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Fortuna Silver Mines Inc
Symbol FVI
Shares Issued 159,939,595
Close 2019-03-27 C$ 4.79
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Fortuna releases NI 43-101 Caylloma, San Jose estimates

2019-03-27 06:52 ET - News Release

Mr. Jorge Ganoza reports

FORTUNA UPDATES MINERAL RESERVES AND MINERAL RESOURCES FOR THE SAN JOSE AND CAYLLOMA MINES

Fortuna Silver Mines Inc. has released updated mineral reserve and mineral resource estimates as of Dec. 31, 2018, for the Caylloma mine located in Peru and the San Jose mine located in Mexico.

Jorge A. Ganoza, president and chief executive officer, commented, "For the second successive year, our infill drill programs at both San Jose and Caylloma were successful at replenishing mineral reserves mined." Mr. Ganoza added, "In addition, the exploration programs executed last year resulted in the definition of a maiden inferred mineral resource for the Victoria mineralized zone at San Jose, as well as the expansion of resources at Animas NE." Mr. Ganoza concluded, "Both targets remain open at depth and along strike for further exploration."

Highlights of reserve and resource update:

  • Combined proven and probable mineral reserves for the Caylloma and San Jose mines are reported at 7.8 million tonnes containing 45.6 million ounces silver and 272,000 ounces gold, representing a year-over-year increase of 17 per cent in tonnes, a 2-per-cent increase in contained silver ounces and no change in gold ounces.
  • Combined inferred mineral resources for the Caylloma and San Jose mines are reported at 8.8 million tonnes containing an estimated 32.8 million ounces silver and 168,000 ounces gold, reflecting a year-over-year decrease of 17 per cent and 13 per cent in contained silver and gold ounces, respectively.

                                  MINERAL RESERVES -- PROVEN AND PROBABLE 
                                                                                            Contained metal  
Property                    Classification    Tonnes         Ag       Au      Pb     Zn      Ag          Au
                                               (000)      (g/t)    (g/t)     (%)    (%)   (moz)       (koz)

Mines    Caylloma, Peru             proven       149         85     0.26    2.09   3.23     0.4           1
                                  probable     2,477         77     0.18    2.12   3.71     6.1          14
                         proven + probable     2,626         77     0.18    2.11   3.69     6.5          15
       San Jose, Mexico             proven       393        237     1.97     N/A    N/A     3.0          25
                                  probable     4,779        235     1.51     N/A    N/A    36.0         232
                         proven + probable     5,172        235     1.55     N/A    N/A    39.0         257
Total                    proven + probable     7,798        182     1.09     N/A    N/A    45.6         272
  
                              MINERAL RESOURCES -- MEASURED AND INDICATED  
                                                                                            Contained metal  
Property                       Classification  Tonnes         Ag         Au      Pb     Zn      Ag       Au
                                                (000)      (g/t)      (g/t)     (%)    (%)   (Moz)    (koz)

Mines    Caylloma, Peru              measured     524         73       0.32    1.16   2.23     1.2        5
                                    indicated   1,633         77       0.29    1.23   2.25     4.1       15
                         measured + indicated   2,157         76       0.30    1.22   2.24     5.3       21
       San Jose, Mexico              measured      49         77       0.56     N/A    N/A     0.1        1
                                    indicated     272         84       0.59     N/A    N/A     0.7        5
                         measured + indicated     321         83       0.59     N/A    N/A     0.9        6
Total                    measured + indicated   2,478         77       0.34     N/A    N/A     6.1       27
    
                                       MINERAL RESOURCES -- INFERRED 
                                                                                         Contained metal  
Property                 Classification    Tonnes        Ag       Au      Pb     Zn       Ag          Au
                                            (000)     (g/t)    (g/t)     (%)    (%)    (Moz)       (koz)

Mines    Caylloma, Peru        inferred     5,345       102     0.32    2.40   3.83     17.6          56
       San Jose, Mexico        inferred     2,415       196     1.44     N/A    N/A     15.2         112
Total                          inferred     7,760       132     0.67     N/A    N/A     32.8         168
   
(1) Mineral reserves and mineral resources are as defined by the 2014 CIM (Canadian Institute of 
Mining, Metallurgy and Petroleum) Definition Standards for Mineral Resources and Mineral Reserves.
(2) Mineral resources are exclusive of mineral reserves.
(3) Mineral resources that are not mineral reserves do not have demonstrated economic viability.
(4) Factors that could materially affect the reported mineral resources or mineral reserves include: 
changes in metal price and exchange rate assumptions; changes in local interpretations of 
mineralization; changes to assumed metallurgical recoveries, mining dilution and recovery; and 
assumptions as to the continued ability to access the site, retain mineral and surface rights titles, 
maintain environmental and other regulatory permits, and maintain the social licence to operate.
(5) Mineral resources and mineral reserves are estimated as of June 30, 2018, for the San Jose mine 
and as of Aug. 31, 2018, for the Caylloma mine and reported as of Dec. 31, 2018, taking into account 
production-related depletion for the period through Dec. 31, 2018.
(6) Mineral reserves for the San Jose mine are estimated using a net smelter return (NSR) break-even 
cut-off grade of 131 g/t AgEq (silver equivalent) based on assumed metal prices of $18.25 (U.S.)/ounce 
Ag and $1,320 (U.S.)/ounce Au; estimated metallurgical recovery rates of 92 per cent for Ag and 91 
per cent for Au and mining costs of $31.38 (U.S.)/t; processing costs of $16.55 (U.S.)/t; and refining, 
distribution and general service costs of $15.27 (U.S.)/ounce based on actual operating costs. 
Mining recovery is estimated to average 89 per cent and mining dilution 12 per cent. Mineral 
resources are estimated at a 100 g/t AgEq cut-off grade using the same metal prices and metallurgical 
recoveries as for mineral reserves and a mine to mill operating cost of $52.50 (U.S.)/t. Proven and 
probable mineral reserves include 3.20 million tonnes containing 26.9 million ounces of silver and 
164,000 ounces of gold reported at a 134 g/t AgEq cut-off grade and inferred resources totalling 
1.32 million tonnes containing 7.1 million ounces of silver and 49,000 ounces of gold reported at 
a 100 g/t AgEq cut-off grade located in the Taviche Oeste concession and subject to a 2.5-per-cent 
royalty.
(7) Mineral reserves for the Caylloma mine are reported above NSR break-even cut-off values based on 
the proposed mining method for extraction including: mechanized (breasting) at $82.90 (U.S.)/t; 
mechanized (enhanced) at $70.30 (U.S.)/t; semi-mechanized at $93.10 (U.S.)/t; and conventional at 
$173.70 (U.S.)/t using assumed metal prices of $18.25 (U.S.)/ounce silver, $1,320 (U.S.)/ounce gold, 
$2,270 (U.S.)/t lead and $2,750 (U.S.)/t zinc; metallurgical recovery rates of 84  per cent for Ag, 
17 per cent for Au, 91 per cent for Pb and 90 per cent for Zn with the exception of high zinc oxide 
areas that use metallurgical recovery rates of 57 per cent for Ag, 17 per cent for Au, 57 per cent 
for Pb and 35 per cent for Zn; and the Ramal Piso Carolina vein that uses a metallurgical recovery 
rate of 75 per cent for Au. Mining, processing and administrative costs used to determine NSR 
cut-off values were estimated based on first half of 2018 actual operating costs. Mining recovery 
is estimated to average 92 per cent with mining dilution ranging from 10 per cent to 40 per cent 
depending on the mining methodology. Mineral resources are reported based on estimated NSR values 
using the same metal prices and metallurgical recovery rates as detailed for mineral reserves; and 
an NSR cut-off grade based on mine to mill operational costs of $50 (U.S.)/t for veins classified 
as wide (Animas, Animas NE, Nancy, San Cristobal) and $135 (U.S.)/t for veins classified as narrow 
(all other veins).
(8) Eric Chapman, PGeo (APEGBC No. 36328), is the qualified person for resources and Amri Sinuhaji 
(APEGBC No. 48305) is the qualified person for reserves, both being employees of Fortuna Silver Mines.
(9) Totals may not add due to rounding procedures.
(1) N/A: not applicable.

San Jose mine, Mexico

As of Dec. 31, 2018, the San Jose mine has proven and probable mineral reserves of 5.2 million tonnes containing 39.0 million ounces of silver and 257,000 ounces of gold, in addition to inferred resources of 2.4 million tonnes containing a further 15.2 million ounces of silver and 112,000 ounces of gold.

Year over year, mineral reserves increased 3 per cent in tonnes while decreasing 3 per cent and 1 per cent in contained silver and gold, respectively, after net changes resulting from production-related depletion and the upgrading and conversion of inferred mineral resources to mineral reserves due to a successful infill drill program focused primarily on the stockwork zones.

Measured and indicated resources exclusive of mineral reserves remained constant year over year at 300,000 tonnes although average silver and gold grades increased by 29 per cent and 23 per cent, respectively, due to changes in operating costs and commercial terms resulting in the break-even cut-off grade for mineral reserves increasing from 117 g/t to 131 g/t AgEq.

Year over year, inferred resources decreased 24 per cent and 12 per cent in contained silver and gold ounces, respectively. Silver and gold grades decreased 19 per cent and 6 per cent, respectively. The net variation is due to reductions resulting from the upgrading of inferred mineral resources by infill drilling in the stockwork zones.

Inferred resources include the first time estimate of the recently discovered Victoria mineralized zone comprising 810,000 t averaging 137 g/t Ag and 1.14 g/t Au reported above a 100 g/t AgEq cut-off. The Victoria mineralized zone remains open in all directions.

Brownfields exploration program budget for 2019 at the San Jose mine is $4.5-million (U.S.), 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 and Trinidad Central Deep.

A 2019 infill drilling program of 2,780 metres is under way at the San Jose mine. The budget of the infill drill program is $400,000 (U.S.).

An updated technical report for the San Jose mine will be filed on SEDAR this week.

Caylloma mine, Peru

As of Dec. 31, 2018, the Caylloma mine has proven and probable mineral reserves of 2.6 million tonnes containing 6.5 million ounces of silver, in addition to inferred mineral resources of 5.3 million tonnes containing 17.6 million ounces of silver.

Year over year, mineral reserve tonnes increased 64 per cent while contained silver, lead and zinc content increased 39 per cent, 54 per cent and 69 per cent, respectively. Changes are primarily due to mining-related depletion and the upgrading and conversion of inferred mineral resources to mineral reserves due to a successful infill drill program focused on the Animas NE vein.

Measured and indicated resources, exclusive of mineral reserves, increased by 14 per cent year over year to 2.2 million tonnes.

Inferred mineral resources year over year decreased by 7 per cent to 5.3 million tonnes. Contained silver, lead and zinc content decreased by 10 per cent, 21 per cent and 12 per cent, respectively. The decrease in inferred mineral resources is primarily due to a successful infill drill program of the Animas NE vein resulting in the upgrading of inferred mineral resources to mineral reserves counteracted by brownfields exploration drilling discovering new resources in the Animas NE vein.

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.

A 2019 infill drilling program of 3,830 metres and 55 metres of development drift is being presently executed at the Caylloma mine. The budget of the program is $480,000 (U.S.).

An updated technical report for the Caylloma mine will be filed on SEDAR this week.

Qualified person

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, currently under construction, in Argentina. The company is selectively pursuing acquisition opportunities throughout the Americas and in select other areas.

We seek Safe Harbor.

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