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Fortuna's San Jose Project on Schedule for Production in Q3
2011
January 18, 2011: Fortuna Silver
Mines Inc. (TSX: FVI / Lima Stock Exchange: FVI) is 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
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To the end of December 2010, US$
23.5 million invested in construction or 42% of CAPEX
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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
Investor Relations:
Management Head Office: Carlos Baca - Tel: +51.1.616.6060, ext. 2
Corporate Office: Ralph Rushton - Tel: +1.604.484.4085
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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