Fortuna provides construction update at its Lindero gold project in Argentina
Fortuna provides construction update at its Lindero gold project in Argentina
Vancouver, February 20, 2019-- Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to provide
an update on cons truction activities at its 100 percent 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 February 7,
2019), management is pleased to report that the road has been repaired and on February 18 th the
mobilization of personnel and materials to the project site resumed.
Mr. Jorge A. Ganoza, President, CEO and Director, commented, “Abnormal rains and electric al thunder
storms not seen in a decade in the region are imp acting 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 o ur original construction
schedule. Our plan now is to initiate ore stacking early in the fourth quarter of 2019, w ith first dore
poured at year end and commercial production target ed for the first quarter of 2020.” Mr. Ganoza
concluded, “The Company r emains 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 cont ractors 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 foundatio n excavations at the crushing site
are 90 percent concluded and the activity has been de-risked. A slow build -up 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, de-risking contractor mobilization.
As of mid-February 2019, the overall project is 40 percent complete. Approximately 88 percent of direct
capital costs have been committed and the total construction capital costs are forecast to increase to
US$295 million or 20 percent over initial capital guidance (see Fortuna news release dated September
21, 2017). The revised construction capital costs forecast includes US$17 million for contingencies. The
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main drivers for the deviation are owners costs and construction indirect costs related to the extension
of the project schedule, road maintenance and contractor stand-by costs due to abnormal rainfall
impacting the project and access roads.
Construction Highlights:
• 18,750 tpd 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 schedule d 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 percent complete. C ivil works are
currently underway 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 pr oject. Commissioning of
this plant is planned for late in the third quarter of 2019.
Tertiary crushing (HPGR) foundations
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• Leach pad and pond area
The excavations and ground preparation for the leach pad is 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 meters of surface gravel and rock for ground preparation is 90
percent complete as of mid-February 2019. Approximately 15 percent 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 receiv e first ore by mid -2019 compared to the original
estimate of March 2019.
Leach pad earthworks and lining
• ADR and SART
The p rocurement of all key equipment is well advanced . Concrete foundations for the ADR
building and work on the equipment foundations is underway.
It is planned that the ADR plant will be ready to receive solution in the fourth quarter of 2019.
• 8 MW power plant
Once in operation, the mine power requirements will be self-generated through an 8MW diesel
generator power plant. Power plant site preparation is complete and seven of twelve 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 ten 50 cubic
meter fuel tanks are currently being installed for permanent operation. The power plant is
scheduled to be fully operational by mid-2019.
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• 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. Post -construction head count is
estimated to be between 350 to 400 workers.
Industrial water for the operation will be sourced from a 120 cubic meter per hour well field and
pumping station located 13 kilometers from the project site. The installation of the 13 kilometer
8” water pipeline to the project site is planned to start i n April with commissioning of the water
system scheduled for mid-year 2019.
Permanent camp
• 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 cu bic yard wheel loaders, one 5 cu bic yard crawler
excavator, two 449 HP dozers, two 250 HP motor graders, and two 800 HP rotary blast hole drill
rigs. In December 2018, the operations team launched a heavy equipment operators training
program for fifty candidates from local communities. The program and the selection of trainees
is expected to conclude in March 2019.
On-site road construction for large equipment and site preparation for mining is planned to start
in the second quarter of 2019.
With Lindero in its first year of full production, Fortuna’s consolidated precious metals annual
production1 is expected to increase in 2020 to 190,000 ounces of gold and 9 million ounces of silver or
328,000 gold equivalent ounces 2. However, based on the successful results from the 1,952 meter year
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 or zinc by- products
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one in -fill drill program concluded at Lindero in September 20 18 (see Fortuna news release dated
September 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.
Further updates on the construction of the Lindero gold Project will be provided as the development of
the project proceeds.
Please click on the following link to access Lindero ’s construction photo gallery on our website:
https://www.fortunasilver.com/mines-and-projects/development/lindero-project-
argentina/construction/.
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 as set out in the
technical report entitled “ Fortuna Silver Mines Inc.: Lindero Property, Salta Province, Arg entina” dated
effective October 31, 2017 is forecast to increase to US$295 million, an increase of 20 percent over what
was budgeted in the technical report ; this amount do es 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 SED AR 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 Engin eers and Geoscientists of the Province of British Columbia
(Registration Number 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 acquisit ion opportunities
throughout the Americas and in select other areas. For more information, please visit its website at
www.fortunasilver.com.
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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
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 a nd 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 estimates; timelines; production at the mines; 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”, “open”, “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 negative
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; delays in construction activities at Lindero;
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 exploration; 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 Forwar d looking 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
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construction and development of the Project will proceed as planned; expectations regarding construction and
mine production costs; timing o f construction activities; 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.