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Fortuna Silver Mines Inc
Symbol C : FVI
Shares Issued 159,939,595
Close 2019-01-17 C$ 4.65
Recent Sedar Documents

Fortuna Silver produces 12.8 moz AgEq in 2018

2019-01-17 06:01 ET - News Release

Mr. Jorge Ganoza reports

FORTUNA REPORTS 2018 FULL YEAR PRODUCTION OF 12.8 MILLION SILVER EQUIVALENT OUNCES AND ISSUES 2019 GUIDANCE

Fortuna Silver Mines Inc. has released fourth quarter and full-year 2018 production figures from its two underground operating mines, the San Jose mine in Mexico and the Caylloma mine in Peru. For the full year 2018, the company produced 8.9 million ounces of silver and 54,200 ounces of gold, or 12.8 million silver equivalent (1) ounces.

2018 consolidated production highlights:

  • Silver and gold production was 7 per cent and 12 per cent, respectively, above 2018 guidance.
  • Silver production was 8,890,943 ounces, a 5-per-cent increase over 2017.
  • Gold production was 54,210 ounces, a 4-per-cent decrease over 2017.
  • Zinc production was 45,484,648 pounds, a 3-per-cent increase over 2017.
  • Lead production was 28,254,570 pounds, a 5-per-cent decrease over 2017.

                                  2018 CONSOLIDATED OPERATING RESULTS
 
                                        Q4 2018                                    2018
                      Caylloma,    San Jose,   Consolidated     Caylloma,      San Jose,    Consolidated
                           Peru       Mexico                         Peru         Mexico
Processed ore
Tonnes milled           135,034      256,181                      534,773      1,040,478
Average tpd milled        1,500        2,846                        1,498          2,956
Silver (2)
Grade (g/t)                  61          230                           63            260
Recovery (%)              82.68        90.90                        84.13          91.75
Production (oz)         219,207    1,718,496      1,937,703       911,309      7,979,634       8,890,943
 
Notes
(1) Silver equivalent is calculated using silver to gold ratio of 72:1.
(2) Metallurgical recovery for silver at the Caylloma mine is calculated based on silver content 
in lead concentrate.
(3) Totals may not add due to rounding. 

                                      Q4 2018                         2018
                     Caylloma,   San Jose,  Consolidated    Caylloma,    San Jose, Consolidated
                          Peru      Mexico                       Peru       Mexico
Gold
Grade (g/t)               0.20        1.58                       0.18         1.75
Recovery (%)             28.49       90.98                      21.88        91.56
Production (oz)            245      11,825        12,070          693       53,517       54,210
Lead
Grade (%)                 2.39                                   2.62
Recovery (%)             90.70                                  91.30
Production (lb)      6,452,784                 6,452,784   28,254,570                28,254,570
Zinc
Grade (%)                 4.30                                   4.28
Recovery (%)             90.21                                  90.20
Production (lb)     11,537,359                11,537,359   45,484,648                45,484,648

Note 
Totals may not add due to rounding.

San Jose mine, Mexico

In the fourth quarter of 2018, the San Jose mine produced 1,718,496 ounces of silver and 11,825 ounces of gold, 9 per cent and 4 per cent below budget, respectively. Average head grades for silver and gold were 230 g/t and 1.58 g/t, 6 per cent below budget and in line with budget, respectively.

Silver and gold production for 2018 totalled 7,979,634 ounces and 53,517 ounces, respectively, being 7 per cent and 11 per cent above the mine's annual guidance. Average head grades for silver and gold were 260 g/t and 1.75 g/t, 8 per cent and 12 per cent above the mines annual guidance, respectively.

Caylloma mine, Peru

In the fourth quarter of 2018, the Caylloma mine produced 219,207 ounces of silver, 5 per cent above budget. Average head grade for silver was 61 g/t, 5 per cent above budget.

Silver production for 2018 totalled 911,309 ounces, 11 per cent above the mine's annual guidance. Average head grade for silver was 63 g/t, 10 per cent above the mine's annual guidance.

In the fourth quarter of 2018, lead and zinc production was 6,452,784 pounds and 11,537,359 pounds, respectively, 2 per cent below budget and 2 per cent above budget, respectively. Average head grades for lead and zinc were 2.39 per cent and 4.30 per cent, 2 per cent below budget and 2 per cent above budget, respectively.

Base metal production for 2018 totalled 28,254,570 pounds of lead and 45,484,648 pounds of zinc, 10 per cent and 2 per cent above the mine's annual guidance, respectively. Average head grades for lead and zinc were 2.62 per cent and 4.28 per cent, 9 per cent and 2 per cent above annual guidance, respectively.

     2019 CONSOLIDATED PRODUCTION AND CASH COST GUIDANCE FOR CONTINUING OPERATIONS  
 
                           Silver    Gold        Lead        Zinc      Cash cost      AISC (1)
                            (moz)   (koz)       (mlb)       (mlb)          ($/t)   ($/oz AgEq)

San Jose mine, Mexico     7.3-8.1   49-54          NA          NA    $63.5-$70.1    $8.3-$10.2
Caylloma mine, Peru       0.9-1.0       -   26.1-28.8   39.8-44.0      80.0-88.4     11.8-14.5
Total                     8.2-9.0   49-54   26.1-28.8   39.8-44.0
       
2019 silver equivalent (2) production guidance of 11.7 million to 12.9 million ounces.
2019 consolidated AISC (1) of $9.9 to $12.1/ounce AgEq.
Notes
(1) All-in sustaining cost (AISC) is a non-GAAP (generally accepted accounting principles) 
financial measure; AISC per ounce of silver equivalent, including byproducts, estimated at 
metal prices of $1,250/ounce Au, $15/ounce Ag, $2,100/tonne lead and $2,700/t. 
(2) Silver equivalent production does not include lead or zinc and is calculated using a 
silver to gold ratio of 72:1.
(3) Totals may not add due to rounding.
 
 

2019 guidance highlights

San Jose mine, Mexico

San Jose plans to process 1,059,000 tonnes of ore averaging 247 g/t Ag and 1.66 g/t Au. Capital investment is estimated at $12.7-million, including $8.3-million for sustaining capital expenditures and $4.3-million for brownfields exploration programs.

Major sustaining capital investment projects include:

Mine development:  $3.4-million

Equipment and infrastructure:  $4.3-million

Caylloma mine, Peru

Caylloma plans to process 535,500 tonnes of ore averaging 64 g/t Ag, 2.53 per cent Pb and 3.87 per cent zinc. Capital investments are estimated at $11.4-million, including $9.8-million for sustaining capital expenditures, $800,000 for non-sustaining capex (capital expenditures) and $800,000 for brownfields exploration programs.

Major sustaining capital investment projects include:

Mine development:  $6.0-million

Equipment and infrastructure:  $3.1-million

Lindero gold project, Argentina

Based on the successful infill drilling campaign completed in 2018 (refer to news release dated Sept. 6, 2018, "Fortuna updates on infill drill program at the Lindero gold Project in Argentina"), Fortuna is currently conducting an updated internal estimate of mineral reserves with the intention of optimizing the mine plan for year 1. Based on preliminary study results, such updated technical information will not materially change the existing global mineral reserve estimate. The company plans to provide a comprehensive update on Lindero construction progress and year 1 production optimization study in early March, 2019.

The company also intends to provide an update on its consolidated mineral reserve and mineral resource estimates in March.

Brownfields exploration highlights

San Jose mine, Mexico

The brownfields exploration program budget for 2019 at the San Jose mine is $4.3-million, which includes 11,500 metres of diamond drilling and 450 metres of underground development for drilling access and platforms. Exploration drilling will focus on the subparallel Victoria mineralized zone.

Caylloma mine, Peru

The brownfields exploration program budget for 2019 at the Caylloma mine is $800,000. Work planned includes mapping and sampling on additional mineralized silver/base metals structures.

Lindero gold project, Argentina

The Arizaro gold-copper porphyry target lies within the Lindero project concession block. In 2019, the company plans to further evaluate the results of the 2,180-metre drill program completed at Arizaro in 2018 and investigate the economic potential of including Arizaro mineralization into the existing Lindero resource.

Greenfields exploration highlights

Serbia

Through an aggregate $3.3-million equity investment in Medgold Resources Corp., Fortuna financed a strategic alliance with Medgold and entered into an option agreement in respect of the Tlamino project (see Medgold news releases dated Jan. 9, 2017, Feb. 9, 2017, and March 7, 2017).

Exploration work on the Tlamino project in 2019 will consist of maiden metallurgical testing on the mineralized material intersected in the 2018 Barje project drill program and approximately 4,000 metres of diamond drilling on the Barje and Karamanaica targets (see Medgold news releases dated June 11, 2018, June 18, 2018, July 5, 2018, July 18, 2018, Sept. 20, 2018, and Nov. 19, 2018). Fortuna retains the right to earn a 51-per-cent interest in the Tlamino project by spending $3.0-million by March, 2020, and gain an additional 19-per-cent interest by spending a further $5-million and completing a preliminary economic assessment by March, 2023.

Mexico

Through an aggregate $2.6-million equity investment in Prospero Silver Corp., Fortuna financed a strategic alliance with Prospero (see Prospero Silver news releases dated April 17, 2017, May 9, 2018, Sept. 6, 2018). This strategic alliance provided for the initial drilling of multiple targets at Prospero's Matorral, Petate, Pachuca SE, Buenavista and Bermudez properties located in Durango, Hidalgo and Chihuahua states. High-level epithermal clay alteration, with anomalous gold, silver or pathfinder elements, is present at each property, none of which has been previously drilled.

Drilling at all five projects was completed in 2017 and 2018 and Fortuna selected the Pachuca SE project as its selected property (see Prospero silver news releases dated Aug. 24, 2017, Sept. 18, 2017, Nov. 8, 2017, Jan. 10, 2018, Jan. 25, 2018, March 14, 2018, March 29, 2018, May 9, 2018, May 30, 2018, Sept. 8, 2018, and Dec. 10, 2018). The parties are currently preparing the definitive option agreement. The Pachuca SE project option agreement will give Fortuna the right to earn up to a 70-per-cent interest by spending $8-million over six years and completing a preliminary economic assessment.

Argentina

The company is revisiting the extensive reconnaissance exploration database comprising over 15 years of sampling and generative work in northern Argentina, acquired from Goldrock Mines along with the Lindero project in 2016.

In addition, the company intends to continue the evaluation of new opportunities on third party properties.

Qualified persons

Amri Sinuhaji, technical services director, and David Volkert, vice-president of exploration, are the qualified persons for Fortuna Silver Mines as defined by National Instrument 43-101. Mr. Sinuhaji is a professional engineer registered with the Association of Professional Engineers and Geoscientists of the Province of British Columbia (No. 48305) and is responsible for ensuring that the production and guidance information contained in this news release is an accurate summary of the original reports and data provided to or developed by Fortuna Silver Mines and he has reviewed and approved such scientific and technical information contained in this news release. Mr. Volkert is a professional geologist registered with the Association of Professional Engineers and Geoscientists of the Province of British Columbia (No. 191936) and is a certified professional geologist with the American Institute of Professional Geologists (No. 10759) and is responsible for ensuring that the brownfields and greenfields exploration information contained in this news release is an accurate summary of the original reports and data provided to or developed by Fortuna Silver Mines and he has reviewed the exploration data underlying the exploration information contained herein. Mr. Volkert has reviewed and approved such scientific and technical information related to the brownfields and greenfields exploration information contained in this news release.

About Fortuna Silver Mines Inc.

Fortuna is a growth-oriented, precious metal producer with its primary assets being the Caylloma silver mine in southern Peru, the San Jose silver-gold mine in Mexico and the Lindero gold project in Argentina. The company is selectively pursuing acquisition opportunities throughout the Americas and in select other areas.

                   2019 AISC GUIDANCE BREAKDOWN

San Jose mine, Mexico
Item                                                    $/oz AgEq

Production cash cost                                    $5.9-$7.2
Commercial and government royalties/mining tax            0.6-0.8
Workers' participation                                    0.4-0.5
Subsidiary G&A                                            0.4-0.5
Sustaining capital expenditures                           0.7-0.8
Brownfields exploration                                   0.3-0.4
AISC                                                     8.3-10.2

Caylloma mine, Peru
Item                                                    $/oz AgEq

Production cash cost                                   $9.1-$11.2
Commercial and government royalties/mining tax            0.2-0.2
Workers' participation                                    0.2-0.2
Subsidiary G&A                                            0.6-0.7
Sustaining capital expenditures                           1.6-2.0
Brownfields exploration                                   0.1-0.2
AISC                                                    11.8-14.5

Consolidated AISC
Item                                                    $/oz AgEq

Production cash cost                                    $6.9-$8.5
Commercial and government royalties/mining tax            0.5-0.6
Workers' participation                                    0.3-0.4
Subsidiary G&A                                            0.5-0.6
Corporate G&A                                             0.5-0.6
Sustaining capital expenditures                           1.0-1.2
Brownfields exploration                                   0.3-0.3
AISC                                                     9.9-12.1

Note
Totals may not add up due to rounding

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