Fortuna Silver Mines Inc. has provided an update on the status of the appeal to the denial order (the “Denial Order”) received on November 10, 2021 from the Secretaría de Medio Ambiente y Recursos Naturales (“SEMARNAT”) with respect to the application to extend the environmental impact authorization (“EIA”) at the San Jose Mine, located in Oaxaca, Mexico.
Fortuna’s Mexican subsidiary, Companía Minera Cuzcatlán (“Minera Cuzcatlan”) is working with its legal advisors to file an appeal to the Denial Order prior to the end of November 2021. The appeal will be brought by Minera Cuzcatlan in the Mexican courts.
The grounds for the appeal are that Minera Cuzcatlan is in full compliance with all material environmental laws, and therefore Minera Cuzcatlan has the right to an extension of the EIA under applicable law. The timing for a decision by the Administrative Court is uncertain, and Fortuna has been advised that such decisions may often take up to a year to be delivered.
Protection of the Mexican courts
The San Jose mine is currently operating under the protection of the Mexican courts which allows the continued operation of the San Jose mine beyond the expiry date of the EIA (refer to Fortuna news release dated October 25, 2021).
Under the terms of the Company’s credit facility (refer to Fortuna news release dated November 11, 2021), the Company is required to obtain a permanent injunction or equivalent protection, in form and substance acceptable to the lenders acting reasonably, by November 20, 2021 to allow the Company to continue to operate the San Jose mine from October 23, 2021. The lenders under the credit facility have agreed to waive that requirement until February 18, 2022, provided such permanent injunction or equivalent protection has not been lifted or stayed prior thereto.
The Company believes that it is fundamentally in compliance with all material aspects of the EIA and is entitled to an extension. The Company is continuing to work with authorities to resolve this matter. Minera Cuzcatlan is continuing to pursue all legal protection available to it in order to continue to operate pending the appeal of the Denial Order.