Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to announce that it has entered into a definitive Scheme Implementation Deed (“Agreement”) with Chesser Resources Limited (ASX: CHZ) (“Chesser”), pursuant to which Fortuna has agreed to acquire 100% of the fully-paid ordinary shares of Chesser (the “Chesser Shares”) in consideration for 0.0248 of a common share of Fortuna (each whole share, a “Fortuna Share”) for each Chesser Share held (“Scheme Consideration”). The Scheme Consideration represents a purchase price of approximately A$0.1421 for each Chesser Share and values the transaction at approximately A$89.0 million (CAD$80.6). The transaction as contemplated by the Agreement (the “Transaction”) will be implemented by way of a scheme of arrangement pursuant to Part 5.1 of the Australian Corporations Act 2001 (Cth) (“Scheme”). Upon implementation of the Scheme, Fortuna expects to issue up to 15,545,682 Fortuna Shares to Chesser shareholders, representing approximately 5.1% of the issued and outstanding Fortuna Shares on an undiluted basis.

The acquisition of Chesser will expand Fortuna’s presence in West Africa to include the preliminary economic assessment stage Diamba Sud Gold Project (“Diamba Sud”) in Senegal, one of the new and emerging gold discoveries in the region. Chesser holds tenements covering approximately 872 km2 of prospective ground located in close proximity to and sharing similar geologic features with tier one gold mines owned by Barrick Gold and B2Gold located in Mali. Diamba Sud itself comprises four open pitable high-grade gold deposits, along with numerous targets yet to be tested. Fortuna will prioritize exploration to expand the mineral resource before advancing Diamba Sud to development stage.

Jorge A. Ganoza, President & CEO of Fortuna, commented, “In a short time, Chesser has done a great job advancing Diamba Sud from early-stage exploration to a PEA-stage project with multiple targets yet to be tested. Within the larger and diversified Fortuna portfolio, the advancement of Diamba Sud will benefit from our technical and operational strength and lower cost of capital.” Mr. Ganoza continued, “Diamba Sud is located in the highly productive Senegal-Mali shear zone, close to world class gold mines. We are excited by the value creation opportunities this transaction offers to Chesser and Fortuna shareholders.” Mr. Ganoza concluded, “This transaction is very much aligned with our strategy to bring high-value exploration and development opportunities in regions where we are established.”

On December 12, 2022, Chesser released a second update (refer to Chesser news release dated December 12, 2022) to its scoping study and Mineral Resource estimate that was originally released in March 2022 (refer to Scoping Study Report Diamba Sud Gold Project, Senegal 15 March 2022). In this second updated report, Chesser reported an Indicated Mineral Resource estimate of 10.0 Mt averaging 1.9 g/t Au containing 625,000 ounces of gold and an Inferred Mineral Resource estimate of 4.7 Mt averaging 1.5 g/t Au containing 235,000 ounces of gold prepared in accordance with the JORC Code (as defined below). The mineral resources are distributed across the Area D, Area A, Karakara, and Bougouda deposits. Potential exploration opportunities exist, including the new discovery at Western Splay which warrants additional exploration.

The scoping study on Diamba Sud demonstrated that the project is a conventional open pit and CIL process design and has the potential to generate an attractive post-tax NPV5% of US$218 million and 43% IRR over a 7.5-year mine life2. Upon closing of the Transaction, Fortuna intends to conduct a detailed optimization study of the current technical data and economic parameters relating to the project, together with the preparation of an updated exploration and development plan. Fortuna’s strong balance sheet and attractive cost of capital will serve to accelerate the continued exploration of Diamba Sud and future development.