NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2014 AND 2013
(All amounts in US$’000’s unless otherwise stated)
94
FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
The assumptions used to estimate the fair value of the share purchase options granted during the year ended December
31, 2014 and 2013 were:
Years ended December 31,
2014
2013
Risk-free interest rate
1.19%
1.18%
Expected stock price volatility
59.29%
57.81%
Expected term in years
3
3
Expected dividend yield
0%
0%
Expected forfeiture rate
4.15%
4.15%
The expected volatility assumption is based on the historical volatility of the Company’s Canadian dollar common share
price on the Toronto Stock Exchange. The weighted average fair value per share purchase option was CAD$4.30 (2013:
CAD$3.68).
The following table summarizes information related to stock options outstanding and exercisable at December 31, 2014:
Weighted average
remaining Weighted average
Weighted average
Number of
contractual life
exercise price on
Exercisable exercise price on
outstanding
of outstanding outstanding share share purchase exercisable share
Exercise price
share purchase
share purchase
purchase options
options
purchase options
in CAD$
options (in ‘000’s)
options (years)
CAD$
(in ‘000’s)
CAD$
$0.85 to $0.99
270
3.8
$ 0.85
270
$ 0.85
$1.00 to $1.99
274
1.3
1.44
274
1.44
$2.00 to $2.99
250
2.0
2.22
250
2.22
$3.00 to $3.99
889
1.4
3.38
397
3.38
$4.00 to $4.99
1,212
1.4
4.18
552
4.03
$6.00 to $6.67
49
2.1
6.67
33
6.67
$0.85 to $6.67
2,944
1.7
$ 3.25
1,776
$ 2.80
The weighted average remaining life of vested share purchase options at December 31, 2014 was 1.5 years (December
31, 2013: 1.6 years).
Subsequent to December 31, 2014, 308,100 share purchase options with an exercise price of CAD$4.03 were exercised
resulting in issued and outstanding shares of 128,845,842.
c) Deferred Share Units (“DSU”) Cost
During 2010, the Company implemented a DSU plan which allows for up to 1% of the number of shares outstanding
from time to time to be granted to eligible directors. All grants under the plan are fully vested upon credit to an eligible
directors’ account.
During the year ended December 31, 2014, the Company granted 244,188 (2013: 230,479) DSU with a market value
of CAD$1,050 (2013: CAD$782), at the date of grants, to non-executive directors.
During the year ended December 31, 2014, the Company paid $514 (2013: $nil) on 127,063 (2013: nil) DSU to a former
director of the Company.
As at December 31, 2014, there are 828,529 (2013: 711,944) DSU outstanding with a fair value of $3,762 (2013:
$2,030). Refer to Note 10.
d) Restricted Share Units (“RSU”) Cost
During 2010, the Company implemented a RSU plan for certain employees or officers. The RSU entitle employees or
officers to a cash payment after the end of a performance period of up to three years following the date of the award.
The RSU payment will be an amount equal to the fair market value of the Company’s common share on the five trading
days immediately prior to the end of the performance period multiplied by the number of RSU held by the employee.
13. Share Capital (Continued)
b) Share Options (Continued)
