Prospero Secures C$1.5-Million Strategic Investment From Fortuna Silver Mines

VANCOUVER, BRITISH COLUMBIA--(Marketwired - April 17, 2017) -

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Prospero Silver Corp. (TSX VENTURE:PSL) (the "Company" or "Prospero") is pleased to announce that it has secured a C$1.5-million strategic investment from Fortuna Silver Mines Inc. ("Fortuna"), a growth-oriented mid-tier precious metals producer.

Subject to TSX Venture Exchange approval, Fortuna will purchase 5,357,142 units at C$0.28 per unit. Each unit comprises one common share in Prospero and one warrant entitling Fortuna to acquire one additional Prospero common share at C$0.35 for a period of 36 months. Prospero will allocate C$1.2 million to drill testing selected projects and C$300k will be allocated towards Prospero's generative efforts in Mexico. Fortuna will have the right to select one of the projects within 18 months from signing of the definitive agreement to joint venture with Prospero, potentially earning in to a 70% interest by spending US$8 million over 6 years and completing a Preliminary Economic Analysis on the selected property.

Tawn Albinson, the President of Prospero commented: "I'm delighted to welcome Fortuna as our strategic partner in Mexico and we look forward to working with their exploration team in the next 18 months. Fortuna's team are experienced mine builders who have placed 2 mines into production; Caylloma in Peru and San Jose in Mexico. They are currently working on their third development project in Argentina. Their investment gives Prospero the additional funding we need to begin drill testing our portfolio of epithermal precious metals targets and to expand our generative efforts in Mexico. We intend to begin drill testing at our Petate, Matorral and Pachuca SE projects as rapidly as possible."

The Agreement

Subject to TSX Venture Exchange acceptance, Fortuna will invest CDN$1,500,000 in Prospero via private placement by purchasing 5,357,142 units at C$0.28 per unit, each unit to consist of one common share of Prospero and one common share purchase warrant ("Warrant"). Each full warrant will entitle Fortuna to purchase one common share of Prospero for three (3) years at a price of CDN$0.35 per share.

Within fifteen (15) months of the date of closing of the private placement, Prospero will spend C$1,200,000 of the funds on drilling targets on Prospero's existing portfolio of mineral properties in Mexico (see Property Descriptions below), with priority targets being the Matorral, Petate and Pachuca SE, and up to 10% of these funds may be allocated to general and administrative costs related to the drilling. Prospero will also spend C$300,000 of the funds on its project generative programs in Mexico.

If Fortuna exercises a minimum of 75% of its Warrants at any time prior to their expiry, Fortuna will be granted the right (the "Second Property Right") for eighteen (18) months after such exercise to option a second Selected Property. Prospero will spend at least 20% of the warrant exercise proceeds on further project generative work in Mexico, and the balance on drilling programs on the Existing Properties, within 12 months of the warrant exercise date. If Fortuna exercises 100% of its Warrants at any time prior to the expiry thereof, Fortuna will have the right to designate a member of the Board of Directors of Prospero.

Prospero will grant to Fortuna the exclusive right (the "Initial Property Right") for a period of up to eighteen (18) months from the date of signing of the Definitive Agreement to select from the Existing Properties or new properties identified by Prospero's generative exploration work one geological target area (a "Selected Property"), in which Fortuna will be granted the option to acquire up to a 70% interest in the Selected Property by spending US$8-million in two stages as outlined below.

The First Option

Fortuna will be granted the option (the "First Option") to acquire a 51% interest by spending US$3.0 million in exploration and development of the Selected Property over a period of three years. Of this amount, Fortuna will commit to spending a minimum of US$1.0 million within the first year, and Prospero will have no obligation to contribute any expenditures on the Selected Property during the currency of the First Option. Once Fortuna has acquired 51% in the Selected Property, Fortuna shall in its sole discretion elect that either:

• Fortuna and Prospero will form a 51:49 joint venture to further develop the Selected Property and each party will contribute to such expenditures in proportion to their ownership interest, or
• Fortuna will notify Prospero that Fortuna is to be granted the right to earn an additional 19% in the Selected Property on the terms of the Second Option described below.

The Second Option

Fortuna will have the option (the "Second Option") to acquire a further 19% in the Selected Property, for a total of 70%, by completing a Preliminary Economic Assessment and spending an additional US$5.0 million in exploration and development of the Selected Property over a period of three years, and Prospero will have no obligation to contribute any expenditures on the Selected Property during the currency of the Second Option.

Once Fortuna has acquired a 70% interest in a Selected Property, Fortuna and Prospero will form a 70:30 joint venture to further develop such Selected Property and each party will contribute to joint venture expenditures in proportion to their ownership interest. Alternatively, if Fortuna is granted the Second Option but does not acquire the additional 19% interest, Fortuna and Prospero will form a 51:49 joint venture to develop the Selected Property.

Once a joint venture has been formed, if either party elects to not contribute and is diluted to a less than 10% interest using industry standard dilution ratios, its ownership interest in the Selected Property will be converted to a 2% NSR royalty. The non-diluted party will have the right at any time to purchase from the diluted party one-quarter of the royalty (equal to a 0.5% royalty) for US$500,000.

Prospero's Project Portfolio

Petate, Hidalgo State

The 6,868 hectare Petate property is the most advanced of Prospero's projects, with drill permits granted for 27 drill sites and surface access secured from the land owners. High-level epithermal alteration is exposed over a 5x4 km area with highly anomalous gold and silver hosted in extensive outcrops and float of steep to strata-bound jasperoid. The significant size of the silicified zones indicates that Petate is a robust mineralized system with excellent potential to host a replacement type deposit at depth.

Santa Maria del Oro Project, Durango State

Matorral and Lineament targets

The Matorral target, with over 7km of prospective structures, is one of two targets on the 9,066 hectare Santa Maria del Oro claims. A drill permit has now been received by Prospero for 20 drill pads in 3 different areas to test for down-dip precious metal mineralization. Prospero's sampling has returned silver values form trace up to 460g/t Ag at surface.

Surface access permits have been obtained and drill permitting is now in progress for the second target, the Magistral Lineament on the western side of the district, which is approximately 1.8km away from the historic Santa Maria del Oro mine. The Lineament structure was located by geophysics (see news release dated November 23, 2011).

Pachuca Southeast, Hidalgo State

The Pachuca SE target consists of high-level epithermal-style alteration exposed in clay pits adjacent and on-strike from the historic Pachuca mining district. Prospero recently received approvals from the Mexican archaeological agency (INAH) paving the way for obtaining title on the 7,256 hectare claim.

The anomalous geochemistry and clay alteration at Pachuca SE target are very similar to that seen in the Vizcaina structure above the historic Pachuca Mine. The target has size potential, strong hydrothermal alteration and a number of geochemical anomalies have been identified associated with structures that could host a preserved Pachuca-type epithermal deposit at depth.

Bermudez, Chihuahua

The 430 hectare Bermudez project is in Chihuahua, about 150km west of the City of Chihuahua. Additional mapping and sampling has been completed on the 2.5km strike length of the high-level low-sulfidation vein system. Based on assay results of 51 new samples, the best locations for 4 drill sites have been selected to test the potential for deeper mineralization.

Acquisition of New Projects

Prospero's geologists have been reviewing potential targets in the field for the last 3 months and successfully identified a number for possible staking. The acquisition of the 100% owned Florida project was reported by news release dated December 7, 2016. One other project is in the advanced stage of staking and Prospero is currently in the process of completing the relevant paperwork.

Qualified Person

Tawn Albinson, M.Sc., President of the Company, is a Qualified Person, as defined in NI 43-101, and is responsible for the technical content of this news release. Mr. Albinson is a Member of the American Institute of Professional Geologists and a Certified Professional Geologist (CPG) No. 11368.

About Fortuna Silver Mines Inc.

Fortuna is a growth-oriented, precious metals producer focused on mining opportunities in Latin America. The company's primary assets are the Caylloma silver mine in southern Peru, the San Jose silver-gold mine in Mexico and the Lindero gold project in Argentina.

About Prospero Silver Corp.

Prospero is a Mexico-focused project generator listed on the TSX.V under the symbol PSL.V. Prospero's aim is to discover world-class precious metal projects in the major mineral belts of Mexico. The Company applies a unique blend of practical exploration experience, cutting-edge mineral deposit science, and an extensive knowledge of Mexico´s geology to find new gold and silver systems. Our exploration programs are run by a small but highly-focused geological team based in Mexico.

Forward-Looking Statement Cautions:

This press release contains certain "forward-looking statements" within the meaning of Canadian securities legislation, relating to, among other things, the Company's proposed use of the financing proceeds. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are statements that are not historical facts; they are generally, but not always, identified by the words "expects," "plans," "anticipates," "believes," "intends," "estimates," "projects," "aims," "potential," "goal," "objective," "prospective," and similar expressions, or that events or conditions "will," "would," "may," "can," "could" or "should" occur, or are those statements, which, by their nature, refer to future events. The Company cautions that Forward-looking statements are based on the beliefs, estimates and opinions of the Company's management on the date the statements are made and they involve a number of risks and uncertainties. Consequently, there can be no assurances that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Except to the extent required by applicable securities laws and the policies of the TSX Venture Exchange, the Company undertakes no obligation to update these forward-looking statements if management's beliefs, estimates or opinions, or other factors, should change. Factors that could cause future results to differ materially from those anticipated in these forward-looking statements include, possible, accidents and other risks associated with mineral exploration operations, the risk that the Company will encounter unanticipated geological factors, the possibility that the Company may not be able to secure permitting and other governmental clearances necessary to carry out the Company's exploration plans, the risk that the Company will not be able to raise the additional funds in the future to continue to carry out its business plans, and the risk of political uncertainties and regulatory or legal changes that might interfere with the Company's business and prospects. The reader is urged to refer to the Company's reports, publicly available through the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com for a more complete discussion of such risk factors and their potential effects.

This news release does not constitute an offer to sell or a solicitation of an offer to buy nor shall there be any sale of any of securities of the Company in any jurisdiction in which such offer, solicitation or sale would be unlawful, including any of the securities in the United States of America. The Company's securities have not been and will not be registered under the United States Securities Act of 1933 (the "1933 Act") or any state securities laws and may not be offered or sold within the United States or to, or for account or benefit of, U.S. Persons (as defined in Regulation S under the 1933 Act) unless registered under the 1933 Act and applicable state securities laws, or an exemption from such registration requirements is available.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.