Fortuna Reports Consolidated Financial Results for the First Quarter 2015

VANCOUVER, BRITISH COLUMBIA--(Marketwired - May 8, 2015) - Fortuna Silver Mines Inc. (FSM)(FVI.TO) -

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

Fortuna Silver Mines Inc. today reported sales of $39.8 million and net income of $3.9 million in the first quarter of 2015.

Jorge A. Ganoza, President and CEO, commented, "We have made an excellent start to the year operating well within our production and cost guidance and look forward to a year of execution on our key expansion project at the San Jose mine." Mr. Ganoza continued, "On March 30th we announced the expansion our credit facility to $60 million giving us access to liquidity of over $130 million, providing significant additional financial flexibility in this period of growth for the Company."

First quarter consolidated financial highlights:

• Sales of $39.8 million
  
  
• Net income of $3.9 million and earnings per share of $0.03
  
  
• Cash flow from operations before changes in non-cash working capital of $5.3 million and cash flow per share of $0.04; and EBITDA of $15.2 million
  
  
• Cash position, including short term investments, and working capital as at March 31, 2015 were $77.2 million and $86.3 million, respectively
  
  
• Silver and gold production of 1,633,169 and 9,739 ounces, respectively
  
  
• Cash cost per ounce of payable silver, net of by-product credits was $3.89
  
  
• AISCC* per ounce of payable silver was $11.79
  
  

*All-in sustaining cash cost is net of by-product credits for gold, lead and zinc

First quarter consolidated financial results

Net income amounted to $3.9 million (Q1 2014: $4.9 million), resulting in basic earnings per share of $0.03 (Q1 2014: $0.04). Net income in Q1 2015 was affected by a 12% reduction in sales as a result of an 18% lower realized silver price as compared to Q1 2014. The negative effect from metal prices was partially offset by lower unit costs at both mines and by lower selling, general and administrative expenses of 42% related to a lower charge on share-based compensation of $1.9 million from mark-to- market effects and lower corporate expenses of $0.7 million.

Silver sold decreased 1% to 1,624,326 ounces while the realized silver price decreased 18% to $16.65 per ounce from the prior year period. Gold sold increased 11% to 9,674 ounces, while the realized gold price decreased 6% to $1,215.57 per ounce, from the prior year period. Sales comprised 61% silver and 23% gold.

Cash flow from operations, before changes in working capital and after income taxes paid decreased 69% to $5.3 million (Q1 2014: $16.9 million). Most of the decrease is related to timing issues in the payment of income taxes at our Mexican operation, which resulted in total payments of $9.6 million (Q1 2014: $1.1 million). EBITDA for the period was $15.2 million, 16% below the $18.0 million recorded in Q1 2014.

Silver and gold production totaled 1,633,169 and 9,739 ounces, respectively. Compared with the prior- year period, silver and gold production increased 6% and 19% explained largely by the commissioning of San Jose´s mill expansion from 1,800 to 2,000 tpd in April 2014 (see Fortuna news release dated April 14, 2014). The company is on schedule to produce 6.5 million ounces of silver and 35.3 thousand ounces of gold or 8.6 million Ag Eq* ounces in 2015. (*) Ag Eq calculated using silver to gold ratio of 60 to 1.

All-in sustaining cash cost per ounce of payable silver, net of by-product credits, decreased to $11.79 per ounce (Q1 2014: $16.52) as a result of higher payable ounces of silver and lower sustaining capital expenditures. All-in sustaining cash cost per ounce of payable silver was below the annual guidance of $16.61 per ounce. In the subsequent quarters we expect planned sustaining capital expenditures to increase resulting in an annual all-in sustaining cash cost per ounce to be in line with guidance for the year.

Silver and gold production was 10% and 23%, respectively, above production in the prior year period. The increases are the result of higher throughput of 19% and of higher head grade for gold of 5%. Production for the quarter was in line with our guidance.

Work on the third expansion of San Jose from 2,000 to 3,000 tpd is moving forward as planned, with detail engineering and purchase orders for major equipment well advanced. We plan to commission by mid-year 2016. At this new rate of production, the company will target consolidated annual production of approximately nine million ounces of silver and fifty-five thousand ounces of gold.

Cash cost per tonne of processed ore for the three months ended March 31, 2015 was $59.79/t, or 10% below the cost in the prior year period due mainly to 19% higher throughput; a 16% devaluation of the peso; and lower milling costs related to energy rates; and, was below the annual guidance of $62.71/t. All- in sustaining cash cost per payable ounce of silver, net of by-product credits, was $9.37 for the three months ended March 31, 2015 (refer to non-GAAP financial measures), below the annual guidance of $16.27.

Silver production was 1% below production in the prior year period due to slightly lower head grade. Zinc production increased 15% as a result of higher head grade and slightly higher metallurgical recoveries. Lead production increased 12% as a result of higher head grade.

Cash cost per tonne at Caylloma for the three months ended March 31, 2015 was $83.99 per tonne of processed ore, a decrease of 4% from the prior year period due to lower indirect costs related to headcount; lower distribution cost related to zinc concentrate transport; and, a 10% devaluation of the soles; and 7% below annual guidance of $90.29/t. Caylloma's all-in sustaining cash cost per payable ounce of silver, net of by-product credits, at Caylloma for the three months year ended March 31, 2015 was $10.99, below the annual guidance of $12.78 (refer to non-GAAP financial measures).

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

Playback of the webcast will be available until August 11, 2015. Playback of the conference call will be available until May 25, 2015 at 11:59 p.m. Eastern. In addition, a transcript of the call will be archived in the company's website:

http://www.fortunasilver.com/s/financial_reports.asp.