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Fortuna Silver Mines Incis pleased to provide an update on
construction activities at its 100% owned San Jose
silver-gold Project in Oaxaca, Mexico. Construction
activities to date are on budget and commissioning of the mine is scheduled
for the third quarter of 2011.
Construction Highlights
- To the end of December 2010, US$ 23.5
million invested in construction or 42% of CAPEX
- Foundation work for crushers, milling and flotation areas is
complete. Mounting and installation of major plant equipment has been
initiated this month, starting with the 13' x 19.5' ball mill.
- Tailings dam construction is 91% advanced and scheduled for
completion in January
- The 8MW power substation has been completed; commissioning is in
process
- The main access ramp has reached the 1400 meter level, where the
first production level will be developed
- Production stope K is being developed
on the Trinidad, Fortuna and Bonanza veins on sub-level 1430. On
production stope L, a cross-cut from the main
access ramp intersected the Trinidad and Bonanza veins on level 1400.
- Water pipeline installation to the mine site is 87% advanced
Jorge Ganoza,
President and CEO, commented, "We are extremely pleased with the
advancement of construction at San Jose where
our engineering team continues to deliver an on-time and on-budget project.
With Caylloma and the San
Jose project in operation, the Company will be in a position to grow
annual silver production organically from its existing reserves to seven
million ounces of silver equivalent by 2013*. In addition, this month we will
be starting an ambitious 30,000 meter drill program around our two key
assets, Caylloma and San
Jose, to continue exploring the resource expansion potential of each
operation."
*All equivalency estimates in this
release are based on Ag = US$ 23.60/oz, Au = US$ 1,350/oz and metallurgical
recoveries of 88% and 90% for silver and gold respectively.
Once San Jose
is in operation in the third quarter of 2011, Management anticipates that
Fortuna's operations at Caylloma and San Jose should produce a total of 2.4 million
ounces of silver and 7,530 ounces of gold or 2.8 million silver equivalent
ounces plus base metal credits in 2011. San Jose's contribution will be
500,000 ounces of silver and 4,580 ounces of gold. The Company is executing
plans to reach 7 million ounces of silver equivalent annual production from
existing reserves by 2013.
In 2012, its first full year of
production, the San Jose Mine is scheduled to
produce 1.77 million ounces of silver and 16,120 ounces of gold or 2.75
million silver equivalent ounces. At full design capacity, planned for 24
months from the start of operations, the San Jose
Mine's annual production forecast is 3.2 million ounces of silver, 24,220
ounces of gold or 4.6 million silver equivalent ounces. The technical
report of the San Jose Project is available on
the Company's website at www.fortunasilver.com
and on SEDAR at www.sedar.com.
Construction Update
Processing Plant and Ancillary
Facilities
Site preparation and foundation work for
the 1,500 tpd processing plant have been completed
for major equipment. Mounting and installation work for the ball mill is
currently taking place, to be followed over the coming three months by
installation of other major equipment including the flotation cells and
crushing plant.
The processing plant has no long lead
items on critical path. Purchase orders for all plant equipment have been
placed with on-site equipment arriving according to schedule.
Tailings Dam
Construction of the tailings dam is 91%
advanced and scheduled to be completed during January. The tailings dam is
currently prepared to store water for the commissioning of the processing
plant.
Underground Mine Development
In December, the main access ramp
reached the 1400 meter elevation - the first production level - allowing for
the development of production stopes K, L and M for
start-up of production at an initial mining rate of 1,000 tpd
in the third quarter of 2011.
Vein widths and grades for the Trinidad,
Fortuna and Bonanza veins cut on level 1400 and sublevel 1430 are in line
with the geologic resource model.
With the onsite arrival of new
underground equipment during late 2010, mine development is advancing
according to plan.
Water Sourcing
The Ocotlan
grey water treatment plant is fully operational and the quality of the water
obtained is within design parameters.
The pipeline to carry water from the
grey water treatment plant to the Project site is 87% complete.
Negotiations with the community are taking place to install the remaining two
kilometers of the pipeline.
Power Substation
Construction of the transformer and
switching stations has been completed. Commissioning is currently
taking place and connection to the national power grid is scheduled for
mid-February.
Qualified Person
Mr. Thomas Kelly, Fellow AusIMM,
is the Company's Qualified Person as defined by the NI 43-101 and has
verified the technical information in this news release.
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 Project 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 COMPANY
Jorge Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Symbol: TSX: FVI / Lima Stock Exchange:
FVI
Forward-Looking Statements
Certain statements in this press release
constitute forward-looking statements and as such are based on an assumed set
of economic conditions and courses of action. These include estimates of the
time of commencement, commissioning and full production, 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 calculation 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.
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