Ore Control at Caylloma Mine
Fortuna reports 2014 record production of 8.7 million silver equivalent ounces and issues guidance for 2015
Jorge A. Ganoza, President and CEO, commented: “2014 has been another consecutive year of organic low cost production growth and for 2015 we have an exciting construction year ahead of us. Our focus is on the execution of construction plans to increase capacity at our San Jose Mine in Mexico by fifty percent to three thousand tonnes per day, to be commissioned in mid-2016. We are well funded with a strong balance sheet and treasury to meet our capital projects related to our ongoing business and expansions.” Mr. Ganoza added: “Post expansion, our San Jose Mine will rank among the fourteen largest primary silver producers in the world with an all-in cash cost below ten dollars per ounce net of by-product gold.”
2014 Consolidated Production Highlights
- Silver and gold production were 10 % and 9 % respectively above 2014 production guidance
- Silver production of 6,599,300 ounces; 42 % increase over 2013
- Gold production of 35,316 ounces; 66 % increase over 2013
- Zinc production of 27,360,530 pounds; 9 % increase over 2013
- Lead production of 16,152,285 pounds; 9 % decrease over 2013
(*) Ag Eq calculated using silver to gold ratio of 60 to 1
2014 Consolidated Operating Results
| Q4 2014 | 2014 | ||||||
|---|---|---|---|---|---|---|---|
| Caylloma, Peru | San Jose, Mexico | Consolidated | Caylloma, Peru | San Jose, Mexico | Consolidated | ||
| Processed Ore | |||||||
| Tonnes milled | 117,060 | 181,702 | 464,823 | 676,959 | |||
| Average tpd milled | 1,301 | 2,019 | 1,302 | 1,928 | |||
| Silver | |||||||
| Grade (g/t) | 173 | 208 | 174 | 226 | |||
| Recovery (%) | 83.88 | 88.98 | 84.53 | 89.40 | |||
| Production (oz) | 544,977 | 1,083,215 | 1,628,191 | 2,202,540 | 4,396,760 | 6,599,300 | |
| Q4 2014 | 2014 | |||||
|---|---|---|---|---|---|---|
| Caylloma, Peru | San Jose, Mexico | Consolidated | Caylloma, Peru | San Jose, Mexico | Consolidated | |
| Gold | ||||||
| Grade (g/t) | 0.27 | 1.65 | 0.31 | 1.72 | ||
| Recovery (%) | 32.79 | 89.02 | 39.54 | 89.52 | ||
| Production (oz) | 335 | 8,561 | 8,896 | 1,820 | 33,496 | 35,316 |
| Lead | ||||||
| Grade (%) | 1.70 | 1.70 | ||||
| Recovery (%) | 92.86 | 92.56 | ||||
| Production (lbs) | 4,084,420 | 4,084,420 | 16,152,285 | 16,152,285 | ||
| Zinc | ||||||
| Grade (%) | 3.03 | 2.97 | ||||
| Recovery (%) | 89.31 | 89.94 | ||||
| Production (lbs) | 6,985,682 | 6,985,682 | 27,360,530 | 27,360,530 | ||
San Jose Mine, Mexico
Silver and gold annual production was 11 % and 10 % over budget respectively. This higher production is explained by mining and processing of non-budgeted inferred resources of 154,573 tonnes averaging 266 g/t Ag and 1.96 g/t Au from the Stockwork zone on Level 1200.
Caylloma Mine, Peru
Silver annual production was 2.2 million ounces or 8 % over budget. 66 % of silver production came from the Animas Vein and 33 % from the bonanza-grade Bateas Vein. The Bateas Vein contribution to mill feed was 33,212 tonnes at an average silver grade of 816 g/t. Zinc annual production was 21 % over budget due to a combination of 18 % higher zinc grade, 2 % higher metallurgical recovery and 9 % higher tonnage contribution of polymetallic ore from Level 12 of the Animas Vein.
2015 Production and Cash Cost Guidance
| Mine | Silver (Moz) |
Gold (koz) |
Investments (US$ M) |
Cash Cost (US$/t) |
AISCC** (US$/oz Ag) |
|---|---|---|---|---|---|
| San Jose, Mexico | 4.3 | 33.3 | 56.5 | 62.7 | 16.27 |
| Caylloma, Peru | 2.2 | 1.9 | 14.0 | 90.3 | 12.78 |
| Total | 6.5 | 35.3 | 70.6 |
(**) All-in sustaining cash cost per ounce of silver is net of by-products gold, lead and zinc
Total figures may not add up due to rounding procedures
- The 2015 San Jose Mine AISCC of US$16.27/oz Ag includes US$5.96/oz Ag or US$24.5 million attributed as sustaining capital investments related to the dry stack tailings filter facility and deposit
- Consolidated AISCC of US$16.61, refer to the appendix for details
- Caylloma Mine zinc and lead production forecast of 28.8 million pounds and 19.4 million pounds respectively
2015 Outlook
San Jose Mine, Mexico
San Jose plans to process 700,000 tonnes of ore averaging 214 g/t Ag and 1.66 g/t Au. Capital investment for 2015 is estimated to be US$56.5 million.
Major investments include:
- Tailings filter facility and dry stack deposit: $28.3 million
- 3,000 tpd mill expansion: $12.6 million
- Mine development: $8.3 million
- Exploration: $3.5 million
The company disclosed further details of capital investments related to the processing plant expansion and tailings filter facility and dry stack deposit on December 17, 2014 (refer to “Fortuna Announces Expansion of its San Jose Mine From 2,000 to 3,000 tpd” news release).
Caylloma Mine, Peru
Caylloma plans to process 464,100 tonnes averaging 175 g/t Ag. Twenty-one per cent of mill feed in the plan is estimated to come from current inferred resource which are planned to be converted to measured and indicated categories during the year. Capital expenditure for 2015 is estimated to be US$14.0 million.
Major investments include:
- Mine development: $6.1 million
- Plant optimization: $4.3 million
- Exploration: $0.7 million
Brownfields Exploration
At the San Jose Mine, the exploration budget for 2015 is US$3.5 million, which includes 12,000 meters of drilling. The program at the mine’s 64,400 hectare concession package is focusing on three main initiatives: i) continue exploring through underground drilling an additional 300 meters of the northern extent of the Trinidad North zone outside the shell of existing inferred resources, drill testing on approximate 100 meter centers, ii) subject to community agreements, drill test from surface the northern strike projection of the vein system beyond Trinidad North, and iii) evaluation and target generation work on multiple prospects within the property package: Veta Maria, La Noria, San Jose West, San Dionisio Ocotlan, Los Ocotes and El Portillo.
At the Caylloma Mine, the company has allocated a modest exploration budget of US$0.7 million for 2015. Over the years the company has built a sufficient resource and reserve base which permits a reduction in exploration drilling for a year without compromising short or medium term production plans. The main exploration initiative for 2015 is the evaluation of our concessions located in the southern portion of the district, where Compañia de Minas Buenaventura is developing the high-grade Tambomayo silver and gold project.
Qualified Person
Boris G. Caro, is an technical consultant and a Qualified Person for Fortuna Silver Mines Inc. as defined by National Instrument 43-101. Mr. Caro is a Member of Australasian Institute of Mining and Metallurgy (Membership Number 305462) and a Registered Member of the Chilean Mining Commission (Comisión Calificadora de Competencias en Recursos y Reservas Mineras, Registered Member Number 0229) 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 acquisition opportunities throughout the Americas. For more information, please visit our website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.