Fortuna provides construction update and reports initial on-site arrival of mine equipment at its Lindero gold Project in Argentina
Fortuna provides construction update and reports initial on-site arrival of mine
equipment at its Lindero gold Project in Argentina
Vancouver, August 7, 2018-- Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to provide an
update on construction activities at its 100 percent owned Lindero gold Project located in the Province
of Salta, Argentina. Based on the progress of construction to date, the Company continues to plan for
the commencement of commercial operations during the third quarter of 2019. With Lindero in its first
year of full production, Fortuna ’s consolidated precious metals annual production 1 is expected to
increase in 2020 to 190,000 ounces of gold and 9 million ounces of silver or 328,000 gold equivalent 2
ounces.
Jorge A. Ganoza, President, CEO and Director, commented, “ Field activities at Lindero are picking up
progressively, with a current on -site head count of 330 people and a planned peak of 950 workers for
December. Delays in the building and expansion of the camp at the site have been a limiting factor for
commencing certain contracts, which has compressed our timeline for the planned start of commercial
operations from early to late in the third quarter of 2019. With a large portion of our major contracts
awarded, our project team is working on opportunities to further optimize the sequencing of concrete,
electromechanical and piping installations to streamline the project’s schedule.” Mr. Ganoza continued,
“Mass earth movement and leach pad construction, one of the initial and largest field activities, is at full
gear now after a slow start and is advancing according to plan for completion in the second quarter of
2019.” Mr. Ganoza added, “Detailed engineering is between 70 percent and 100 percent completed for
all project areas allowing for the start of construction on all scheduled fronts. The procurement of all key
equipment and major construction contracts is progressing according to the project’s timetable. As of
the end of July, we estimate we have awarded contracts and purchase orders that represent
approximately 71 percent of the project’s direct capital costs.”
Construction Highlights:
• Initial on -site delivery of Komatsu mine equipment started in mid-July with the arrival of two
graders and a dozer. The manufacturer is on schedule to deliver eleven additional pieces of
equipment, including six 100 ton trucks and two 17 cubic yard wheel loaders in September 2018.
Final delivery of two mine production drill rigs is scheduled for November 2018. Mine
development activities are scheduled to commence in December 2018 with drilling and blasting
scheduled for March 2019.
Notes:
1. Based on annual production plans for the life of the San Jose, Caylloma and Lindero mines.
2. Gold equivalent is calculated using a gold to silver ratio of 1 to 65 and does not include lead nor zinc by-products.
-2-
• Mass earth works for the leach pad and solution ponds is advancing according to the
commissioning and production plan after suffering from a slow start and ramp -up in
development. Activities have been r escheduled and will not have an adverse impact on our
construction timeline. The leach pad is programmed to receive first ore in the second quarter
2019 rather than the end of the first quarter ; which is still in line with the commissioning and
production plan.
• The project was impacted by a setback in the acquisition of temporary camp modules from a
local supplier which caused a two month delay in the mobilization of the contractor for major
concrete works to mid -August 2018 . This has compress ed the project’ s schedule for the
commencement of commercial operations from early to late in the third quarter of 2019, while
still remaining within the original range of the schedule.
• The Company has increased the size of its temporary camp to host a peak of 950 workers in
December 2018 in order to accommodate for overlapping construction activities and higher
headcount.
• As of the end of Ju ly, the Company has assigned mainly through purchase orders and
construction contracts approximately US$131 million, or 71 percent of the project’s total direct
capital cost. Total direct capital cost s are forecast to increase by approximately 6 percent. The
initial c apital cost of the project is currently forecast to increase between 10 percent and 17
percent, the increment is mainly driven by the impact of higher headcount in indirect costs and
higher owner’ s cost . The forecast initial capital costs is subject to , among other matters, the
final revision and negotiation of the large and labor intensive electromechanical and piping
installation contract and initiatives for the optimization of headcount at the site.
• As of the end of June , total cash spent o n construction at Lindero in 2018 amounted to
approximately US$38 million, with US $31 million spent in the second quarter. The pace of
spending is expected to continue to increase over the following months to an anticipated total
amount spent of US$150 to US$175 million in 2018. As of the end of June , the Company
maintains a healthy liquidity position of over US$278 million, including US $80 million of an
undrawn credit facility, which along with cash generated from operations , is expected by
management to meet funding requirements for the construction of the project.
• An infill drill program at Lindero was completed successfully in June, with a focus on enhancing
the geo-metallurgical model for the year one production plan. The drill rig has been moved for a
2,000 meter program to test the Arizaro satellite gold -copper target, located approximately
three kilometers from the site of Lindero’s ore processing facility.
Further updates on the construction of the Lindero gold Project will be provided as the development of
the project proceeds.
Please click on the f ollowing link to access Lindero’ s construction photo gallery on our website:
https://www.fortunasilver.com/mines-and-projects/development/lindero-project-
argentina/construction/.
-3-
About the Lindero gold Project
In September 2017, the commencement of construction at Lindero was officially launched (see Fortuna
news releases dated September 21, 2017 and December 21, 2017 ). Lindero has been designed as an
18,750 t onnes 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 US$239
million; this amount does not include VAT 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 SE DAR at
www.sedar.com and on the Company's website at
https://fortunasilver.com/site/assets/files/4098/lindero-project-technical-report-effective-date-31-oct-
2017.pdf.
Qualified Person
Eric N. Chapman, M.Sc., Vice President of Technical Services, is the Qualified Person for Fortuna
Silver Mines Inc. 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 Number 36328) and has reviewed and approved th e 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. For more information, please visit its website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO and Director
Fortuna Silver Mines Inc.
Trading symbols: NYSE: FSM | TSX: FVI
Investor Relations:
Carlos Baca
T (Peru): +51.1.616.6060, ext. 0
-4-
Forward looking Statements
This news release contains forward looking statements which constitute “forward looking information” within the
meaning of applicable Canadian securities legislation and “forward looking statements” within the meaning of the
“safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 (collectively, “Forward looking
Statements”). All statements included herein, other than statements of historical fact, are Forward looking
Statements and are subject to a variety of known and unknown risks and uncertainties which could cause actual
events or results to differ materially from those reflected in the Forward looking Statements. The Forward looking
Statements in this news release may include, without limitation, statements about the Company’s plans for its
mines and mineral properties , including the construction and development of the Lindero gold Project ; the
Company’s business strategy, plans and outlook; the merit of the Company’s mines and mineral properties; mineral
resource and reserve est imates; timelines; the future financial or operating performance of the Company;
expenditures; approvals and other matters. Often, but not always, these Forward looking Statements can be
identified by the use of words such as “estimated”, “potential”, “ope n”, “future”, “assumed”, “projected”, “used”,
“detailed”, “has been”, “gain”, “planned”, “reflecting”, “will”, “ containing”, “remaining”, “to be”, or statements
that events, “could” or “should” occur or be achieved and similar expressions, including negat ive variations.
Forward looking Statements involve known and unknown risks, uncertainties and other factors which may cause
the actual results, performance or achievements of the Company to be materially different from any results,
performance or achievements expressed or implied by the Forward looking Statements. Such uncertainties and
factors include, among others, whether the Company’s activities at the Lindero gold Project , including the
construction and development of the p roject will proceed as planned; 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 expl oration; uncertainties inherent in the
estimation of mineral reserves, mineral resources, and metal recoveries; governmental and other approvals;
political unrest or instability in countries where Fortuna is active; labor relations issues; as well as those factors
discussed under “Risk Factors” in the Company's Annual Information Form. Although the Company has attempted
to identify important factors that could cause actual actions, events or results to differ materially from those
described in Forward looki ng Statements, there may be other factors that cause actions, events or results to differ
from those anticipated, estimated or intended.
Forward looking Statements contained herein are based on the assumptions, beliefs, expectations and opinions of
management, including but not limited to : that the Company’s activities at the Lindero gold Project , including the
construction and development of the Project will proceed as planned; expectations regarding construction and
mine production costs; expected trends in mineral prices and currency exchange rates; the accuracy of the
Company’s current mineral resource and reserve estimates; that the Company’s activities will be in accordance with
the Company’s public statements and stated goals; that there will be no material adverse change affecting the
Company or its properties; that all required approvals will be obtained; that there will be no significant disruptions
affecting construction and operations of the Lindero gold Project and such other assumptions as set out herein.
Forward looking Statements are made as of the date hereof and the Company disclaims any obligation to update
any Forward looking Statements, whether as a result of new information, future events or results or otherwise,
except as required by law. There can be no assurance that Forward looking Statements will prove to be accurate, as
actual results and future events could differ materially from those anticipated in such statements. Accordingly,
investors should not place undue reliance on Forward looking Statements.