Fortuna reports 2017 production of 11.9 million silver equivalent ounces and issues guidance for 2018
Fortuna reports 2017 production of 11.9 million silver equivalent ounces and
issues guidance for 2018
Vancouver, January 17, 2018-- Fortuna Silver Mines, Inc. (NYSE: FSM) (TSX: FVI) is pleased to announce
2017 production figures from its two underground operating silver mines, the San Jose Mine in Mexico
and the Caylloma Mine in Peru. The company produced 8.5 million ounces of silver and 56.4 thousand
ounces of gold or 11.9 million AgEq1 ounces.
2017 Consolidated Production Highlights
Silver and gold production were 4 % and 8 % respectively above 2017 guidance
Silver production of 8,469,593 ounces; 15 % increase over 2016
Gold production of 56,441 ounces; 21 % increase over 2016
Zinc production of 44,347,035 pounds; 3 % increase over 2016
Lead production of 29,877,890 pounds; 9 % decrease over 2016
Note: 1. Silver equivalent is calculated using silver to gold ratio of 60 to 1
2017 Consolidated Operating Results
Q4 2017 2017
Caylloma,
Peru
San Jose,
Mexico Consolidated Caylloma,
Peru
San Jose,
Mexico Consolidated
Processed Ore
Tonnes milled 134,635 271,370 529,704 1,070,791
Average tpd milled 1,496 3,015 1,484 3,035
Silver
Grade (g/t) 65 259 66 238
Recovery (%) 84.69 91.86 84.31 91.82
Production (oz) 238,414 2,071,762 2,310,176 943,038 7,526,555 8,469,593
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Q4 2017 2017
Caylloma,
Peru
San Jose,
Mexico Consolidated Caylloma,
Peru
San Jose,
Mexico Consolidated
Gold
Grade (g/t) 0.18 1.89 0.18 1.77
Recovery (%) 13.85 92.17 15.87 91.62
Production (oz) 106 15,177 15,283 491 55,950 56,441
Lead
Grade (%) 2.91 2.81
Recovery (%) 90.75 91.06
Production (lbs) 7,846,302 7,846,302 29,877,890 29,877,890
Zinc
Grade (%) 4.36 4.21
Recovery (%) 90.14 90.23
Production (lbs) 11,676,397 11,676,397 44,347,035 44,347,035
Note: Metallurgical recovery for silver at the Caylloma Mine is calculated based on silver content in lead concentrate
San Jose Mine, Mexico
The San Jose Mine produced 2,071,762 ounces of silver and 15,177 ounces of gold in the fourth quarter,
15 % and 16 % above budget respectively. Average head grades for silver and gold were 259 g/t and
1.89 g/t, 12 % and 13 % above budget respectively.
Silver and gold production for 2017 totaled 7.5 million ounces and 55,950 ounces respectively; being 5 %
and 8 % above the mine’s annual guidance. Average head grades for silver and gold were 238 g/t and
1.77 g/t, 3 % and 6 % above the mine´s annual guidance respectively.
In 2017, m ine production was sourced from Trinidad Central and Trinidad North with each area
contributing 57 % and 43 % of ore respectively. The processing plant treated an average of 3,035 tpd.
Caylloma Mine, Peru
The Caylloma Mine produced 238,414 ounces of silver in the fourth quarter, 8 % below budget. Average
silver head grade of 65 g/t, 13 % below budget, was offset by higher metallurgical recovery of 84.69%,
6 % above budget.
Silver production for 2017 totaled 943,038 ounces; 4 % below the mine’s annual guidance. Average head
grade for silver was 66 g/t, 7 % below the mine’s annual guidance.
Lead and zinc production for the fourth quarter was 7,846,302 pounds and 11,676,397 pounds
respectively, 4 % below budget and 13 % above budget. Average head grades for lead and zinc were
2.91% and 4.36%, 1 % below budget and 13 % above budget respectively.
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Base metals production for 2017 totaled 29,877,890 pounds of lead and 44,347,035 pounds of zinc; in
line with annual guidance and 8 % above the mine’s annual guidance, respectively. Average head grades
for lead and zinc were 2.81% and 4.21%, 3 % and 9 % above annual guidance.
In 2017, m ine production was sourced primarily from the Animas NE and Animas Central areas with
each contributing 58 % and 32 % of ore respectively. The processing plant treated an average of 1,484
tpd.
2018 Consolidated Production and Cash Cost Guidance
Silver
(Moz)
Gold
(koz)
Lead
(Mlbs)
Zinc
(Mlbs)
Cash Cost
($/t)
AISC1
($/oz Ag)
San Jose Mine, Mexico 7.5 48.3 NA NA 61.2 6.6
Caylloma Mine, Peru 0.8 -- 25.8 44.8 81.3 (5.2)
Total 8.3 48.3 26.5 44.1
■ 2018 silver equivalent2 production guidance of 11.4 million ounces
■ 2018 consolidated AISC1 of $6.8/oz Ag
Notes:
1. All-in sustaining cash cost (AISC) per ounce of silver is net of by -products gold, lead and zinc ; see appendix for
breakdown
2. Silver equivalent production does not include lead or zinc and is calculated using a silver to gold ratio of 65 to 1
3. Total figures may not add due to rounding
2018 Outlook
San Jose Mine, Mexico
San Jose plans to process 1,050,000 tonnes of ore averaging 240 g/t Ag and 1.56 g/t Au. Capital
investments are estimated at $16.9 million; includes $8.5 million for sustaining CAPEX 1 and $8.4 million
for exploration programs.
Major capital investment projects include:
Mine development: $3.5 million
Equipment and infrastructure: $4.1 million
Note: 1. Capital Expenditure
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Caylloma Mine, Peru
Caylloma plans to process 535,500 tonnes of ore averaging 57 g/t Ag, 2.41% Pb and 4.21% Zn. Capital
investments are estimated at $21.3 million; including $16.4 million for sustaining CAPEX, $2.8 million for
non-sustaining CAPEX, and $2.2 million for Brownfields exploration programs.
Major capital investment projects include:
Mine development: $6.4 million
Equipment and infrastructure: $4.3 million
Tailings dam expansion $5.7 million
Non-sustaining investments of $2.8 million relate to improving productivity and efficiency. Main projects
include power transmission capacity upgrade, mill flotation cells upgrade and pavement of principal
mine haulage ways. These investments have payback periods ranging between 6 months and 3 years .
The tailings dam expansion allows for additional storage capacity until 2021.
Lindero gold Project, Argentina
The initial capital cost for the construction of Lindero is estimated at $239 million (see Fortuna news
release dated Sep tember 21, 2017 ). For 2018, capital expenditures are estimated at $201 million,
representing 84 % of the construction budget.
Project Construction Milestones
Selected milestones from the project construction schedule were released on December 2017 (see
Fortuna news release dated December 21, 2017) and include:
2018
• February: Start mass earthworks
• April: First concrete for permanent installations
• August: Start of equipment installation, including HPGR tertiary crusher
• November: Construction of roads and platforms in preparation for initiation of mining activities
2019
• January: Commissioning of power plant
• March: Placing of first ore on the leach pad
• May: First doré poured as part of commissioning
Brownfields Exploration Highlights
San Jose Mine, Mexico
Brownfields exploration program budget for 2018 at the San Jose Mine is $ 8.4 million, which includes
45,500 meters of diamond drilling and 340 meters of underground development for drill ing access and
platforms. Exploration drilling will focus on the Trin idad Central and Trinidad North zones and on the
sub-parallel Victoria vein.
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Caylloma Mine, Peru
Brownfields exploration program budget for 2018 at the Caylloma Mine is $ 2.2 million, which includes
10,250 meters of diamond drilling. Drilling will focus on a previously unexplored area between ore
shoots on the Animas NE vein that were discovered in 2017 (see Fortuna news release dated October
11, 2017).
Lindero gold Project, Argentina
The Arizaro gold -copper porphyry target lies within the Lindero Project concession block. We plan to
investigate the economic potential of including Arizaro mineralization into the existing Lindero resource
through additional surface mapping and 2,000 meters of core drilling targeting shallow, high -grade
copper-gold mineralization with a budget of $321,000.
The Company is also revisiting the extensive reconnaissance exploration database comprising over
fifteen years of sampling and generative work in northern Argentina, acquired from Goldrock Mines
along with the Lindero Project in 2016. Evaluation of new opportunities on third-party properties is
ongoing.
Greenfields Exploration Highlights
Serbia
Through two C$1.5 million equity investments in Medgold Resources Corp. (TSX.V: MED) , Fortuna
funded a S trategic Alliance with Medgold and joint ventured th e Tlamino Project as its first S elected
Property (see Medgold news releases dated January 9, 2017, February 9, 2017, and March 7, 2017).
Exploration work on the Tlamino joint venture will consist of 2 ,000 meters of core drilling with a budget
of $340,000. Fortuna retains the right to nominate a second Selected Property over the course of 2018.
Exploration remains centered on high and low -sulfidation epithermal gold -silver mineralization in the
western portion of the Tethyan orogenic system. Each joint venture, when formed, will allow Fortuna
the right to earn a 51 % interest by spending $3.0 million over three y ears, and gain an additional 19 %
interest by spending a further $5.0 million and completing a preliminary economic assessment.
Mexico
Fortuna entered into an equity investment agreement with Prospero Silver Corp. (TSX .V: PSL) in early
2017 (see Prospero Silver news release dated April 17, 2017 ). This Strategic A lliance provides for the
initial drilling of multiple targets at Prospero’s Matorral, Petate, Pachuca SE and Bermudez properties
located in Durango, Hidalgo and Chihuahua States, respectively. High -level epithermal clay alteration
with anomalous gold, silver or pathfinder elements are present at each property, none of which has
been previously drilled.
The agreement gives Fortuna the right to select one of the projects to joint venture with Prospero,
potentially earning a 70 % interest by spending $8 million over six years and completing a preliminary
economic assessment on the selected property. Should Fortuna exercise its Prospero warrants, the right
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to select a second project under the same terms as above is retained. The exploration strategy is to
complete the planned drilling at all targets, assess the data and select properties as dictated by the
results.
Drilling at the Matorral and Petate projects was completed in 2017 (see Prospero Silver news releases
dated August 24, 2017, September 18, 2017 , November 8, 2017 , and January 10, 2018 ) and drilling at
the Pachuca SE and Bermudez projects will be completed during the first quarter of 2018.
Qualified Person
Edwin A. Gutierrez, Technical Services Corporate Manager, is the Qualified Person for Fortuna Silver
Mines Inc. as defined by National Instrument 43 -101. Mr. Gutierrez is a Registered Member of the
Society for Mining, Metallurgy and Exploration, Inc. (SME Registered Member Number 4119110RM) and
is responsible for ensuring that the information contained in this news release is an accurate summary
of the original reports and data provided to or developed by Fortuna Silver Mines.
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 i s 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
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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 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; 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 t he Company’s activities at the Lindero gold Project 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 dev elopment 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 diff er materially from those described in Forward 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 will proceed as
planned; expectations regarding 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 operations 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 prov e 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.
This news release also refers to non- GAAP financial measures, such as cash cost per tonne of processed ore; cash
cost per payable ounce of silver; total production cost per tonne; all -in sustaining cash cost; all -in cash cost;
adjusted net (loss) income; operating cash flow per share before changes in working capital, income taxes, and
interest income; and adjusted EBITDA. These measures do not have a standardized meaning or method of
calculation, even though the descriptions of such measures may be similar. These performance measures have no
meaning under International Financial Reporting Standards (IFRS) and therefore, amounts presented may not be
comparable to similar data presented by other mining companies.
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Appendix
2018 AISC Guidance Breakdown
San Jose Mine:
Item $/oz Ag
Cash cost net of by-product credits 1.4
Commercial and government royalties/
mining tax 1.2
Workers’ participation 0.9
Subsidiary G&A 0.7
Sustaining capex 1.2
Brownfields exploration 1.2
AISC 6.6
Caylloma Mine:
Item $/oz Ag
Cash cost net of by-product credits (40.3)
Commercial and government royalties/
mining tax 4.1
Workers’ participation 2.4
Subsidiary G&A 4.7
Sustaining capex 21.1
Brownfields exploration 2.8
AISC (5.2)
Consolidated:
Item $/oz Ag
Cash cost net of by-product credits (2.7)
Commercial and government royalties/
mining tax 1.5
Workers’ participation 1.1
Subsidiary G&A 1.1
Corporate G&A 1.4
Sustaining capex 3.1
Brownfields exploration 1.3
AISC 6.8
Note: Total figures may not add up due to rounding