessed only after the reporting date.

The amendments are applied retrospectively for annual periods beginning on or after 1 January 2024, with early application permitted. Page | 17

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

The following new standards or amendments are effective for annual periods beginning on or after January 1, 2024 and are expected to have no impact on the Company’s financial statements:

●	Lease Liability in a Sale and Leaseback (Amendments to IFRS 16)
●	Supplier Finance Arrangements (Amendments to IAS 7 and IFRS 7)
---	---
●	Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (Amendments to IFRS 10 and IAS 28)
---	---

The Company is currently evaluating the impact of the following amended standard, effective January 1, 2025, and interpretations on its consolidated financial statements:

●	Lack of Exchangeability (Amendments to IAS 21)

4 . 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, 2023, 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 the environmental reclamation provision. As at December 31, 2023, the Company used the following long-term prices for the reserve and resource estimations: gold $1,600/oz, silver $21/oz, lead $2,000/t and zinc $2,600/t, except at the San Jose mine which used $1,880/oz gold and $23.90/oz silver.

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 | 18

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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 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.

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 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, discount 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 | 19

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

v. 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.

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 occur 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 20 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.

(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 Page | 20

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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 impairment reversal exist for an asset or a group of assets. External sources of information the Company considers include changes in the market, economic and legal environment in which the Company operates that are not within its control and affect the recoverable amount of mining interests. Internal sources of information the Company considers include the manner in which mining properties and plant and equipment are being used or are expected to be used, and indicators of economic performance of the assets.

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 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 judgements 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 judgements 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.

5 . TRADE AND OTHER RECEIVABLES


As at	December 31, 2023		December 31, 2022
Trade receivables from doré and concentrate sales	$	19,970	$	23,977
Advances and other receivables		5,189		7,443
Value added tax receivables		44,370		36,745
Trade and other receivables	$	69,529	$	68,165

Page | 21

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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, 2023 and December 31, 2022.

As at December 31, 2023, current VAT receivables included $7.5 million (December 31, 2022 - $8.8 million) for Argentina, $7.4 million (December 31, 2022 - $4.7 million) for Mexico, $5.1 million (December 31, 2022 - $1.0 million) for Côte d’Ivoire, and $22.7 million (December 31, 2022 - $20.9 million) for Burkina Faso.

During the year ended December 31, 2023, the Company sold VAT receivables in the amount of $10.4 million at a factor rate of 5% to a commercial bank in Burkina Faso.

In the fourth quarter of 2023, the Company recognized foreign exchange losses incurred during the devaluation of the Argentine Peso in December 2023, primarily impacting VAT receivables. As of December 2023, the Company has unrealized FX losses of $7.6 million related to Argentine VAT receivables. The Company had already implemented an investment strategy, utilizing Argentine export promotions, to address its local currency requirements in Argentina. This strategy enabled the Company to achieve gains of $12.4 million from trades in Argentine Peso denominated cross-border securities, which helped offset foreign exchange losses.

6 . INVENTORIES


As at	Note	December 31, 2023		December 31, 2022
Concentrate stockpiles		$	1,328	$	2,161
Doré bars			273		4,494
Leach pad and gold-in-circuit			27,527		31,649
Ore stockpiles			73,015		52,692
Materials and supplies			53,235		44,476
Total inventories		$	155,378	$	135,472
Less: non-current portion	10		(39,553)		(43,439)
Current inventories		$	115,825	$	92,033

During the year ended December 31, 2023, the Company expensed $584.6 million of inventories to cost of sales (December 31, 2022 - $481.5 million).

During the year ended December 31, 2023, a charge of $6.2 million (December 31, 2022 – charge of $8.9 million) was recognized to reduce low grade stockpiles at Lindero and Yaramoko to net realizable value. This includes a charge of $2.3 million (December 31, 2022 – charge of $3.4 million) related to depletion and depreciation.

During the year ended December 31, 2023, the Company completed an assessment of its consumption plan for the materials in the warehouse and set up a provision of $10.1 million ($3.0 million Yaramoko, $4.6 million San Jose and $2.5 million at Lindero) related to inventory obsolescence.

7. OTHER CURRENT ASSETS


As at	December 31, 2023		December 31, 2022
Prepaid expenses	$	14,604	$	11,180
Income tax recoverable		5,113		718
Other		106		123
Other current assets	$	19,823	$	12,021

Page | 22

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

8. ACQUISITION OF CHESSER RESOURCES

On September 20, 2023, the Company acquired a portfolio of exploration projects in eastern Senegal, including the flagship Diambu Sud project, through the acquisition of Chesser Resources Limited ("Chesser").

The transaction did not qualify as a business combination under IFRS 3, Business Combinations, as significant inputs and processes that together constitute a business were not identified, given the early stage of exploration and evaluation of the projects acquired. The acquisition was therefore accounted for as an asset acquisition, and the purchase price was allocated to the assets acquired and liabilities assumed, based on their relative fair values at the date of acquisition. Acquisition costs were capitalized as part of the cost of assets acquired.

The cost of acquisition includes the fair value of the Fortuna shares issued to acquire Chesser, based on the issuance of 15,545,368 Fortuna shares at $2.93 per share, the Fortuna acquisition costs related to the acquisition, and the settlement of taxes related to the transaction. These taxes relate to the capital gain on the indirect disposition of the exploration projects in Senegal, and related registration fees.

The Company advanced interest-bearing loans of $3.4 million Australian dollars ($2.2 million) to Chesser in advance of closing of the transaction. The loans, and related interest, were effectively settled upon closing of the transaction.

The consideration and allocation of purchase price to assets acquired and liabilities assumed are as follows:


Consideration transferred
Shares issued	$	45,548
Acquisition costs		2,182
Settlement of loan facility from Fortuna		2,212
Capital gains taxes and registration fees		9,371
	$	59,313

Assets acquired and liabilities assumed		****
Cash and cash equivalents	$	420
Other current assets		300
Property, plant and equipment		282
Exploration and evaluation assets		58,862
Current liabilities		(551)
****	$	59,313

Page | 23

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

9. MINERAL PROPERTIES AND PROPERTY, PLANT AND EQUIPMENT


		Mineral Properties - Depletable		Mineral Properties - Non depletable		Construction in Progress		Property, Plant & Equipment		Total
COST
Balance as at December 31, 2022	$	866,999	$	712,269	$	154,647	$	704,781	$	2,438,696
Acquisition of Chesser		-		58,862		-		282		59,144
Additions		100,366		39,835		111,690		23,930		275,821
Changes in closure and reclamation provision		9,407		-		-		152		9,559
Disposals and write-offs		(142)		(5,883)		-		(6,872)		(12,897)
Transfers		534,991		(532,127)		(222,119)		219,255		-
Balance as at December 31, 2023	$	1,511,621	$	272,956	$	44,218	$	941,528	$	2,770,323
ACCUMULATED DEPLETION AND IMPAIRMENT
Balance as at December 31, 2022	$	506,268	$	-	$	-	$	364,807	$	871,075
Disposals and write-offs		(40)		-		-		(6,610)		(6,650)
Impairment		60,602		-		49		29,964		90,615
Depletion and depreciation		156,425		-		-		84,646		241,071
Balance as at December 31, 2023	$	723,255	$	-	$	49	$	472,807	$	1,196,111
Net Book Value as at December 31, 2023	$	788,366	$	272,956	$	44,169	$	468,721	$	1,574,212

Following the first gold pour on May 24, 2023, and the subsequent ramp-up of operations, the Séguéla project was evaluated to determine if it was ready for its intended use. Determining when a mine under construction is substantially complete and ready for its intended use involves significant judgement. Some of the criteria used to make the determination for the Séguéla mine included:

●	Completion of all major capital expenditures to prepare the mine for steady state operations.
●	The mine and plant achieving a predetermined percentage of design capacity.
---	---
●	Metallurgical recoveries aligning with expectations.
---	---
●	Ability to sustain ongoing metal production.
---	---
●	Availability and utilization of key infrastructure aligned with the intended design.
---	---

No single factor was more important than any other factor. Management considered these factors collectively and determined that commercial production was achieved, and assets were ready for their intended use on July 1, 2023, for the open pit mine and August 1, 2023, for the processing plant and supporting infrastructure. Upon reaching commercial production, the related assets started depreciating, and the Company stopped capitalizing interest expenses associated with the project on July 1, 2023.

During the year ended December 31, 2023, the Company capitalized $6.5 million of interest related to the construction of the Séguéla mine (year ended December 31, 2022 - $3.3 million).

As at December 31, 2023, non-depletable mineral properties include $88.5 million of exploration and evaluation assets (December 31, 2022 - $26.4 million).

During the year ended December 31, 2023, mining equipment arrived at site and was placed into use at the Séguéla mine as part of a mining services contract. As a result, the Company recognized right-of-use assets with a cost of $35.8 million.

As at December 31, 2023, property, plant and equipment includes right-of-use assets with a net book value of $56.1 million (December 31, 2022 - $21.5 million). Related depletion and depreciation for the year ended December 31, 2023, was $16.2 million (year ended December 31, 2022 - $9.5 million).

Page | 24

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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


		Mineral<br> Properties - <br>Depletable		Mineral<br> Properties - <br>Non depletable		Construction in Progress		Property, Plant & Equipment		Total
COST
Balance as at December 31, 2021	$	758,112	$	719,663	$	57,759	$	675,486	$	2,211,020
Additions		74,301		35,468		117,860		14,255		241,884
Changes in closure and reclamation provision		(10,024)		5,238		-		(235)		(5,021)
Disposals and write-offs		(372)		(5,502)		-		(3,313)		(9,187)
Transfers		44,982		(42,598)		(20,972)		18,588		-
Balance as at December 31, 2022	$	866,999	$	712,269	$	154,647	$	704,781	$	2,438,696
ACCUMULATED DEPLETION AND IMPAIRMENT
Balance as at December 31, 2021	$	275,460	$	-	$	-	$	223,206	$	498,666
Disposals and write-offs		-		-		-		(1,970)		(1,970)
Impairment		117,237		-		-		65,605		182,842
Depletion and depreciation		113,571		-		-		77,966		191,537
Balance as at December 31, 2022	$	506,268	$	-	$	-	$	364,807	$	871,075
Net Book Value as at December 31, 2022	$	360,731	$	712,269	$	154,647	$	339,975	$	1,567,622

10. OTHER NON-CURRENT ASSETS


As at	Note	December 31, 2023		December 31, 2022
Ore stockpiles	6	$	39,553	$	43,439
Value added tax receivables			13,172		3,642
Income tax recoverable			1,170		1,137
Other			5,521		3,705
Total other non-current assets		$	59,416	$	51,923

As at December 31, 2023, non-current VAT receivables included $3.8 million (December 31, 2022 - $3.6 million) for Mexico and $9.4 million (December 31, 2022 - nil) for Burkina Faso.

11. TRADE AND OTHER PAYABLES


As at	Note	December 31, 2023		December 31, 2022
Trade accounts payable		$	100,387	$	72,571
Payroll and related payables			21,896		22,967
Mining royalty payable			3,997		2,476
Other payables			15,112		7,794
Derivative liabilities			81		270
Share units payable	17(a)(b)(c)		6,611		5,818
Total trade and other payables		$	148,084	$	111,896

12. 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 year ended December 31, 2023, and 2022:

Page | 25

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Key Management Personnel

Amounts paid to key management personnel were as follows:


		Years ended December 31,
	2023		2022
Salaries and benefits	$	8,450	$	11,532
Directors fees		830		934
Consulting fees		66		69
Share-based payments		4,874		7,042
	$	14,220	$	19,577

During the year ended December 31, 2023, and 2022, the Company was charged for consulting services by Mario Szotlender, a director of the Company.

13. LEASE OBLIGATIONS


	Minimum lease payments
As at	December 31, 2023		December 31, 2022
Less than one year	$	20,339	$	11,343
Between one and five years		44,677		14,044
More than five years		6,457		5,806
		71,473		31,193
Less: future finance charges		(14,072)		(9,847)
Present value of lease obligations		57,401		21,346
Less: Current portion		(14,941)		(9,416)
Non-current portion	$	42,460	$	11,930

14. DEBT

The following table summarizes the changes in debt:


		Credit <br>facility		Convertible debentures		Total
Balance at December 31, 2021	$	117,082	$	40,407	$	157,489
Convertible debenture conversion		-		(60)		(60)
Drawdown		80,000		-		80,000
Transaction costs		(688)		-		(688)
Amortization of discount		626		1,808		2,434
Payments		(20,000)		-		(20,000)
Balance at December 31, 2022		177,020		42,155		219,175
Convertible debenture conversion		-		(225)		(225)
Drawdown		75,500		-		75,500
Amortization of discount		926		1,971		2,897
Payments		(90,500)		-		(90,500)
Balance at December 31, 2023	$	162,946	$	43,901	$	206,847
Less: Current portion		–		(43,901)		(43,901)
Non-current portion	$	162,946	$	-	$	162,946

Page | 26

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(a)	Credit Facilities

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 Amended Credit Facility from $120.0 million to $200.0 million, subject to the conditions described below. The Amended Credit Facility has a term of four years, maturing in November 2025, and steps down to $150.0 million after three years. Interest initially accrued on LIBOR loans under the Amended Credit Facility at LIBOR plus an applicable margin of between two and three percent per annum, which varied according to the consolidated leverage levels of the Company, as defined in the Amended Credit Facility.

Effective December 15, 2022, the Company executed a second amendment to the fourth Amended Credit Facility. The second amendment increased the amount of the Amended Credit Facility from $200.0 million to $250.0 million and increased the level of the step down of the Amended Credit Facility from $150.0 million to $175.0 million in November 2024. The amendment also introduced an uncommitted $50.0 million accordion option, exercisable from June 1, 2023, to October 2024. LIBOR loans under the Amended Credit Facility were converted to Term Benchmark loans, with the interest base rate on these loans converting from LIBOR to an Adjusted Term SOFR. The applicable loan margins on Term Benchmark loans increased by 25 basis points across all levels of the margin grid, and the commitment fee rate increased by 9 to 12 basis points across the margin grid. The counterparties, guarantors, covenants, step down date and maturity date of the Amended Credit Facility were unchanged.

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

In December 2023, the Amended Credit Facility was further amended to include additional security to the lenders in the form of guarantees and share pledges from the Company’s subsidiaries which indirectly own the Diamba Sud project in Senegal, acquired pursuant to the acquisition of Chesser.

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 therein. As at December 31, 2023, 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 | 27

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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, 2023, 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 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.

15. OTHER NON-CURRENT LIABILITIES


As at	Note	December 31, 2023		December 31, 2022
Restricted share units	17(b)	$	2,648	$	1,490
Other			7,325		1,106
Total other non-current liabilities		$	9,973	$	2,596

Other non-current liabilities include $6.4 million of severance provisions for the anticipated San Jose mine closure at the end of 2024.

Page | 28

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

16. CLOSURE AND RECLAMATION PROVISIONS

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


		Closure and Reclamation Provisions
	****	Caylloma Mine		****	San Jose Mine		Lindero Mine		****	Yaramoko Mine		Séguéla Mine		Total
Balance as at December 31, 2022		$	13,956		$	7,670	$	11,514	$	13,375	$	6,790	$	53,305
Changes in estimate			2,215			949		2,442		261		3,692		9,559
Reclamation expenditures			(1,011)			(192)		-		-		-		(1,203)
Accretion			790			777		529		597		295		2,988
Effect of changes in foreign exchange rates			-			1,154		-		-		-		1,154
Balance as at December 31, 2023			15,950			10,358		14,485		14,233		10,777		65,803
Less: Current portion			(3,804)			(1,261)		-		-		-		(5,065)
Non-current portion		$	12,146		$	9,097	$	14,485	$	14,233	$	10,777	$	60,738

		Closure and Reclamation Provisions
		Caylloma<br>Mine			San Jose<br>Mine		Lindero<br>Mine			Yaramoko Mine		Séguéla<br>Mine		Total
Balance as at December 31, 2021		$	14,898		$	7,128	$	19,639	$	12,895	$	1,552	$	56,112
Changes in estimate			(1,235)			(493)		(8,666)		135		5,238		(5,021)
Reclamation expenditures			(503)			(120)		-		-		-		(623)
Accretion			796			682		541		345		-		2,364
Effect of changes in foreign exchange rates			-			473		-		-		-		473
Balance as at December 31, 2022			13,956			7,670		11,514		13,375		6,790		53,305
Less: Current portion			(1,577)			(600)		-		-		-		(2,177)
Non-current portion		$	12,379		$	7,070	$	11,514	$	13,375	$	6,790	$	51,128

The following table summarizes certain key inputs used in determining the present value of reclamation costs related to mine and development sites:


	Closure and Reclamation Provisions
	Caylloma<br>Mine		San Jose<br>Mine		Lindero<br>Mine			Yaramoko<br>Mine		Séguéla<br>Mine		Total
Undiscounted uninflated estimated cash flows	$	17,036	$	11,972	$	24,507	$	14,805	$	11,003	$	79,323
Discount rate		6.30%		9.29%		4.19%		4.23%		3.88%
Inflation rate		3.20%		4.85%		2.26%		2.20%		2.61%

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

17. SHARE BASED PAYMENTS

During the year ended December 31, 2023, the Company recognized share-based payments of $8.1 million, (December 31, 2022 – $10.2 million) related to the amortization of deferred, restricted and performance share units and $nil (December 31, 2022 – $0.1 million) related to amortization of stock options.

Page | 29

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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, 2021		805,055	$	3,137
Granted		117,643		452
Changes in fair value		-		(121)
Outstanding, December 31, 2022		922,698		3,468
Granted		125,802		431
Changes in fair value		-		144
Outstanding, December 31, 2023		1,048,500	$	4,043

(b)	Restricted Share Units (RSUs)


		Cash Settled				Equity Settled
	Number of RSUs		Fair Value		Number of RSUs
Outstanding, December 31, 2021		1,859,139	$	5,503		1,644,461
Granted		1,348,538		5,264		-
Units paid out in cash		(1,256,288)		(5,737)		-
Vested and paid out in shares		-		-		(665,305)
Transferred from equity to cash settled		413,864		-		(413,864)
Transferred from cash to equity settled		(155,674)		-		155,674
Forfeited or cancelled		(260,870)		-		(15,111)
Changes in fair value and vesting		-		(1,190)		-
Outstanding, December 31, 2022		1,948,709		3,840		705,855
Granted		1,716,286		5,887		-
Units paid out in cash		(1,214,393)		(4,812)		-
Vested and paid out in shares		-		-		(297,275)
Transferred from equity to cash settled		406,487		-		(406,487)
Forfeited or cancelled		(188,892)		-		(2,093)
Changes in fair value and vesting		-		301		-
Outstanding, December 31, 2023		2,668,197		5,216		-
Less: current portion				(2,568)
Non-current portion			$	2,648

Page | 30

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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


		Cash Settled			Equity Settled
	Number of PSUs		Fair Value		Number of PSUs
Outstanding, December 31, 2021		515,008	$	3,104	1,845,887
Granted		-		-	824,768
Forfeited or cancelled		-		-	(434,007)
Transferred from equity to cash settled		168,452		-	(168,452)
Units paid out in cash		(683,460)		(3,882)	-
Vested and paid out in shares		-		-	(228,740)
Changes in fair value and vesting		-		778	-
Outstanding, December 31, 2022		-		-	1,839,456
Granted		-		-	844,187
Forfeited or cancelled		-		-	(152,729)
Transferred from equity to cash settled		340,236		-	(340,236)
Units paid out in cash		(340,236)		(1,240)	-
Vested and paid out in shares		-		-	(350,666)
Change in fair value and vesting		-		1,240	-
Outstanding, December 31, 2023		-	$	-	1,840,012

(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, 2023, a total of 2,950,529 stock options are available for issuance under the plan.


	Number of stock options	Weighted average<br>exercise price
		Canadian dollars
Outstanding, December 31, 2021	1,249,383	$	5.88
Expired unexercised	(612,565)		6.16
Outstanding, December 31, 2022	636,818		5.62
Exercised	(127,350)		3.22
Expired unexercised	(509,468)		6.21
Outstanding, December 31, 2023	-	$	-
Vested and exercisable, December 31, 2022	636,818	$	5.62
Vested and exercisable, December 31, 2023	-	$	-

18. SHARE CAPITAL

Authorized Share Capital

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

On April 28, 2023, the Company announced a renewal of its Normal Course Issuer Bid Program (“NCIB”) pursuant to which the Company can purchase up to five percent of its outstanding common shares. Under the NCIB, purchases of common shares may be made through the facilities of the TSX, the NYSE and/or alternative Canadian trading systems. The share repurchase program started on May 2, 2023 and will expire on the earlier of: (i) May 1, 2024; Page | 31

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

(ii) the date the Company acquires the maximum number of common shares allowable under the NCIB; or (iii) the date the Company otherwise decides not to make any further repurchases under the NCIB.

During the year ended December 31, 2023, the Company did not purchase any of its outstanding common shares. During the year ended December 31, 2022, the Company acquired and cancelled 2,201,404 common shares through its previous program at an average cost of $2.69 per share for a total cost of $5.9 million.

19. EARNINGS PER SHARE


		Years ended December 31,
	2023		2022
Basic:
Net loss attributable to Fortuna shareholders	$	(50,836)	$	(128,132)
Weighted average number of shares (000's)		295,067		291,281
Loss per share - basic	$	(0.17)	$	(0.44)


		Years ended December 31,
	2023		2022
Diluted:
Net loss attributable to Fortuna shareholders	$	(50,836)	$	(128,132)
Diluted net loss for the period	$	(50,836)	$	(128,132)

Weighted average number of shares (000's)		295,067		291,281
Weighted average diluted number of shares (000's)		295,067		291,281
Loss per share - diluted	$	(0.17)	$	(0.44)

For the year ended December 31, 2023, nil (December 31, 2022 – 509,468) out of the money options, 1,657,298 (December 31, 2022 – 2,380,857) share units, and 9,143,000 (December 31, 2022 – 9,176,000) potential shares issuable on conversion of the debentures were excluded from the diluted earnings per share calculation. These items were excluded from the diluted earnings per share calculations as their effect would have been anti-dilutive.

Page | 32

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

20. SALES

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


	Years ended December 31, 2023
		Peru		Mexico		Argentina		Burkina Faso		Côte d'Ivoire		Total
Silver-gold concentrates	$	-	$	148,828	$	-	$	-	$	-	$	148,828
Silver-lead concentrates		60,813		-		-		-		-		60,813
Zinc concentrates		42,989		-		-		-		-		42,989
Gold doré		-		-		207,509		228,846		154,165		590,520
Provisional pricing adjustments		(1,600)		878		-		-		-		(722)
Sales to external customers	$	102,202	$	149,706	$	207,509	$	228,846	$	154,165	$	842,428

	Years ended December 31, 2022
		Peru		Mexico		Argentina		Burkina Faso		Côte d'Ivoire		Total
Silver-gold concentrates	$	-	$	173,871	$	-	$	-	$	-	$	173,871
Silver-lead concentrates		50,300		-		-		-		-		50,300
Zinc concentrates		53,147		-		-		-		-		53,147
Gold doré		-		-		212,092		193,541		-		405,633
Provisional pricing adjustments		(1,116)		(344)		-		-		-		(1,460)
Sales to external customers	$	102,331	$	173,527	$	212,092	$	193,541	$	-	$	681,491


	Years ended December 31,
	2023		2022
Customer 1	$	228,846	$	193,541
Customer 2		207,505		212,092
Customer 3		154,165		-
Customer 4		102,206		102,332
Customer 5		78,519		76,851
Customer 6		71,187		70,584
Customer 7		-		26,091
	$	842,428	$	681,491

From time to time, the Company enters into forward sale and collar contracts to mitigate the price risk for some of its forecasted base and precious metals production, and non-metal commodities.

During the year ended December 31, 2023, the Company recognized $1.5 million of realized losses on the settlement of forward sale and collar contracts (December 31, 2022 - $0.7 million realized losses), and $0.3 million unrealized gains from changes in the fair value of the open positions (December 31, 2022 - $1.2 million unrealized gains).

Page | 33

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

21. COST OF SALES


	Years ended December 31,
	2023		2022
Direct mining costs	$	297,322	$	272,329
Salaries and benefits		75,088		44,432
Workers' participation		1,422		4,285
Depletion and depreciation		216,250		171,447
Royalties and other taxes		46,036		33,304
Other		16,285		8,898
Cost of sales	$	652,403	$	534,695

For the year ended December 31, 2023, depletion and depreciation includes $13.9 million of depreciation related to right-of-use assets (December 31, 2022 - $9.0 million).

22. GENERAL AND ADMINISTRATION


	Years ended December 31,
	2023		2022
General and administration	$	55,769	$	50,191
Workers' participation		241		954
		56,010		51,145
Share-based payments		8,063		10,311
General and administration	$	64,073	$	61,456

23. OTHER (INCOME) EXPENSES


	Years ended December 31,
	2023		2022
Loss on disposal of property, plant, and equipment	$	209	$	789
Other (income) expenses		18,665		521
	$	18,874	$	1,310

Other expenses include payments made and provisions raised during the year ended December 31, 2023:

●	$2.8 million related to a new agreement with the workers’ union at San Jose,
●	$1.5 million for stand-by and maintenance costs during the work stoppage at San Jose,
---	---
●	$6.4 million severance provisions for the anticipated San Jose mine closure at the end of 2024,
---	---
●	$1.4 million penalty provision related to a customs dispute at Séguéla,
---	---
●	$2.0 million at Yaramoko for stand-by and maintenance costs during the underground work stoppage, and
---	---
●	$3.7 million in administrative penalties incurred by Yaramoko, payable to the Ministry of Mines.
---	---

24. INTEREST AND FINANCE COSTS, NET


	Years ended December 31,
	2023		2022
Interest income	$	3,654	$	1,851
Interest expense		(18,367)		(8,885)
Bank stand-by and commitment fees		(304)		(193)
Accretion expense		(2,988)		(2,364)
Lease liabilities		(3,785)		(2,466)
	$	(21,790)	$	(12,057)

Page | 34

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

25. 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,
	2023		2022
Net loss before tax	$	(11,051)	$	(125,109)
Statutory tax rate		27.0%		27.0%
Anticipated income tax at statutory rates		(2,984)		(33,779)
Non-deductible expenditures (deductible expenditures)		2,443		(3,513)
Differences between Canadian and foreign tax rates		(729)		10,448
Changes in estimate		7,419		(4,492)
Inflation adjustment		(63,095)		(57,403)
Impact of foreign exchange		70,014		17,336
Change in deferred tax assets not recognized		11,489		70,178
Mining taxes		2,714		5,629
Withholding taxes		5,629		7,720
Other items		(321)		(1,327)
Total income tax expense	$	32,579	$	10,797

Total income tax represented by:
Current income tax expense	$	42,636	$	35,783
Deferred tax recovery		(10,057)		(24,986)
	$	32,579	$	10,797

(b)	Tax Amounts Recognized in Profit or Loss

---	---	---	---	---	---	---
		Years ended December 31,
		2023			2022
Current tax expense
Current taxes on profit for the year		$	42,096		$	35,884
Changes in estimates related to prior years			540			(101)
		$	42,636		$	35,783

Deferred tax expense
Origination and reversal of temporary differences and foreign exchange rate		$	(16,899)		$	(20,826)
Changes in estimates related to prior years			6,879			(4,392)
Effect of differences in tax rates			(37)			232
Effect of changes in tax rates			-			-
		$	(10,057)		$	(24,986)

Total tax expense		$	32,579		$	10,797

Page | 35

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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,
	2023		2022
Deferred tax assets:
Reclamation and closure cost obligation	$	15,011	$	14,942
Carried forward tax loss		16,043		3,552
Equipment and buildings		-		11,976
Accounts payable and accrued liabilities		16,747		13,286
Deductibility of resource taxes		154		2,406
Lease obligations		7,972		8,374
Other		-		86
Total deferred tax assets	$	55,927	$	54,622

Deferred tax liabilities:
Mineral properties	$	(193,646)	$	(202,087)
Mining and foreign withholding taxes		(1,124)		(3,524)
Equipment and buildings		(5,941)		-
Convertible debenture		(406)		(831)
Inflation		(598)		(4,306)
Inventory and other		(14,067)		(11,493)
Total deferred tax liabilities	$	(215,782)	$	(222,241)

Net deferred tax liabilities	$	(159,855)	$	(167,619)

	2023		2022
Classification:
Deferred tax assets	$	-	$	-
Deferred tax liabilities		(159,855)		(167,619)
Net deferred tax liabilities	$	(159,855)	$	(167,619)

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


	2023		2022
At January 1	$	167,619	$	191,668
Deferred income tax (recovery) expense through income statement		(10,057)		(24,831)
Deferred income tax expense through equity		2,293		782
At December 31	$	159,855	$	167,619

Page | 36

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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 consist of the following amounts:


	December 31,		December 31,
	2023		2022
Unrecognized deductible temporary differences and unused tax losses:
Non-capital losses	$	138,736	$	164,427
Provisions		19,335		7,215
Share issue costs		-		306
Mineral properties, plant and equipment		163,508		184,970
Lease obligation		1,729		578
Derivative liabilities		23,395		335
Investments in equity securities and associates		1,069		1,070
Unrecognized deductible temporary differences	$	347,772	$	358,901

As at December 31, 2023, 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 follows:


	December 31,		December 31,
	2023		2022
Mexico	$	27,491	$	150,379
Peru		96,467		78,505
West Africa		-		18,122

(e)	Tax Loss Carry Forwards

Tax losses have the following expiry dates:


		December 31,			December 31,
	Year of expiry	2023		Year of expiry	2022
Canada	2025 - 2042	$	210,847	2025 - 2042	$	184,717
Mexico	2024 - 2031		6,623	2023 - 2031		20

In addition, as at December 31, 2023, the Company has accumulated Canadian resource related expenses of $8.2 million (December 31, 2022- $8.0 million) for which the deferred tax benefit has not been recognized.

26. SEGMENTED INFORMATION

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 when considering the performance of the Company’s business units.

Page | 37

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

The following summary describes the operations of each reportable segment:

●	Mansfield – operates the Lindero gold mine
●	Sanu – operates the Yaramoko gold mine
---	---
●	Sango – operates the Séguéla gold mine
---	---
●	Cuzcatlan – operates the San Jose silver-gold mine
---	---
●	Bateas – operates the Caylloma silver, lead, and zinc mine
---	---
●	Corporate – corporate stewardship
---	---


	Year ended December 31, 2023
		Mansfield		Sanu		Sango		Cuzcatlan	****		Bateas		Corporate	****		Total
Revenues from external customers	$	207,509	$	228,846	$	154,165	$	149,706		$	102,202	$	-		$	842,428
Cost of sales before depreciation and depletion		(125,438)		(113,693)		(38,948)		(100,040)			(58,034)		-			(436,153)
Depreciation and depletion in cost of sales		(51,258)		(73,064)		(40,524)		(40,028)			(11,376)		-			(216,250)
General and administration		(9,697)		(919)		(4,930)		(7,304)			(5,157)		(36,066)			(64,073)
Impairment of mineral properties, plant and equipment		-		-		-		(90,615)			-		-			(90,615)
Other (expenses) income		(10,601)		(4,998)		(1,136)		(17,428)			108		(1,689)			(35,744)
Finance items		9,685		(1,045)		(3,039)		(707)			296		(15,834)			(10,644)
Segment income (loss) before taxes		20,200		35,127		65,588		(106,416)			28,039		(53,589)			(11,051)
Income taxes		(2,096)		(7,423)		(8,472)		(910)			(8,862)		(4,816)			(32,579)
Segment income (loss) after taxes	$	18,104	$	27,704	$	57,116	$	(107,326)		$	19,177	$	(58,405)		$	(43,630)

	Year ended December 31, 2022
		Mansfield		Sanu		Sango		Cuzcatlan			Bateas		Corporate			Total
Revenues from external customers	$	212,092	$	193,541	$	-	$	173,527		$	102,331	$	-		$	681,491
Cost of sales before depreciation and depletion		(111,625)		(106,953)		-		(91,312)			(53,358)		-			(363,248)
Depreciation and depletion in cost of sales		(54,644)		(64,893)		-		(37,776)			(14,134)		-			(171,447)
General and administration		(8,698)		(2,101)		(366)		(8,150)			(4,478)		(37,663)			(61,456)
Impairment of mineral properties, plant and equipment		(70,156)		(103,457)		-		(9,229)			-		-			(182,842)
Other (expenses) income		(3,239)		2,570		(1,175)		(5,026)			(208)		(8,972)			(16,050)
Finance items		(1,695)		(760)		(360)		(660)			(1,167)		(6,915)			(11,557)
Segment income (loss) before taxes		(37,965)		(82,053)		(1,901)		21,374			28,986		(53,550)			(125,109)
Income taxes		(3,529)		13,056		405		(4,855)			(8,915)		(6,959)			(10,797)
Segment income (loss) after taxes	$	(41,494)	$	(68,997)	$	(1,496)	$	16,519		$	20,071	$	(60,509)		$	(135,906)



As at December 31, 2023		Mansfield	****		Sanu	****		Sango		Cuzcatlan	****		Bateas		Corporate	****		Total
Total assets	$	491,213		$	228,335		$	976,169	$	58,501		$	139,161	$	74,484		$	1,967,863
Total liabilities	$	53,175		$	59,043		$	243,532	$	36,955		$	49,944	$	237,093		$	679,742
Capital expenditures^1^	$	44,667		$	63,833		$	118,693	$	22,260		$	22,394	$	3,974		$	275,821
^1^Capital expenditures are on an accrual basis for the year ended December 31, 2023

As at December 31, 2022		Mansfield			Sanu			Sango		Cuzcatlan			Bateas		Corporate			Total
Total assets	$	499,937		$	182,621		$	833,179	$	187,898		$	142,385	$	30,204		$	1,876,224
Total liabilities	$	44,152		$	47,122		$	173,082	$	30,381		$	49,143	$	243,648		$	587,528
Capital expenditures^1^	$	23,048		$	54,137		$	118,645	$	24,397		$	19,610	$	2,047		$	241,884
^1^Capital expenditures are on an accrual basis for the year ended December 31, 2022

27. 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.

Page | 38

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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 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 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, 2023, and 2022, 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 | 39

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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


		Carrying value									Fair value
December 31, 2023	****	Fair Value through OCI		****	Fair value through profit or loss		Amortized cost		Total		Level 1		****	Level 2		****	Level 3		****	Carrying value approximates Fair Value
Financial assets measured at Fair Value
Investments in equity securities		$	80		$	-	$	-	$	80	$	80		$	-		$	-		$	-
Trade receivables concentrate sales			-			16,819		-		16,819		-			16,819			-			-
		$	80		$	16,819	$	-	$	16,899	$	80		$	16,819		$	-		$	-
****
Financial assets not measured at Fair Value
Cash and cash equivalents		$	-		$	-	$	128,148	$	128,148	$	-		$	-		$	-		$	128,148
Trade receivables doré sales			-			-		3,151		3,151		-			-			-			3,151
Other receivables			-			-		5,189		5,189		-			-			-			5,189
		$	-		$	-	$	136,488	$	136,488	$	-		$	-		$	-		$	136,488
****
Financial liabilities measured at Fair Value
Metal forward sale and collar contracts liability		$	-		$	(81)	$	-	$	(81)	$	-		$	(81)		$	-		$	-
Share units payable			-			(9,259)		-		(9,259)		-			(9,259)			-			-
		$	-		$	(9,340)	$	-	$	(9,340)	$	-		$	(9,340)		$	-		$	-
****
Financial liabilities not measured at Fair Value
Trade payables		$	-		$	-	$	(100,387)	$	(100,387)	$	-		$	-		$	-		$	(100,387)
Payroll payable			-			-		(21,896)		(21,896)		-			-			-			(21,896)
Credit facilities			-			-		(162,946)		(162,946)		-			(165,000)			-			-
Convertible debentures			-			-		(43,901)		(43,901)		-			(44,344)			-			-
Other payables			-			-		(82,807)		(82,807)		-			-			-			(82,807)
		$	-		$	-	$	(411,937)	$	(411,937)	$	-		$	(209,344)		$	-		$	(205,090)

Page | 40

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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


	Carrying value								Fair value
December 31, 2022	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	$	78	$	-	$	-	$	78	$	78	$	-	$	-	$	-
Trade receivables concentrate sales		-		21,455		-		21,455		-		21,455		-		-
Fuel hedge contracts asset		-		18		-		18		-		18		-		-
	$	78	$	21,473	$	-	$	21,551	$	78	$	21,473	$	-	$	-

Financial assets not measured at Fair Value
Cash and cash equivalents	$	-	$	-	$	80,493	$	80,493	$	-	$	-	$	-	$	80,493
Trade receivables doré sales		-		-		2,522		2,522		-		-		-		2,522
Other receivables		-		-		7,443		7,443		-		-		-		7,443
	$	-	$	-	$	90,458	$	90,458	$	-	$	-	$	-	$	90,458

Financial liabilities measured at Fair Value
Foreign exchange forward contracts liability	$	-	$	(270)	$	-	$	(270)	$	-	$	(270)	$	-	$	-
Share units payable		-		(7,308)		-		(7,308)		-		(7,308)		-		-
	$	-	$	(7,578)	$	-	$	(7,578)	$	-	$	(7,578)	$	-	$	-

Financial liabilities not measured at Fair Value
Trade payables	$	-	$	-	$	(72,571)	$	(72,571)	$	-	$	-	$	-	$	(72,571)
Payroll payable		-		-		(22,967)		(22,967)		-		-		-		(22,967)
Credit facilities		-		-		(177,020)		(177,020)		-		(180,000)		-		-
Convertible debentures		-		-		(42,155)		(42,155)		-		(46,138)		-		-
Other payables		-		-		(31,519)		(31,519)		-		-		-		(31,519)
	$	-	$	-	$	(346,232)	$	(346,232)	$	-	$	(226,138)	$	-	$	(127,057)

Page | 41

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

28. MANAGEMENT OF FINANCIAL 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, 2023 and 2022 is as follows:



As at	December 31, 2023		December 31, 2022
Cash and cash equivalents	$	128,148	$	80,493
Trade and other receivables		69,529		68,165
Income tax receivable		6,283		718
Other non-current receivables		18,693		8,503
	$	222,653	$	157,879

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. Materially all of the Company’s concentrates are sold to large, well-known concentrate buyers.

(b)	Liquidity Risk

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they come due. The Company manages its liquidity risk by continually monitoring forecasted and actual cash flows. The Company has in place a planning and budgeting process to help determine the funds required to support its normal operating requirements and its development plans. The Company aims to maintain sufficient liquidity to meet its short term business requirements, taking into account its anticipated cash flows from operations, its holdings of cash and cash equivalents, and its committed and anticipated liabilities.

The Company had $213.1 million of liquidity comprised of cash and cash equivalents and undrawn credit facilities as at December 31, 2023. The Company believes that it has sufficient liquidity to meet the Company’s minimum obligations for at least the next 12 months from December 31, 2023.

Compania Minera Cuzcatlan S.A. de C.V. (“Minera Cuzcatlan”), the wholly owned subsidiary that operates the San Jose mine, has an ongoing legal proceeding (the “Mexican Legal Proceedings") over the 12-year extension of its Environmental Impact Authorization (“EIA”) with the Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) after it annulled the mine’s EIA on January 5, 2023. Until there is a determination in the Mexican Page | 42

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Legal Proceedings, the San Jose mine continues to operate under the terms of the 12-year EIA due to a permanent injunction granted by the Mexican Federal Administrative Court (see Note 33).

Until the determination of the Mexican Legal Proceedings, the Company has agreed to certain temporary restrictions on its Amended Credit Facility and is required to have a positive unappealable decision in such proceedings prior to December 31, 2024. In the event such a decision is not received before December 31, 2024, an event of default would occur and the availability under the Amended Credit Facility would be reduced to nil. Management expects to receive either a positive unappealable decision or an additional extension from its lenders prior to December 31, 2024. In the event that the Company does not receive either a positive unappealable decision or an extension and an event of default occurs, the Company anticipates having sufficient liquidity to fulfill its financial obligations and settle any outstanding debt.

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

As at December 31, 2023, 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, 2023
		Less than								After
		1 year	****		1 - 3 years	****		4 - 5 years		5 years		Total
Trade and other payables	$	148,084		$	-		$	-	$	-	$	148,084
Debt		45,715			165,000			-		-		210,715
Income taxes payable		31,779			-			-		-		31,779
Lease obligations		20,339			39,775			4,902		6,457		71,473
Other liabilities		-			9,973			-		-		9,973
Closure and reclamation provisions		5,527			27,157			8,219		38,420		79,323
	$	251,444		$	241,905		$	13,121	$	44,877	$	551,347



	Expected payments due by year as at December 31, 2022
		Less than						After
		1 year		1 - 3 years		4 - 5 years		5 years		Total
Trade and other payables	$	111,896	$	-	$	-	$	-	$	111,896
Debt		-		225,940		-		-		225,940
Income taxes payable		11,589		-		-		-		11,589
Lease obligations		11,343		8,308		5,736		5,806		31,193
Other liabilities		-		2,596		-		-		2,596
Capital commitments, Séguéla		13,923		380		-		-		14,303
Closure and reclamation provisions		3,227		24,635		9,110		23,040		60,012
	$	151,978	$	261,859	$	14,846	$	28,846	$	457,529

(c)	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, West Africa CFA francs, Australian dollars, and Euros. 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.

Page | 43

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

As at December 31, 2023 and 2022, the Company was exposed to currency risk through the following assets and liabilities denominated in foreign currencies:


		December 31, 2023
	****	Canadian Dollars	****	Peruvian Soles	****	Mexican Pesos	****	Argentine Pesos	****	West African CFA Francs	****	Australian Dollars	****	Euros
Cash and cash equivalents		480		6,871		8,798		1,092,738		39,898,039		48		-
Marketable securities		105		-		-		-		-		-		-
Restricted cash		-		-		-		-		573,830		-		-
Trade and VAT receivables		388		1,730		114,189		9,554,183		16,584,783		(117)		-
Income tax receivable		-		28,052		84,050		-		-		-		-
VAT - long term receivable		-		-		64,265		-		5,582,765		-		-
Trade and other payables		(18,669)		(51,327)		(174,021)		(6,605,563)		(18,465,087)		(1,259)		(2,535)
Provisions, current		-		(5,905)		(21,420)		(1,334,105)		-		-		-
Income tax payable		-		-		(28,094)		-		(2,136,164)		-		-
Other liabilities		(184)		-		(121,249)		-		-		-		-
Provisions, non-current		-		(13,879)		(107,576)		-		-		-		-
Total foreign currency exposure		(17,880)		(34,458)		(181,058)		2,707,253		42,038,166		(1,328)		(2,535)
US$ equivalent of foreign currency exposure		(13,516)		(9,280)		(10,718)		3,350		70,851		(905)		(2,802)


	December 31, 2022
	Canadian<br>Dollars	Peruvian<br>Soles	Mexican<br>Pesos	Argentine<br>Pesos	West <br> African <br> CFA <br>Francs	Australian <br>Dollars	Euros
Cash and cash equivalents	587	6,237	73,868	11,845	6,057,885	250	0
Marketable securities	105	-	-	-	-	-	-
Restricted cash	-	-	-	-	2,338,983	-	-
Trade and VAT receivables	215	3,317	73,868	2,062,918	12,979,116	(115)	-
Income tax receivable	-	28,137	13,900	-	-	-	-
VAT - long term receivable	-	-	70,520	-	-	-	-
Trade and other payables	(13,374)	(16,966)	(218,288)	(1,429,416)	(15,346,471)	(1,285)	(274)
Provisions, current	-	(8,123)	(11,729)	(387,883)	-	-	-
Income tax payable	51	-	(84,393)	-	(1,353,215)	-	-
Other liabilities	(177)	-	(9,708)	-	-	-	-
Provisions, non-current	-	(12,611)	(90,797)	-	-	-	-
Total foreign currency exposure	(12,593)	(9)	(182,759)	257,464	4,676,298	(1,150)	(274)
US$ equivalent of foreign currency exposure	(9,297)	(2)	(9,439)	1,436	7,416	(793)	(287)

Page | 44

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Sensitivity as to change in foreign currency exchange rates on our foreign currency exposure as at December 31, 2023 is provided below:


		Effect on foreign
		denominated
Currency	Change	items
Mexican pesos	+/- 10%	$	974
Peruvian soles	+/- 10%	$	844
Argentine pesos	+/- 10%	$	305
Canadian dollars	+/- 10%	$	1,229
West African CFA francs	+/- 10%	$	6,441
Australian dollars	+/- 10%	$	82
Euros	+/- 10%	$	255

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 28(f), 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.

(d)	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, 2023:


Metal	****	Change	****	Effect on Sales
Silver		+/- 10%		$	433
Gold		+/- 10%		$	246
Lead		+/- 10%		$	488
Zinc		+/- 10%		$	449

During the year ended December 31, 2023, the Company recognized negative sales adjustments of $0.7 million (December 31, 2022 – negative $1.5 million) as a result of changes in metal prices on the final settlement or during the quotational period.

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 (see Note 20).

(e)	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 SOFR-based debt and the mark-to-market value of derivative instruments which depend on interest rates.

(f)	Capital Management

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

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, 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. These changes have since been ratified and extended legislation to December 31, 2025.

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, 2023		December 31, 2022
Equity	$	1,238,367	$	1,244,756
Debt		206,847		219,175
Lease obligations		57,401		21,346
Less: cash and cash equivalents		(128,148)		(80,493)
	$	1,374,467	$	1,404,784

Other than the restrictions related to capital controls, and complying with the debt covenants under the Company’s Amended Credit Facility, the Company is not subject to any externally imposed capital requirements. As at December 31, 2023 and 2022, the Company was in compliance with its debt covenants.

29. SUPPLEMENTAL CASH FLOW INFORMATION

Changes in working capital for the years ended December 31, 2023 and 2022 are as follows:


	Years ended December 31,
	2023		2022
Trade and other receivables	$	(17,111)	$	7,315
Prepaid expenses		(3,242)		(1,643)
Inventories		(21,020)		(20,415)
Trade and other payables		31,636		(3,278)
Total changes in working capital	$	(9,737)	$	(18,021)

Page | 46

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

(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 periods as set out below are as follows:


	Bank loan		Convertible debentures		Lease<br>obligations
As at December 31, 2021	$	117,082	$	40,407	$	29,405
Loss on debt modifications		—		—		(729)
Additions		80,000		—		2,774
Terminations		—		—		(661)
Conversion of debenture		—		(60)		—
Interest		626		1,808		2,623
Payments		(20,000)		—		(12,209)
Transaction costs		(688)		—		—
Foreign exchange		—		—		143
As at December 31, 2022		177,020		42,155		21,346
Additions		75,500		—		48,805
Terminations		—		—		(21)
Conversion of debenture		—		(225)		—
Interest		926		1,971		3,658
Payments		(90,500)		—		(16,625)
Foreign exchange		—		—		238
As at December 31, 2023	$	162,946	$	43,901	$	57,401

The significant non-cash financing and investing transactions during the years ended December 31, 2023 and 2022 are as follows:



	Years ended December 31,
	2023		2022
Acquisition of Chesser	$	45,548	$	-
Mineral properties, plant and equipment changes in closure and reclamation provision	$	(9,559)	$	5,021
Stock options allocated to share capital upon exercise	$	96	$	-
Additions to right of use assets	$	48,805	$	2,774
Share units allocated to share capital upon settlement	$	2,864	$	2,525

30. **** NON-CONTROLLING INTEREST

As at December 31, 2023, the non-controlling interest (“NCI”) of the State of Burkina Faso, which represents a 10% interest in Roxgold SANU S.A., totaled $3.4 million. The income attributable to the NCI for the year ended December 31, 2023, totaling $2.6 million, is based on the net income for Yaramoko.

Page | 47

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

As at December 31, 2023, the NCI of the State of Côte d’Ivoire, which represents a 10% interest in Roxgold Sango S.A., totaled $46.4 million. The income attributable to the NCI for the year ended December 31, 2023, totaling $4.7 million, is based on the net income for Séguéla.


Summarized statement of financial position

As of December 31, 2023	Yaramoko		Séguéla
Non-controlling interest percentage		10%		10%
Current assets	$	53,002	$	82,462
Non-current assets		153,037		318,912
Current liabilities		(30,356)		(63,515)
Non-current liabilities		(100,919)		(228,553)
Net assets	$	74,764	$	109,306

Non-controlling interest	$	3,379	$	46,376

Summarized income statement

For the period ended December 31, 2023	Yaramoko		Séguéla
Revenue	$	228,846	$	154,165
Net income (loss) and comprehensive income (loss)	$	(2,881)	$	66,915

Summarized cash flows

For the period ended December 31, 2023	Yaramoko		Séguéla
Cash flows provided by operating activities	$	101,193	$	109,264
Cash flows used in investing activities	$	(51,057)	$	(59,022)
Cash flows (used in) provided by financing activities	$	(43,025)	$	79

31. 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 $18.2 million, which consisted of progressive closure activities of $6.2 million, final closure activities of $9.8 million, and post closure activities of $2.3 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 2024, the Company provided a bank letter of guarantee of $12.9 million to the Peruvian Government in respect of such closure costs and taxes.

(b) San Jose Letter of Guarantee

The Company has established three letters of guarantee in the aggregate amount of $0.8 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 March 5, 2024, September 17, 2024 and December 31, 2024, respectively. The letter expiring on March 5, 2024 is in the process of being extended for a further 12 months.

Page | 48

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

As at December 31, 2023, the Company had capital commitments of $5.8 million, for civil work, equipment purchases and other services at the Lindero mine, which are expected to be expended within one year.

Côte d’Ivoire

The Company entered into an agreement with a service provider at the Séguéla mine wherein if the Company terminates the agreement prior to the end of its term, in November 2026, the Company would be required to make an early termination payment, which is reduced monthly over 48 months. If the Company had terminated the agreement on December 31, 2023, and elected not to purchase the service provider’s equipment, it would have been subject to an early termination payment of $16.7 million. If the Company had terminated the agreement on December 31, 2023, and elected to purchase the service provider’s equipment, the early termination amount would be adjusted to exclude equipment depreciation and demobilization of equipment, and only include portion of the monthly management fee and demobilization of personnel.

(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 recognized 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 recognized 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.

Peru

The Company was assessed $1.2 million (4.3 million Peruvian soles), including interest and penalties of $0.8 million (2.9 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 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, 2023, the Company has recorded the amount paid of $1.2 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 10).

The Company was assessed $0.7 million (2.8 million Peruvian soles), including interest and penalties of $0.5 million (1.7 million Peruvian soles), for the 2011 tax year by SUNAT, the Peruvian tax authority, with respect to the deduction of certain losses arising from intercompany transactions. The Company applied to the Peruvian tax court to appeal the assessment. On May 14, 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.

Page | 49

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Argentina

The windfall income tax prepayment applies to companies that meet certain income tax or net income tax (before the deduction of accumulated tax losses) thresholds for 2021 or 2022. The aggregate amount of the windfall income tax prepayment payable by Mansfield calculated in accordance with the Resolution was approximately $1.0 million (810 million Argentine Pesos), excluding related accrued interest of approximately $0.3 million (277 million Argentine Pesos).

The windfall income tax prepayment was to be paid in three equal and consecutive monthly instalments, starting on October 22, 2022, and was payable in addition to income tax instalments currently being paid by corporate taxpayers on account of their income tax obligations. The windfall income tax prepayment is an advance payment of income taxes which were due to be paid in 2022.

Based on the historical accumulated losses of Mansfield for fiscal 2021, which can be carried forward for 2022, Mansfield was not liable for income tax, and based upon current corporate income tax laws and the ability of the Company to deduct historical accumulated losses, income tax will not be required to be paid for fiscal 2022.

To protect Mansfield’s position from having to pay the windfall income tax prepayment as an advance income tax for 2022, which based on management’s projections is not payable, Mansfield applied to the Federal Court of Salta Province for a preliminary injunction to prevent the AFIP from issuing a demand or other similar measure for the collection of the windfall income tax prepayment.  On October 3, 2022, Mansfield was notified that the Court had granted the preliminary injunction. As a result, Mansfield did not pay any of the instalments.

Mansfield also filed an administrative claim with the AFIP to challenge the constitutionality of the Resolution, which was rejected by AFIP on November 2, 2022. Mansfield has challenged the rejection of its administrative claim, by filing legal proceedings against the AFIP with the Federal Court. On February 15, 2023, the Federal Court granted Mansfield a preliminary injunction in these legal proceedings. Mansfield has subsequently presented additional documentation to AFIP which has resulted in the windfall tax prepayment installments being eliminated from Mansfield’s account in AFIP’s system. The legal proceedings to determine the unconstitutionality of the Resolution and whether interest is payable to AFIP continue under the protection of a preliminary injunction.

(e) Other Contingencies

The Company is subject to various investigations and other claims; and legal, labour, 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 unfavourably 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.

Page | 50

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

32. IMPAIRMENT

Impairment Testing

In accordance with the Company’s accounting policies each cash-generating unit (CGU) is assessed for indicators of impairment from both internal and external sources at the end of each reporting period. If such indicators of impairment exist for any CGU, those CGUs are tested for impairment. Based on this assessment, the Company determined that the San Jose and Lindero CGUs had indicators of impairment.

The recoverable amounts of the CGUs are determined based on the discounted cash flows expected to be derived from the Company’s mining properties, which is a Level 3 fair value estimate. Due to its short mine life, the recoverable amount of the San Jose mine was calculated based on its Value in Use (VIU). The recoverable amount of the Lindero CGU was calculated based on its Fair Value Less Cost of Disposal (FVLCD).

San Jose

During the fourth quarter of 2023, the life of mine plan for the San Jose mine was updated and indicated that the Mineral Reserves will be exhausted at the end of 2024, compared to mid-2025 as previously planned. The decrease in the life of mine was the result of significant cost increases over the last 12 months, which resulted from:

•Appreciation of the Mexican Peso.

•	Higher labour costs as a result of new labour reform mandates which either took effect on January 1, 2024, or are expected to take place in 2024.
•	Higher contractor costs for transportation, distribution, shotcrete, maintenance and mine services.
---	---
•	Higher costs for fuel, energy and materials related to inflation.
---	---

In addition to the reduction in Mineral Reserves in the Trinidad Zone, planned expansion areas such as the Victoria Zone failed to convert from Mineral Resources to Mineral Reserves as a result of the higher costs noted above.

As a result, the Company determined that the recoverable amount of the San Jose CGU was $10.0 million, and recorded an impairment charge of $90.6 million to reduce the carrying amount of the CGU to its recoverable amount.

Lindero

As of December 31, 2023, the Company determined that there were indicators of impairment at the Lindero mine due to an increase in capital costs for the heap leach expansion project and an increase in operating costs as a result of macro-economic factors, in particular the pace of inflation relative to the devaluation of the Argentine Peso. As a result, management estimated the recoverable amount of the Lindero mine as at December 31, 2023, determined on a fair value less cost of disposal basis, and concluded that no impairment charge was required. However, adverse changes in any of the assumptions used to determine the recoverable amount in future periods may result in an impairment.

Key Assumptions

The projected cash flows used in impairment testing are significantly affected by changes in the assumptions of metal prices, estimated quantities of mineral reserves and mineral resources that form the basis for the life of mine plans, production cost estimates, capital requirements, and discount rates. The Company’s impairment testing incorporated the following key assumptions.

Page | 51

Fortuna Silver Mines Inc.

Notes to Consolidated Financial Statements

For the years ended December 31, 2023 and 2022

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

Weighted Average Cost of Capital

Projected cash flows were discounted using an after-tax discount rate that reflects the weighted average cost of capital for each CGU when considering estimates for risk free interest rates, market value of the Company’s equity, market return on equity, share volatility, debt-to-equity financing ratio and a country risk premium. Discount rates used in each impairment assessment were as follows:

Cash Generating Unit	Discount Rate
Lindero, after-tax	7.7%
San Jose, after-tax	6.6%
San Jose, pre-tax	6.9%

Pricing Assumptions

Metal pricing including in the cash flow projects beyond five years is based on historical volatility and consensus analyst pricing. The metal price assumptions used in the Company’s impairment assessments were as follows:

Metal	2024	2025	2026	2027	Long Term
Gold (Per Once)	$2,000	$2,000	$1,925	$1,875	$1,800
Silver (Per Ounce)	$24.50	$24.50	$24.00	$23.25	$23.00

Production and Costs

The Company’s estimates of future cash costs of production and capital expenditures are based on the life of mine (LOM) plan for each cash generating unit. The LOM plans for each CGU are based on detailed research and analysis and consider the optimal level of capital investment, overall production levels and mine sequence, commodity prices, export and corporate taxes, historical performance, and other factors to maximize the value of the CGU. Adverse changes in any of the assumptions made in future periods may result in an impairment.

Projected future revenues reflect the forecasted production at each CGU as detailed in their LOM plans. The LOM may include mineralized material that does not qualify for inclusion as a mineral reserve or a mineral resource. This is consistent with the methodology used to measure value beyond proven and probable reserves when allocating the purchase price of a business combination to acquired mining assets. The Company’s estimate of recoverable amount for accounting purposes is not a “preliminary assessment”, as defined in Canadian Securities Administrators’ National Instrument 43- 101 “Standards of Disclosure for Mineral Projects”.

33. SUBSEQUENT EVENTS

On October 30, 2023, the Company announced that the Mexican Federal Administrative Court (the “Court”) had ruled in favour of Cuzcatlan (Fortuna’s Mexican subsidiary), and reinstated the 12 year environmental impact authorization for the San Jose mine. The decision of the Court has been appealed and was admitted by the Mexican Collegiate Court (the “Appeals Court”) in January 2024. Cuzcatlan filed a response in February 2024. A decision of the Appeals Court is expected within the next six to 12 months. The permanent injunction that Cuzcatlan already has allowing the San Jose ine to continue to operate, remains in effect. If a positive unappealable decision in these proceedings is not received by Cuzcatlan before December 31, 2024, the availability under the Amended Credit Facility will be reduced to nil, and an event of default will occur. Page | 52

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the year ended December 31, 2023

As of March 6, 2024

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023

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, 2023 and 2022 (the “2023 Financial Statements”) and the related notes thereto which 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, including its annual information form, on SEDAR+ at www.sedarplus.ca 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 6, 2024. The information and discussion provided in this MD&A covers the year December 31, 2023, 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 to Canadian dollars.

Fortuna 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, 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 U.S. Securities and Exchange Commission (“SEC”) as set out in the cautionary note 57 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 2022 dated March 28, 2023 and its Management Information Circular dated May 8, 2023, which are available 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: cash cost per ounce of gold; all-in sustaining cash cost per ounce of gold sold; all-in sustaining cash cost per ounce of gold equivalent 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 cashflow and free cashflow from ongoing operations; adjusted net income; adjusted attributable net income, adjusted EBITDA, net debt 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 may not be comparable to similar financial measures disclosed by other issuers. Non-IFRS measures are further discussed in the “Non-IFRS Measures” section 30 of this MD&A.

Fortuna | 2

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

CONTENTS


Business Overview	4
Corporate Developments	4
Highlights	5
Financial Results	8
Quarterly Results of Operations	18
Quarterly Information	25
Liquidity and Capital Resources	26
Financial Instruments	29
Share Position & Outstanding Options & Equity Based Share Units	29
Related Party Transactions	30
Non-IFRS Financial Measures	30
Risks and Uncertainties	44
Critical Accounting Estimates, Assumptions, and Judgements	53
Controls and Procedures	54
Cautionary Statement on Forward-Looking Statements	55
Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources	57

Fortuna | 3

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (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, Côte d’Ivoire, Mexico, Peru, and Senegal. 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 southwestern 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 the open pit Séguéla gold mine (“Séguéla”, or the “Séguéla Mine”) located in southwestern 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 (“NYSE”) under the trading symbol FSM and on the Toronto Stock Exchange (“TSX”) under the trading symbol FVI.

CORPORATE DEVELOPMENTS

San Jose EIA

On October 30, 2023 the Company announced that the Mexican Federal Administrative Court (the “Court”) had ruled in favour of Compañia Minera Cuzcatlan S.A. de C.V (“Minera Cuzcatlan”), Fortuna’s Mexican subsidiary, and reinstated the 12-year environmental impact authorization (“EIA”) for the San Jose Mine.

The decision of the Court has been appealed and was admitted by the Mexican Collegiate Court (the “Appeals Court”) in January 2024. Minera Cuzcatlan filed a response in February 2024. A decision of the Appeals Court is expected within the next six to 12 months. The permanent injunction that Minera Cuzcatlan already has remains in effect which allows the San Jose Mine to continue to operate.

Until the determination of the legal proceedings, the Company has agreed to certain temporary restrictions under the credit facility as disclosed in the Liquidity and Capital Resources section below.

IMPAIRMENT EXPENSE RECORDED IN THE FOURTH QUARTER OF 2023

In the fourth quarter of 2023 the Company recorded an impairment of mining interests and property plant and equipment of $90.6 million ($90.6 million net of tax). The impairment expense recognized against the carrying values of the mining interests is as follows:


	Impairment Expense		Impairment Expense
			Net of Tax
San Jose	$	90.6	$	90.6
Impairment expense	$	90.6	$	90.6
Figures may not add due to rounding

Fortuna | 4

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

San Jose

During the fourth quarter of 2023, the life of mine plan for the San Jose Mine was updated and indicated that the Mineral Reserves will be exhausted at the end of 2024, compared to mid-2025 as previously planned. The decrease in the life of mine was the result of significant cost increases over the last 12 months, which resulted from:

●	Appreciation of the Mexican Peso
●	Higher labour costs as a result of new labour reform mandates which either took effect on January 1, 2024 or are expected to take effect in 2024
---	---
●	Higher contractor costs for transportation, distribution, shotcrete, maintenance and mine services
---	---
●	Higher costs for fuel, energy and materials related to inflation
---	---

In addition to the reduction in Mineral Reserves in the Trinidad Zone, planned expansion areas such as the Victoria Zone failed to convert Mineral Resources to Mineral Reserves as a result of the higher costs noted above.

The external factors increasing San Jose’s cost structure were not anticipated in the impairment assessment completed in 2022 along with the corresponding impact on the mines ability to replace Mineral Reserves. The change in circumstances and costs were integrated into a new impairment assessment with the result being an impairment charge of $90.6 million.

Lindero

As of December 31, 2023, the Company determined that there were indicators of impairment at the Lindero Mine due to an increase in capital costs for the heap leach expansion project and an increase in operating costs as a result of macro-economic factors; particularly in the pace of inflation relative to the devaluation of the Argentine Peso. In determining the recoverable value of the Lindero Cash Generating Unit (CGU), the Company made estimates of discounted 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, export taxes, future capital expenditures, discount rates and exchange rates. The Company performed a test of impairment using a discount rate of 7.7% and a long term gold price of $1,750/oz to determine the fair value less cost of disposal (FVLCD) of the CGU and concluded that no impairment charge was required as of December 31, 2023. However, any adverse changes in any of the assumptions above in future periods may result in an impairment.

HIGHLIGHTS FOR THE YEAR ENDED DECEMBER 31, 2023

Financial

●	Sales were $842.4 million, an increase of 24% from the $681.5 million reported in the year ended December 31, 2022 (“2022”)
●	Mine operating income was $190.0 million, an increase of 29% from the $146.8 million reported in 2022
---	---
●	Operating loss was $0.4 million, a decrease of 100% from the $113.6 million in operating loss reported in 2022
---	---
●	Net loss was $43.6 million or $0.17 per share, a decrease from a net loss of $135.9 million or $0.44 per share reported in 2022
---	---
●	Adjusted net income (refer to Non-IFRS Financial Measures) was $72.6 million compared to $42.6 million in 2022, representing a 70% year-over-year increase
---	---
●	Adjusted EBITDA (refer to Non-IFRS Financial Measures) was $335.1 million compared to $245.5 million reported in 2022, representing a 36% year-over-year increase
---	---
●	Free cash flow from ongoing operations (refer to Non-IFRS Financial Measures) was $153.5 million compared to $69.2 million reported in 2022, representing a 122% year-over-year increase
---	---

Fortuna | 5

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

●	Net cash provided by operating activities was $296.9 million, an increase of 53% from the $194.2 million reported in 2022

Operating

●	Gold production of 326,638 ounces, a 26% increase from 2022
●	Silver production of 5,883,691 ounces, a decrease of 15% from 2022
---	---
●	Lead production of 40,851,657 pounds, an increase of 18% from 2022
---	---
●	Zinc production of 55,060,450 pounds, an increase of 19% from 2022
---	---
●	Consolidated All-in Sustaining Costs (“AISC”) of $1,508 per ounce on a gold equivalent sold basis compared to $1,431 per ounce for 2022. See “Non-IFRS Measures - All-in Sustaining Cash Cost per Ounce of Gold Equivalent Sold” for additional information
---	---

Health & Safety

For the fourth quarter of 2023, the Company recorded one lost time injury (“LTI”), three restricted work injuries and four medical treatment injuries (“MTI”) over 3.47 million hours worked. The year-to-date LTI frequency rate (“LTIFR”) at the end of this quarter was 0.36 (0.39 in 2022) lost time injuries per million hours worked while the year-to-date total recordable injury frequency rate (“TRIFR”) was 1.22 (2.32 in 2022) total recordable injuries per million hours worked.

Environment

No significant incidents were recorded during the fourth quarter of 2023, and no instances of environmental non-compliance were identified by authorities, nor were any fines related to environmental permits and regulations recorded.

Community Engagement

During the fourth quarter of 2023, there were no significant disputes at any of our sites. We also recorded 219 local stakeholder engagement activities during the period. These included consultation meetings with local administration and community leaders, participation in ceremonies and courtesy visits.

Climate Change

In the fourth quarter of 2023, the Company continued to pursue its climate change action plan, which aims to reduce its greenhouse gas emissions and strengthen its resilience to climate-related risks. The Company completed a climate-related scenario risk analysis in line with the guidelines set forth in the Task Force on Climate-Related Financial Disclosures Framework while finalizing its process of defining climate-related metrics and targets.

Fortuna | 6

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Operating and Financial Highlights

A summary of the Company’s consolidated financial and operating results for the three and twelve months ended December 31, 2023 are presented below:


	Three months ended December 31,			Years ended December 31,
Consolidated Metrics	2023	2022	% Change	2023	2022	% Change
Selected highlights
Silver
Metal produced (oz)	1,354,003	1,746,746	(22%)	5,883,691	6,907,275	(15%)
Metal sold (oz)	1,398,553	1,775,019	(21%)	5,899,186	6,924,640	(15%)
Realized price ($/oz)	23.27	21.35	9%	23.37	21.75	7%
Gold
Metal produced (oz)	107,376	64,112	67%	326,638	259,427	26%
Metal sold (oz)	106,961	62,718	71%	328,264	259,313	27%
Realized price ($/oz)	1,990	1,737	15%	1,948	1,802	8%
Lead
Metal produced (000's lbs)	10,798	8,735	24%	40,852	34,588	18%
Metal sold (000's lbs)	11,641	9,118	28%	41,074	34,869	18%
Zinc
Metal produced (000's lbs)	13,933	12,575	11%	55,060	46,176	19%
Metal sold (000's lbs)	14,407	11,027	31%	56,166	44,770	25%
Unit Costs
Production cash cost ($/oz Au Eq)	840	873	(4%)	874	849	3%
All-in sustaining cash cost ($/oz Au Eq)	1,509	1,579	(4%)	1,508	1,431	5%

Mine operating income	51.9	26.0	100%	190.0	146.8	29%
Operating loss	(77.4)	(173.1)	55%	(0.4)	(113.6)	100%
Attributable net loss	(92.3)	(152.8)	40%	(50.8)	(128.1)	60%
Attributable loss per share - basic	(0.30)	(0.52)	42%	(0.17)	(0.44)	61%
Adjusted attributable net income^1^	20.6	6.4	222%	64.9	41.4	57%
Adjusted EBITDA^1^	120.3	55.8	116%	335.1	245.5	36%
Net cash provided by operating activities	105.1	49.6	112%	296.9	194.2	53%
Free cash flow from ongoing operations^1^	66.2	4.4	1,405%	153.5	69.2	122%
Capital Expenditures^2^
Sustaining	46.8	33.9	38%	136.1	98.1	39%
Non-sustaining^3^	1.8	(2.3)	178%	5.2	8.2	(37%)
Séguéla construction	—	23.5	(100%)	50.0	107.7	(54%)
Brownfields	5.5	6.5	(15%)	16.1	23.3	(31%)
^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 | 7

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

The following table presents a summary of certain selected financial information for the three years ended December 31, 2023, 2022 and 2021:


	Three months ended December 31,					Years ended December 31,
	2023		2022		% Change	2023		2022		2021
Sales		265.3		164.7	61%		842.4		681.5	599.9
Mine operating income		51.9		26.0	100%		190.0		146.8	205.5
Operating (loss) income		(77.4)		(173.1)	55%		(0.4)		(113.6)	136.9
Net (loss) income		(89.8)		(160.4)	44%		(43.6)		(135.9)	59.4
Attributable net (loss) Income		(92.3)		(152.8)	40%		(50.8)		(128.1)	57.9
(Loss) earnings per share - basic		(0.30)		(0.52)	42%		(0.17)		(0.44)	0.24
Attributable (loss) earnings per share - basic		(0.30)		(0.52)	43%		(0.17)		(0.44)	0.24

As at							December 31, 2023		December 31, 2022	December 31, 2021
Cash and cash equivalents							128.1		80.5	107.1
Total assets							1,967.9		1,876.2	2,021.9
Debt							206.8		219.2	157.5
Shareholder's equity attributable to Fortuna shareholders							1,238.4		1,244.8	1,375.1

FINANCIAL RESULTS

Sales


	Three months ended December 31,			Years ended December 31,
	2023	2022	% Change	2023	2022	% Change
Provisional sales $
Lindero	61.4	48.8	26%	207.5	212.1	(2%)
Yaramoko	56.0	45.7	23%	228.8	193.5	18%
Séguéla	85.8	-	100%	154.2	-	100%
San Jose	33.6	43.8	(23%)	152.2	175.6	(13%)
Caylloma	28.0	24.7	13%	103.6	103.7	(0%)
Adjustments^1^	0.5	1.7	(71%)	(3.9)	(3.4)	(15%)
Total sales $	265.3	164.7	61%	842.4	681.5	24%
^1^ Adjustments consists of mark to market, final price and assay adjustments
Based on provisional sales before final price adjustments. Net after payable metal deductions, treatment, and refining charges
Treatment charges are allocated to base metals at Caylloma and to gold at San Jose

Fourth Quarter 2023 vs Fourth Quarter 2022

Consolidated sales for the three months ended December 31, 2023 were $265.3 million, a 61% increase from the $164.7 million reported in the same period in 2022. Sales by reportable segment for the three months ended December 31, 2023 were as follows:

●	Lindero recognized adjusted sales of $61.4 million from the sale of 29,308 ounces of gold, a 26% increase from the same period in 2022. Sales increased at Lindero as a result of higher realized metal prices of $1,993 per gold ounce compared to $1,732 in the previous period and higher ounces sold. See "Results of Operations – Lindero Mine, Argentina" for additional information.
●	Yaramoko recognized adjusted sales of $56.0 million from the sale of 28,229 ounces of gold which was 23% higher than the same period in 2022. Higher gold sales at Yaramoko were primarily driven by higher metal prices of $1,984 per gold ounce compared to $1,742 in the comparable period and higher ounces sold. See "Results of Operations – Yaramoko Mine, Burkina Faso" for additional information.
---	---

Fortuna | 8

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

●	Séguéla recognized adjusted sales of $85.8 million from the sale of 43,018 ounces of gold. The mine was under construction in the same period for 2022. See "Results of Operations – Séguéla Mine, Côte d’Ivoire" for additional information.
●	San Jose recognized adjusted sales of $34.1 million, a 26% decrease from the $45.9 million reported in the same period in 2022. The decrease in sales was primarily driven by lower production from lower grades as well as lower tonnes mined as a result of operational challenges. This was partially offset by higher metal prices. See "Results of Operations – San Jose Mine, Mexico" for additional information.
---	---
●	Caylloma recognized adjusted sales of $28.1 million compared to $24.3 million reported in the same period in 2022. The increase in sales was primarily the result of higher increased production from higher grades and higher metal prices. See "Results of Operations – Caylloma Mine, Peru" for additional information.
---	---

Twelve Months of 2023 vs Twelve Months of 2022

Consolidated sales for the twelve months ended December 31, 2023 were $842.4 million, a 24% increase from the $681.4 million reported in the same period in 2022. Sales by reportable segment for the twelve months ended December 31, 2023 were as follows:

●	Lindero recognized adjusted sales of $207.5 million from the sale of 103,503 ounces of gold, a 2% decrease from the same period in 2022. Lower gold sales were the result of lower production due to lower gold grades delivered to the leach pad which was in line with the mining sequence, partially offset by higher metal prices. See "Results of Operations – Lindero Mine, Argentina" for additional information.
●	Yaramoko recognized adjusted sales of $228.8 million from the sale of 117,676 ounces of gold which was an 18% increase from the previous period. Higher sales were mainly due to higher metal prices as well as increased production from higher processed tonnes and higher grades. See "Results of Operations – Yaramoko Mine, Burkina Faso" for additional information.
---	---
●	Séguéla recognized adjusted sales of $154.2 million from the sale of 78,521 ounces of gold. See "Results of Operations – Séguéla Mine, Côte d’Ivoire " for additional information.
---	---
●	San Jose recognized adjusted sales of $149.7 million, a 14% decrease from the $173.5 million reported in the same period in 2022. Sales for the year were lower at San Jose primarily due to the illegal blockade of the mine in the second quarter and lower production from lower grades which is in line with the reserve model and partially offset by higher realized prices. See "Results of Operations – San Jose Mine, Mexico" for additional information.
---	---
●	Caylloma recognized adjusted sales of $102.2 million which were in line with the $102.3 million reported in the same period in 2022. See "Results of Operations – Caylloma Mine, Peru" for additional information.
---	---

Fortuna | 9

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Operating Income (Loss) and Adjusted EBITDA


	Three months ended December 31,						Years ended December 31,
	2023		%^1^	2022		%^1^	2023		%^1^	2022		%^1^
Operating income (loss)
Lindero		(5.8)	(9%)		(69.6)	(142%)		10.5	5%		(36.3)	(17%)
Séguéla		38.0	44%		1.4	0%		68.6	45%		(1.5)	0%
Yaramoko		2.2	4%		(95.0)	(208%)		36.2	5%		(81.3)	(42%)
San Jose		(110.6)	(325%)		(1.6)	(3%)		(105.7)	(71%)		22.0	13%
Caylloma		8.4	30%		6.8	28%		27.7	27%		30.2	29%
Corporate		(9.6)			(15.1)			(37.7)			(46.6)
Total		(77.4)	(29%)		(173.1)	(105%)		(0.4)	(0%)		(113.5)	(17%)

Adjusted EBITDA^2^
Lindero		30.1	49%		17.3	35%		80.9	39%		90.2	43%
Séguéla		63.0	73%		1.1	0%		106.3	69%		(0.3)	0%
Yaramoko		19.5	35%		24.0	53%		108.3	47%		85.6	44%
San Jose		6.4	19%		18.4	40%		40.4	27%		71.6	41%
Caylloma		11.1	39%		9.8	40%		38.7	38%		39.3	38%
Corporate		(9.8)			(14.8)			(39.5)			(40.9)
Total		120.3	45%		55.8	34%		335.1	40%		245.5	36%
^1^ As a Percentage of Sales
^2^ Refer to Non-IFRS Financial Measures
Figures may not add due to rounding

Fourth Quarter 2023 vs Fourth Quarter 2022

Operating loss for the three months ended December 31, 2023 was $77.4 million, a decrease of $95.7 million over the same period in 2022 which was primarily due to:

●	Higher operating income at the Lindero Mine was the result of an impairment charge of $70.2 million in the comparable period of 2022. Operating income for the fourth quarter of 2023 was impacted by several one time charges including:
o	A write-down of long-term low grade stockpiles to net realizable value of $5.4 million due to an increase in the expected costs to complete. The write-down was calculated based on an average cost per tonne including cash and non-cash costs as required under IFRS where as low grade stockpiles at Lindero are accumulated based on incremental cash costs. On a cash only basis, the low grade stockpiles remain profitable.
---	---
o	In the fourth quarter of 2023 the site completed a detailed review of inventory in warehouse and identified $2.5 million in inventory that was obsolete. The materials were written-off.
---	---
o	In December of 2023 the new Argentine government allowed a rapid devaluation of the Argentine Peso which resulted in a foreign exchange loss of $5.0 million primarily driven by the devaluation of VAT receivables
---	---
●	Yaramoko saw an increase in operating income of $97.2 million as a result of the mine recognizing an impairment charge of $103.5 million in the fourth quarter of 2022. Operating results at Yaramoko in the fourth quarter of 2023 were impacted by a write-down of materials in warehouse of $3.0 million as the site completed a detailed review of what will be consumed prior to the end of the current mine life and an administrative penalty of $2.7 million imposed by the government of Burkina Faso.
---	---
●	Séguéla recognized operating income of $38.0 million in the fourth quarter as the site completed its production ramp-up. In the comparable period the mine was still under construction.
---	---

Fortuna | 10

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

●	Operating loss at the San Jose Mine for the fourth quarter of 2023 was $110.6 million compared to operating income of $1.6 million in the same period of 2022. The decrease in operating income was primarily due to:
o	An impairment of mineral properties of $90.6 million related to an impairment charge for the San Jose cash generating unit. Refer “Impairment Expense Recorded in the Fourth Quarter of 2023” above.
---	---
o	A provision for $6.4 million related to employee severance costs as the mine is currently expected to close at the end of 2024 when Mineral Reserves are exhausted
---	---
o	A write-down of materials in warehouse of $4.4 million as a result of the shorter mine life and a revision in the inventory consumption plan
---	---
o	A write-off of $4.1 million of mineral properties related to exploration programs that will no longer be continued
---	---
●	Operating income at the Caylloma Mine for the fourth quarter of 2023 was $1.6 million higher than the comparable period of 2022 as a result of higher sales.
---	---

After adjusting for items that are not indicative of future operating earnings, adjusted EBITDA (refer to Non-IFRS Financial Measures) was $120.3 million for the three months ended December 31, 2023, an increase of $64.5 million over the same period in 2022. Higher adjusted EBITDA was primarily the result of contributions from the Séguéla Mine which was still under construction in the comparable period of 2022.

The most comparable IFRS measure to the Non-IFRS measure adjusted EBITDA is net income. Net loss for the three months ended December 31, 2023 was $89.8 million. Refer to the discussion above and to the section entitled “Non-IFRS Measures” for more detailed information.

Twelve months of 2023 vs Twelve months of 2022

Operating loss for the twelve months ended December 31, 2023 was $0.4 million, a decrease of $113.2 million over the same period in 2022 which was primarily due to:

●	Operating loss for the year ending December 31, 2022 included an impairment charge of $182.8 million related to impairments at the San Jose, Lindero and Yaramoko CGUs.
●	Contributions from the Séguéla Mine in the second half of 2023. The mine was under construction during 2022.
---	---
●	Lower operating income at the Lindero Mine was driven by the same factors above that influenced results for the quarter as well as higher distribution costs from the sale of copper concentrate during the year.
---	---
●	An operating loss at San Jose of $105.7 million for 2023 compared to an operating income of $22.0 million in the comparable period. The reduction in operating income was primarily the result of an impairment charge of $90.6 million that was recognized in the fourth quarter.
---	---
●	Operating income at Yaramoko was higher by $117.5 million as a result of the mine recognizing an impairment charge of $103.5 million in the previous year.
---	---
●	Operating income at Caylloma decreased by $2.4 million primarily as a result of higher operating costs.
---	---

After adjusting for items that are not indicative of future operating earnings, adjusted EBITDA (refer to Non-IFRS Financial Measures) was $335.1 million for the twelve months ended December 31, 2023, an increase of $89.6 million over the same period in 2022. Higher adjusted EBITDA was primarily the result of contributions from the Séguéla Mine which was still under construction in the previous period.

The most comparable IFRS measure to the Non-IFRS measure adjusted EBITDA is net loss. Net loss for the twelve months ended December 31, 2023 was $43.6 million. Refer to the discussion above and to the section entitled “Non-IFRS Measures” for more detailed information.

Fortuna | 11

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

All-in Sustaining Cost (“AISC”)

Fourth Quarter 2023 vs Fourth Quarter 2022

Consolidated AISC per gold equivalent ounce sold for the fourth quarter of 2023 was $1,509 per ounce compared to $1,579 per ounce for the comparable quarter. The decrease in AISC was primarily the result of:

●	Cash costs per ounce of $840 per gold equivalent ounces were lower than the $873 per gold equivalent ounce reported in Q4 2022 due to lower cost ounces from the Séguéla Mine, partially offset by a higher cost per ounce at the San Jose Mine due to lower production and higher costs
●	Higher gold equivalent ounces (“GEO”) sold primarily due to low contributions from the Séguéla Mine that was under construction in the comparable period.
---	---
●	The previous period benefited from the impact of the gain on a forward contract for diesel of $1.1 million.
---	---

Twelve Months of 2023 vs Twelve Months of 2022

Consolidated AISC per gold equivalent ounce sold for the twelve months ended December 31, 2023 was $1,508 per ounce compared to $1,431 per ounce for the comparable period. The increase in AISC was primarily the result of:

●	Cash cost per gold equivalent ounce was $874 compared to the $849 reported in 2022 as the contribution of lower cost production in the second half of the year from Séguéla was offset higher costs per ounce at Lindero mainly due to lower planned head grades in 2023 and higher costs at San Jose due to lower processed ore and lower head grades
●	Higher sustaining capital at the Lindero Mine as a result of Phase 2 of the leach pad expansion and higher capitalized stripping
---	---
●	The previous period benefited from the impact of the gain on a forward contract for diesel of $4.6 million.
---	---

General and Administrative (“G&A”) Expenses


	Three months ended December 31,					Years ended December 31,
(Expressed in millions)	2023		2022		% Change	2023		2022		% Change
Mine G&A		7.2		6.1	18%		27.5		22.5	22%
Corporate G&A		8.4		5.9	42%		28.3		27.7	2%
Share-based payments		4.3		4.4	(2%)		8.1		10.3	(21%)
Workers' participation		—		0.2	(100%)		0.2		1.0	(80%)
Total		19.9		16.6	20%		64.1		61.5	4%

G&A expenses for the three months ended December 31, 2023 increased 20% to $19.9 million compared to $16.6 million reported in the same period in 2022. The increase was the result of the Séguéla project entering production and timing of expenses.

G&A expenses for the twelve months ended December 31, 2023 of $64.1 million were in line with the $61.5 million reported in the same period in 2022 with higher mine G&A being offset by lower share based compensation.

Fortuna | 12

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Foreign Exchange Loss

Foreign exchange loss for the three months ended December 31, 2023 increased $2.0 million to $2.4 million compared to $0.4 million reported in the same period in 2022. Foreign exchange losses for the quarter were primarily driven by a $5.0 million loss in Argentina as the government allowed a rapid devaluation of the Argentine Peso in December which reduced the value of Peso denominated VAT balances.

Foreign exchange loss for the twelve months ended December 31, 2023 increased $2.0 million to $10.9 million compared to $8.9 million reported in the same period in 2022. Losses for the year were primarily driven by the December devaluation of the Argentine Peso in both August and December as well as devaluations of the West African Franc and the impact on VAT and cash balances.

Income Tax Expense

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 (“ETR”) 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 ETR and the sensitivity of the tax provision to these factors, the ETR will fluctuate, sometimes significantly. This trend is expected to continue in future periods.

Income tax expense for the three months ended December 31, 2023 was $17.0 million compared to an income tax recovery of $15.3 million reported in the same period in 2022. The $32.3 million increase in the income tax expense was a result of Séguéla starting to accrue income taxes in the fourth quarter of 2023 as well as there not being a deferred tax recovery associated with the impairment charge at San Jose as it only has a year of mine life left. The fourth quarter of 2022 also had a large deferred tax recovery associated with the impairment charges realized in the quarter.

Income tax expense for the twelve months ended December 31, 2023 was $32.6 million compared to an income tax expense of $10.8 million reported in the same period in 2022. The increase of $21.8 million is primarily attributable to the Séguéla Mine starting to accrue for income tax expenses in the fourth quarter of 2024 and the impact of a deferred tax recoveries in 2022 related to the impairment charge of $182.8 million.

The ETR for the three months ended December 31, 2023 was (23%) compared to 9% for the same period in 2022. The decrease of 33% is primarily a result of the impairment charge at San Jose in the fourth quarter of 2023.

The ETR for the twelve months ended December 31, 2023 was (295%) compared to (9%) for the same period in 2022. The change in the ETR was the result of the impairment charge recognized at San Jose in the fourth quarter of 2023 and there not being a deferred tax recovery associated with the impairment charge as a result of the short mine life.

2024 GUIDANCE AND OUTLOOK

Séguéla Mine, Côte d’Ivoire

Mill throughput expanded to 1.46 Mta, achieving 70% of mill expansion scheduled for 2026

The 2024 mine plan considers mining in the Antenna, Ancien, and Koula pits, with plans to process 1.46 million tonnes of ore averaging 3.0 g/t Au, and capital investments estimated at $39.8 million, including $32 million for sustaining capital expenditures and $7.8 million for Brownfields exploration programs.

Fortuna | 13

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Feasibility and optimization work is underway to realize the opportunity to incorporate underground mineable resources at the Sunbird, Ancien, and Koula deposits.

Major sustaining capital investments include:

●	Capitalized stripping$17.1 million
●	Tailings storage facility (TSF) lift$4.8 million
---	---
●	Other miscellaneous $10.1 million
---	---

Capitalized stripping at Séguéla corresponds to further mining of the Antenna pit and development and mining of the Ancien and Koula pits. The overall stripping ratio for 2024 is planned to be 8.2:1. AISC for 2024 reflects the ongoing TSF expansion project, which will add tailings holding capacity for the next two years and is expected to be completed in the first half of 2024.

In 2024, annual ore processing is expanded to 1.46 million tonnes, 17 percent above tonnage scheduled for year 1 in the 2021 Technical Report, and close to the expansion target of 1.57 million tonnes scheduled for year 3. Process plant de-bottlenecking initiatives in 2024 still present upside opportunities for throughput capacity.

Cash cost and AISC:

●

The Company expects a 2024 cash cost between $630 and $730 per ounce of gold, an increase of approximately 113 percent over 2023 at the upper range, and 84 percent at the lower range of guidance. The increase is mainly due to the mine’s stripping ratio rising from 3.7:1 to 8.2:1, in accordance with the mine plan. In addition, higher costs are anticipated for processing, which include milling, energy consumption, freight, transportation, and overhead.

●

The Company expects a 2024 AISC between $1,110 and $1,230 per ounce of gold, an increase of approximately 54 percent over 2023 at the upper range, and 39 percent at the lower range of guidance. The increase is explained by higher cash cost per ounce and higher capex per ounce of approximately $120 related to capitalized stripping costs.

---

Yaramoko Mine, Burkina Faso

Grade and tonnages benefit from exploration success in 2023

At the Yaramoko Mine, the Company plans to process 435,000 tonnes of ore averaging 8.3 g/t Au. Capital investment decreases substantially compared to previous years and in 2024 mainly comprises of development and exploration activities.

Major sustaining capital investment projects include:

●	Mine development$13.9 million
●	Brownfields exploration $6.1 million
---	---

Cash cost and AISC:

●	The Company expects a 2024 cash cost between $865 and $965 per ounce of gold, an increase of approximately 29 percent over 2023 at the upper range, and 16 percent at the lower range of guidance. The increase is due primarily to the reallocation of fixed mining costs from capex to opex and lower processed ore.
●	The Company expects a 2024 AISC between $1,220 and $1,320 per ounce of gold, a decrease of approximately 7 percent under 2023 at the upper range, and 14 percent at the lower range of guidance. The decrease is explained by lower capex year over year of approximately $250 per ounce of gold.
---	---

Fortuna | 14

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Lindero Mine, Argentina Sustaining capital intensive year, including a one-time leach pad expansion of $41.7 million

The Lindero Mine is expected to place 6.6 million tonnes of ore on the leach pad averaging 0.62 g/t Au, containing an estimated 131,000 ounces of gold. Capital investments are estimated at $64.0 million, including $51.5 million in capital projects, and $12.5 million in capitalized stripping costs.

Major sustaining capital investments include:

●	Capitalized stripping $12.5 million
●	Leach pad phase II expansion$41.7 million
---	---
●	Heavy equipment replacement and overhaul$6.6 million
---	---
●	Plant critical spare parts$3.2 million
---	---

Cash cost and AISC:

●

The Company expects a 2024 cash cost between $850 and $950 per ounce of gold, mostly in line with 2023.

●

The Company expects a 2024 AISC between $1,730 and $1,950 per ounce of gold, an increase of approximately 22 percent over 2023 at the upper range, and 9 percent at the lower range of guidance. 2024 is a particularly capital intensive year for Lindero, including a one-time leach pad phase II expansion project which is planned to be completed in the second half of 2024, with a capital estimate of $41.7 million.

---

While the mine continues delivering on cost savings from operational efficiency programs, the economics of Lindero are exposed to potential significant impacts in changes to macro-economic and taxation policies, derived from emergency announcements made by the newly elected Government in its attempt to eliminate the national fiscal deficit. Cash cost per ounce does not include any potential changes to the Argentine taxation regime on imports and export duties, as these are still being discussed by the Government and Congress. However, if passed as advertised, these represent additional risks to higher cash cost per ounce and AISC estimates.

San Jose Mine, Mexico

Cost increments lead to exhaustion of reserves by year end 2024

At the San Jose Mine, the Company plans to process 0.90 million tonnes of ore averaging 142 g/t Ag and 0.9 g/t Au. Silver and gold production reflect the declining grade profile of the tail end of the Mineral Reserves.

The updated mine plan for 2024 is scheduled to exhaust Mineral Reserves by the end of 2024, compared to mid-2025 as previously planned. Over the past 12 months, the operation has experienced significant cost increments, of which the main drivers are:

●	Mexican Peso appreciation; representing approximately 35 percent of cost increment.
●	Higher contractor costs for transportation, distribution, shotcrete, maintenance, and mining services; representing approximately 16 percent of cost increment.
---	---
●	Higher labour costs and new labour reform mandates, which took effect on January 1, 2024; representing approximately 21 percent of cost increment.
---	---
●	Change from owner’s mining fleet to contractor for mine development; representing approximately 6 percent of cost increment.
---	---
●	Higher costs in fuel, energy, materials, and consumables related to 2023 inflation; representing approximately 5 percent of cost increment.
---	---

Fortuna | 15

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

As a result of the cost increments described above, the mine plan has been reduced by approximately six months, leading to an anticipated closure in late 2024 from the previous estimation of closure in mid-2025. The Company has assigned a dedicated team to review and update a multiyear progressive mine closure and monitoring plan with a current budget of approximately $27.0 million, which will begin its implementation during 2024. Multiple considerations are being included such as closure-related technical studies and designs, remediation of affected areas, decommissioning and removal of infrastructure, landform reshaping, revegetation, and value-added activities for the communities associated with progressive closure, repurposing, and where appropriate, long-term monitoring and maintenance, whilst adhering to strict compliance with mine closure governmental regulations and high international standards.

The Company is engaged in an intensive exploration program to delineate the newly discovered Yessi vein.

Cash cost and AISC:

●

The Company expects a 2024 cash cost between $20.3 and $22.3 per ounce of silver, an increase of approximately 70 percent over 2023 at the upper range, and 54 percent at the lower range of guidance. The increase is mainly explained by lower production related to the grade profile as per the remaining life of mine plan, and the impact of higher projected operational expenditures, reflecting incremental costs throughout 2023. In addition, cash cost includes remaining lateral and vertical development and infill drilling required to complete final stoping and mining, as well as mining equipment overhauling, totaling $10.7 million.

●

The Company expects a 2024 AISC between $22.8 and $24.0 per ounce of silver, an increase of approximately 31 percent over 2023 at the upper range, and 24 percent at the lower range of guidance. The increase is mainly explained by lower volume and higher cash cost, partially offset by no capital expenditures in 2024.

---

Caylloma Mine, Peru

Consistent performer

At the Caylloma Mine, the Company plans to process 0.5 million tonnes of ore averaging 78 g/t Ag, 3.12% Pb, and 4.20% Zn. Capital investments are estimated at $21.0 million, including $19.0 million for sustaining capital expenditures and $2.0 million for Brownfields exploration programs.

Sustaining capital investments include:

●	Mine development$5.1 million
●	Caylloma Mine substation power grid enhancement$2.9 million
---	---
●	Plant power sub-station, phase II$1.4 million
---	---
●	New paste backfill system $4.7 million
---	---

●	Operating permits and

Global Industry Standard on Tailings Management (GISTM) $1.2 million

●	Maintenance $3.7 million

Cash cost and AISC:

●	The Company expects a 2024 cash cost between $12.7 and $14.0 per ounce of silver, a decrease of approximately 6 percent under 2023 at the upper range, and 14 percent at the lower range of guidance. The decrease is mainly due to lower treatment and refining charges in 2024.
●	The Company expects a 2024 AISC between $18.0 and $21.0 per ounce of silver, in line with 2023 at the upper range, and a decrease of 14 percent at the lower range of guidance. The decrease is explained mainly by lower cash costs and slightly lower capital expenditures.
---	---

Fortuna | 16

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

2024 Exploration Outlook

Fortuna continues to advance its robust pipeline of Brownfields and Greenfields exploration projects in West Africa and the Americas, building on the success of the exploration programs carried out in 2023.

Brownfields Exploration

Fortuna´s consolidated Brownfields exploration budget for 2024 for its five mines and the Diamba Sud Gold Project totals $30.8 million, which includes 192,500 meters of reverse circulation, diamond core, and air core exploration drilling.

Séguéla Mine, Côte d’Ivoire

The Brownfields exploration program budget for 2024 at Séguéla is $7.8 million, which includes 41,750 meters of exploration drilling, focused on testing and extending underground targets associated with the Sunbird, Ancien, and Koula deposits, as well as advancing emerging deposits such as Barana, Badior, and Kestral, and continuing to explore for additional prospects.

San Jose Mine, Mexico

The Brownfields exploration program budget for 2024 at San Jose is $4.9 million, which includes 13,900 meters of diamond drilling, focused on testing and extending the Yessi vein as well as exploring additional targets within the mine area.

Yaramoko Mine, Burkina Faso

The Brownfields exploration program budget for 2024 at Yaramoko is $6.1 million, which includes 41,450 meters of exploration drilling, with underground drilling testing western and depth extensions to the Zone 55 deposit, surface drilling testing several anomalies along the Boni Shear, Bagassi South surface extensions, and other surface targets.

Caylloma Mine, Peru

The Brownfields exploration program budget for 2024 at Caylloma is $2.0 million, supporting field exploration, regional geophysics, and ongoing studies of the structural controls to mineralization on the Animas vein.

Diamba Sud Gold Project, Senegal

The Brownfields exploration program budget for 2024 at the Diamba Sud Gold Project is $9.9 million, which includes 42,700 meters of drilling, including extension and resource development, in addition to the testing and advancement of previously identified geochemistry anomalies. Additional geochemical and geophysical surveys at Diamba Sud will be conducted in support of advancing the project.

Greenfields Exploration

Greenfields exploration will continue in Mexico, Argentina, Senegal, and Côte d'Ivoire advancing generative programs across several projects supported by a budget of $7.5 million, including continuing active corporate development.

Fortuna | 17

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (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,
	****	2023	2022	2023	2022
Mine Production
Tonnes placed on the leach pad		1,556,000	1,334,509	6,005,049	5,498,064

Gold
Grade (g/t)		0.63	0.80	0.64	0.81
Production (oz)		29,591	29,301	101,238	118,418
Metal sold (oz)		29,308	27,847	103,503	117,076
Realized price ($/oz)		1,993	1,732	1,942	1,803

Unit Costs
Cash cost ($/oz Au)^1^		934	814	920	739
All-in sustaining cash cost ($/oz Au)^1^		1,557	1,219	1,565	1,140

Capital Expenditures ($000's) ^2^
Sustaining		10,607	3,973	39,358	18,035
Sustaining leases		598	567	2,393	2,398
Non-sustaining		1,302	–	1,978	169
Brownfields		–	184	–	1,288
^1^Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.

^2^ Capital expenditures are presented on a cash basis

Quarterly and Annual Operating and Financial Highlights

In the fourth quarter of 2023, a total of 1,556,000 tonnes of ore were placed on the heap leach pad, with an average gold grade of 0.63 g/t, containing an estimated 31,665 ounces of gold. Gold production for Q4 2023 totaled 29,591 ounces. This represents a 1% increase in total ounces, from the previous quarter. Gold production was comprised of 24,977 ounces in doré bars, 4,443 ounces of gold contained in fine carbon, and 171 ounces contained in copper concentrate. Ore mined was 2.1 million tonnes, with a stripping ratio of 0.6:1. The stripping ratio in the fourth quarter was 45 percent lower than the third quarter of 2023.

For the full year 2023 gold production totaled 101,238 ounces, achieving midpoint of annual production guidance. Gold production comprised of 94,905 ounces in doré bars, 6,015 ounces in gold contained in fine carbon, and 319 ounces contained in copper concentrate. The stripping ratio for 2023 was 1.14:1, aligned with the mining plan for the year.

The cash cost per ounce of gold for the quarter ending December 31, 2023, was $934 compared to $814 in the same period of 2022. For the year ending December 31, 2023, the cash cost per ounce was $920, an increase from $739 in 2022. The increase in cash cost per ounce of gold for both the quarter and for the full year was primarily due to lower processed gold grades in accordance with the mine plan.

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

both the quarter and the year was primarily due to higher cash costs, along with increased sustaining capital expenditures related to the heap leach expansion. This was partially mitigated by higher copper by-product credits.

As of December 31, 2023, the leach pad expansion project is approximately 23% complete. Mobilization of the civil contractor’s personnel and equipment has advanced with earth moving activities having commenced in January. Deliveries of geomembrane and geosynthetic clay liner are on-track, with the remaining materials expected to arrive on site in the first quarter of 2024. The leach pad expansion remains on schedule for completion during the second half of 2024.

Yaramoko Mine , Burkina Faso

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. The table below shows the key metrics used to measure the operating performance of the mine: tonnes milled, grade, production, and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		110,445	142,694	531,578	546,651

Gold
Grade (g/t)		7.16	6.45	6.81	6.37
Recovery (%)		98	98	98	98
Production (oz)		28,235	26,190	117,711	106,108
Metal sold (oz)		28,229	26,250	117,676	107,433
Realized price ($/oz)		1,984	1,742	1,945	1,802

Unit Costs
Cash cost ($/oz Au)^1^		949	818	809	840
All-in sustaining cash cost ($/oz Au)^1^		1,720	1,829	1,499	1,529

Capital Expenditures ($000's) ^2^
Sustaining		12,620	18,994	49,938	45,665
Sustaining leases		1,077	1,419	4,758	5,692
Brownfields		1,261	2,855	4,917	5,873
^1^Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
^2^ Capital expenditures are presented on a cash basis

Quarterly and Annual Operating and Financial Highlights

The Yaramoko Mine produced 28,235 ounces of gold in the fourth quarter of 2023 with an average gold head grade of 7.16g/t, 8% and 11% increases when compared to the same period in 2022. Higher production was due to higher grades partially offset by lower mill throughput in the fourth quarter and a planned maintenance shutdown in December.

Gold production in 2023 totaled 117,711 ounces, achieving the higher end of the annual guidance range.

The cash cost per ounce of gold sold for the quarter ended December 31, 2023, was $949 compared to $818 in the same period in 2022. The increase for the quarter is mainly attributed to higher mining costs, particularly due to equipment, energy, and overhead expenses, but was partially offset by higher gold production. For the year ending December 31, 2023, the cash cost per ounce of gold sold was $809, a decrease from $840 in 2022. The full year decrease is mainly due to increased production and lower mining costs during prior quarters. Fortuna | 19

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

The all-in sustaining cash cost per gold ounce sold was $1,720 for the quarter ended December 31, 2023, compared to $1,829 in the same period of 2022. The change in the quarter was primarily due to the increased cash cost described above, increased royalties and an administrative penalty in Q4, offset by reduced capital expenditures. For the full year, the all-in sustaining cash cost was $1,499 in 2023, compared to $1,529 in 2022. The increased royalies and administrative penalty costs in Q4 were offset by increased production and decreased costs earlier in the year.

Exploration and grade control drilling success in conjunction with underground development extended mineralization on the western side of the Zone 55 mineralized structure. This provided additional mining areas which demonstrated wider and higher-grade extensions of mineralization within and beyond the existing resource boundary.

Séguéla Mine, Côte d’Ivoire

The Séguéla Mine is located in the Woroba District of Côte d’Ivoire, and began commercial production on July 1, 2023. The operation consists of an open pit mine, feeding ore to a single stage crushing circuit, with crushed ore being fed to a SAG mill followed by conventional carbon-in-leach and gravity recovery circuits prior to electro winning and smelting of gold doré. The table below shows the key metrics used to measure the operating performance of the mine: tonnes milled, grade, production, and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		387,624	-	807,616	-
Average tonnes crushed per day		4,123	-	3,282	-

Gold
Grade (g/t)		3.62	-	3.42	-
Recovery (%)		95	-	94	-
Production (oz)		43,096	-	78,617	-
Metal sold (oz)		43,018	-	78,521	-
Realized price ($/oz)		1,994	-	1,963	-

Unit Costs
Cash cost ($/oz Au)^1^		323	-	357	-
All-in sustaining cash cost ($/oz Au)^1^		737	-	760	-

Capital Expenditures ($000's) ^2^
Sustaining		7,765	-	10,912	-
Sustaining leases		2,285	-	5,329	-
^1^Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
^2^ Capital expenditures are presented on a cash basis

Quarterly and Annual Operating and Financial Highlights

In the fourth quarter of 2023, mined material totaled 387,624 tonnes of ore, averaging 3.62 g/t Au, and containing an estimated 43,096 ounces of gold from the Antenna Pit. Movement of waste during the quarter totaled 2,110,209 tonnes, for a strip ratio of 5.4:1. Séguéla produced 43,096 ounces of gold at an average head grade of 3.62 g/t Au, a 37% increase and a 5% decrease, respectively, compared to the previous quarter. The increase in gold production is directly related to the mill achieving consistently higher throughput, processing 387,624 tonnes, a 25% increase over the previous quarter.

Gold production in 2023 totaled 78,617 ounces, exceeding the higher end of the annual guidance range.

Fortuna | 20

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Reconciliation of tonnes, grade, and gold ounces mined for the fourth quarter from Antenna show a positive correlation when compared to the long-term reserve model with 6% higher ore tonnes mined at 16% higher grades resulting in 24% more gold ounces extracted than predicted in the model.

Process plant performance continued to improve as feed characteristics were stabilized and initial bottlenecks addressed. Recovery in the fourth quarter increased to 94.9%, ahead of feasibility study assumptions. Plant productivity also continued to improve with throughput in the fourth quarter being 186 tonnes/hour, a 20% increase on the 154 tonnes/hour nameplate capacity.

Cash cost per gold ounce sold was $323 for Q4 2023 and $357 for the full year, which was below plan and guidance, primarily due to higher production, higher head grades, lower consumable consumption, and lower service costs.

All-in sustaining cash cost per gold ounce sold was $737 for Q4 2023 and $760 for the full year, which was below plan and guidance, primarily due to lower cash cost and higher sales volume, partially offset by higher capital expenditures.

Fortuna | 21

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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: tonnes milled, grade, recovery, gold and silver production, and unit costs:


		Three months ended December 31,				Years ended December 31,
	****	2023	****	2022	****	2023	****	2022
Mine Production
Tonnes milled		241,035		259,500		930,200		1,029,590
Average tonnes milled per day		2,678		2,883		2,643		2,925

Silver
Grade (g/t)		145		194		171		191
Recovery (%)		91		91		91		91
Production (oz)		1,023,525		1,473,627		4,656,631		5,762,563
Metal sold (oz)		1,040,888		1,482,452		4,659,611		5,755,330
Realized price ($/oz)		23.35		21.37		23.36		21.73

Gold
Grade (g/t)		0.91		1.13		1.06		1.14
Recovery (%)		90		90		90		90
Production (oz)		6,345		8,499		28,559		34,124
Metal sold (oz)		6,406		8,621		28,524		34,201
Realized price ($/oz)		1,983		1,734		1,942		1,802

Unit Costs
Production cash cost ($/t)^2^		103.89		86.26		98.98		81.33
Production cash cost ($/oz Ag Eq)^1,2^		17.57		11.16		14.40		10.56
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		21.98		15.53		19.40		15.11

Capital Expenditures ($000's) ^3^
Sustaining		3,190		3,695		14,018		15,731
Sustaining leases		246		169		878		658
Non-sustaining		505		–		1,682		869
Brownfields		1,257		961		4,215		5,606
^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
^3^ Capital expenditures are presented on a cash basis

Fortuna | 22

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Quarterly and Annual Operating and Financial Highlights

In the fourth quarter of 2023, San Jose produced 1,023,525 ounces of silver and 6,345 ounces of gold, 31% and 25% decreases respectively, at average head grades for silver and gold of 145 g/t and 0.91 g/t, 25% and 20% decreases respectively, when compared to the same period in 2022. The decrease in silver and gold production for the quarter is explained by the declining grade profile of Mineral Reserves in the mine plan, as well as lower tonnage extracted from the mine. The reduction in tonnage is due to operational challenges leading to delays in backfilling and blasting operations in stopes P and Q during December 2023. During the fourth quarter, the processing plant milled 241,035 tonnes at an average of 2,678 tonnes per day.

Production in 2023 totaled 4,656,631 ounces of silver and 28,559 ounces of gold, 12% and 16% below annual guidance range, respectively. The decrease in production is attributed primarily to the 15-day illegal union blockade in the second quarter, the associated disruption to operations thereafter, and a silver and gold head grade reconciliation to reserves at the lower end of guidance range.

The cash cost per silver equivalent ounce for the three months ending December 31, 2023, was $17.57, an increase from $11.16 in the same period of 2022. This increase was primarily attributed to lower head grades, as discussed above, and higher cash costs per tonne primarily related to the appreciation of the Mexican Peso, higher mining contractor tariffs, and a 7% decrease in processed ore. For the year ending December 31, 2023 the cash cost per silver equivalent ounce sold was $14.40 compared to $10.56. The full year increase was driven by lower head grades, and higher cash cost per tonne, which was similarly influenced by the appreciation of the Mexican Peso and 10% lower tonnes processed.

The all-in sustaining cash cost of payable silver equivalent ounce for the three months ended December 31, 2023 increased by 42% to $21.98, and full year 2023 increased 28% to $19.40. This compares to $15.53 per ounce and $15.11 per ounce for the same periods in 2022. These increases were mainly driven by higher cash costs and lower production, slightly mitigated by lower workers' participation costs.

The decrease in Brownfields expenditures is primarily attributable to reduced drilling activity in 2023. Drilling in 2023 was however higher than initially anticipated, owing to the emergent drilling campaign at the Yessi vein, discovered in the third quarter of the year. Exploration at the Yessi vein is ongoing.

Fortuna | 23

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (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: tonnes milled, grade, recovery, silver, gold, lead, and zinc production and unit costs:


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		140,800	138,491	543,876	546,186
Average tonnes milled per day		1,564	1,556	1,528	1,539

Silver
Grade (g/t)		88	75	85	80
Recovery (%)		83	81	83	81
Production (oz)		330,478	273,119	1,227,060	1,144,714
Metal sold (oz)		353,935	289,870	1,229,298	1,156,381
Realized price ($/oz)		23.06	21.28	23.37	21.81

Gold
Grade (g/t)		0.11	0.12	0.14	0.14
Recovery (%)		21	22	22	32
Production (oz)		109	122	513	777
Metal sold (oz)		—	—	40	603
Realized price ($/oz)		—	—	1,902	1,864

Lead
Grade (%)		3.84	3.22	3.74	3.27
Recovery (%)		91	89	91	88
Production (000's lbs)		10,798	8,735	40,852	34,588
Metal sold (000's lbs)		11,641	9,118	41,074	34,869
Realized price ($/lb)		0.97	0.96	0.98	0.98

Zinc
Grade (%)		5.00	4.63	5.11	4.32
Recovery (%)		90	89	90	89
Production (000's lbs)		13,933	12,575	55,060	46,176
Metal sold (000's lbs)		14,407	11,027	56,166	44,770
Realized price ($/lb)		1.13	1.35	1.23	1.57

Unit Costs
Production cash cost ($/t)^2^		100.71	95.70	100.40	92.96
Production cash cost ($/oz Ag Eq)^1,2^		13.67	12.46	14.28	12.34
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		22.34	20.30	19.90	17.97

Capital Expenditures ($000's) ^3^
Sustaining		8,635	7,188	17,903	18,694
Sustaining leases		912	845	3,538	3,350
Brownfields		966	473	2,302	1,202
^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
^3^ Capital expenditures are presented on a cash basis

Fortuna | 24

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Quarterly and Annual Operating and Financial Highlights

In the fourth quarter, the Caylloma Mine produced 330,478 ounces of silver at an average head grade of 88 g/t, a21% and 17% increase, respectively, when compared to the previous quarter. Silver production for 2023 totaled 1,227,060 ounces, exceeding the upper end of annual guidance range by 10 percent.

Lead and zinc production for the quarter was 10.8 million pounds of lead, and 13.9 million pounds of zinc. Lead and zinc production rose by 24% and 11%, respectively, compared to the same period in 2022. Head grades averaged 3.84%, and 5.00%, a 19% and 8% increase, respectively, when compared to the previous quarter. Record lead and zinc production for 2023 totaled 40.9 and 55.1 million pounds, respectively. Increased production is the result of positive grade reconciliation to the reserve model in levels 16 and 18 of the Animas vein. Gold production totaled 109 ounces with an average head grade of 0.11 g/t.

The cash cost per silver equivalent ounce sold for the quarter ended December 31, 2023, was $13.67 compared to $12.46 in the same period in 2022. The increase for the quarter is attributed primarily due to higher cash cost per tonne, higher treatment charges and the impact of higher silver prices on the calculation of silver equivalent ounces . For the year ended December 31, 2023, the cash cost per ounce of silver equivalent sold was $14.28, compared to $12.34 in 2022. The full year increase was driven mainly by the same factors explained above for the quarter.

The all-in sustaining cash cost per ounce of payable silver equivalent for the three months ended December 31, 2023, increased 10% to $22.34, compared to $20.30 for the same period in 2022. The all-in sustaining cash cost per ounce of payable silver equivalent for the full year 2023 increased 11% to $19.90, compared to $17.97 in 2022. The increases were mainly driven by the impact of increasing silver prices on the calculation of silver equivalent ounces, and higher capital costs.

Underground development for the quarter was mainly focused on mine levels 15, 16, and 18. The increase in Brownfields expenditures is primarily attributable to greater footage and additional diamond drilling.

QUARTERLY INFORMATION

The following table provides information for the last eight fiscal quarters up to December 31, 2023:


	Q4 2023	Q3 2023	Q2 2023	Q1 2023	Q4 2022	Q3 2022	Q2 2022	Q1 2022
Sales	265.3	243.1	158.4	175.7	164.7	166.6	167.9	182.3
Mine operating income	51.9	65.9	31.9	40.4	26.0	24.7	32.5	63.5
Operating income (loss)	(77.4)	45.4	7.7	23.9	(173.1)	5.7	13.1	40.7
Net income (loss)	(89.8)	30.9	3.5	11.9	(160.4)	(4.1)	1.7	27.0

Basic (loss) earnings per share	(0.30)	0.09	0.01	0.04	(0.52)	(0.01)	0.01	0.09
Diluted (loss) earnings per share	(0.30)	0.09	0.01	0.04	(0.52)	(0.01)	0.01	0.09

Total assets	1,967.9	2,046.6	1,991.5	1,946.1	1,876.2	2,032.6	2,060.0	2,060.4
Debt	206.8	246.6	285.9	244.9	219.2	204.2	218.6	198.0

Figures may not add due to rounding

Sales increased 9% in the fourth quarter of 2023 to $265.3 million compared to $243.1 million in the third quarter of 2023 due to higher production. Net income decreased by $120.7 million compared to the third quarter of 2023 as a result of an impairment charge at San Jose and a number of onetime charges.

Fortuna | 25

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Sales increased 53% in the third quarter of 2023 to $243.1 million compared to $158.4 million in the second quarter of 2023. Sales in the quarter were impacted by the addition of Séguéla as an operating mine. Net income increased by $27.4 million compared to the second quarter of 2023 as a result of contributions from Séguéla which was in ramp-up during the previous quarter and the return to full operations at San Jose following an illegal blockade.

Sales decreased 10% in the second quarter of 2023 to $158.4 million compared to $175.7 million in the first quarter of 2023. Sales in the quarter were impacted by the illegal blockade at San Jose. Net income decreased by $8.4 million compared to the first quarter of 2023 as a result of lower sales and $7.3 million of other operating expenses related to care and maintenance, stand-by charges, and one-time payments associated with the work stoppages at Yaramoko and San Jose.

Sales increased 7% in the first quarter of 2023 to $175.7 million compared to $164.7 million in the fourth quarter of 2022 as higher gold sales and realized prices offset lower silver production. Net income increased by $172.3 million compared to the fourth quarter of 2022 as a result of an impairment charge of $182.8 million ($164.5 million net of tax) in the previous quarter.

Sales decreased 1% in the fourth quarter of 2022 to $164.7 million compared to $166.6 million in the third quarter of 2022 as lower production was offset by higher metal prices. Net loss increased by $156.3 million compared to the third quarter of 2022 as a result of an impairment charge of $182.8 million ($164.5 million net of tax) related to write-downs in the carrying values of the San Jose, Yaramoko, and Lindero cash generating units.

Sales decreased 1% in the third quarter of 2022 to $166.6 million compared to $167.9 million in the second quarter of 2022 as higher production was offset by lower realized metal prices. Mine operating income was impacted by higher processing costs and a $1.0 million write down of inventory to net realizable value at Yaramoko. Net income decreased $5.8 million compared to the second quarter of 2022 primarily due to the factors described above as well the write-off of the Tlamino property for $3.4 million.

Sales decreased 8% in the second quarter of 2022 to $167.9 million compared to $182.3 million in the first quarter of 2022 due primarily to lower sales at Yaramoko as mining finished in the QV zone and mill feed was supplemented by stockpiles reducing head grade delivered to the mill and lower head grades at San Jose. Mine operating income was lower as a result of lower sales as well as a $4.0 million write-down of inventory to net realizable value and an increase in costs due to inflationary pressures. Net income decreased $25.3 million compared to the first quarter of 2022 primarily due to the factors described above as well as higher current taxes from the recognition of withholding taxes.

Sales decreased 8% in the first quarter of 2022 to $182.3 million compared to $198.9 million in the fourth quarter of 2021 due primarily to lower sales at Lindero as a result of the impacts of COVID-19 at the mine and due to lower head grades at San Jose. Operating income was in line with the previous quarter as higher mine operating income was offset by the $2.1 million write-off due to the termination of a property agreement for the Santa Fe Property in Mexico and an increase in foreign exchange losses in the quarter. Net income increased $10.4 million compared to the fourth quarter of 2021 primarily due to lower current and deferred taxes.

LIQUIDITY AND CAPITAL RESOURCES

Cash and Cash Equivalents

The Company has cash and cash equivalents of $128.1 million at December 31, 2023 compared to $80.5 million at the end of 2022. The increase in cash and cash equivalents was primarily the result of the completion of construction at Séguéla and the mine starting to generate free cash flow. Significant cash movements are described below.

Fortuna | 26

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Working Capital

Working capital decreased to $89.6 million at the end of 2023 compared to $117.6 million at the end of 2022. The decrease in working capital was primarily a result of the convertible debentures moving from long term to current liabilities as they will mature on October 31, 2024 and an increase in accounts payable with the Séguéla Mine moving into operations.

Operating Activities

Cash flow generated from operating activities for the year ending December 31, 2023 increased to $296.9 million compared to $194.2 million in 2022. The increase in operating cash flow was primarily due to the addition of Séguéla as an operating mine in the second half of 2023 and higher realized gold prices. Negative working capital movements for 2023 were lower than the previous year due to an increase in payables at Séguéla as the mine shifted to operations. Interest paid in the year was higher due to an increase in interest rates and the Company stopped capitalizing interest costs when the Séguéla Mine transitioned to commercial production.

Investing Activities

For the year ending December 31, 2023 the Company invested $217.3 million in capital expenditures on a cash basis consisting of $143.6 million in sustaining capital and $73.7 million in expansionary capital. Capital investments consisted primarily of the following:

Sustaining

●	$39.4 million invested at the Lindero Mine to support both capitalized stripping and the Phase 2 expansion of the leach pad
●	$54.9 million at Yaramoko which consisted primarily of underground development
---	---
●	$20.2 million at Bateas and $18.2 million at San Jose primarily for capitalized development costs
---	---
●	$10.9 million in capitalized stripping and mine development at Séguéla
---	---

Expansionary

●	$3.9 million related to exploration and study work at the Diamba Sud project
●	$10.0 million to Newcrest West Africa Holdings Pty Ltd. paid on the achievement of the first gold pour at Séguéla under a contractual obligation
---	---
●	$50.0 million to complete the construction of Séguéla
---	---
●	$6.5 million in capitalized interest related to the Séguéla project
---	---

During the period the Company also realized an investment gain of $12.4 million related to blue chip swaps at Lindero to access a foreign exchange window opened by the government and paid $12.8 million related to the acquisition of Chesser Resources for capitalized acquisition and transaction costs.

Financing Activities

Financing activities for the year primarily consisted of a $75.5 million draw down on the credit facility to complete the construction of Séguéla and a subsequent repayment of $90.5 million after Séguéla transitioned to operations. The Company also spent $16.6 million related to payments on lease obligations.

Capital Resources

The Company maintains a $250.0 million revolving credit facility (“Credit Facility”). As at December 31, 2023, the Company had drawn down $165.0 million of the available credit (excluding letters of credit). The Credit Facility has a term of four years and matures on November 4, 2025. The amount available under the Credit Facility steps down to $175.0 million on November 4, 2024. Interest accrues on SOFR loans under the Credit Facility at SOFR plus an applicable margin of 2.25% to 3.25% which varies depending on the consolidated leverage levels of the Company.

Fortuna | 27

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

The 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 therein. As at December 31, 2023, the Company was in compliance with all of the covenants under the Credit Facility.


As at	December 31, 2023		December 31, 2022		Change
Cash and cash equivalents		128.1		80.5		47.6
Credit facility		250.0		250.0		-
Total liquidity available		378.1		330.5		47.6
Amount drawn on credit facility^1^		(165.0)		(180.0)		15.0
Net liquidity position		213.1		150.5		62.6
^1^Excluding letters of credit

Figures may not add due to rounding

As of the date of this MD&A, the Company has the following debt coming due within the next 12 months:

●	The maturity of $45.7 million in outstanding convertible debentures on October 31, 2024

On January 5, 2023, the Company announced that it had received notice of a resolution (“SEMARNAT Resolution”) from the Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) which provides that SEMARNAT has annulled and is re-assessing the 12-year extension to the environmental impact authorization (“EIA”) for the San Jose Mine that it had granted to Fortuna’s wholly-owned subsidiary, Compania Minera Cuzcatlan S.A. de C.V. (“Minera Cuzcatlan”) in December 2022.

Minera Cuzcatlan initiated legal proceedings in the Mexican Federal Administrative Court (the “Court”) to contest and revoke the annulment of the EIA, and also obtained a permanent injunction which allows the San Jose Mine to continue to operate under the terms of the 12-year EIA until the determination of these legal proceedings.

On October 30, 2023, the Company announced that the Court had ruled in favour of Minera Cuzcatlan and reinstated the 12-year EIA. The decision of the Court has been appealed and was admitted by the Mexican Collegiate Court (the “Appeals Court”) in January 2024. Minera Cuzcatlan filed a response with the Appeals Court in February 2024. A decision of the Appeals Court is expected within the next six to 12 months. The permanent injunction that Minera Cuzcatlan already has remains in effect.

Until the determination of these legal proceedings, the Company has agreed with its lenders to certain temporary restrictions under the Credit Facility (which restrictions have been reduced from those imposed by the lenders in 2023) as follows:

●	The Company may not exercise the $50.0 million accordion feature.

●

The Company must maintain a minimum liquidity balance of $70.0 million. In the event that the Company fails to maintain this minimum requirement over a period of 30 days, the availability of the credit under the facility will be reduced to $200.0 million. The credit availability will revert to $250.0 million once the Company re-establishes the minimum liquidity balance requirement over a period of 30 days.

●	The Company cannot make any cash-based permitted acquisition and investments, nor any discretionary expansionary capital expenditures.

●	The Company may not make investments in or provide financial assistance to non-guaranteeing subsidiaries in excess of $3,000,000.

Fortuna | 28

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

In the event that: (1) the permanent injunction ceases to be in effect; (2) the Court upholds the SEMARNAT Resolution, (3) an Administrative Authority issues a resolution to cease operations at the San Jose Mine, or (4) a positive unappealable decision in the Mexican Legal Proceedings is not received before December 31, 2024, the availability under the Credit Facility will be reduced to nil, and an event of default will occur thereunder.

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 $16.8 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 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.

See note 3 (section m) and Note 28 of the 2023 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 306,587,630 common shares outstanding as at March 6, 2024. In addition, there were 1,840,012 outstanding equity-settled share-based awards as follows:


Performance share units	1,840,012

An aggregate of 1,807,223 share-settled performance units issued by the Company are subject to a multiplier ranging from 50% to 200% depending on the achievement level of certain performance targets.

As at December 31, 2023, the Company has $45.7 million of senior subordinated unsecured convertible debentures outstanding. 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. 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, resulting in the issuance of up to 9,143,000 common shares subject to adjustments in certain circumstances. Refer to Note 14 of the 2023 Financial Statements for additional details.

Normal Course Issuer Bid

On April 28, 2023 the Company announced a renewal of its Normal Course Issuer Bid Program (“NCIB”) pursuant to which the Company may purchase up to five percent of its outstanding common shares. Under the NCIB, purchases of common Fortuna | 29

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

shares may be made through the facilities of the TSX, the NYSE and/or alternative Canadian trading systems. The share repurchase program started on May 2, 2023 and will expire on the earlier of May 1, 2024; the date Fortuna acquires the maximum number of common shares allowable under the NCIB; or the date Fortuna otherwise decides not to make any further repurchases under the NCIB.

RELATED PARTY TRANSACTIONS ****

The Company has entered into the following related party transactions during the three and twelve months ended December 31, 2023 and 2022:

(a) Key Management Personnel

During the three and twelve months ended December 31, 2023 and 2022, the Company was charged for consulting services by Mario Szotlender, a director of the Company.

Amounts paid to key management personnel were as follows:


	Three months ended December 31,				Years ended December 31,
(Expressed in $ thousands)	2023		2022		2023		2022
Salaries and benefits		1,564		2,475		8,450		11,532
Directors fees		208		197		830		934
Consulting fees		16		16		66		69
Share-based payments		2,682		2,626		4,874		7,042
		4,470		5,314		14,220		19,577

ACQUISITION OF CHESSER RESOURCES

On September 20, 2023, the Company completed, by way of a Scheme Implementation Deed, the acquisition of Chesser Resources (ASX: CHZ) (the “Chesser Acquisition”). Under the terms of the Chesser Acquisition, Fortuna acquired all of the shares of Chesser Resources in consideration for 0.0248 of one common share of Fortuna for each Chesser share held, and Chesser became a wholly-owned subsidiary of the Company. The Company issued 15,545,368 common shares as consideration for the transaction, representing approximately 5.1% of the outstanding common shares of Fortuna on an undiluted basis.

The acquisition of Chesser represents a relatively small transaction for Fortuna and the Company expects the ongoing integration to be efficient and effective. In addition to closing and transaction related costs, the acquisition triggered a capital gains tax on the indirect acquisition of a Senegalese entity and associated registration fees. A payment of $9.4 million was made to the Senegalese tax authority on October 20, 2023 to settle these obligations based on the final valuation of the consideration exchanged.

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 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 sustaining costs per ounce of gold equivalent 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 attributable net income; adjusted EBITDA; net debt and working capital.

Fortuna | 30

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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.

The following table outlines the non-IFRS financial measures and ratios, their definitions, the most directly comparable IFRS measures and why we use these measures.

Non-IFRS Financial Measure or Ratio	Definition	Most Directly Comparable IFRS Measure	Why we use this measure and why it is useful to investors
Silver Equivalent Ounces Sold	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.	Silver Ounces Sold	Management believes this provides a consistent way to measure costs and performance.
Gold Equivalent Ounces Sold	Gold equivalent ounces are calculated by converting other metal production to its gold equivalent using relative metal/gold metal prices at realized prices and adding the converted metal production expressed in gold ounces to the ounces of gold production.	Silver Ounces Sold
Cash Costs	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.	Cost of Sales	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.
Cash Cost Per Tonne	This ratio is calculated by dividing Cash Costs by the number of tonnes milled in the period.
Cash Cost Per Ounce	This ratio is calculated by dividing cash costs by gold or silver equivalent ounces sold in the period.

Fortuna | 31

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Non-IFRS Financial Measure or Ratio	Definition	Most Directly Comparable IFRS Measure	Why we use this measure and why it is useful to investors
All-In Sustaining Costs (AISC)	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.<br><br>We define All-in Sustaining Costs as 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.
AISC per Ounce Sold	This ratio is calculated by dividing AISC by gold or silver equivalent ounces sold in the period.
All-In Costs	All-In Costs is calculated consistently with AISC but is inclusive of non-sustaining capital.
Free cash Flow From Ongoing Operations	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.	Net Cash Provided by Operating Activities	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.
Adjusted Net Income and Adjusted Attributable Net Income<br><br><br><br>	Adjusted net income and adjusted attributable 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 Séguéla 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.	Net Income	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.	Fortuna	32

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Non-IFRS Financial Measure or Ratio	Definition	Most Directly Comparable IFRS Measure	Why we use this measure and why it is useful to investors
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 Séguéla 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.	Net Income	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.
Working Capital	Working capital is non-IFRS measure which is calculated by subtracting current liabilities from current assets.	Current Assets, Current Liabilities	Management believes that working capital is a useful indicator of the liquidity of the Company.
Net Debt	Net debt is a Non-IFRS measure which is calculated by adding together current and long term debt and then subtracting cash and cash equivalents.	Current Debt, Long Term Debt, Cash and Cash Equivalents	Management believes that net debt is a useful indicator of the liquidity of the Company.

Cash Cost per Ounce of Gold Equivalent Sold

The following tables presents a reconciliation of cash cost per ounce of gold equivalent sold to the cost of sales in the 2023 Financial Statements for the three and twelve months ended December 31, 2023 and 2022:


Cash Cost Per Gold Equivalent Ounce Sold - Q4 2023	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	GEO Cash Costs
Cost of sales	57,913	49,598	46,239	41,108	18,599	213,457
Inventory adjustment	(7,884)	(3,033)	—	(4,407)	(683)	(16,007)
Depletion, depreciation, and amortization	(15,061)	(15,345)	(25,972)	(11,407)	(3,476)	(71,261)
Royalties and taxes	(3,916)	(4,437)	(6,364)	(815)	(227)	(15,759)
By-product credits	(4,183)	—	—	—	—	(4,183)
Right of use	—	—	—	219	365	584
Other	—	—	—	344	(397)	(53)
Production cash costs	26,869	26,783	13,903	25,042	14,181	106,778
Inventory adjustment	—	—	—	(147)	683	536
Right of use	—	—	—	(219)	(365)	(584)
Depletion and depreciation in concentrate inventory	—	—	—	56	10	66
Realized gain on diesel hedge	—	—	—	—	—	—
Treatment and refining charges	—	—	—	1,505	4,241	5,746
Cash cost applicable per gold equivalent ounce sold	26,869	26,783	13,903	26,237	18,750	112,542
Ounces of gold equivalent sold	28,779	28,229	43,018	17,650	16,236	133,912
Cash cost per ounce of gold equivalent sold (/oz)	934	949	323	1,487	1,155	840
Gold equivalent was calculated using the realized prices for gold of 1,990/oz Au, 23.3/oz Ag, 2,137/t Pb, and 2,499/t Zn for Q4 2023.

All values are in US Dollars.

Fortuna | 33

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)


Cash Cost Per Gold Equivalent Ounce Sold - Q4 2022	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	GEO Cash Costs
Cost of sales	43,057	42,084	—	34,775	16,676	136,592
Inventory adjustment	(312)	—	—	27	216	(69)
Depletion, depreciation, and amortization	(13,441)	(17,884)	—	(10,557)	(2,960)	(44,842)
Royalties and taxes	(3,353)	(2,732)	—	(1,260)	(181)	(7,526)
By-product credits	(982)	—	—	—	—	(982)
Right of use	—	—	—	—	—	—
Other	—	—	—	(601)	(497)	(1,098)
Production cash costs	24,969	21,468	—	22,384	13,254	82,075
Inventory adjustment	(1,379)	—	—	(27)	(216)	(1,622)
Right of use	—	—	—	—	—	—
Depletion and depreciation in concentrate inventory	—	—	—	47	(120)	(73)
Realized gain on diesel hedge	(1,105)	—	—	—	—	(1,105)
Treatment and refining charges	—	—	—	947	3,128	4,075
Cash cost applicable per gold equivalent ounce sold	22,485	21,468	—	23,351	16,046	83,350
Ounces of gold equivalent sold	27,634	26,250	—	25,747	15,795	95,426
Cash cost per ounce of gold equivalent sold (/oz)	814	818	—	907	1,016	873
Gold equivalent was calculated using the realized prices for gold of 1,737/oz Au, 21.4/oz Ag, 2,106/t Pb, and 2,986/t Zn for Q4 2022.

All values are in US Dollars.


Cash Cost Per Gold Equivalent Ounce Sold - Year 2023	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	GEO Cash Costs
Cost of sales	176,696	186,757	79,472	140,068	69,408	652,401
Inventory adjustment	(10,693)	(3,859)	—	(4,564)	(576)	(19,692)
Depletion, depreciation, and amortization	(51,258)	(73,064)	(40,529)	(40,058)	(13,390)	(218,299)
Royalties and taxes	(14,958)	(14,678)	(10,932)	(4,390)	(1,078)	(46,036)
By-product credits	(7,921)	—	—	—	—	(7,921)
Right of use	—	—	—	758	1,933	2,691
Other	—	—	—	253	(1,692)	(1,439)
Production cash costs	91,866	95,156	28,011	92,067	54,605	361,705
Inventory adjustment	2,823	—	—	10	576	3,409
Right of use	—	—	—	(758)	(1,933)	(2,691)
Depletion and depreciation in concentrate inventory	—	—	—	30	76	106
Realized gain on diesel hedge	—	—	—	—	—	—
Treatment and refining charges	—	—	—	4,352	19,974	24,326
Cash cost applicable per gold equivalent ounce sold	94,689	95,156	28,011	95,701	73,298	386,855
Ounces of gold equivalent sold	102,896	117,676	78,521	80,458	63,229	442,780
Cash cost per ounce of gold equivalent sold (/oz)	920	809	357	1,189	1,159	874
Gold equivalent was calculated using the realized prices for gold of 1,948/oz Au, 23.4/oz Ag, 2,155/t Pb, and 2,706/t Zn for YTD 2023.

All values are in US Dollars.

Fortuna | 34

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)


Cash Cost Per Gold Equivalent Ounce Sold - Year 2022	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	GEO Cash Costs
Cost of sales	164,179	171,846	—	129,088	67,491	532,604
Inventory adjustment	293	(6,397)	—	156	48	(5,900)
Depletion, depreciation, and amortization	(54,644)	(64,894)	—	(37,773)	(14,108)	(171,419)
Royalties and taxes	(15,545)	(11,630)	—	(5,262)	(867)	(33,304)
By-product credits	(1,214)	(25)	—	—	—	(1,239)
Right of use	—	—	—	—	—	—
Other	—	(329)	—	(2,477)	(1,789)	(4,595)
Production cash costs	93,069	88,571	—	83,732	50,775	316,147
Inventory adjustment	(1,984)	1,320	—	(156)	(48)	(868)
Right of use	—	—	—	—	—	—
Depletion and depreciation in concentrate inventory	—	—	—	(2)	76	74
Realized gain on diesel hedge	(4,620)	—	—	—	—	(4,620)
Treatment and refining charges	—	329	—	3,508	15,476	19,313
Cash cost applicable per gold equivalent ounce sold	86,465	90,220	—	87,082	66,279	330,046
Ounces of gold equivalent sold	116,950	107,433	—	99,439	64,952	388,774
Cash cost per ounce of gold equivalent sold (/oz)	739	840	—	876	1,020	849
Gold equivalent was calculated using the realized prices for gold of 1,802/oz Au, 21.8/oz Ag, 2,161/t Pb, and 3,468/t Zn for YTD 2022.

All values are in US Dollars.

Fortuna | 35

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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

The following tables shows a breakdown of the all-in sustaining cash cost per ounce of gold equivalent sold for the three and twelve months ended December 31, 2023 and 2022:


AISC Per Gold Equivalent Ounce Sold - Q4 2023	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	Corporate	GEO AISC
Cash cost applicable per gold equivalent ounce sold	26,869	26,783	13,903	26,237	18,750	—	112,542
Inventory net realizable value adjustment	—	—	—	—	—	—	—
Royalties and taxes	3,916	4,437	6,364	815	227	—	15,759
Worker's participation	—	—	—	(430)	399	—	(31)
General and administration	2,833	(336)	1,398	1,789	1,344	12,603	19,631
Stand-by	—	2,700	—	—	—	—	2,700
Total cash costs	33,618	33,584	21,665	28,411	20,720	12,603	150,601
Sustaining capital1	11,205	14,958	10,050	4,693	10,513	—	51,419
All-in sustaining costs	44,823	48,542	31,715	33,104	31,233	12,603	202,020
Gold equivalent ounces sold	28,779	28,229	43,018	17,650	16,236	—	133,912
All-in sustaining costs per ounce	1,557	1,720	737	1,876	1,924	—	1,509
Gold equivalent was calculated using the realized prices for gold of 1,990/oz Au, 23.3/oz Ag, 2,137/t Pb, and 2,499/t Zn for Q4 2023.
1 Presented on a cash basis

All values are in US Dollars.


AISC Per Gold Equivalent Ounce Sold - Q4 2022	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	Corporate	GEO AISC
Cash cost applicable per gold equivalent ounce sold	22,485	21,468	—	23,351	16,046	—	83,350
Inventory net realizable value adjustment	1,052	—	—	—	—	—	1,052
Royalties and taxes	3,353	2,732	—	1,260	181	—	7,526
Worker's participation	—	—	—	751	480	—	1,231
General and administration	2,081	531	—	2,319	928	10,329	16,188
Stand-by	—	—	—	—	—	—	—
Total cash costs	28,971	24,731	—	27,681	17,635	10,329	109,347
Sustaining capital3	4,724	23,268	—	4,825	8,506	—	41,323
All-in sustaining costs	33,695	47,999	—	32,506	26,141	10,329	150,670
Gold equivalent ounces sold	27,634	26,250	—	25,747	15,795	—	95,426
All-in sustaining costs per ounce	1,219	1,829	—	1,263	1,655	—	1,579
Gold equivalent was calculated using the realized prices for gold of 1,737/oz Au, 21.4/oz Ag, 2,106/t Pb, and 2,986/t Zn for Q4 2022.
1 Presented on a cash basis

All values are in US Dollars.


AISC Per Gold Equivalent Ounce Sold - Year 2023	****	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	Corporate	GEO AISC
Cash cost applicable per gold equivalent ounce sold		94,689	95,156	28,011	95,701	73,298	—	386,855
Inventory net realizable value adjustment		—	334	—	—	—	—	334
Royalties and taxes		14,958	14,678	10,932	4,390	1,078	—	46,036
Worker's participation		—	—	—	(316)	1,927	—	1,611
General and administration		9,624	919	4,510	7,040	4,810	35,903	62,806
Stand-by		—	5,699	—	4,084	—	—	9,783
Total cash costs		119,271	116,786	43,453	110,899	81,113	35,903	507,425
Sustaining capital^3^		41,751	59,613	16,241	19,111	23,743	—	160,459

Fortuna | 36

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

All-in sustaining costs	161,022	176,399	59,694	130,010	104,856	35,903	667,884
Gold equivalent ounces sold	102,896	117,676	78,521	80,458	63,229	—	442,780
All-in sustaining costs per ounce	1,565	1,499	760	1,616	1,658	—	1,508
Gold equivalent was calculated using the realized prices for gold of 1,948/oz Au, 23.4/oz Ag, 2,155/t Pb, and 2,706/t Zn for YTD 2023.
1 Presented on a cash basis

All values are in US Dollars.


AISC Per Gold Equivalent Ounce Sold - Year 2022	Lindero	Yaramoko	Séguéla	San Jose	Caylloma	Corporate	GEO AISC
Cash cost applicable per gold equivalent ounce sold	86,465	90,220	—	87,082	66,279	—	330,046
Inventory net realizable value adjustment	1,052	3,125	—	—	—	—	4,177
Royalties and taxes	15,545	11,630	—	5,262	867	—	33,304
Worker's participation	—	—	—	3,096	2,087	—	5,183
General and administration	8,578	2,101	—	7,164	4,063	37,661	59,567
Stand-by	—	—	—	—	—	—	—
Total cash costs	111,640	107,076	—	102,604	73,296	37,661	432,277
Sustaining capital3	21,721	57,230	—	21,995	23,246	—	124,192
All-in sustaining costs	133,361	164,306	—	124,599	96,542	37,661	556,469
Gold equivalent ounces sold	116,950	107,433	—	99,439	64,952	—	388,774
All-in sustaining costs per ounce	1,140	1,529	—	1,253	1,486	—	1,431
Gold equivalent was calculated using the realized prices for gold of 1,802/oz Au, 21.8/oz Ag, 2,161/t Pb, and 3,468/t Zn for YTD 2022.
1 Presented on a cash basis

All values are in US Dollars.

Fortuna | 37

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (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

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 2023 Financial Statements for the three and twelve months ended December 31, 2023 and 2022:


Cash Cost Per Equivalent Silver Ounce Sold - Q4 2023	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		41,108		18,599		59,707
Inventory adjustment		(4,407)		(683)		(5,090)
Depletion, depreciation, and amortization		(11,407)		(3,476)		(14,883)
Royalties and taxes		(815)		(227)		(1,042)
By-product credits		—		—		—
Right of use		219		365		584
Other		344		(397)		(53)
Production cash costs		25,042		14,181		39,223
Total tonnes		241,035		140,800		381,835
Production cash cost per tonne		104		101		103


Cash Costs		25,042		14,181		39,223
Inventory adjustment		(147)		683		536
Depletion and depreciation in concentrate inventory		56		10		66
Treatment and refining charges		1,505		4,241		5,746
Cash cost applicable per silver equivalent sold		26,456		19,115		45,571
Ounces of silver equivalent sold^1^		1,505,763		1,398,062		2,903,825
Cash cost per ounce of silver equivalent sold ($/oz)		17.57		13.67		15.69
^1^ Silver equivalent sold for Q4 2023 for San Jose is calculated using a silver to gold ratio of 84.9:1. Silver equivalent sold for Q4 2023 for Caylloma is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:23.8 pounds, and silver to zinc ratio of 1:20.3 pounds.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices


Cash Cost Per Silver Equivalent Ounce Sold - Q4 2022	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		34,775		16,676		51,451
Inventory adjustment		27		216		243
Depletion, depreciation, and amortization		(10,557)		(2,960)		(13,517)
Royalties and taxes		(1,260)		(181)		(1,441)
By-product credits		—		—		—
Right of use		—		—		—
Other		(601)		(497)		(1,098)
Production cash costs		22,384		13,254		35,638
Total tonnes		259,500		138,491		397,991
Production cash cost per tonne		86		96		90


Cash Costs		22,384		13,254		35,638
Inventory adjustment		(27)		(216)		(243)
Depletion and depreciation in concentrate inventory		47		(120)		(73)
Treatment and refining charges		947		3,128		4,075
Cash cost applicable per silver equivalent sold		23,351		16,046		39,397
Ounces of silver equivalent sold^1^		2,092,500		1,287,998		3,380,498
Cash cost per ounce of silver equivalent sold ($/oz)		11.16		12.46		11.65
^1^ Silver equivalent sold for San Jose for Q4 2022 is 81.2:1.Silver equivalent sold for Caylloma for Q4 2022 is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:22.3 pounds, and silver to zinc ratio 1:15.7.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. 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, 2023 (in US Dollars, tabular amounts in millions, except where noted)


Cash Cost Per Silver Ounce Sold - Year 2023	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		140,068		69,408		209,476
Inventory adjustment		(4,564)		(576)		(5,140)
Depletion, depreciation, and amortization		(40,058)		(13,390)		(53,448)
Royalties and taxes		(4,390)		(1,078)		(5,468)
By-product credits		—		—		—
Right of use		758		1,933		2,691
Other		253		(1,692)		(1,439)
Production cash costs		92,067		54,605		146,672
Total tonnes		930,200		543,877		1,474,077
Production cash cost per tonne		99		100		100


Cash Costs		92,067		54,605		146,672
Inventory adjustment		10		576		586
Depletion and depreciation in concentrate inventory		30		76		106
Treatment and refining charges		4,352		19,974		24,326
Cash cost applicable per silver equivalent sold		96,459		75,231		171,690
Ounces of silver equivalent sold^1^		6,700,419		5,269,540		11,969,959
Cash cost per ounce of silver equivalent sold ($/oz)		14.40		14.28		14.34
^1^ Silver equivalent sold for YTD 2023 for San Jose is calculated using a silver to gold ratio of 83.1:1. Silver equivalent sold for YTD 2023 for Caylloma is calculated using a silver to gold ratio of 81.4:1, silver to lead ratio of 1:23.9 pounds, and silver to zinc ratio of 1:19.0 pounds.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices


Cash Cost Per Silver Ounce Sold - Year 2022	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		129,088		67,491		196,579
Inventory adjustment		156		48		204
Depletion, depreciation, and amortization		(37,773)		(14,108)		(51,881)
Royalties and taxes		(5,262)		(867)		(6,129)
By-product credits		—		—		—
Right of use		—		—		—
Other		(2,477)		(1,789)		(4,266)
Production cash costs		83,732		50,775		134,507
Total tonnes		1,029,590		546,186		1,575,776
Production cash cost per tonne		81		93		85


Cash Costs		83,732		50,775		134,507
Inventory adjustment		(156)		(48)		(204)
Depletion and depreciation in concentrate inventory		(2)		76		74
Treatment and refining charges		3,508		15,476		18,984
Cash cost applicable per silver equivalent sold		87,082		66,279		153,361
Ounces of silver equivalent sold^1^		8,243,436		5,372,277		13,615,713
Cash cost per ounce of silver equivalent sold ($/oz)		10.56		12.34		11.26
^1^ Silver equivalent sold for YTD 2022 for San Jose is calculated using a silver to gold ratio of 82.9:1. Silver equivalent sold for YTD 2022 for Caylloma is calculated using a silver to gold ratio of 85.5:1, silver to lead ratio of 1:22.9 pounds, and silver to zinc ratio of 1:13.9 pounds.
^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, 2023 (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 payable ounce of silver equivalent sold for the three and twelve months ended December 31, 2023 and 2022:


AISC Per Silver Equivalent Ounce Sold - Q4 2023	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		26,237		18,750		44,987
Royalties and taxes		815		227		1,042
Worker's participation		(430)		399		(31)
General and administration		1,789		1,344		3,133
Stand-by		—		—		—
Total cash costs		28,411		20,720		49,131
Sustaining capital^3^		4,693		10,513		15,206
All-in sustaining costs		33,104		31,233		64,337
Silver equivalent ounces sold^1^		1,505,763		1,398,062		2,903,825
All-in sustaining costs per ounce^2^		21.98		22.34		22.16
1 Silver equivalent sold for Q4 2023 for San Jose is calculated using a silver to gold ratio of 84.9:1. Silver equivalent sold for Q4 2023 for Caylloma is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:23.8 pounds, and silver to zinc ratio of 1:20.3 pounds.
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


AISC Per Silver Equivalent Ounce Sold - Q4 2022	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		23,351		16,046		39,397
Royalties and taxes		1,260		181		1,441
Worker's participation		751		480		1,231
General and administration		2,319		928		3,247
Stand-by		—		—		—
Total cash costs		27,681		17,635		45,316
Sustaining capital^3^		4,825		8,506		13,331
All-in sustaining costs		32,506		26,141		58,647
Silver equivalent ounces sold^1^		2,092,500		1,287,998		3,380,498
All-in sustaining costs per ounce^2^		15.53		20.30		17.35
1 Silver equivalent sold for San Jose for Q4 2022 is 81.2:1.Silver equivalent sold for Caylloma for Q4 2022 is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:22.3 pounds, and silver to zinc ratio 1:15.7.
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


AISC Per Silver Equivalent Ounce Sold - Year 2023	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		95,701		73,298		168,999
Royalties and taxes		4,390		1,078		5,468
Worker's participation		(316)		1,927		1,611
General and administration		7,040		4,810		11,850
Stand-by		4,084		—		4,084
Total cash costs		110,899		81,113		192,012
Sustaining capital^3^		19,111		23,743		42,854
All-in sustaining costs		130,010		104,856		234,866
Silver equivalent ounces sold^1^		6,700,419		5,269,540		11,969,959
All-in sustaining costs per ounce^2^		19.40		19.90		19.62
1 Silver equivalent sold for YTD 2023 for San Jose is calculated using a silver to gold ratio of 83.1:1. Silver equivalent sold for YTD 2023 for Caylloma is calculated using a silver to gold ratio of 81.4:1, silver to lead ratio of 1:23.9 pounds, and silver to zinc ratio of 1:19.0 pounds.
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

Fortuna | 40

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)


AISC Per Silver Equivalent Ounce Sold - Year 2022	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		87,082		66,279		153,361
Royalties and taxes		5,262		867		6,129
Worker's participation		3,096		2,087		5,183
General and administration		7,164		4,063		11,227
Stand-by		—		—		—
Total cash costs		102,604		73,296		175,900
Sustaining capital^3^		21,995		23,246		45,241
All-in sustaining costs		124,599		96,542		221,141
Silver equivalent ounces sold^1^		8,243,436		5,372,277		13,615,713
All-in sustaining costs per ounce^2^		15.11		17.97		16.24
1 Silver equivalent sold for YTD 2022 for San Jose is calculated using a silver to gold ratio of 82.9:1. Silver equivalent sold for YTD 2022 for Caylloma is calculated using a silver to gold ratio of 85.5:1, silver to lead ratio of 1:22.9 pounds, and silver to zinc ratio of 1:13.9 pounds.
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 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, 2023 and 2022:


		Three months ended December 31,				Years ended December 31,
(Expressed in millions)	2023		2022		2023		****	2022

Net cash provided by operating activities		105.1		49.6		296.9			194.2
Adjustments
Séguéla, working capital		-		-		4.4			-
Additions to mineral properties, plant and equipment		(46.3)		(39.6)		(143.6)			(113.4)
Gain on blue chip swap investments		12.4		-		12.4			-
Mexican royalty payment		-		-		-			3.0
Other adjustments		(5.0)		(5.6)		(16.6)			(14.6)
Free cash flow from ongoing operations		66.2		4.4		153.5			69.2

Figures may not add due to rounding

Fortuna | 41

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Adjusted Net Income

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, 2023 and 2022:


		Three months ended December 31,				Years ended December 31,
(Expressed in millions)	2023		2022		2023		2022
Net income		(89.8)		(160.4)		(43.6)		(135.9)
Adjustments, net of tax:
Community support provision and accruals^1^		(0.4)		(0.1)		(0.5)		(0.1)
Foreign exchange loss, Séguéla Mine		-		(0.4)		-		0.8
Write off of mineral properties		4.0		0.3		4.5		5.1
Unrealized loss (gain) on derivatives		0.1		0.1		(0.3)		(0.4)
Impairment of mineral properties, plant and equipment		90.6		164.5		90.6		164.5
Inventory adjustment		13.5		3.8		14.2		8.0
Accretion on right of use assets		0.5		0.5		3.3		2.3
Other non-cash/non-recurring items		4.9		(1.1)		4.4		(1.7)
Adjusted net income		23.4		7.2		72.6		42.6
^1^Amounts are recorded in Cost of sales

Figures may not add due to rounding

Adjusted EBITDA

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, 2023 and 2022:


	Three months ended December 31,					Years ended December 31,
(Expressed in millions)	2023		2022		2023		2022
Net income		(89.8)		(160.4)		(43.6)		(135.9)
Adjustments:
Community support provision and accruals		(0.5)		(0.1)		(0.7)		(0.1)
Inventory adjustment		15.4		3.8		16.3		8.9
Foreign exchange loss, Séguéla Mine		-		(0.4)		0.8		0.8
Net finance items		7.5		3.1		21.8		12.1
Depreciation, depletion, and amortization		71.6		45.3		219.6		172.8
Income taxes		17.0		(15.3)		32.6		10.8
Impairment of mineral properties, plant and equipment		90.6		182.8		90.6		182.8
Investment income		-		-		-		-
Other non-cash/non-recurring items		8.5		(3.0)		(2.3)		(6.7)
Adjusted EBITDA		120.3		55.8		335.1		245.5

Figures may not add due to rounding

Fortuna | 42

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Adjusted Attributable Net Income

The following table presents a reconciliation of Adjusted Attributable Net Income from attributable net income, the most directly comparable IFRS measure, for the three and twelve months ended December 31, 2023 and 2022:


		Three months ended December 31,				Years ended December 31,
(Expressed in millions)	2023		2022		2023		2022
Net loss attributable to shareholders		(92.3)		(152.8)		(50.8)		(128.1)
Adjustments, net of tax:
Community support provision and accruals^1^		(0.4)		(0.1)		(0.5)		(0.1)
Foreign exchange loss, Séguéla Mine^2^		-		(0.4)		-		1.1
Write off of mineral properties		4.0		0.3		4.5		5.1
Unrealized loss (gain) on derivatives		0.1		0.1		(0.3)		(0.4)
Impairment of mineral properties, plant and equipment		90.6		155.9		90.6		155.9
Inventory adjustment		13.2		3.8		13.9		7.6
Accretion on right of use assets		0.5		0.5		3.1		2.3
Other non-cash/non-recurring items		4.9		(0.9)		4.4		(2.0)
Adjusted attributable net income		20.6		6.4		64.9		41.4
^1^Amounts are recorded in Cost of sales

Net Debt

The following table presents a calculation of net debt for the twelve months ended December 31, 2023 and 2022:



(Expressed in millions except Total net debt to Adjusted EBITDA ratio)		As at December 31, 2023
Credit facility	$		165.0
Convertible debenture			45.7
Debt			210.7
Less: Cash and Cash Equivalents			(128.1)
Total net debt^1^	$		82.6
Adjusted EBITDA (last four quarters)	$		335.1
Total net debt to adjusted EBITDA ratio			0.2:1
^1^Excluding letters of credit

Working Capital

The following table presents a calculation of working capital for the twelve months ended December 31, 2023 and 2022:


	Years ended December 31,
	2023		2022
Current Assets	$	333,325	$	252,712
Current Liabilities		243,770		135,080
Working Capital	$	89,555	$	117,632

Fortuna | 43

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Qualified Person

Eric Chapman, Senior Vice-President of Technical Services, is a Professional Geoscientist of the Engineers and Geoscientists 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 MD&A and has verified the underlying data.

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 on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar.shtml.

RISKS AND UNCERTAINTIES

The following is a discussion of risk factors relevant to the Company’s operations and future financial performance. Additional risks not currently known by the Company, or that the Company currently deems immaterial, may also impair the Company’s operations. You should carefully consider the risks and uncertainties described below as well as the other information contained and incorporated by reference in this MD&A.

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; rising rates of inflation which impact the costs of production; political risks, capital controls risk and the limitations on the repatriation of operating cash flows, environmental risks; risks related to the ability of the Company to obtain permits for its operations, including risks related to the legal proceedings in respect of the reinstatement of the 12 year extension of the EIA at the San Jose Mine; and risks related to its relations with employees. Before deciding to invest in securities of the Company, investors should consider carefully such risks and uncertainties.

Article I.Foreign Jurisdiction Risk

As at the date of the MD&A, the Company conducts its operations in Argentina, Burkina Faso, Côte d'Ivoire, Mexico, Peru, and Senegal. All these jurisdictions are potentially subject to a number of political and economic risks as described below, including risk specific to operating in West Africa. The Company is unable to determine the impact of these risks on 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.

The majority of the Company’s production and revenue to December 31, 2023 was derived from its operations in Argentina, Mexico, Burkina Faso, Côte d'Ivoire, 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, and economic and regulatory instability; unanticipated changes to royalty and tax regulations; unreliable and undeveloped infrastructure, labor unrest, and labor 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 Fortuna | 44

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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 the risks and uncertainties described above are prevalent in the jurisdictions where the Company operates. In particular, on April 28, 2023, the Mexican Government reformed its mining code which significantly changed the current legal environment including shortening the length of concessions from 50 years to 30 years, requiring all new mining concession to be granted pursuant to a public tendering process; imposing new indigenous consultation requirements and new environmental safeguards; tightening the requirements for water, and other reforms. The impact to Fortuna’s operations is currently under review.

On December 10, 2023, the Milei government came to power in Argentina and began wide-spread change to the country’s economic and taxation policies. This included a significant devaluation of the Peso in December 2023. It is unclear how the change in government and macro-economic policies will impact Argentina and the economic environment and management will continue to monitor the situation.

On January 28, 2024, the government of Burkina Faso, along with Mali and Niger, announced its intention to withdraw from the Economic Community of West Africa States (ECOWAS). The protocol to withdraw from ECOWAS takes up to one year to complete and there is significant uncertainty on how this will impact the economic and political situation in Burkina Faso. Burkina Faso has not yet announced an intention to withdraw from the West African Monetary Union (WAMU) which dictates free trade and the currency within the economic zone. Management will continue to monitor the situation and take the appropriate actions to limit risk as a result of the announcement.

Risks of Operating in West Africa

Certain of the Company’s operations are currently conducted in West Africa, with the Séguéla Mine in Côte d’Ivoire, the Yaramoko Mine in Burkina Faso, and the Diamba Sud Exploration project in Senegal, and, as such is common in other mining jurisdictions, the Company’s operations are exposed to various political, economic, and other risks and uncertainties. These risks and uncertainties include, but are not limited to: civil and ethnic unrest, war (including in neighboring countries), terrorist actions, hostage taking or detainment of personnel, military repression, criminal activity, nationalization, illegal mining, invalidation of governmental orders, failure to enforce existing laws, labor disputes, corruption, sovereign risk, political instability, the failure of foreign parties, courts or governments to honor or enforce contractual relations or uphold property rights, changing government regulations with respect to mining (including royalties, environmental requirements, labor, taxation, land tenure, foreign investments, income repatriation, and capital recovery), fluctuations in currency exchange and inflation rates, import and export restrictions, the expropriation of assets and property interests, currency controls and government regulations that favor or require the Company to award contracts in, employ citizens of, or purchase supplies from, a particular jurisdiction; as well as by laws and policies of Canada affecting foreign trade, investment and taxation.

As African governments continue to grapple with challenges in their public finance management systems, the strength of commodity prices has resulted in the gold mining sector being targeted as a source of revenue for the Governments, by enhancing tax collection from the extractive sector in particular. Governments are assessing the terms for mining company to exploit resources in their countries

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 Fortuna | 45

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

problems. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure could result in loss, reduction, or expropriation of entitlements. In addition, changes in government laws and regulations, including taxation, royalties, the repatriation of capital and profits, restrictions on production, export controls, changes in taxation policies, environmental and ecological compliance, expropriation of property and shifts in the political stability of the country, could adversely affect the Company’s exploration, development and production initiatives in these countries and their profitability.

Different economic and social issues exist in emerging markets which may affect the Company’s operating and financial results. For example, infectious diseases (including malaria, HIV/AIDS, tuberculosis, and the Ebola virus) are major health care issues in African countries. Workforce training and health programs to maximize prevention awareness and minimize the impact of infectious diseases in Africa may prove insufficient to adequately address these serious issues. Operations in some emerging countries of West Africa may also be subject to civil disturbances and criminal activities such as trespass, illegal mining, sabotage, theft, and vandalism. Any disturbances and criminal activities may cause disruptions at the Company’s operations, increase operating costs, result in harm to employees or trespassers, cause damage to production facilities or otherwise decrease operational efficiency, increase community tensions or result in criminal and/or civil liability for the Company or its respective employees and/or financial damages or penalties. In particular, the risks associated with civil unrest in the foreign jurisdictions and local communities in which the Company operates may lead to critical supply chain interruptions.

Any of the above events could delay or prevent the Company from exploring, permitting, developing operating, or its properties even if economic quantities of minerals are found and could have a material adverse impact upon the Company’s operations.

Article II.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 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.

During the fourth quarter of 2023, the life of mine plan for the San Jose Mine was updated which indicated that the Mineral Reserves will be exhausted at the end of 2024, compared to mid-2025 as previously planned, unless the Company replaces planned depletion of reserves through its exploration program. Upon the closure of the San Jose Mine, the Fortuna | 46

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Company will become more heavily reliant on a reduced number of operating projects. As a result, the Company’s ability to maintain its current production or to increase its annual production of precious metals and generate revenue therefrom will depend significantly upon the Company’s ability to discover or acquire new deposits, bring new mines into production successfully and to expand mineral reserves at existing mines. Exploration and development of mineral properties involve significant financial risk. Very few properties that are explored are later developed into operating mines.

Article III.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.

The operations of the Company are subject to all of the hazards and risks normally incidental to mining exploration, development and operational activities, including fire, explosions, floods, structural collapses, industrial accidents, unusual or unexpected geological conditions, ground control problems, power outages, pollution, industrial water shortages, inclement weather, cave-ins and mechanical equipment failure. Any such hazards could result in work stoppages, damage to or destruction of mines and other facilities, damage to life and property, environmental damage, and possible legal liability for any or all damages. While the Company maintains insurance against certain risks, potential claims could exceed policy limits or be excluded from coverage. There are also risks against which the Company cannot or may elect not to insure. The potential costs which could be associated with any liabilities not covered by insurance or in excess of insurance coverage may have a material adverse effect on the Company’s business, financial condition or results of operations.

Article IV.Uncertainties Related to New Mining Operations

It is not unusual in the mining industry for new mining operations to experience unexpected difficulties during the start-up phase or the subsequent ramp up in production to design capacity. The transition from construction to operations at the Séguéla Mine could be impacted by unexpected delays, operational issues or costs in achieving planned production levels 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.

Article V.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 Fortuna | 47

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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 licenses and permits from various governmental authorities. The Company currently has been granted the requisite licenses and permits to enable it to carry on its existing business and operations. However, there can be no assurance that the Company will be able to obtain all the necessary licenses 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.

On January 5, 2023, the Company announced that it had received the SEMARNAT Resolution which provides that SEMARNAT has annulled and is re-assessing the 12-year extension to the EIA for the San Jose Mine that it granted to Minera Cuzcatlan in December 2021. Management of the Company believes that the SEMARNAT resolution is unfounded and has no merits. Minera Cuzcatlan initiated the Mexican Legal Proceedings to contest and revoke the annulment of the San Jose EIA. On March 10, 2023, the Court granted Cuzcatlan a permanent injunction which allows the San Jose Mine to continue to operate under the terms of the 12-year EIA until the determination of the Mexican Legal Proceedings. On October 30, 2023, the Company announced that the Court had ruled in favour of Minera Cuzcatlan and reinstated the 12-year EIA. The decision of the Court has been appealed and was admitted by the Appeals Court in January 2024. Minera Cuzcatlan filed a response with the Appeals Court in February 2024. A decision of the Appeals Court is expected within the next six to 12 months; the results cannot be predicted with certainty due to the uncertainty inherent in litigation. The permanent injunction that Minera Cuzcatlan already has remains in effect which allows the mine to continue to operate.

Article VI.Safety and Security

The Company’s Yaramoko Mine is located in Burkina Faso and the Séguéla Mine is located in in Côte d’Ivoire. Following instability in recent years in several West African countries, the prevailing security environment in certain West African countries has deteriorated due to the presence of various militant secessionist and Islamist paramilitary groups, including the 2022 military coups in Burkina Faso and the coup in Niger in July of 2023. While additional measures have been implemented in response to ensure the security of its various assets, personnel, and contractors, and while 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 Fortuna | 48

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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.

Article VII.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, 2023 and 2022 is as follows:


As at	December 31, 2023		December 31, 2022
Cash and cash equivalents	$	128.1	$	80.5
Trade and other receivables		69.5		68.2
Income tax receivable		6.3		0.7
Other non-current receivables		18.7		8.5
	$	222.6	$	157.9

Figures may not add due to rounding

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 is sold to large well-known concentrate buyers.

Article VIII.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, 2023:


Metal	Change	Effect on Sales
Silver	+/- 10%	0.4
Gold	+/- 10%	0.2
Lead	+/- 10%	0.5
Zinc	+/- 10%	0.4

Changes in the market prices of the precious metals that the Company produces affects the Company’s profitability and cashflow. Metals prices can fluctuate due to many factors including, demand, the strength of the United States dollar, currency exchange rates, inflation, global mine production levels, other general price instability. Decrease in the market price of metals can also significantly affect the value of the Company’s metal inventory, stockpiles and leach pads, and it may be necessary to record a write-down to the net realizable value as well as significantly impact the carrying value of Company’s assets.

Fortuna | 49

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

The zinc and lead 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.

Article IX.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, Euros, Australian dollars, 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, 2023:


Currency of foreign denominated items	Change	Effect
Mexican pesos	+/- 10%	1.0
Peruvian soles	+/- 10%	0.8
Argentine pesos	+/- 10%	0.3
Canadian dollars	+/- 10%	1.2
West African CFA francs	+/- 10%	6.4
Australian dollar	+/- 10%	0.1
Euros	+/- 10%	0.3

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 Pesos 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.

The following tables summarize the Company’s exposure to currency risk through the following assets and liabilities denominated in foreign currencies:


As at December 31, 2023 (In millions of local currency)	Canadian<br>dollars	Peruvian<br>soles	Mexican<br>pesos	Argentine<br>pesos	West African CFA Francs	Australian <br>Dollars	Euro
Cash and cash equivalents	0.5	6.9	8.8	1,092.7	39,898.0	-	-
Marketable securities	0.1	-	-	-	-	-	-
Restricted cash	-	-	-	-	573.8	-	-
Trade and VAT receivables	0.4	1.7	114.2	9,554.2	16,584.8	(0.1)	-
Income tax receivable	-	28.1	84.1	-	-	-	-
VAT - long term receivable	-	-	64.3	-	5,582.8	-	-
Trade and other payables	(18.7)	(51.3)	(174.0)	(6,605.6)	(18,465.1)	(1.3)	(2.5)
Provisions, current	-	(5.9)	(21.4)	(1,334.1)	-	-	-
Income tax payable	-	-	(28.1)	-	(2,136.2)	-	-
Other liabilities	(0.2)	-	(121.2)	-	-	-	-
Provisions, non-current	-	(13.9)	(107.6)	-	-	-	-
Total foreign currency exposure	(17.9)	(34.4)	(180.9)	2,707.2	42,038.1	(1.4)	(2.5)
US$ equivalent of foreign currency exposure	(13.5)	(9.3)	(10.7)	3.4	70.9	(0.9)	(2.8)
Figures may not add due to rounding

Fortuna | 50

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)


As at December 31, 2022 (In millions of local currency)	Canadian<br>dollars	Peruvian<br>soles	Mexican<br>pesos	Argentine<br>pesos	West African CFA Francs	Australian <br>Dollars	Euro
Cash and cash equivalents	0.6	6.2	73.9	11.8	6,057.9	0.3	-
Marketable securities	0.1	-	-	-	-	-	-
Restricted cash	-	-	-	-	2,339.0	-	-
Trade and VAT receivables	0.2	3.3	73.9	2,062.9	12,979.1	(0.1)	-
Income tax receivable	-	28.1	13.9	-	-	-	-
VAT - long term receivable	-	-	70.5	-	-	-	-
Trade and other payables	(13.4)	(17.0)	(218.3)	(1,429.4)	(15,346.5)	(1.3)	(0.3)
Provisions, current	-	(8.1)	(11.7)	(387.9)	-	-	-
Income tax payable	0.1	-	(84.4)	-	(1,353.2)	-	-
Other liabilities	(0.2)	-	(9.7)	-	-	-	-
Provisions, non-current	-	(12.6)	(90.8)	-	-	-	-
Total foreign currency exposure	(12.6)	(0.1)	(182.7)	257.4	4,676.3	(1.1)	(0.3)
US$ equivalent of foreign currency exposure	(9.3)	(0.0)	(9.4)	1.4	7.4	(0.8)	(0.3)
Figures may not add due to rounding

Article X.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 manages its liquidity risk by continuously monitoring forecasted and actual cashflows. A rigorous reporting, planning, and budgeting process is 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”.

As at December 31, 2023, 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, 2023
	Less than			After
	1 year	1 - 3 years	4 - 5 years	5 years	Total
Trade and other payables	148.1	-	-	-	148.1
Debt	45.7	165.0	-	-	210.7
Income taxes payable	31.8	-	-	-	31.8
Lease obligations	20.3	39.8	4.9	6.5	71.5
Other liabilities	-	10.0	-	-	10.0
Closure and reclamation provisions	5.5	27.2	8.2	38.4	79.3
Total	251.4	242.0	13.1	44.9	551.4
Figures may not add due to rounding

Fortuna | 51

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Article XI.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, 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. These changes have since ratified and extended legislation to December 31, 2025.


As at	December 31, 2023		December 31, 2022
Equity		1,238.4		1,244.8
Debt		206.8		219.2
Lease obligations		57.4		21.3
Less: cash and cash equivalents		(128.1)		(80.5)
		1,374.5		1,404.8
Figures may not add due to rounding

Other than the restrictions related to 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, 2023, the Company was in compliance with its debt covenants.

Article XII.Interest Rate Risk

Article XIII.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. Fortuna | 52

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Article XIV.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 landowners 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.

On August 16, 2022, the Argentine Tax Authority (“AFIP”) published General Resolution No.5248/2022 (the “Resolution”) which established a one-time “windfall income tax prepayment” for companies that have obtained extraordinary income derived from the general increase in international prices. The Resolution was published by AFIP without prior notice. The windfall income tax prepayment applies to companies that meet certain income tax or net income tax (before the deduction of accumulated tax losses) thresholds for 2021 or 2022. The aggregate amount of the windfall income tax prepayment payable by Mansfield calculated in accordance with the Resolution was approximately $1.0 million (810 million Argentine Pesos), excluding related accrued interest of approximately $0.3 million (277 million Argentine Pesos). The windfall income tax prepayment was to be paid in three equal and consecutive monthly instalments, starting on October 22, 2022, and was payable in addition to income tax instalments currently being paid by corporate taxpayers on account of their income tax obligations. The windfall income tax prepayment is an advance payment of income taxes which were due to be paid in 2022.

Based on the historical accumulated losses of Mansfield for fiscal 2021, which can be carried forward for 2022, Mansfield was not liable for income tax for fiscal 2022. **** To protect Mansfield’s position from having to pay the windfall income tax prepayment as an advance income tax for 2022, which based on management’s projections was not payable, Mansfield applied to the Federal Court of Salta Province for a preliminary injunction to prevent the AFIP from issuing a demand or other similar measure for the collection of the windfall income tax prepayment. On October 3, 2022, Mansfield was notified that the Court had granted the preliminary injunction. As a result, Mansfield did not pay any of the instalments.

CRITICAL ACCOUNTING ESTIMATES, ASSUMPTIONS AND JUDGEMENTS

The preparation of consolidated financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed at each period end. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

For further information on our significant judgements and accounting estimates, refer to note 4 of our 2023 Financial Statements. There have been no subsequent material changes to these significant judgements and accounting estimates.

Fortuna | 53

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

Changes in Accounting Policies

The Company adopted various amendments to IFRS, which were effective for accounting periods beginning on or after January 1, 2023. These include amendments to IAS 1 (Presentation of Financial Statements) and IFRS Practice Statement 2 (Making Materiality Judgements), IAS 8 (Definition of Accounting Estimates) and IAS 12 (Deferred tax related to assets and liabilities arising from a single transaction). The impact of adoption was not significant to the Company's financial statements.

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 and as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended.

The Company evaluated, with the participation of its CEO and CFO, the effectiveness of its disclosure controls and procedures as of December 31, 2023 and concluded that they are effective.

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 of

December 31, 2023.

There have been no changes in the Company’s internal control over financial reporting during the year ended December

31, 2023 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over

financial reporting.

The Company’s internal control over financial reporting as of December 31, 2023 has been audited by KPMG LLP, Independent Registered Public Accounting Firm, Vancouver, BC, Canada. The required report is included in the “Report of Independent Registered Public Accounting Firm,” that accompanies the Company’s audited consolidated financial statements as of and for the fiscal years ended December 31, 2023 and 2022.

Fortuna | 54

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS ****

This MD&A and any documents incorporated by reference into this MD&A includes certain “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 often, but not always, identified by the use of words such as “anticipates”, “believes”, “plans”, “estimates”, “expects”, “forecasts”, “targets”, “possible”, “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 include, without limitation, statements relating to: Mineral Resource and Mineral Reserve estimates as they involve the implied assessment, based on estimates and assumptions that the resources and reserves described exist in the quantities predicted or estimated and can be profitably produced in the future; the Company's plans and expectations for its material properties and future exploration, development and operating activities including, without limitation, capital expenditure, production and cash cost and AISC 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; estimated production forecasts for 2024; estimated costs; estimated cash costs and all-in sustaining cash costs and expenditures for 2024; estimated capital expenditures in 2024; estimated Brownfields and Greenfields expenditures in 2024; exploration plans; the future results of exploration activities; the timing of the implementation and completion of sustaining capital investment projects at the Company’s mines; statements relating to the anticipated closure of the San Jose Mine and the possibility of extending production beyond 2024; statements regarding the ongoing exploration at the Yessi vein at the San Jose MIne; the current budget for the San Jose Mine closure and monitoring plan; the Company’s expectation that there are no changes in internal controls during the year ended December 31, 2023 that are reasonably likely to materially affect the Company’s internal control over financing reporting; property permitting and litigation matters; the Company’s expectation that the leach pad expansion project at the Lindero Mine will be completed during the second half of 2024; the fluctuation of its effective tax rate in the jurisdictions where the Company does business; statements that management will continue to monitor the political and regulatory environments in Argentina and in Burkina Faso and will take appropriate actions to mitigate the risks to the Company’s operations; and the Company’s expectations regarding the timeline for providing updated Mineral Resource and Mineral Reserve estimates.

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.

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

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; risks associated with political instability and changes to the regulations governing the Company’s business operations; changes in national and local government legislation, taxation, controls, regulations and political or economic developments in countries in which the Company does or may carry on business; risks associated with war, hostilities or other conflicts, such as the Ukrainian – Russian conflict, and the impact it may have on global economic activity; risks relating to the termination of the Company’s mining concessions in certain circumstances; 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, the Séguéla 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; 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 pandemics, epidemics and public health crises; and the impact they might have on the Company’s business, operations and financial condition; the Company’s ability to access its supply chain; the ability of the Company to transport its products; and impacts on the Company’s employees and local communities all of which may affect the Company’s ability operate; competition; fluctuations in metal prices; regulations and restrictions with respect to imports; high rates of inflation; risks associated with entering into commodity forward and option contracts for base metals production; fluctuations in currency exchange rates and restrictions on foreign exchange and currencies; 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; uncertainty relating to nature and climate change conditions; 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; risks related to the volatility of the trading price of the Company’s common shares and the Company’s debentures; dilution from further equity or convertible debenture financings; risks related to future insufficient liquidity resulting from a decline in the price of the Company’s 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 any U.S. judgments which may be brought 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 for the financial year ended December 31, 2022 filed with the Canadian Securities Administrators and available at www.sedarplus.ca 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 and factors management considers reasonable as at the date of this MD&A, 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; there being no significant disruptions affecting operations, whether relating to labor, supply, power, blockades, damage to equipment or other matter; 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 or otherwise that would impair their ability to provide goods and services; permitting, construction, development, expansion, and Fortuna | 56

Fortuna Silver Mines Inc.

Management’s Discussion and Analysis

For the year ended December 31, 2023 (in US Dollars, tabular amounts in millions, except where noted)

production continuing on a basis consistent with the Company’s current expectations; that the appeal filed in the Mexican Collegiate Court challenging the reinstatement of the EIA will be unsuccessful; 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; 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 Mineral 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.

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 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 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 | 57

NEWS RELEASE

Fortuna Reports Results for the Fourth Quarter and Full Year 2023

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

Vancouver, March 6, 2024: Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) (“Fortuna” or the “Company”) today reported its financial and operating results for the fourth quarter and full year 2023.

Fourth Quarter and Full Year 2023 highlights

Financial

●Attributable net loss for the quarter of $92.3 million or $0.30 per share after non-cash impairment charges of $90.6 million in Q4 2023, totaling an attributable net loss of $50.8 million for the full year 2023

●Attributable adjusted net income^1^ of $20.6 million or $0.07 per share in Q4 2023, totaling $64.9 million, or $0.22 per share for the full year 2023

•Net cash generated by operations for the quarter was $105.1 million or $0.36 per share in Q4 2023, totaling $296.3 million or $ 1.0 per share for the full year 2023

●Free cash flow from ongoing operations^1^ of $66.2 million in Q4 2023; totaling $153.5 million for the full year 2023

●The Company repaid $41.0 million of its corporate credit facility in the fourth quarter and the total net debt^1^ at year end stands at $83.0 million. An additional payment of $25.0 million was made subsequent to year end.

●Liquidity as at December 31, 2023 was $213.1 million

Operational

•Record gold equivalent production of 136,154 ounces^3^ in Q4 2023 and record annual gold equivalent production of 452,389 ounces^3^; representing increases of 6 and 13 percent compared to the respective periods in 2022

•Record gold production of 107,376 ounces in Q4 2023 and 326,638 ounces for the full year 2023

•Silver production of 1,354,003 ounces in Q4 2023 and 5,883,691 ounces for the full year 2023

•Consolidated cash cost per gold equivalent ounce^1^ of $840 in Q4 2023 and $874 for the full year 2023

•Consolidated AISC per gold equivalent ounce^1^ of $1,509 for Q4 2023 and $1,508 for the full year 2023

•Continuous trend of improvement in annual safety performance across the business with a Total Recordable Injury Frequency Rate (TRIFR) of 1.22, and a Lost Time Injury Frequency Rate (LTIFR) of 0.36, compared to 2.32 and 0.39 in 2022

Growth and Development

●During the fourth quarter of 2023 the Company initiated a 45,000-meter drill program at its newly acquired Diamba Sud project in Senegal. Subject to results the Company plans to produce a Preliminary Economic Assessment by the end of 2024

●At the end of December 2023, the Séguéla Mine processing facility was performing 26% above name plate capacity. For 2024 management has identified opportunities to further optimize and debottleneck throughput.

Jorge A. Ganoza, President and CEO, commented, “In the fourth quarter Fortuna delivered strong free cash-flow from ongoing operations of $65 million compared to $70 million in the third quarter. The Company also achieved record gold equivalent production of 136,154 ounces and record sales of $265.3 million, representing increases of 6% and 9% respectively compared to Q3.” Mr. Ganoza added, “Fourth quarter net earnings were impacted by non-cash write-downs and the remaining short life of reserves at San Jose, where we have recorded a non-cash impairment charge of $90.6

^1^ Refer to Non-IFRS financial measures

^2^ AISC/oz Ag Eq calculated at realized metal prices, refer to mine site results for realized prices and Non-IFRS Financial Measures for silver equivalent ratio

^3^ Gold equivalent production includes gold, silver, lead and zinc and is calculated using the following metal prices: $1,802/oz Au, $21.75/oz Ag, $2,161/t Pb and $3,468/t Zn or Au:Ag = 1:82.89, Au:Pb = 1:0.83, Au:Zn = 1:0.52

Fortuna | 1

million. At San Jose our exploration continues pursuing the discovery of new resources with the aim of extending production beyond 2024.”

Mr. Ganoza continued, “Fortuna had a strong close to 2023, with record annual gold production exceeding guidance and silver falling short by 7%. Gold equivalent production increased 13% to a record 452,389 gold equivalent ounces compared to 2022, and we have guided further growth in 2024. Record annual sales of $842.4 million were 24% above 2022. All our mines met or improved site AISC guidance for the year with the only exception being the San Jose Mine, which is operating on the tail end of reserves and had to contest with an illegal blockade at the beginning of the year.

Mr. Ganoza concluded, “For 2024 our capital allocation priorities continue to be centered on providing maximum balance sheet flexibility through further debt reduction, and funding of aggressive organic growth programs with approximately 200,000 meters of exploration drilling planned across the portfolio. The Diamba Sud project in Senegal and the Séguéla Mine in Côte d´Ivoire are priorities for our exploration programs during the year.”

Fourth Quarter 2023 and Full Year 2023 Consolidated Results


	Three months ended December 31,			Years ended December 31,
(Expressed in millions)	2023	2022	% Change	2023	2022	% Change
Sales	265.3	164.7	61%	842.4	681.5	24%
Mine operating income	51.9	26.0	100%	190.0	146.8	29%
Operating loss	(77.4)	(173.1)	55%	(0.4)	(113.6)	100%
Attributable net loss	(92.3)	(152.8)	40%	(50.8)	(128.1)	60%
Attributable loss per share - basic	(0.30)	(0.52)	43%	(0.17)	(0.44)	61%
Adjusted attributable net income^1^	20.6	6.4	222%	64.9	41.4	57%
Adjusted EBITDA^1^	120.3	55.8	116%	335.1	245.5	36%
Net cash provided by operating activities	105.1	49.6	112%	296.9	194.2	53%
Free cash flow from ongoing operations^1^	66.2	4.4	1,405%	153.5	69.2	122%
Production cash cost ($/oz Au Eq)	840	873	(4%)	874	849	3%
All-in sustaining cash cost ($/oz Au Eq)	1,509	1,579	(4%)	1,508	1,431	5%
Capital expenditures^2^
Sustaining	46.8	33.9	38%	136.1	98.1	39%
Non-sustaining^3^	1.8	(2.3)	178%	5.2	8.2	(37%)
Séguéla construction	-	23.5	(100%)	50.0	107.7	(54%)
Brownfields	5.5	6.5	(15%)	16.1	23.3	(31%)
As at				December 31, 2023	December 31, 2022	% Change
Cash and cash equivalents				128.1	80.5	59%
Net liquidity position (excluding letters of credit)				213.1	150.5	42%
Shareholder's equity attributable to Fortuna shareholders				1,238.4	1,244.8	(1%)
^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 filed on SEDAR+ at www.sedarplus.ca 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 2023 Results

Attributable Net Loss and Adjusted Net Income

Attributable net loss for the period was $92.3 million compared to an attributable net loss of $152.8 million in Q4 2022 The loss in the quarter is explained by the following items:

●	An impairment charge of $90.6 million related to the anticipated closure of the San Jose Mine in late 2024, as the updated mine plan is scheduled to exhaust Mineral Reserves by the end of the year compared to mid-2025 as previously planned
●	A write-down of materials inventory of $10.1 million at the San Jose, Yaramoko and Lindero Mines
---	---
●	A write-down of low-grade ore stockpiles of $5.4 million at the Lindero Mine
---	---
●	A $6.4 million severance provision associated with the scheduled closure of the San Jose Mine
---	---

Fortuna | 2

●	A write-down of $5.9 million related to greenfield exploration projects in Mexico and Argentina

After adjusting for impairment charges and other non-recurring items, adjusted attributable net income was $20.6 million or $0.07 per share compared to $6.4 million or $0.02 per share in Q4 2022. The increase was primarily due to higher gold sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla in its second full quarter of production. This was combined with 7% higher sales at Yaramoko from higher processed head grade. This was partially offset by lower sales at San Jose related to lower head grades consistent with the Mineral Reserve and a reduction in mined tonnage related to operational challenges in backfilling and blasting activities. The realized gold price was $1,990 per ounce in Q4 2023 compared to $1,737 per ounce in Q4 2022.

Other items impacting the adjusted net income for the quarter compared to Q4 2022 were higher G&A of $3.3 million, mostly related to the addition of Séguéla G&A and timing of execution on certain corporate G&A items; higher foreign exchange loss of $2.4 million primarily related to 118% devaluation of the official exchange rate in Argentina as part of the measures taken by the new elected government to achieve a more sustainable real exchange rate in the short term; Other expenses of $2.7 million related to administrative penalties at Yaramoko, and a higher interest expense of $4.0 million as a result of higher interest rates and $1.4 million of interest charges capitalized in Q4 2022 vs nil in Q4 2023. This was partially offset by $12.4 million of investment income related to cross-border, Argentine pesos denominated bond trades.

Depreciation and Depletion

Depreciation and depletion increased $27.1 million to $71.6 million in the fourth quarter of 2023 compared to $44.5 million in the comparable period of 2022. The increase was primarily due to an increase in ounces sold as well as higher depletion per ounce at Séguéla due to the depletion of the purchase price allocation from the Roxgold acquisition of $17.1 million.

Adjusted EBITDA and Cash Flow

Adjusted EBITDA for the quarter was $120.3 million, a margin of 45% over sales, compared to $55.8 million and margin over sales of 34%, reported in the same period in 2022. The main driver for the increase in EBITDA was the contribution from Séguéla with EBITDA margin of 73% in Q4 2023, combined with higher EBITDA from Yaramoko related to higher gold output. In addition, adjusted EBITDA reflects the positive impact from the inclusion of $12.4 million of investment income at our Argentine operations. The trade associated with the investment income was a one-off event executed under a time limited waiver granted by the government of Argentina in Q4 to allow exporters a partial recovery of economic losses incurred from the accumulated lag of the nominal exchange rate with respect to inflation.

Net cash generated by operations for the quarter was $105.1 million or $0.34 per share compared to $49.6 million or $0.17 per share in Q4 2022. The increase of $54.8 million reflects higher EBITDA of $61.8 million.

Free cash flow from ongoing operations for the quarter was $66.2 million compared to $4.4 million in Q4 2022. The increase reflects higher net cash generated by operations.

Cash cost per ounce and AISC

Cash cost per gold equivalent ounce was $840, a decrease from the $873 reported in Q4 2022 as the contribution of lower cost ounces from Séguéla in Q4 2023 was offset by partially offset by higher cost per ounce at San Jose, which increased by over 64% due to lower production and higher costs year over year. This combined with higher cost per gold ounce at Lindero and Yaramoko of $120 and $131 respectively associated with lower head grades at Lindero and higher costs in Q4 2023 at Yaramoko. AISC per gold equivalent ounce was $1,509 in Q4, slightly below the $1,579 recorded the prior year due to lower capex on a per ounce basis, partially offset by higher royalties related to the higher realized gold price.

Fortuna | 3

Full Year 2023 Results

Attributable Net Loss and Adjusted Net Income

Attributable net loss for the year was $50.8 million, compared to an attributable net loss of $128.1 million in 2022. The loss in 2023 is explained by impairment charges of $90.6 million at the San Jose Mine explained above.

After adjusting for impairment charges and other non-recurring items, attributable adjusted net income for 2023 was $64.9 million or $0.22 per share, compared to $41.4 million or $0.14 per share in 2022. The increase was primarily due to higher gold sales volume and higher gold prices. Higher gold sales volume was mainly due to the contribution of Séguéla in the second half of the year upon successful commissioning and ramp-up in Q2 2023, and higher sales volume at Yaramoko explained by higher processed head grades in 2023. This was partially offset by lower production at Lindero, aligned with the grade profile in the mine plan, and lower head grades and processed ore at San Jose, explained by declining head grades in reserves and the impact of the 15 day mine stoppage in Q2 and related lingering operational challenges during the year. The realized gold price was $1,948 per ounce in 2023 compared to $1,802 per ounce in 2022.

Other items impacting the adjusted net income compared to 2022 were higher G&A of $2.7 million, mostly related to the addition of Séguéla G&A; higher foreign exchange loss of $4.6 million mostly related to the devaluation of the Argentine peso as described above; higher other expenses of $9.7 million related to $3.5 million of stand-by charges at San Jose and Yaramoko in Q2 2023, $2.8 million related to a new agreement with the worker´s union at San Jose in Q2 2023, and $3.7 million of administrative penalties at Yaramoko payable to the Ministry of Mines recorded in Q2 and Q4 2023, and a higher interest expense of $7.5 million as a result of an increased debt balance outstanding, higher interest rates and discontinued capitalized interest charges in the second half of the year. This was partially offset by $12.4 million of investment income related to cross-border, Argentine pesos denominated bond trades.

Depreciation and Depletion

Depreciation and depletion for 2023 increased $46.8 million to $219.7 million compared to $172.8 million in 2022. The increase was primarily due an increase in ounces sold, the start of depletion at Séguéla, including $25.3 million related to the purchase price allocation from Roxgold, and higher depletion at Yaramoko due to declining reserves which increased the depletion rate of new capital additions underground.

Adjusted EBITDA and Free Cash Flow

Adjusted EBITDA for the year was $335.1 million, a margin of 40% over sales, compared to $245.5 million reported in 2022, representing a margin of 36% over sales. The main drivers for the increase were the contribution of Séguéla with EBITDA margin of 69%, and higher production and improved margins at Yaramoko. In addition, adjusted EBITDA reflects the positive impact from the inclusion of $12.4 million of investment income at our Argentine operations as described above.

Net cash generated by operations for 2023 was $296.9 million or $1.00 per share compared to $194.2 million or $0.67 per share in 2022. The increase of $102.7 million is explained by higher EBITDA of $89.6 million combined with lower income tax paid of $16.3 million in 2023 primarily due to lower taxes paid at the San Jose Mine, no taxes paid at the Séguéla Mine in 2023 and higher repatriation withholding taxes incurred in 2022.

Free cash flow from ongoing operations for 2023 was $153.5 million compared to $69.2 million in 2022. The increase of $84.3 million reflects higher net cash generated by operations, partially offset by higher sustaining capital expenditures, including brownfields explorations. Sustaining capital expenditures on a cash basis increased by $27.6 million to $143.6 million explained by higher CAPEX at Lindero related to the leach-pad expansion and capex incurred at Séguéla in the second half of 2023.

Cash cost per ounce and AISC

Fortuna | 4

Cash cost per equivalent gold ounce was $874, slightly above the $849 reported in 2022 as the contribution of lower cost ounces from Séguéla in the second half of 2023 was offset by higher cost per gold ounce at Lindero of $182 related mainly to lower planned head grades in 2023, and higher cost per equivalent gold ounce at San Jose of $379 explained primarily by lower processed ore and lower head grades.

AISC per ounce of gold equivalent of $1,508 in 2023 was $77 above the $1,431 recorded the prior year due mainly to higher cash cost per gold equivalent ounce and higher capex at Lindero related to the leach pad expansion.

Liquidity

Total liquidity available to the Company as at December 31, 2023 was $213.1 million, comprised of $128.1 million of cash and cash equivalents and $85.0 million undrawn (excluding letters of credit) on the Company’s revolving $250.0 million credit facility. Total net debt as of the end of the quarter was $83.2 million.

Subsequent to the year end the Company paid down an additional $25.0 million on its corporate credit facility, taking the outstanding debt amount to $140.0 million.

Fortuna | 5

Lindero Mine, Argentina


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes placed on the leach pad		1,556,000	1,334,509	6,005,049	5,498,064

Gold
Grade (g/t)		0.63	0.80	0.64	0.81
Production (oz)		29,591	29,301	101,238	118,418
Metal sold (oz)		29,308	27,847	103,503	117,076
Realized price ($/oz)		1,993	1,732	1,942	1,803

Unit Costs
Cash cost ($/oz Au)^1^		934	814	920	739
All-in sustaining cash cost ($/oz Au)^1^		1,557	1,219	1,565	1,140

Capital Expenditures ($000's) ^2^
Sustaining		10,607	3,973	39,358	18,035
Sustaining leases		598	567	2,393	2,398
Non-sustaining		1,302	–	1,978	169
Brownfields		–	184	–	1,288

^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 filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.

^2^ Capital expenditures are presented on a cash basis.

The all-in sustaining cash cost per gold ounce sold during Q4 2023 was $1,557, up from $1,219 in the fourth quarter of 2022. For the full year of 2023, the all-in sustaining cash cost was $1,565, compared to $1,140 in 2022. The increase both for the quarter and the year was driven by higher cash costs, along with increased sustaining capital expenditures related to the leach pad expansion. This was partially mitigated by higher copper by-product credits.

Fortuna | 6

Yaramoko Mine, Burkina Faso


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		110,445	142,694	531,579	546,651

Gold
Grade (g/t)		7.16	6.45	6.81	6.37
Recovery (%)		98	98	98	98
Production (oz)		28,235	26,190	117,711	106,108
Metal sold (oz)		28,229	26,250	117,676	107,433
Realized price ($/oz)		1,984	1,742	1,945	1,802

Unit Costs
Cash cost ($/oz Au)^1^		949	818	809	840
All-in sustaining cash cost ($/oz Au)^1^		1,720	1,829	1,499	1,529

Capital Expenditures ($000's) ^2^
Sustaining		12,620	18,994	49,938	45,665
Sustaining leases		1,077	1,419	4,758	5,692
Brownfields		1,261	2,855	4,917	5,873

^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 filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.

^2^Capital expenditures are presented on a cash basis.

The Yaramoko Mine produced 28,235 ounces of gold in the fourth quarter of 2023 with an average gold head grade of 7.16 g/t, 8% and 11% increases when compared to the same period in 2022. Higher production was due to higher grades partially offset by lower mill throughput in the fourth quarter and a planned maintenance shutdown in December.

Gold production in 2023 totaled 117,711 ounces, achieving the higher end of the annual guidance range.

The all-in sustaining cash cost per gold ounce sold was $1,720 for the quarter ended December 31, 2023, compared to $1,829 in the same period of 2022. The change in the quarter was primarily due to the increased cash cost described above, increased royalties and an administrative penalty in Q4, offset by reduced capital expenditures. For the full year, the all-in sustaining cash cost per gold ounces sold was $1,499 in 2023, compared to $1,529 in 2022. The increased royalties and administrative penalty costs in Q4 2023 were offset by increased production and decreased costs earlier in the year.

Fortuna | 7

Séguéla Mine, Côte d'Ivoire


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		387,624	-	807,617	-
Average tonnes crushed per day		4,123	-	3,282	-

Gold
Grade (g/t)		3.62	-	3.42	-
Recovery (%)		95	-	94	-
Production (oz)		43,096	-	78,617	-
Metal sold (oz)		43,018	-	78,521	-
Realized price ($/oz)		1,994	-	1,963	-

Unit Costs
Cash cost ($/oz Au)^1^		323	-	357	-
All-in sustaining cash cost ($/oz Au)^1^		737	-	760	-

Capital Expenditures ($000's) ^2^
Sustaining		7,765	-	10,912	-
Sustaining leases		2,285	-	5,329	-
^1^Cash cost and All-in sustaining cash cost are non-IFRS financial measures. Refer to Non-IFRS Financial Measures.
^2^ Capital expenditures are presented on a cash basis

In the fourth quarter of 2023, mined material totaled 387,624 tonnes of ore, averaging 3.62 g/t Au, and containing an estimated 43,096 ounces of gold from the Antenna Pit. Movement of waste during the quarter totaled 2,110,209 tonnes, for a strip ratio of 5.4:1. Séguéla produced 43,096 ounces of gold, a 37% increase and a 5% decrease, respectively, compared to the third quarter of 2023. The increase in gold production is directly related to the mill achieving consistently higher throughput, processing 387,624 tonnes, a 25% increase over the previous quarter.

Gold production in 2023 totaled 78,617 ounces, exceeding the higher end of the annual guidance range.

Fortuna | 8

San Jose Mine, Mexico


		Three months ended December 31,				Years ended December 31,
	****	2023	****	2022	****	2023	****	2022
Mine Production
Tonnes milled		241,035		259,500		930,200		1,029,590
Average tonnes milled per day		2,678		2,883		2,643		2,925

Silver
Grade (g/t)		145		194		171		191
Recovery (%)		91		91		91		91
Production (oz)		1,023,525		1,473,627		4,656,631		5,762,563
Metal sold (oz)		1,040,888		1,482,452		4,659,611		5,755,330
Realized price ($/oz)		23.35		21.37		23.36		21.73

Gold
Grade (g/t)		0.91		1.13		1.06		1.14
Recovery (%)		90		90		90		90
Production (oz)		6,345		8,499		28,559		34,124
Metal sold (oz)		6,406		8,621		28,524		34,201
Realized price ($/oz)		1,983		1,734		1,942		1,802

Unit Costs
Production cash cost ($/t)^2^		103.89		86.26		98.98		81.33
Production cash cost ($/oz Ag Eq)^1,2^		17.57		11.16		14.40		10.56
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		21.98		15.53		19.40		15.11

Capital Expenditures ($000's) ^3^
Sustaining		3,190		3,695		14,018		15,731
Sustaining leases		246		169		878		658
Non-sustaining		505		–		1,682		869
Brownfields		1,257		961		4,215		5,606

^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 filed on SEDAR+ at www.sedarplus.ca for a description of the calculation of these measures.

^3^Capital expenditures are presented on a cash basis.

The cash cost per silver equivalent ounce for the three months ending December 31, 2023, was $17.57, an increase from $11.16 in the same period of 2022. This increase was primarily attributed to lower head grades, as discussed above, and higher cash costs per tonne primarily related to the appreciation of the Mexican peso, higher mining contractor tariffs, and a 7% decrease in processed ore. For the year ending December 31, 2023 the cash cost per silver equivalent ounce sold was $14.40 compared to $10.56. The full year increase was driven by lower head grades, and higher cash cost per tonne, which was similarly influenced by the appreciation of the Mexican Peso and 10% lower tonnes processed.

Fortuna | 9

The all-in sustaining cash cost of payable silver equivalent for the three months ended December 31, 2023 increased by 42% to $21.98 per ounce, and full year 2023 increased by 28% to $19.40 per ounce. This compares to $15.53 per ounce and $15.11 per ounce for the same periods in 2022. These increases were mainly driven by higher cash costs and lower production, slightly mitigated by lower workers' participation costs.

Caylloma Mine, Peru


		Three months ended December 31,		Years ended December 31,
	****	2023	2022	2023	2022
Mine Production
Tonnes milled		140,800	138,491	543,876	546,186
Average tonnes milled per day		1,564	1,556	1,528	1,539

Silver
Grade (g/t)		88	75	85	80
Recovery (%)		83	81	83	81
Production (oz)		330,478	273,119	1,227,060	1,144,714
Metal sold (oz)		353,935	289,870	1,229,298	1,156,381
Realized price ($/oz)		23.06	21.28	23.37	21.81

Gold
Grade (g/t)		0.11	0.12	0.13	0.14
Recovery (%)		21	22	22	32
Production (oz)		109	122	513	777
Metal sold (oz)		—	—	40	603
Realized price ($/oz)		—	—	1,902	1,864

Lead
Grade (%)		3.84	3.22	3.74	3.27
Recovery (%)		91	89	91	88
Production (000's lbs)		10,798	8,735	40,852	34,588
Metal sold (000's lbs)		11,641	9,118	41,074	34,869
Realized price ($/lb)		0.97	0.96	0.98	0.98

Zinc
Grade (%)		5.00	4.63	5.11	4.32
Recovery (%)		90	89	90	89
Production (000's lbs)		13,933	12,575	55,060	46,176
Metal sold (000's lbs)		14,407	11,027	56,166	44,770
Realized price ($/lb)		1.13	1.35	1.23	1.57

Unit Costs
Production cash cost ($/t)^2^		100.71	95.70	100.40	92.96
Production cash cost ($/oz Ag Eq)^1,2^		13.67	12.46	14.28	12.34
All-in sustaining cash cost ($/oz Ag Eq)^1,2^		22.34	20.30	19.90	17.97

Capital Expenditures ($000's) ^3^
Sustaining		8,635	7,188	17,903	18,694
Sustaining leases		912	845	3,538	3,350
Brownfields		966	473	2,302	1,202

^1^Production cash cost silver equivalent and All-in sustaining cash cost silver equivalent are calculated using realized metal prices for each period respectively.

^3^Capital expenditures are presented on a cash basis.

Fortuna | 10

In the fourth quarter, the Caylloma Mine produced 330,478 ounces of silver at an average head grade of 88 g/t, a 21% and 17% increase, respectively, when compared to the previous quarter. Silver production for 2023 totaled 1,227,060 ounces, exceeding the upper end of annual guidance range by 10%.

Lead and zinc production for the quarter was 10.8 million pounds of lead, and 13.9 million pounds of zinc. Lead and zinc production rose by 24% and 11%, respectively, compared to the same period in 2022. Head grades averaged 3.84%, and 5.00%, a 19% and 8% increase, respectively, when compared to the previous quarter. Record lead and zinc production for 2023 totaled 40.9 and 55.1 million pounds, respectively. Increased production is the result of positive grade reconciliation to the reserve model in levels 16 and 18 of the Animas vein. Gold production for the quarter totaled 109 ounces with an average head grade of 0.11 g/t.

The cash cost per silver equivalent ounce sold for the quarter ended December 31, 2023, was $13.67 compared to $12.46 in the same period in 2022. The increase for the quarter is attributed primarily due to higher cash cost per tonne, higher treatment charges and the impact of higher silver prices on the calculation of silver equivalent ounces . For the year ended December 31, 2023, the cash cost per ounce of gold sold was $14.3, compared to $12.3 in 2022. The full year increase was driven mainly by the same factors explained above for the quarter.

The all-in sustaining cash cost per ounce of payable silver equivalent for the three months ended December 31, 2023, increased 10% to $22.34, compared to $20.30 for the same period in 2022. The all-in sustaining cash cost per ounce of payable silver equivalent for the full year 2023 increased 11% to $19.90, compared to $17.97 in 2022. The increases were mainly driven by the impact of higher silver prices on the calculation of silver equivalent ounces, higher cash costs per ounce and higher capital costs.

Underground development for the quarter was mainly focused on mine levels 15, 16, and 18. The increase in Brownfields expenditures is primarily attributable to greater meterage and additional diamond drilling.

Qualified Person

Eric Chapman, Senior Vice President of Technical Services, 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.

Fortuna | 11

Fourth Quarter Unaudited and Annual Audited Income Statement and Cash Flow

Income Statement


		Three months ended December 31,					Years ended December 31,
	Note	2023		2022		2023		2022
Sales	20	$	265,314	$	164,723	$	842,428	$	681,491
Cost of sales	21		213,462		138,683		652,403		534,695
Mine operating income			51,852		26,040		190,025		146,796

General and administration	22		19,909		16,676		64,073		61,456
Foreign exchange loss			2,430		442		10,885		8,866
Impairment of mineral properties, plant and equipment	32		90,615		182,842		90,615		182,842
Write-off of mineral properties			5,263		372		5,985		5,874
Other (income) expenses	23		11,009		(1,186)		18,874		1,310
			129,226		199,146		190,432		260,348

Operating loss			(77,374)		(173,106)		(407)		(113,552)

Investment gains	5		12,395		—		12,395		-
Interest and finance costs, net	24		(7,535)		(3,111)		(21,790)		(12,057)
(Loss) gain on derivatives	20		(301)		453		(1,249)		500
			4,559		(2,658)		(10,644)		(11,557)

Loss before income taxes			(72,815)		(175,764)		(11,051)		(125,109)

Income taxes
Current income tax expense	25		27,057		7,756		42,636		35,783
Deferred income tax expense (recovery)	25		(10,033)		(23,086)		(10,057)		(24,986)
			17,024		(15,330)		32,579		10,797
Net loss for the year		$	(89,839)	$	(160,434)	$	(43,630)	$	(135,906)

Net loss attributable to:
Fortuna shareholders		$	(92,316)	$	(152,772)	$	(50,836)	$	(128,132)
Non-controlling interest	30		2,477		(7,662)		7,206		(7,774)
		$	(89,839)	$	(160,434)	$	(43,630)	$	(135,906)

Loss per share	19
Basic		$	(0.30)	$	(0.52)	$	(0.17)	$	(0.44)
Diluted		$	(0.30)	$	(0.52)	$	(0.17)	$	(0.44)

Weighted average number of common shares outstanding (000's)
Basic			306,511		291,429		295,067		291,281
Diluted			306,511		291,429		295,067		291,281

Fortuna | 12

Statement of Cash Flow


		Three months ended December 31,				Years ended December 31,
	Note	2023		2022		2023		2022

Operating activities:
Net loss for the year		$	(89,839)		(160,434)	$	(43,630)	$	(135,906)
Items not involving cash
Depletion and depreciation			71,602		44,499		219,688		172,809
Accretion expense	24		1,597		1,256		6,773		4,830
Income taxes			17,023		(15,329)		32,579		10,797
Interest expense, net	24		5,933		1,855		15,017		7,227
Share-based payments, net of cash settlements			2,602		2,961		2,017		(1)
Impairment of mineral properties, plant and equipment	32		90,615		182,841		90,615		182,841
Inventory net realizable value adjustments	6		5,260		3,809		6,188		8,898
Inventory obsolescence adjustments	6		10,097		-		10,097		-
Write-off of mineral properties	9		5,210		372		5,985		5,874
Unrealized foreign exchange loss			4,441		(1,911)		5,706		4,554
Investment gains	5		(12,395)		-		(12,395)		-
Unrealized gains on derivatives			81		182		(170)		(1,194)
Other	23		4,462		(239)		5,142		-
Closure and reclamation payments	16		(599)		(270)		(1,203)		(623)
Changes in working capital	29		887		38		(9,737)		(18,021)
Cash provided by operating activities			116,977		59,630		332,672		242,085
Income taxes paid			(6,271)		(7,351)		(25,872)		(42,222)
Interest paid			(6,916)		(3,366)		(13,545)		(7,465)
Interest received			1,287		660		3,654		1,851
Net cash provided by operating activities			105,076		49,573		296,909		194,249

Investing activities:
Costs related to Chesser acquisition, net of cash acquired	8		(10,260)		-		(13,321)		-
Restricted cash			-		-		—		(1,911)
Additions to mineral properties and property, plant and equipment			(51,852)		(70,402)		(217,314)		(251,236)
Contractor advances on Séguéla construction			-		-		(8)		(2,186)
Purchases of investments	5		(9,359)		-		(9,359)		-
Proceeds from sale of investments	5		21,754		-		21,754		-
Other investing activities			(1,283)		-		1,364		-
Cash used in investing activities			(51,000)		(70,402)		(216,884)		(255,333)

Financing activities:
Transaction costs on credit facility	14		-		-		—		(688)
Proceeds from credit facility	14		10,000		15,000		75,500		80,000
Repayment of credit facility	14		(50,500)		-		(90,500)		(20,000)
Repurchase of common shares	18		-		-		—		(5,929)
Issuance of common shares from option exercise			301		-		301		-
Payments of lease obligations			(4,976)		(2,988)		(16,625)		(12,209)
Dividend payment to non-controlling interest			(87)		-		(1,392)		(2,708)
Cash (used in) provided by financing activities			(45,262)		12,012		(32,716)		38,466
Effect of exchange rate changes on cash and cash equivalents			1,551		1,457		346		(3,986)
Increase (decrease) in cash and cash equivalents during the year			10,365		(7,360)		47,655		(26,604)
Cash and cash equivalents, beginning of the year			117,780	$	116,126		80,493		107,097
Cash and cash equivalents, end of the year		$	128,145	$	108,766	$	128,148	$	80,493

Cash and cash equivalents consist of:
Cash		$	106,135	$	65,140	$	106,135	$	65,140
Cash equivalents			22,013		15,353		22,013		15,353
Cash and cash equivalents, end of the year		$	128,148	$	80,493	$	128,148	$	80,493
Supplemental cash flow information (Note 29)

Fortuna | 13

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 equivalent sold; all-in sustaining cash cost per ounce of gold equivalent sold; all-in cash cost per ounce of gold equivalent 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; attributable adjusted net income; adjusted EBITDA; net debt 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.

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, 2023 (“2023 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 to an investor and the additional purposes, if any, for which management of Fortuna uses such measures and ratio. The 2023 MD&A may be accessed on SEDAR+ at www.sedarplus.ca under the Company’s profile, Fortuna Silver Mines Inc.

Except as otherwise described in the 2023 MD&A, the Company has calculated these measures consistently for all periods presented.

Fortuna | 14

Reconciliation to Adjusted Net Income for the Three and Twelve Months ended December 31, 2023 and 2022


	Three months ended December 31,		Years ended December 31,
Consolidated (in millions of US dollars)	2023	2022	2023	2022
Net income	(89.8)	(160.4)	(43.6)	(135.9)
Adjustments, net of tax:
Community support provision and accruals^1^	(0.4)	(0.1)	(0.5)	(0.1)
Foreign exchange loss, Séguéla Mine^2^	-	(0.4)	-	0.8
Write off of mineral properties	4.0	0.3	4.5	5.1
Unrealized loss on derivatives	0.1	0.1	(0.3)	(0.4)
Impairment of mineral properties, plant and equipment	90.6	164.5	90.6	164.5
Inventory adjustment	13.5	3.8	14.2	8.0
Accretion on right of use assets	0.5	0.5	3.3	2.3
Other non-cash/non-recurring items	4.9	(1.1)	4.4	(1.7)
Adjusted Net Income	23.4	7.2	72.6	42.6
^1^Amounts are recorded in Cost of sales
^2^Amounts are recorded in General and Administration
Figures may not add due to rounding

Reconciliation to Attributable Adjusted Net Income for the Three and Twelve Months ended December 31, 2023 and 2022


	Three months ended December 31,		Years ended December 31,
Consolidated (in millions of US dollars)	2023	2022	2023	2022
Net loss attributable to shareholders	(92.3)	(152.8)	(50.8)	(128.1)
Adjustments, net of tax:
Community support provision and accruals^1^	(0.4)	(0.1)	(0.5)	(0.1)
Foreign exchange loss, Séguéla Mine^2^	–	(0.4)	–	1.1
Write off of mineral properties	4.0	0.3	4.5	5.1
Unrealized loss (gain) on derivatives	0.1	0.1	(0.3)	(0.4)
Impairment of mineral properties, plant and equipment	90.6	155.9	90.6	155.9
Inventory adjustment	13.2	3.8	13.9	7.6
Accretion on right of use assets	0.5	0.5	3.1	2.3
Other non-cash/non-recurring items	4.9	(0.9)	4.4	(2.0)
Attributable Adjusted Net Income	20.6	6.4	64.9	41.4
^1^Amounts are recorded in Cost of sales
^2^Amounts are recorded in General and Administration
Figures may not add due to rounding

Reconciliation to Adjusted EBITDA for the Three and Twelve Months ended December 31, 2023 and 2022


	Three months ended December 31,		Years ended December 31,
Consolidated (in millions of US dollars)	2023	2022	2023	2022
Net income	(89.8)	(160.4)	(43.6)	(135.9)
Adjustments:
Community support provision and accruals	(0.5)	(0.1)	(0.7)	(0.1)
Inventory adjustment	15.4	3.8	16.3	8.9
Foreign exchange loss, Séguéla Mine	-	(0.4)	0.8	0.8
Net finance items	7.5	3.1	21.8	12.1
Depreciation, depletion, and amortization	71.6	45.3	219.6	172.8
Income taxes	17.0	(15.3)	32.6	10.8
Impairment of mineral properties, plant and equipment	90.6	182.8	90.6	182.8
Other non-cash/non-recurring items	8.5	(3.0)	(2.3)	(6.7)
Adjusted EBITDA	120.3	55.8	335.1	245.5

Figures may not add due to rounding

Fortuna | 15

Reconciliation of Free Cash Flow from ongoing operations for the Three and Twelve Months ended December 31, 2023 and 2022


	Three months ended December 31,		Years ended December 31,
Consolidated (in millions of US dollars)	2023	2022	2023	2022

Net cash provided by operating activities	105.1	49.6	296.9	194.2
Adjustments
Séguéla, working capital	-	-	4.4	-
Additions to mineral properties, plant and equipment	(46.3)	(39.6)	(143.6)	(113.4)
Gain on blue chip swap investments	12.4	-	12.4	-
Mexican royalty payment	-	-	-	3.0
Other adjustments	(5.0)	(5.6)	(16.6)	(14.6)
Free cash flow from ongoing operations	66.2	4.4	153.5	69.2

Figures may not add due to rounding

Reconciliation of Cash Cost per Gold Equivalent Ounce Sold for the Three and Twelve Months ended December 31, 2023 and 2022


Cash Cost Per Gold Equivalent Ounce Sold - Q4 2023	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	GEO Cash Costs
Cost of sales	57,913		49,598		46,239		41,108		18,599		213,457
Inventory adjustment	(7,884)		(3,033)		—		(4,407)		(683)		(16,007)
Depletion, depreciation, and amortization	(15,061)		(15,345)		(25,972)		(11,407)		(3,476)		(71,261)
Royalties and taxes	(3,916)		(4,437)		(6,364)		(815)		(227)		(15,759)
By-product credits	(4,183)		—		—		—		—		(4,183)
Right of use	—		—		—		219		365		584
Other	—		—		—		344		(397)		(53)
Production cash costs	26,869		26,783		13,903		25,042		14,181		106,778
Inventory adjustment	—		—		—		(147)		683		536
Right of use	—		—		—		(219)		(365)		(584)
Depletion and depreciation in concentrate inventory	—		—		—		56		10		66
Realized gain on diesel hedge	—		—		—		—		—		—
Treatment and refining charges	—		—		—		1,505		4,241		5,746
Cash cost applicable per gold equivalent ounce sold	26,869		26,783		13,903		26,237		18,750		112,542
Ounces of gold equivalent sold	28,779		28,229		43,018		17,650		16,236		133,912
Cash cost per ounce of gold equivalent sold (/oz)	934		949		323		1,487		1,155		840
Gold equivalent was calculated using the realized prices for gold of 1,990/oz Au, 23.3/oz Ag, 2,137/t Pb, and 2,499/t Zn for Q4 2023.

All values are in US Dollars.

Fortuna | 16


Cash Cost Per Gold Equivalent Ounce Sold - Q4 2022	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	GEO Cash Costs
Cost of sales	43,057		42,084		—		34,775		16,676		136,592
Inventory adjustment	(312)		—		—		27		216		(69)
Depletion, depreciation, and amortization	(13,441)		(17,884)		—		(10,557)		(2,960)		(44,842)
Royalties and taxes	(3,353)		(2,732)		—		(1,260)		(181)		(7,526)
By-product credits	(982)		—		—		—		—		(982)
Right of use	—		—		—		—		—		—
Other	—		—		—		(601)		(497)		(1,098)
Production cash costs	24,969		21,468		—		22,384		13,254		82,075
Inventory adjustment	(1,379)		—		—		(27)		(216)		(1,622)
Right of use	—		—		—		—		—		—
Depletion and depreciation in concentrate inventory	—		—		—		47		(120)		(73)
Realized gain on diesel hedge	(1,105)		—		—		—		—		(1,105)
Treatment and refining charges	—		—		—		947		3,128		4,075
Cash cost applicable per gold equivalent ounce sold	22,485		21,468		—		23,351		16,046		83,350
Ounces of gold equivalent sold	27,634		26,250		—		25,747		15,795		95,426
Cash cost per ounce of gold equivalent sold (/oz)	814		818		—		907		1,016		873
Gold equivalent was calculated using the realized prices for gold of 1,737/oz Au, 21.4/oz Ag, 2,106/t Pb, and 2,986/t Zn for Q4 2022.

All values are in US Dollars.


Cash Cost Per Gold Equivalent Ounce Sold - Year 2023	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	GEO Cash Costs
Cost of sales	176,696		186,757		79,472		140,068		69,408		652,401
Inventory adjustment	(10,693)		(3,859)		—		(4,564)		(576)		(19,692)
Depletion, depreciation, and amortization	(51,258)		(73,064)		(40,529)		(40,058)		(13,390)		(218,299)
Royalties and taxes	(14,958)		(14,678)		(10,932)		(4,390)		(1,078)		(46,036)
By-product credits	(7,921)		—		—		—		—		(7,921)
Right of use	—		—		—		758		1,933		2,691
Other	—		—		—		253		(1,692)		(1,439)
Production cash costs	91,866		95,156		28,011		92,067		54,605		361,705
Inventory adjustment	2,823		—		—		10		576		3,409
Right of use	—		—		—		(758)		(1,933)		(2,691)
Depletion and depreciation in concentrate inventory	—		—		—		30		76		106
Realized gain on diesel hedge	—		—		—		—		—		—
Treatment and refining charges	—		—		—		4,352		19,974		24,326
Cash cost applicable per gold equivalent ounce sold	94,689		95,156		28,011		95,701		73,298		386,855
Ounces of gold equivalent sold	102,896		117,676		78,521		80,458		63,229		442,780
Cash cost per ounce of gold equivalent sold (/oz)	920		809		357		1,189		1,159		874
Gold equivalent was calculated using the realized prices for gold of 1,948/oz Au, 23.4/oz Ag, 2,155/t Pb, and 2,706/t Zn for year 2023.

All values are in US Dollars.

Fortuna | 17


Cash Cost Per Gold Equivalent Ounce Sold - Year 2022	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	GEO Cash Costs
Cost of sales	164,179		171,846		—		129,088		67,491		532,604
Inventory adjustment	293		(6,397)		—		156		48		(5,900)
Depletion, depreciation, and amortization	(54,644)		(64,894)		—		(37,773)		(14,108)		(171,419)
Royalties and taxes	(15,545)		(11,630)		—		(5,262)		(867)		(33,304)
By-product credits	(1,214)		(25)		—		—		—		(1,239)
Right of use	—		—		—		—		—		—
Other	—		(329)		—		(2,477)		(1,789)		(4,595)
Production cash costs	93,069		88,571		—		83,732		50,775		316,147
Inventory adjustment	(1,984)		1,320		—		(156)		(48)		(868)
Right of use	—		—		—		—		—		—
Depletion and depreciation in concentrate inventory	—		—		—		(2)		76		74
Realized gain on diesel hedge	(4,620)		—		—		—		—		(4,620)
Treatment and refining charges	—		329		—		3,508		15,476		19,313
Cash cost applicable per gold equivalent ounce sold	86,465		90,220		—		87,082		66,279		330,046
Ounces of gold equivalent sold	116,950		107,433		—		99,439		64,952		388,774
Cash cost per ounce of gold equivalent sold (/oz)	739		840		—		876		1,020		849
Gold equivalent was calculated using the realized prices for gold of 1,802/oz Au, 21.8/oz Ag, 2,161/t Pb, and 3,468/t Zn for year 2022.

All values are in US Dollars.

Reconciliation of All-in Sustaining Cash Cost per Ounce of Gold Equivalent Sold for the Three and Twelve Months ended December 31, 2023 and 2023


AISC Per Gold Equivalent Ounce Sold - Q4 2023	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	Corporate	****	GEO AISC
Cash cost applicable per gold equivalent ounce sold	26,869		26,783		13,903		26,237		18,750		—		112,542
Inventory net realizable value adjustment	—		—		—		—		—		—		—
Royalties and taxes	3,916		4,437		6,364		815		227		—		15,759
Worker's participation	—		—		—		(430)		399		—		(31)
General and administration	2,833		(336)		1,398		1,789		1,344		12,603		19,631
Stand-by	—		2,700		—		—		—		—		2,700
Total cash costs	33,618		33,584		21,665		28,411		20,720		12,603		150,601
Sustaining capital1	11,205		14,958		10,050		4,693		10,513		—		51,419
All-in sustaining costs	44,823		48,542		31,715		33,104		31,233		12,603		202,020
Gold equivalent ounces sold	28,779		28,229		43,018		17,650		16,236		—		133,912
All-in sustaining costs per ounce	1,557		1,720		737		1,876		1,924		—		1,509
Gold equivalent was calculated using the realized prices for gold of 1,990/oz Au, 23.3/oz Ag, 2,137/t Pb, and 2,499/t Zn for Q4 2023.
1 Presented on a cash basis

All values are in US Dollars.

Fortuna | 18


AISC Per Gold Equivalent Ounce Sold - Q4 2022	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	Corporate	****	GEO AISC
Cash cost applicable per gold equivalent ounce sold	22,485		21,468		—		23,351		16,046		—		83,350
Inventory net realizable value adjustment	1,052		—		—		—		—		—		1,052
Royalties and taxes	3,353		2,732		—		1,260		181		—		7,526
Worker's participation	—		—		—		751		480		—		1,231
General and administration	2,081		531		—		2,319		928		10,329		16,188
Stand-by	—		—		—		—		—		—		—
Total cash costs	28,971		24,731		—		27,681		17,635		10,329		109,347
Sustaining capital3	4,724		23,268		—		4,825		8,506		—		41,323
All-in sustaining costs	33,695		47,999		—		32,506		26,141		10,329		150,670
Gold equivalent ounces sold	27,634		26,250		—		25,747		15,795		—		95,426
All-in sustaining costs per ounce	1,219		1,829		—		1,263		1,655		—		1,579
Gold equivalent was calculated using the realized prices for gold of 1,737/oz Au, 21.4/oz Ag, 2,106/t Pb, and 2,986/t Zn for Q4 2022.
1 Presented on a cash basis

All values are in US Dollars.


AISC Per Gold Equivalent Ounce Sold - Year 2023	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	Corporate	****	GEO AISC
Cash cost applicable per gold equivalent ounce sold	94,689		95,156		28,011		95,701		73,298		—		386,855
Inventory net realizable value adjustment	—		334		—		—		—		—		334
Royalties and taxes	14,958		14,678		10,932		4,390		1,078		—		46,036
Worker's participation	—		—		—		(316)		1,927		—		1,611
General and administration	9,624		919		4,510		7,040		4,810		35,903		62,806
Stand-by	—		5,699		—		4,084		—		—		9,783
Total cash costs	119,271		116,786		43,453		110,899		81,113		35,903		507,425
Sustaining capital3	41,751		59,613		16,241		19,111		23,743		—		160,459
All-in sustaining costs	161,022		176,399		59,694		130,010		104,856		35,903		667,884
Gold equivalent ounces sold	102,896		117,676		78,521		80,458		63,229		—		442,780
All-in sustaining costs per ounce	1,565		1,499		760		1,616		1,658		—		1,508
Gold equivalent was calculated using the realized prices for gold of 1,948/oz Au, 23.4/oz Ag, 2,155/t Pb, and 2,706/t Zn for year 2023.
1 Presented on a cash basis

All values are in US Dollars.


AISC Per Gold Equivalent Ounce Sold - Year 2022	Lindero	****	Yaramoko	****	Séguéla	****	San Jose	****	Caylloma	****	Corporate	****	GEO AISC
Cash cost applicable per gold equivalent ounce sold	86,465		90,220		—		87,082		66,279		—		330,046
Inventory net realizable value adjustment	1,052		3,125		—		—		—		—		4,177
Royalties and taxes	15,545		11,630		—		5,262		867		—		33,304
Worker's participation	—		—		—		3,096		2,087		—		5,183
General and administration	8,578		2,101		—		7,164		4,063		37,661		59,567
Stand-by	—		—		—		—		—		—		—
Total cash costs	111,640		107,076		—		102,604		73,296		37,661		432,277
Sustaining capital3	21,721		57,230		—		21,995		23,246		—		124,192
All-in sustaining costs	133,361		164,306		—		124,599		96,542		37,661		556,469
Gold equivalent ounces sold	116,950		107,433		—		99,439		64,952		—		388,774
All-in sustaining costs per ounce	1,140		1,529		—		1,253		1,486		—		1,431
Gold equivalent was calculated using the realized prices for gold of 1,802/oz Au, 21.8/oz Ag, 2,161/t Pb, and 3,468/t Zn for year 2022.
1 Presented on a cash basis

All values are in US Dollars.

Fortuna | 19

Reconciliation of Production Cash Cost per Tonne and Cash Cost per Payable Silver Equivalent Ounce Sold for the Three and Twelve Months ended December 31, 2023 and 2022


Cash Cost Per Silver Equivalent Ounce Sold - Q4 2023	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		41,108		18,599		59,707
Inventory adjustment		(4,407)		(683)		(5,090)
Depletion, depreciation, and amortization		(11,407)		(3,476)		(14,883)
Royalties and taxes		(815)		(227)		(1,042)
By-product credits		—		—		—
Right of use		219		365		584
Other		344		(397)		(53)
Production cash costs		25,042		14,181		39,223
Total tonnes		241,035		140,800		381,835
Production cash cost per tonne		104		101		103


Cash Costs		25,042		14,181		39,223
Inventory adjustment		(147)		683		536
Depletion and depreciation in concentrate inventory		56		10		66
Treatment and refining charges		1,505		4,241		5,746
Cash cost applicable per silver equivalent sold		26,456		19,115		45,571
Ounces of silver equivalent sold^1^		1,505,763		1,398,062		2,903,825
Cash cost per ounce of silver equivalent sold ($/oz)		17.57		13.67		15.69
^1^ Silver equivalent sold for Q4 2023 for San Jose is calculated using a silver to gold ratio of 84.9:1. Silver equivalent sold for Q4 2023 for Caylloma is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:23.8 pounds, and silver to zinc ratio of 1:20.3 pounds.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices


Cash Cost Per Silver Equivalent Ounce Sold - Q4 2022	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		34,775		16,676		51,451
Inventory adjustment		27		216		243
Depletion, depreciation, and amortization		(10,557)		(2,960)		(13,517)
Royalties and taxes		(1,260)		(181)		(1,441)
By-product credits		—		—		—
Right of use		—		—		—
Other		(601)		(497)		(1,098)
Production cash costs		22,384		13,254		35,638
Total tonnes		259,500		138,491		397,991
Production cash cost per tonne		86		96		90


Cash Costs		22,384		13,254		35,638
Inventory adjustment		(27)		(216)		(243)
Depletion and depreciation in concentrate inventory		47		(120)		(73)
Treatment and refining charges		947		3,128		4,075
Cash cost applicable per silver equivalent sold		23,351		16,046		39,397
Ounces of silver equivalent sold^1^		2,092,500		1,287,998		3,380,498
Cash cost per ounce of silver equivalent sold ($/oz)		11.16		12.46		11.65
^1^ Silver equivalent sold for San Jose for Q4 2022 is 81.2:1.Silver equivalent sold for Caylloma for Q4 2022 is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:22.3 pounds, and silver to zinc ratio 1:15.7.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices

Fortuna | 20


Cash Cost Per Silver Equivalent Ounce Sold - Year 2023	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		140,068		69,408		209,476
Inventory adjustment		(4,564)		(576)		(5,140)
Depletion, depreciation, and amortization		(40,058)		(13,390)		(53,448)
Royalties and taxes		(4,390)		(1,078)		(5,468)
By-product credits		—		—		—
Right of use		758		1,933		2,691
Other		253		(1,692)		(1,439)
Production cash costs		92,067		54,605		146,672
Total tonnes		930,200		543,877		1,474,077
Production cash cost per tonne		99		100		100


Cash Costs		92,067		54,605		146,672
Inventory adjustment		10		576		586
Depletion and depreciation in concentrate inventory		30		76		106
Treatment and refining charges		4,352		19,974		24,326
Cash cost applicable per silver equivalent sold		96,459		75,231		171,690
Ounces of silver equivalent sold^1^		6,700,419		5,269,540		11,969,959
Cash cost per ounce of silver equivalent sold ($/oz)		14.40		14.28		14.34
1 Silver equivalent sold for year 2023 for San Jose is calculated using a silver to gold ratio of 83.1:1. Silver equivalent sold for year 2023 for Caylloma is calculated using a silver to gold ratio of 81.4:1, silver to lead ratio of 1:23.9 pounds, and silver to zinc ratio of 1:19.0 pounds.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices


Cash Cost Per Silver Equivalent Ounce Sold - Year 2022	****	San Jose	****	Caylloma	****	SEO Cash Costs
Cost of sales		129,088		67,491		196,579
Inventory adjustment		156		48		204
Depletion, depreciation, and amortization		(37,773)		(14,108)		(51,881)
Royalties and taxes		(5,262)		(867)		(6,129)
By-product credits		—		—		—
Right of use		—		—		—
Other		(2,477)		(1,789)		(4,266)
Production cash costs		83,732		50,775		134,507
Total tonnes		1,029,590		546,186		1,575,776
Production cash cost per tonne		81		93		85


Cash Costs		83,732		50,775		134,507
Inventory adjustment		(156)		(48)		(204)
Depletion and depreciation in concentrate inventory		(2)		76		74
Treatment and refining charges		3,508		15,476		18,984
Cash cost applicable per silver equivalent sold		87,082		66,279		153,361
Ounces of silver equivalent sold^1^		8,243,436		5,372,277		13,615,713
Cash cost per ounce of silver equivalent sold ($/oz)		10.56		12.34		11.26
1 Silver equivalent sold for year 2022 for San Jose is calculated using a silver to gold ratio of 82.9:1. Silver equivalent sold for year 2022 for Caylloma is calculated using a silver to gold ratio of 85.5:1, silver to lead ratio of 1:22.9 pounds, and silver to zinc ratio of 1:13.9 pounds.
^2^ Silver equivalent is calculated using the realized prices for gold, silver, lead, and zinc. Refer to Financial Results - Sales and Realized Prices

Fortuna | 21

Reconciliation of All-in Sustaining Cash Cost and All-in Cash Cost per Payable Silver Equivalent Ounce Sold for the Three and Twelve Months ended December 31, 2023 and 2022


AISC Per Silver Equivalent Ounce Sold - Q4 2023	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		26,237		18,750		44,987
Royalties and taxes		815		227		1,042
Worker's participation		(430)		399		(31)
General and administration		1,789		1,344		3,133
Stand-by		—		—		—
Total cash costs		28,411		20,720		49,131
Sustaining capital^3^		4,693		10,513		15,206
All-in sustaining costs		33,104		31,233		64,337
Silver equivalent ounces sold^1^		1,505,763		1,398,062		2,903,825
All-in sustaining costs per ounce^2^		21.98		22.34		22.16
1 Silver equivalent sold for Q4 2023 for San Jose is calculated using a silver to gold ratio of 84.9:1. Silver equivalent sold for Q4 2023 for Caylloma is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:23.8 pounds, and silver to zinc ratio of 1:20.3 pounds.
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


AISC Per Silver Equivalent Ounce Sold - Q4 2022	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		23,351		16,046		39,397
Royalties and taxes		1,260		181		1,441
Worker's participation		751		480		1,231
General and administration		2,319		928		3,247
Stand-by		—		—		—
Total cash costs		27,681		17,635		45,316
Sustaining capital^3^		4,825		8,506		13,331
All-in sustaining costs		32,506		26,141		58,647
Silver equivalent ounces sold^1^		2,092,500		1,287,998		3,380,498
All-in sustaining costs per ounce^2^		15.53		20.30		17.35
1 Silver equivalent sold for San Jose for Q4 2022 is 81.2:1.Silver equivalent sold for Caylloma for Q4 2022 is calculated using a silver to gold ratio of 0.0:1, silver to lead ratio of 1:22.3 pounds, and silver to zinc ratio 1:15.7.
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


AISC Per Silver Equivalent Ounce Sold - Year 2023	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		95,701		73,298		168,999
Royalties and taxes		4,390		1,078		5,468
Worker's participation		(316)		1,927		1,611
General and administration		7,040		4,810		11,850
Stand-by		4,084		—		4,084
Total cash costs		110,899		81,113		192,012
Sustaining capital^3^		19,111		23,743		42,854
All-in sustaining costs		130,010		104,856		234,866
Silver equivalent ounces sold^1^		6,700,419		5,269,540		11,969,959
All-in sustaining costs per ounce^2^		19.40		19.90		19.62
1 Silver equivalent sold for year 2023 for San Jose is calculated using a silver to gold ratio of 83.1:1. Silver equivalent sold for year 2023 for Caylloma is calculated using a silver to gold ratio of 81.4:1, silver to lead ratio of 1:23.9 pounds, and silver to zinc ratio of 1:19.0 pounds.
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

Fortuna | 22


AISC Per Silver Equivalent Ounce Sold - Year 2022	****	San Jose	****	Caylloma	****	SEO AISC
Cash cost applicable per silver equivalent ounce sold		87,082		66,279		153,361
Royalties and taxes		5,262		867		6,129
Worker's participation		3,096		2,087		5,183
General and administration		7,164		4,063		11,227
Stand-by		—		—		—
Total cash costs		102,604		73,296		175,900
Sustaining capital^3^		21,995		23,246		45,241
All-in sustaining costs		124,599		96,542		221,141
Silver equivalent ounces sold^1^		8,243,436		5,372,277		13,615,713
All-in sustaining costs per ounce^2^		15.11		17.97		16.24
1 Silver equivalent sold for year 2022 for San Jose is calculated using a silver to gold ratio of 82.9:1. Silver equivalent sold for year 2022 for Caylloma is calculated using a silver to gold ratio of 85.5:1, silver to lead ratio of 1:22.9 pounds, and silver to zinc ratio of 1:13.9 pounds.
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, 2023 and accompanying 2023 MD&A, which are available for download on the Company’s website, www.fortunasilver.com, on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov/edgar.

Conference Call and Webcast

A conference call to discuss the financial and operational results will be held on Thursday, March 7, 2024 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 David Whittle, 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 at https://www.webcaster4.com/Webcast/Page/1696/49929 or over the phone by dialing in just prior to the starting time.

Conference call details:

Date: Thursday, March 7, 2024

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: 866537

Replay number (Toll Free): +1.877.481.4010

Replay number (International): +1.919.882.2331

Replay Passcode: 49929

Playback of the earnings call will be available until Thursday, March 21, 2024. Playback of the webcast will be available until Thursday, March 6, 2025. In addition, a transcript of the call will be archived on the Company’s website.

Fortuna | 23

About Fortuna Silver Mines Inc.

Fortuna Silver Mines Inc. is a Canadian precious metals mining company with five operating mines in Argentina, Burkina Faso, Côte d'Ivoire, Mexico, and Peru. Sustainability is integral to all our operations and relationships. We produce gold and silver and generate shared value over the long-term for our stakeholders through efficient production, environmental protection, and social responsibility. For more information, please visit our website.

ON BEHALF OF THE BOARD

Jorge A. Ganoza

President, CEO, and Director

Fortuna Silver Mines Inc.

Investor Relations:

Forward-looking Statements

This news release contains forward-looking statements which constitute "forward-looking information" within the meaning of applicable Canadian securities legislation and "forward-looking statements" within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995 (collectively, "Forward-looking Statements"). All statements included herein, other than statements of historical fact, are Forward-looking Statements and are subject to a variety of known and unknown risks and uncertainties which could cause actual events or results to differ materially from those reflected in the Forward-looking Statements. The Forward-looking Statements in this news release include, without limitation, statements about the Company's plans for its mines and mineral properties; the Company’s anticipated financial and operational performance in 2024; estimated production and costs of production for 2024, including grade and volume of metal produced and sales, revenues and cashflows, and capital costs (sustaining and non-sustaining), and operating costs, including projected production cash costs and all-in sustaining costs; the ability of the Company to mitigate the inflationary pressures on supplies used in its operations; estimated capital expenditures and estimated exploration spending in 2024, including amounts for exploration activities at its properties; statements regarding the Company's liquidity, access to capital; the impact of high inflation on the costs of production and the supply chain; the Company’s expectation that the leach pad expansion project at Lindero will be completed during the second half of 2024; statements that a Preliminary Economic Assessment in respect of the Diamba Sud project will be prepared by the end of 2024, subject to the results of the results of the Company’s drill program; statements relating to the anticipated closure of the San Jose Mine and the possibility of extending production beyond 2024; statements that the Diamba Sud project and the Séguéla Mine are priorities for exploration programs in 2024; statements that management has identified opportunities in 2024 to further optimize and debottleneck the processing facility at the Séguéla Mine; the Company's business strategy, plans and outlook, including statements that the Company has guided further growth in 2024 and anticipates further debt reduction; the merit of the Company's mines and mineral properties; mineral resource and reserve estimates, metal recovery rates, concentrate grade and quality; changes in tax rates and tax laws, requirements for permits, 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; uncertainty relating to new mining operations such as the Séguéla Mine; risks associated with war or other geo-political hostilities, such as the Ukrainian – Russian conflict, any of which could continue to cause a disruption in global economic activity; fluctuation in currencies and foreign exchange rates; increases in the rate of inflation; the imposition or any extension of capital controls in countries in which the Company operates; any changes in tax laws in Argentina and the other countries in which we operate; 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; that the appeal filed in the Mexican Collegiate Court challenging the reinstatement of the environmental impact authorization at the San Jose Mine (the “EIA”) will be successful; 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

Fortuna | 24

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 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, labor and contractor availability and other operating or technical difficulties); geopolitical uncertainties that may affect the Company’s production, workforce, business, operations and financial condition; the expected trends in mineral prices and currency exchange rates; that the Company will be successful in mitigating the impact of inflation on its business and operations; that the appeal in respect of the ruling in favor of Minera Cuzcatlan reinstating the EIA will not be successful; that all required approvals and permits will be obtained for the Company’s business and operations on acceptable terms; that there will be no significant disruptions affecting the Company's operations, the ability to meet current and future obligations and such other assumptions as set out herein. Forward-looking Statements are made as of the date hereof and the Company disclaims any obligation to update any Forward-looking Statements, whether as a result of new information, future events or results or otherwise, except as required by law. There can be no assurance that these Forward-looking Statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, investors should not place undue reliance on Forward-looking Statements.

Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources

Reserve and resource estimates included in this news release have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy, and Petroleum Definition Standards on Mineral Resources and Mineral Reserves. NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for public disclosure by a Canadian company of scientific and technical information concerning mineral projects. Unless otherwise indicated, all mineral reserve and mineral resource estimates contained in the technical disclosure have been prepared in accordance with NI 43-101 and the Canadian Institute of Mining, Metallurgy and Petroleum Definition Standards on Mineral Resources and Reserves. Canadian standards, including NI 43-101, differ significantly from the requirements of the Securities and Exchange Commission, and mineral reserve and resource information included in this news release may not be comparable to similar information disclosed by U.S. companies.

Fortuna | 25