FORTUNA MINING CORP.

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:

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:

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