16:45:30 EST Wed 11 Dec 2019
Enter Symbol
or Name
USA
CA



Login ID:
Password:
Save
Fortuna Silver Mines Inc
Symbol FVI
Shares Issued 159,939,595
Close 2019-02-20 C$ 5.01
Recent Sedar Documents

Fortuna resumes moving people, material to Lindero

2019-02-20 07:04 ET - News Release

Mr. Jorge Ganoza reports

FORTUNA PROVIDES CONSTRUCTION UPDATE AT ITS LINDERO GOLD PROJECT IN ARGENTINA

Fortuna Silver Mines Inc. has provided an update on construction activities at its 100-per-cent-owned Lindero gold project located in the province of Salta, Argentina.

Following the cessation of unusually heavy rainfall in Salta province in recent weeks, which resulted in damage to the road leading to the Lindero project site (see Fortuna news release dated Feb. 7, 2019), management is pleased to report that the road has been repaired and on Feb. 18 the mobilization of personnel and materials to the project site resumed.

Jorge A. Ganoza, president, chief executive officer and director, commented: "Abnormal rains and electrical thunder storms not seen in a decade in the region are impacting our construction activities and schedule projections. A large amount of the float in the construction schedule has been consumed due to a slow start and ramp-up in excavations at the leach pad and crushing plant, key activities in the critical path of the project." Mr. Ganoza continued: "As a result, we have had to revise our original construction schedule. Our plan now is to initiate ore stacking early in the fourth quarter of 2019, with first dore poured at year-end and commercial production targeted for the first quarter of 2020." Mr. Ganoza concluded, "The company remains well funded with low debt and sufficient liquidity to meet its construction and working capital requirements for the completion of construction activities and operating ramp-up activities at Lindero."

Management has completed a thorough review of the project's remaining construction schedule. Based on the progress of construction to date and the impact that abnormal rainfall has had on construction activities since late December, 2018, the start of the summer season, the company now plans to initiate ore stacking early in the fourth quarter of 2019 and is extending its guidance for achieving commercial production to the first quarter of 2020. The project team has had to overcome a slow start and ramp-up of activities from two key contractors involved in the massive earth excavations for the leach pad and foundation excavations for the crushing site; two activities that affect the critical path of the project. As of early February, 2019, excavations for the leach pad and foundation excavations at the crushing site are 90 per cent concluded and the activity has been derisked. A slow buildup of camp availability has been another challenge for the project. Current on-site head count stands at 900 workers with a peak projection of 1,100 workers expected in April, 2019. The construction camp has the capacity to host a population of 1,200 workers, derisking contractor mobilization.

As of mid-February, 2019, the overall project is 40 per cent complete. Approximately 88 per cent of direct capital costs have been committed and the total construction capital costs are forecast to increase to $295-million (U.S.) or 20 per cent over initial capital guidance (see Fortuna news release dated Sept. 21, 2017). The revised construction capital costs forecast includes $17-million (U.S.) for contingencies. The main drivers for the deviation are owner costs and construction indirect costs related to the extension of the project schedule, road maintenance and contractor standby costs due to abnormal rainfall impacting the project and access roads.

Construction highlights:

  • 18,750-tonne-per-day crushing and agglomeration plant:
    • All the crushing equipment manufactured by Weir has been shipped and received in the port of Valparaiso in Chile. The equipment is scheduled to be imported into Argentina and delivery to the project site will start in late February, 2019. The crushing equipment includes a primary crusher, apron feeder, three secondary cone crushers and three screens. The high-pressure grinding roll (HPGR), manufactured by Weir, arrived on site in December, 2018. Two agglomeration drums have been shipped and are in transit to Argentina. Chutes, conveyors and steel structures are being fabricated in shops in Argentina and Chile with deliveries according to schedule.
    • Excavation work for foundations at the crushing site is 95 per cent complete. Civil works are currently under way with the building of retaining walls, placement of concrete at the HPGR site, and reinforced steel placement for primary and secondary crusher foundations. The HPGR site concrete placement, originally scheduled for November, 2018, has suffered from delays due to an unexpected volume of rock mass encountered during foundation excavations.
    • The crushing and agglomeration plant is on the critical path of the project. Commissioning of this plant is planned for late in the third quarter of 2019.
  • Leach pad and pond area:
    • The excavations and ground preparation for the leach pad are one of the largest earth moving activities of the project, and one that suffered the most from contractor performance. The excavation of 1.2 million cubic metres of surface gravel and rock for ground preparation is 90 per cent complete as of mid-February, 2019. Approximately 15 per cent of the start-up area for the leach pad is complete with liner, piping and overliner installed. It is estimated that the leach pad start-up area will be ready to receive first ore by mid-2019 compared with the original estimate of March, 2019.
  • ADR and SART:
    • The procurement of all key equipment is well advanced. Concrete foundations for the ADR building and work on the equipment foundations are under way.
    • It is planned that the ADR plant will be ready to receive solution in the fourth quarter of 2019.
  • Eight-megawatt power plant:
    • Once in operation, the mine power requirements will be self-generated through an eight MW diesel generator power plant. Power plant site preparation is complete and seven of 12 power generators have arrived at the project and have been placed at their site. The remaining five power generators are expected to arrive on site in the first quarter of 2019. Twelve transformers for the plant are planned to arrive by the end of February, 2019, and 10 50-cubic-metre fuel tanks are currently being installed for permanent operation. The power plant is scheduled to be fully operational by mid-2019.
  • Construction camp and ancillary facilities:
    • The construction camp has the capacity to host a population of 1,200 workers. Peak head count at the site is projected in April, 2019, at 1,100 workers. Postconstruction head count is estimated to be between 350 and 400 workers.
    • Industrial water for the operation will be sourced from a 120-cubic-metre-per-hour well field and pumping station located 13 kilometres from the project site. The installation of the 13-kilometre eight-inch water pipeline to the project site is planned to start in April with commissioning of the water system scheduled for midyear 2019.
  • Mine and equipment fleet:
    • All mine equipment required for the start of operations has arrived and has been assembled on site including: six 100-ton trucks, two 17-cubic-yard wheel loaders, one five-cubic-yard crawler excavator, two 449-horsepower dozers, two 250-horsepower motor graders and two 800-horsepower rotary blast hole drill rigs. In December, 2018, the operations team launched a heavy equipment operators training program for 50 candidates from local communities. The program and the selection of trainees are expected to conclude in March, 2019.
    • On-site road construction for large equipment and site preparation for mining are planned to start in the second quarter of 2019.

With Lindero in its first year of full production, Fortuna's consolidated precious metals annual production is expected to increase in 2020 to 190,000 ounces of gold and nine million ounces of silver or 328,000 gold equivalent ounces. However, based on the successful results from the 1,952-metre year 1 infill drill program concluded at Lindero in September, 2018 (see Fortuna news release dated Sept. 6, 2018), management has initiated a review of the Lindero mine plan with the objective of capturing potential opportunities to maximize ounces of gold produced during the initial year. The results of the optimization study are expected to be announced in late March, 2019.

About the Lindero gold project

In September, 2017, the commencement of construction at Lindero was officially launched (see Fortuna news releases dated Sept. 21, 2017, and Dec. 21, 2017). Lindero has been designed as an 18,750-tonne-per-day owner-operated open-pit mine with a pit life of 13 years based on existing mineral reserves. The initial capital cost budget estimate for the construction of Lindero is $239-million (U.S.); this amount does not include VAT (value-added tax) which is expected to be recovered in the first 24 months from the start of mining operations. The technical report of the Lindero project is available on SEDAR and on the company's website.

Qualified person

Eric N. Chapman, MSc, vice-president of technical services, is the qualified person for Fortuna Silver Mines as defined by National Instrument 43-101. Mr. Chapman is a professional geoscientist of the Association of Professional Engineers and Geoscientists of the province of British Columbia (registration No. 36328) and has reviewed and approved the scientific and technical 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.

We seek Safe Harbor.

© 2019 Canjex Publishing Ltd. All rights reserved.