Fortuna reports 2020 full year production of 11.3 million silver equivalent ounces and issues 2021 guidance
Fortuna reports 2020 full year production of 11.3 million silver equivalent
ounces and issues 2021 guidance
Vancouver, January 19, 20 21 – Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) reports production
results for the fourth quarter and full year 2020 from its three operating mines in Latin America, the San
Jose Mine in Mexico, the Caylloma Mine in Peru, and the Lindero Mine in Argentina. For the full year 2020,
the C ompany produced 7,133,717 ounces of silver and 55,349 ounces of gold or 11.3 million silver
equivalent1 ounces. The Company withdrew its production and cost guidance for 2020 in early April due
to the COVID-19 pandemic and the temporary shutdown of operations mandated by governments in
Mexico and Argentina (refer to Fortuna news release dated April 2, 2020 ). Due to the uncertainties related
to the impact caused by COVID-19 constraints on Fortuna’s business and operations, the Company chose
not to issue a revised guidance when operations and activities re-started in Mexico and Argentina.
2020 Consolidated Production Highlights
• Silver production of 7,133,717 ounces; 19 percent decrease over 2019
• Gold production of 55,349 ounces; 10 percent increase over 2019
• Lead production of 29,627,923 pounds; 3 percent increase over 2019
• Zinc production of 45,545,299 pounds; in line with 2019
• Cash cost2 for San Jose is US$69.4/t
• Cash cost2 for Caylloma is US$81.8/t
2021 Consolidated Production Guidance Highlights
• Gold production of between 178 to 202 thousand ounces; a projected increase of between 322
to 365 percent over 2020
• Silver production of between 6.8 to 7.6 million ounces; a projected decrease of 5 percent over
2020 to a projected increase of 7 percent over 2020
• Gold equivalent 1 production of between 267 to 302 thousand ounces; a projected increase of
between 79 to 103 percent over 2020
NYSE: FSM | TSX: FVI
www.fortunasilver.com NEWS RELEASE
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2020 Consolidated Operating Highlights
Fourth Quarter 2020 Full Year 2020
Caylloma,
Peru
San Jose,
Mexico
Lindero,
Argentina Consolidated Caylloma6,
Peru
San Jose7,
Mexico
Lindero8,
Argentina Consolidated
OPERATIONAL FIGURES
Tonnes milled 136,132 272,179 - - 510,047 934,381 - -
Average tpd milled 1,530 3,024 - - 1,433 2,647 - -
Ore placed on pad3 (t) - - 950,000 - - - 1,610,000 -
SILVER4
Grade (g/t) 73 206 - - 72 224 - -
Recovery (%) 82.3 91.42 - - 81.91 91.52 - -
Production (oz) 263,921 1,648,816 - 1,912,737 968,111 6,165,606 - 7,133,717
GOLD
Grade (g/t) 0.60 1.26 1.13 - 0.41 1.38 1.00 -
Gold placed on pad3 (oz) - - 34,000 - - - 52,000 -
Recovery (%) 69.27 91.27 - - 60.56 91.34 - -
Production (oz) 1,827 10,095 13,435 25,357 4,109 37,805 13,435 55,349
LEAD
Grade (%) 3.16 - - - 3.00 - - -
Recovery (%) 88.94 - - - 87.81 - - -
Production (lbs) 8,426,068 - - 8,426,068 29,627,923 - - 29,627,923
ZINC
Grade (%) 4.69 - - - 4.61 - - -
Recovery (%) 88.25 - - - 87.91 - - -
Production (lbs) 12,434,072 - - 12,434,072 45,545,299 - - 45,545,299
Notes:
1. Silver and gold equivalent production does not include lead or zinc, and is calculated using silver to gold ratio of 76 to 1
2. Preliminary estimates of cash operating costs per tonne are subject to modification on final cost consolidation
3. Lindero tonnes and gold grade are estimated using grade control sampling of blast holes; numbers are reported to the nearest
ten thousand for tonnes and thousand for gold ounces
4. Metallurgical recovery for silver at the Caylloma Mine is calculated based on silver content in lead concentrate
5. Totals may not add due to rounding
6. Production for the full year was not impacted despite government mandated restrictions and the implementation of Company
protocols related to COVID-19
7. Production for 2020 was impacted by a 54 -day government mandated suspension in the second quarter in response to the
COVID-19 pandemic
8. Construction activit ies and pre -production in 2020 was severely impacted by a government mandated suspension of
operations for more than half of the second quarter of 2020 in response to the COVID -19 pandemic. Production numbers
refer to ounces generated from pre-production activities
San Jose Mine, Mexico
The San Jose Mine produced 1,648,816 ounces of silver and 10,095 ounces of gold in the fourth quarter
of 2020 with average head grades for silver and gold of 206 g/t and 1.26 g/t, respectively. Silver and gold
production for the full year totaled 6,165,606 ounces and 37,805 ounces, respectively. Average head
grades for silver and gold for the year were 224 g/t and 1.38 g/t, respectively.
Production for the f ull year was impacted by a 54 -day government mandated suspension in the second
quarter of 2020 related to the COVID-19 pandemic (refer to Fortuna news release dated May 26, 2020).
Caylloma Mine, Peru
In the fourth quarter of 2020, the Caylloma Mine produced 263,921 ounces of silver with an average head
grade of 73 g/t. Silver production for the full year 2020 totaled 968,111 ounces, an increase of 3 percent
over 2019, with an average head grade of 72 g/t.
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Gold production for the fourth quarter of 2020 was 1,827 ounces with an average head grade of 0.60 g/t.
Gold production for the full year 2020 totaled 4,109 ounces, an increase of 150 percent over 2019 , with
an average head grade of 0.41 g/t. Gold production was positively impacted by unusual higher head grades
compared to the reserve model at the Animas NE vein. The exploration team is carrying out work to
understand the occurrence and controls of these higher-grade zones that can carry gold grades as high as
10 g/t.
Lead and zinc production for the fourth quarter of 2020 was 8,426,068 pounds and 12,434,072 pounds
with average head grades for lead and zinc of 3.16% and 4.69%, respectively. Base metal production for
the full year totaled 45,545,299 pounds of zinc, in line with production in 2019, and 29,627,923 pounds
of lead, an increase of 3 percent over 2019. A verage head grades for lead and zinc for the year were
3.00% and 4.61%, respectively.
Production for the full year was not impacted despite government ma ndated restrictions, the
implementation of Company protocols related to COVID-19 (refer to Fortuna news release dated March
17, 2020), and a voluntary three-week suspension of operations in July (refer to Fortuna news release
dated July 28, 2020).
Lindero Mine, Argentina
In the fourth quarter of 2020, a total of 950,000 tonnes of ore wer e placed on the heap leach pad
averaging 1.13 g/t gold, containing an estimated 34,000 ounces of gold. First gold was poured at Lindero
in October 2020, and doré production for the fourth quarter of 2020 was 13,435 ounces of gold. For full
year 2020, a total of 1.61 million tonnes of ore have been placed on the heap leach pad averaging
1.00 g/t gold, containing an estimated 52,000 ounces of gold.
Fourth Quarter 2020 Full Year 2020
OPERATIONAL FIGURES
Ore mined1 (t) 1,900,000 3,780,000
Waste mined1 (t) 1,580,000 3,900,000
Total mined1 (t) 3,490,000 7,760,000
Strip ratio (waste to ore) 0.83 1.05
Average crushing throughput (tpd) 10,406 8,831
Ore placed on leach pad1 (t) 950,000 1,610,000
Ore placed grade1 (g/t) 1.13 1.00
Gold produced (oz) 13,435 13,435
Gold sold (oz) 10,935 10,935
Note:
1. Lindero tonnes and gold grade are estimated using grade control sampling of blast holes; numbers are reported to the nearest
ten thousand for tonnes and thousand for gold ounces
The table below details material movements from the pit as estimated from t he grade control model
versus the Mineral Reserve block model for the fourth quarter of 2020. Reconciliation of the estimate
indicates a good correlation with 3.9 percent more gold ounces mined than predicted and gold grade in
line with expectation.
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Material Parameter Grade Control Model1, 3 Mineral Reserve Model2, 3 Difference
Mineral Tonnes 1,900,000 1,820,000 4.4 %
Gold (g/t) 0.86 0.86 0 %
Gold (oz) 53,000 51,000 3.9 %
Waste Tonnes 1,580,000 1,660,000 -4.8 %
Notes:
1. Grade control model numbers are based on estimates from blast holes
2. Mineral Reserve model numbers are based on the Mineral Reserve estimates as of March 31, 2019 (refer to Fortuna
news release dated April 4, 2019). See also the Technical Report entitled “Fortuna Silver Mines Inc.: Lindero Property,
Salta Province, Argentina” with an effective date of October 31, 2017 prepared by Eric Chapman, Edwin Gutierrez, Geoff
Allard, and Denys Parra Murrugarra. The updated Mineral Reserve estimate does not materially change the information
presented in the Technical Report.
3. Based on a gold cut-off grade of 0.27 g/t
Gold production and Sales
The Company produced 13,435 ounces of gold in 2020, which is in line with its revised production forecast
of between 13,000 to 15,000 ounces (refer to Fortuna news release dated November 12, 2020). Sales for
the year totaled 10,935 ounces.
Mining
A total of 3.78 million tonnes of ore were mined in 2020 at a strip ratio of 1.05:1. Mining and equipment
performance are in line with design parameters and support the operation´s processing capacity of
18,750 tonnes per day.
Processing
During 2020, a total of 1.6 million tonnes of coarse ore were placed on the heap leach pad at an average
gold head grade of 1.00 g/t containing a total of 52,000 ounces of gold. Average ore crushing throughput
rate for the year was 8,831 tonnes per day. Recovery of gold from the heap leach was in line with
expectations based on metallurgical testing of coarse ore with an estimated 16,687 ounces of gold leached
as of December 31, 2020.
In the fourth quarter of 2020, primary and secondary crusher throughput averaged 10,406 tonnes per day
with the ramp up schedule progressing according to plan, achieving 75 percent of the 18,750 tonnes per
day design capacity in December 2020. The operation is fine-tuning the crushing system with a focus on
screens, chutes, and belt conveyors in order to ramp up crushing throughput to the design capacity.
Commissioning of the HPGR, agglomeration plant, and stacking system was completed in mid-December
with all systems in the ramp up phase. The operation is transitioning from placing coarse ore on the heap
leach pad with trucks to placing tertiary crushed ore via the stacking system, which is expected to increase
heap gold recovery from an estimated 50 percent to 78 percent over a 90 -day period based on
metallurgical column test results.
The SART plant was commissioned in mid -December and the ramp up phase commenced with the
circulation of 80 cubic meters per hour of pregnant solution, approximately 20 percent of design capacity.
Once design parameters are achieved, copper concentration in the pregnant solution will be reduced
allowing the ADR plant to operate at design parameters.
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The Company expects the ramp up phase of the entire processing circuit to be completed in the first
quarter of 2021.
Construction and Sustaining capital
Construction at Lindero is substantially complete as of the end of December 2020 with construction capital
expenditures projected to be within the US$320 million guidance (refer to Fortuna news release dated
May 8, 2020 ), including remaining capital expenditures of US$2.0 million to be allocated to finalize
construction of ancillary facilities and to commissioning activities. During 2020, sustaining capital of
US$1.7 million was spent mainly on the purchase of spare parts for major equipment.
2021 Consolidated Production and Cost Guidance
The Company’s production and cost guidance set out below for 2021 assumes that operations will
continue during the year without any major interruptions related to COVID-19. At each of our mine sites,
health protocols are in place for control, isolation and quarantine, as necessary, and these continue to be
reviewed and adjusted accordingly based on the circumstances at each location. The Company’s focus is
the health and safety of the workforce and on measures to prevent and manage the transmission of
COVID-19 amongst the workforce and the communities in which Fortuna operates.
Mine Silver
(Moz)
Gold
(koz)
Lead
(Mlbs)
Zinc
(Mlbs) Cash Cost AISC1
SILVER (US$/t) (US$/oz Ag Eq)
San Jose, Mexico 5.8 - 6.5 38 - 42 - - 68 - 75 12.2 – 14.5
Caylloma, Peru 1.0 - 1.1 - 29 - 32 44 - 49 85 - 93 19.4 – 23.0
GOLD (US$/oz Au) (US$/oz Au)
Lindero, Argentina - 140 - 160 - - 365 - 4303 730 - 8603
CONSOLIDATED TOTAL 6.8 - 7.6 178 - 202 29 - 32 44 - 49
Notes:
1. All-in sustaining cost (AISC) is a non-GAAP financial measure, refer to Forward-looking Statements regarding non-GAAP
financial measures at the end of this news release; AISC includes production cash cost, commercial and government
royalties, mining tax, e xport duties (as applicable), worker’s participation (as applicable), subsidiary G&A, sustaining
capital expenditures, and Brownfields exploration and is estimated at metal prices of US$1, 800/oz Au, US$ 22/oz Ag,
US$1,900/t Pb, and US$2,300/t Zn
2. Totals may not add due to rounding
3. Refer to Lindero Mine Cost Guidance section in 2021 Guidance Highlights below
2021 Guidance Highlights
San Jose Mine, Mexico
At the San Jose Mine, the operation plans to process 1.13 million tonnes averaging 196 g/t Ag and
1.26 g/t Au. Capital investment is estimated at US$ 23.4 million, including US$13.4 million for sustaining
capital expenditures and US$10.0 million for Brownfields exploration programs.
Major sustaining capital investment projects include:
• Mine development: US$6.9 million
• Dry stack expansion: US$1.8 million
• Equipment and infrastructure: US$1.8 million
• Infill drilling: US$0.9 million
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Caylloma Mine, Peru
At the Caylloma Mine, the operation plans to process 530,000 tonnes averaging 74 g/t Ag, 2.87% Pb, and
4.30% Zn. Capital investments are estimated at US$ 21.7 million, including US$15.2 million for sustaining
capital expenditures and US$4.7 million for Brownfields exploration programs.
Major sustaining capital investment projects include:
• Mine development and infill drilling: US$5.9 million
• Tailings dam expansion: US$4.7 million
• Electric system upgrade: US$1.9 million
• Infrastructure: US$1.5 million
Lindero Mine, Argentina
At the Lindero Mine, the operation plans to place on the leach pad 6.3 million tonnes of ore averaging
1.08 g/t Au, containing an estimated 218,000 ounces of gold . Capital investments are estimated at
US$20.8 million, including US$ 20.5 million for sustaining capital expenditures and US$ 0.3 million for
Brownfields exploration programs.
Gold p roduction is planned to ramp -up throughout the year to reach the annual guidance range of
between 140,000 to 160,000 ounces with approximately two thirds of annual production anticipated to
be achieved in the second half of 2021.
The ramp up phase of the HPGR, agglomeration, and stacking system is proceeding according to schedule,
and the operation expects to integrate the entire comminution and conveyor belt system and reach design
capacity by the end of the first quarter of 2021. Throughout this period, some coarse ore will continue to
be placed on the heap leach pad by truck as the operation transitions to the stacking system.
By the end of the first quarter of 2021, t he operation also expects the SART plant to achieve design
capacity which will reduce s oluble copper in the pregnant solution, resulting in more efficient cyanide
consumption and gold recovery at the ADR plant.
The operation expects to complete construction of the planned phase one expansion of the heap leach
pad by the second quarter of 2021, which will provide sufficient leaching area until 2024.
Sustaining Capital
Major sustaining capital investment projects include:
• Heap leach pad completion (years 1 – 3): US$7.0 million
• ADR plant expansion: US$5.0 million
• Maintenance and energy: US$4.0 million
The Company has decided to bring forward the expansion of the ADR plant from year four in the life of
mine plan, due to higher projected gold production of 24,000 ounces for the initial three years compared
to the original feasibility study. The expansion o f the ADR will provide greater gold adsorption capacity
and efficient recovery of the additional ounces.
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The major components of sustaining capital, including the expansions of the ADR plant and heap leach
pad, representing between 70% and 80% of the annu al budget are expected to be executed in the first
half of 2021.
Cost Guidance
Annual cash cost per ounce of gold for 2021 is projected between US$ 365 and US$ 430 and AISC is
projected between US$730 and US$860 per ounce of gold. For the first half of the year, AISC is projected
between US $1,130 and US$ 1,335 due to the ramp-up in gold production and sustaining capital
expenditure execution in the first semester and to range between US$525 and US$615 per ounce of gold
in the second half of 2021.
Projected AISC for 2021 is approximately US$200 per ounce of gold higher than was projected in our news
releases dated February 20, 2020 and May 8, 2020. The main drivers of the increase , which are partially
offset by reduced cost in key consumables of approximately US$25 per ounce of gold, are listed below:
• Sustaining capital expenditures: Expansion of the ADR plant and the heap leach pad represents
approximately US$80 per ounce of gold.
• Export duty and mining royalty: Higher gold price assumptions represent US$20 per ounce, and a
higher export duty rate of eight percent of sales, compared to five percent in the prior guidance,
represents US$40 per ounce of gold
• Production cost: A ten percent increase in unit costs per tonne represents approximately US$40
per ounce of gold. The main drivers of the increase are related to COVID-19 expenses of
US$2.1 million, various indirect costs of approximately US$1.8 million, and higher planned
maintenance contractor services at the processing plant in 2021 of US$1.2 million.
Brownfields Exploration Outlook
The Company is expanding its exploration budget and initiatives in 2021 as the capital-intensive phase of
Lindero has ended. Fortuna´s consolidated Brownfields exploration budget for 2021 for all three mines
totals US$15.9 million, which includes 53,800 meters of diamond drilling and 2,170 meters of
underground development. Consolidated Brownfields exploration expenses in 2020 were US$4.6 million.
San Jose Mine, Mexico
The Brownfields exploration program budget for 2021 at the San Jose Mine is US$10.9 million, which
includes 33,800 meters of diamond drilling and 1,770 meters of underground development for drilling
access, platforms, and services. Underground exploration drilling will focus on the shallow and deep north
and south extensions of the Trinidad vein system and the sub -parallel Victoria mineralized zone, while
surface drilling will test two new targets to the south and north of the mine.
Caylloma Mine, Peru
The Brownfields exploration program budget for 2021 at the Caylloma Mine is US$4.7 million, which
includes 19,000 meters of diamond drilling and 500 meters of underground development for drilling
access, platforms, and services. Surface and underground drilling will focus on the extensions of two ore
shoots along the Animas vein, the possible extension of mineral resources along the San Cristobal silver
vein located to the north of the mine and one new grassroots target located to the south of the mine.
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Lindero Mine, Argentina
The Brownfields exploration program budget for 2021 at the Lindero Mine is US$320,000, which includes
1,000 meters of drilling on the Arizaro target located 3.5 kilometers to the southeast of the mine. The
drilling will test for additional mineralization that could potentially contribute to Lindero’s future
production.
Greenfields Exploration Outlook
Active reconnaissance exploration programs on acquired projects and evaluations of possible acquisitions
in Mexico, Argentina, and select other jurisdictions will continue throughout 2021. Allocated budget for
greenfield exploration activities in 2021 is US$5.0 million.
Quality Assurance & Quality Control
Grade control estimates are based on blast hole chip samples submitted to Lindero’s on-site laboratory
for preparation and assaying for gold, using fire assay with an atomic absorption finish. The QA -QC
program includes the blind insertion of certified reference standards and assay blanks at a frequency of
approximately 1 per 20 normal samples as well as the submission of duplicate samples for verification of
sampling and assay precision levels by an ISO 9001:2000 certified umpire laboratory. ALS Global
Laboratory in Mendoza, Argentina prepared the samples for assaying and then forwarded the samples to
ALS Global Laboratory in Lima, Peru for assay by standard fire assay methods.
Qualified Person
Amri Sinuhaji is the Technical Services Director – Mine Planning for the Company and is a Professional
Engineer registered with the Association of Professional Engineers and Geoscientists of the Province of
British Columbia (#48305) and a Qualified Person as defined by National Instrument 43-101- Standards of
Disclosure for Mineral Projects. Mr. Sinuhaji has reviewed and ap proved the scientific and technical
information contained in this news release and has verified the underlying data.
About Fortuna Silver Mines Inc.
Fortuna Silver Mines Inc. is a Canadian precious metals mining company with operations in Peru, Mexico
and Argentina. Sustainability is integral to all our operations and relationships. We produce silver and gold
and generate shared value over the long -term for our shareholders and stakeholders through efficient
production, environmental protection a nd social responsibility. For more information, please visit our
website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza
President, CEO, and Director
Fortuna Silver Mines Inc.