Fortuna Silver
Mines Inc. (NYSE: FSM | TSX: FVI | BVL: FVI) is
pleased to announce
2011 production figures from the San Jose Mine located in Mexico and the Caylloma
Mine located in Peru.
The mining operations
of the Company performed
strongly in 2011 delivering our fifth consecutive year of silver production growth and sustained low cash cost per silver ounce. For 2012,
Fortuna is scheduled
to produce 3.7 million ounces
of silver and 17,400 ounces
of gold production or 4.6 million Ag Eq ounces plus base metal credits.
Mr. Jorge Ganoza, President and CEO, commented: �2011 was marked by two milestones for the Company,
our NYSE listing on September
19th and the start of commercial operations
on September 1st
at our San Jose Mine
in Mexico. The San Jose Mine initiated operations at a rate of 1,000 tonnes per day
and for 2012 we have an approved
plan and budget to expand capacity
to 1,500 tpd. This expansion will continue fueling our low cost
annual silver
production growth into
2012 and 2013.�
2011 Consolidated
Production Highlights
- Silver production of 2.50 million ounces;
31% increase over 2010
- Gold
production of 7,000 ounces; 174% increase over 2010
- Lead
production of 19.7 million pounds; 8% decrease
over 2010
- Zinc
production of 23.4 million pounds; 10% decrease
over 2010
Consolidated Operating Highlights:
|
2011
|
Q4 2011
|
|
Caylloma, Peru
|
San Jose, Mexico
|
Consolidated
|
Caylloma, Peru
|
San Jose, Mexico
|
Consolidated
|
Processed Ore
|
|
|
Tonnes milled
|
448,866
|
125,301
|
|
116,364
|
87,884
|
|
Average tpd milled
|
1,272
|
949
|
|
1,307
|
987
|
|
Cash cost per Ag oz*
|
(0.59)
|
4.51
|
0.37
|
6.67
|
2.85
|
5.11
|
Silver**
|
|
|
Grade (g/t)
|
171
|
144
|
|
177
|
159
|
|
Recovery (%)
|
81.43
|
84.60
|
|
80.78
|
84.00
|
|
Production (oz)
|
2,008,488
|
490,555
|
2,499,043
|
536,426
|
377,377
|
913,803
|
|
|
|
|
|
|
|
|
|
2011
|
Q4 2011
|
|
Caylloma, Peru
|
San Jose, Mexico
|
Consolidated
|
Caylloma, Peru
|
San Jose, Mexico
|
Consolidated
|
Gold
|
|
|
Grade (g/t)
|
0.36
|
1.36
|
|
0.35
|
1.48
|
|
Recovery (%)
|
45.71
|
84.40
|
|
44.87
|
84.90
|
|
Production (oz)
|
2,393
|
4,622
|
7,015
|
591
|
3,562
|
4,153
|
Lead
|
|
|
Grade (%)
|
2.15
|
-
|
|
1.85
|
-
|
1.85
|
Recovery (%)
|
92.68
|
-
|
|
92.40
|
-
|
92.40
|
Production (lbs)
|
19,677,366
|
-
|
19,677,366
|
4,396,319
|
-
|
4,396,319
|
Zinc
|
|
|
Grade (%)
|
2.68
|
-
|
|
2.47
|
-
|
2.47
|
Recovery (%)
|
88.46
|
-
|
|
89.73
|
-
|
89.73
|
Production (lbs)
|
23,424,479
|
-
|
23,424,479
|
5,687,747
|
-
|
5,687,747
|
|
|
|
|
|
|
|
|
(*) US$, Net of by-product credits
(**) Caylloma
Mine Ag recovery in Pb concentrate
San Jose Mine, Mexico
Production
at the San Jose silver
and gold mine was delivered
on September 1st
2011 on-time and on-budget after fifteen months of
construction and commissioning. The mine
and mill are operating within
design parameters at a rate of 1,000 tpd with a planned expansion to 1,500 tpd
budgeted for 2012. Cash cost per Ag oz, net of by-product
credits, for 2011 was
US$4.51. For 2012 the mine is scheduled to produce 1.7
million ounces of silver
and 15,000 ounces of gold. Capital projects for mine and plant expansion and a new concentrate leaching facility to produce dore
bars stands at US$30.7 million.
Exploration
at San Jose in 2012 will continue to focus on the evaluation
and advancement of multiple mineral
occurrences outlined through
mapping and stream
and soil sampling on
the 58,000 hectare land package the Company controls in the area surrounding
the San Jose Mine. A 15,000 meter drill
program has been budgeted for the year to drill test new targets
and follow-up on the results
of the 2011 program.
Caylloma Mine, Peru
The Caylloma Mine had another year of consistent
performance in 2011. For 2012, the mine is scheduled to produce 2 million ounces of
silver with additional by-product gold,
lead and zinc. Capital projects budgeted for the year total
US$25 million and include a new tailings facility with total holding capacity
for seventeen years,
camp improvements, upgrading
of the power grid and plant equipment
and infrastructure optimizations.
For 2011
the cash cost per Ag oz net of by-product credits was negative US$0.59.
This represents an increase
with respect to 2010 of US$ 6.37/oz, driven by cash cost increases and lower base metal credits in the second
half of 2011, with special emphasis in the fourth quarter. Cash cost
per oz throughout 2011 went
from negative US$
5.82 in Q1 to US$ 6.67 in Q4. This increment
is explained by a decrease in by-product credits of US$ 9.40/oz and a 29% unit cash cost per tonne increase.
The decrease in by-product
credits is primarily due to lower base
metal prices (Pb 24%,
Zn 21%) and lower lead production (13%).
The unit cost increments
reflect to a large extent
inflationary pressures in qualified
labor and industry related services that have
been mounting in the Peruvian
underground mining industry
since late
2010. For 2012 the Company anticipates cost pressures
to continue; several productivity
and cost control initiatives are included in the 2012 operational
and capital budgets.
Caylloma District exploration for 2012 includes 24,000 meters of diamond drilling and 3,500 meters of underground drifting.
The program is focused
on the evaluation of high-grade silver targets on the
32,000 hectare land package controlled around the mine. These
targets include
extensions of bonanza-style mineralization
in the Bateas Vein
and the northeastern and southwestern
extensions of the Animas Vein.
2012 Production Guidance
Mine
|
Silver (M oz)
|
Gold (k oz)
|
Zinc (M lbs)
|
Lead (M lbs)
|
Caylloma, Peru
|
2.0
|
2.4
|
21.0
|
18.0
|
San Jose, Mexico
|
1.7
|
15.0
|
--
|
--
|
Total:
|
3.7
|
17.4
|
21.0
|
18.0
|
- 2012
forecast silver
production of 3.7 million ounces and
gold production of 17,400 ounces or 4.6
million Ag Eq ounces
plus base metal credits
(Ag = US$30/oz, Au = US$1,660/oz; metallurgical
recoveries of 88% and 90% for Ag and Au respectively)
Qualified Person
Thomas I. Vehrs, Ph.D., Vice President of Exploration, is
the Qualified Person for Fortuna Silver Mines Inc. as defined
by National Instrument 43-101. Dr. Vehrs is a Founding Registered Member of the
Society for Mining, Metallurgy,
and Exploration, Inc. (SME Registered Member Number 3323430RM)
and is responsible
for ensuring that the
information contained in this
news release is an accurate
summary of the original reports and data provided to or developed by
Fortuna Silver Mines.
Fortuna Silver Mines
Inc.
Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America.
Our primary assets
are the Caylloma silver
Mine in southern Peru
and the San Jose silver-gold Mine in
Mexico. The Company is
selectively pursuing additional acquisition opportunities.
For more information, please visit our website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge Ganoza
President,
CEO and Director
Fortuna Silver
Mines Inc.
Trading
symbols: NYSE: FSM | TSX: FVI | BVL: FVI
Investor
Relations:
Management Head Office: Carlos
Baca - Tel: +51.1.616.6060,
ext. 0
Corporate
Office: Ralph
Rushton - Tel: +1.604.484.4085
Media Contact, North America:
Christina Pagano
Breakstone Group
Phone: 212-213-2851
Mobile:
646-382-3871
E-mail:
paganopr@aol.com
Forward-Looking Statements
This news release contains
forward-looking statements
which constitute �forward-looking information� within
the meaning of applicable Canadian securities legislation and
�forward-looking statements�
within the meaning of
the �safe harbor�
provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking
statements are statements
that are not historical
facts and that are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking
statements. When
used in this
document, the words such
as �anticipates�, �believes�,
�plans�, �estimates�, �expects�,
�forecasts�, �targets�,
"intends�, �advance�,
�projects�, �calculates�
and similar expressions are forward-looking
statements.
The forward-looking statements are based on an assumed set of economic
conditions and courses of actions, including estimates of future production levels,
expectations regarding mine production costs, expected
trends in mineral prices
and statements that describe Fortuna�s future
plans, objectives or goals. There is a significant risk that actual results will vary, perhaps materially, from results projected depending on such factors as changes in general
economic conditions and financial
markets, changes in prices
for silver and other metals, technological and operational hazards
in Fortuna�s mining
and mine development activities,
risks inherent in mineral exploration, uncertainties
inherent in the estimation of mineral reserves, mineral resources, and metal recoveries, the
timing and availability of financing,
governmental and other
approvals, political unrest or instability in
countries where Fortuna is
active, labor relations and other
risk factors.
Although Fortuna has attempted
to identify important factors
that could cause actual results to differ materially from those contained in forward-looking
statements or information, there
may be other factors that cause results to be materially different from those anticipated, described, estimated, assessed or intended. There
can be no assurance that any forward-looking statements
or information will prove
to be accurate as actual results and future events could differ materially from those anticipated in such statements or information. Accordingly,
readers should not
place undue reliance
on forward-looking statements
or information.