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Title : Fortuna Silver (FVI.to)(FSM) and IKN's First Law of Mining NRs
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Fortuna Silver (FVI.to)(FSM) and IKN's First Law of Mining NRs

A reminder of the IKN First Law of Mining NRs:

"The IKN First Law of Mining News Releases: Considering that anything contained in a mining news release is presented in the best possible way for the company in question, any piece of information contained in a NR that comes across in any way negative means the real news and/or events behind it must be very, very bad indeed."

And now this, that they decided to keep quiet for the last three years and are now obliged to reveal:

VANCOUVER, British Columbia, Jan. 29, 2020 (GLOBE NEWSWIRE) -- Fortuna Silver Mines, Inc. (NYSE: FSM) (TSX: FVI) is providing an update on the status of a disputed royalty on one of its extracting mining concessions at the San Jose mine, located in Oaxaca, Mexico.

In 2017 the Mexican Geological Service (“SGM”) advised the Company that a previous owner of one of the Company’s mineral concessions at the San Jose mine had granted the SGM a royalty of 3% of the billing value of minerals obtained from the concession. The Company, supported by legal opinions from three independent law firms, has previously advised the Mexican mining authorities that it is of the view that no royalty is payable, and in 2018 initiated administrative and legal proceedings against the Direccion General de Minas (“DGM”) to remove reference to the royalty on the title register. The proceedings are progressing in accordance with the procedures of the Mexican administrative court.

The Company has recently received notice from the DGM seeking to cancel the mining concession if the royalty, in the Mexican pesos equivalent of US$30 million plus VAT (being the amount of the claimed royalty from 2011 to 2019), is not paid before March 15, 2020. The Company will be initiating legal proceedings to contest the cancellation procedure and also to stay the cancellation process.  In the event that the Company is unsuccessful in cancelling the action taken by the DGM or in obtaining a stay of execution, it may be required to pay, or post a bond or other security, up to the amount claimed, in order to preserve the mining concession.  In that case the Company would immediately thereafter proceed with dispute proceedings.

If the Company is required to pay the royalty or post security it will do so from available working capital. The Company remains adequately funded to meet its capital requirements for the completion of the Lindero Project and to fund sustaining capital expenditures at its operating mines.

About Fortuna Silver Mines Inc.

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