Fortuna reports production of 1.8 million ounces of silver and 10,101 ounces of gold for the first quarter of 2020
Fortuna reports production of 1.8 million ounces of silver and 10,101 ounces of gold
for the first quarter of 2020
Vancouver, April 14, 2020-- Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to report
production results for the first quarter of 2020 from its two operating mines in Latin America, the San Jose
Mine in Mexico and the Caylloma Mine in Peru. The C ompany produced 1.8 million ounces of silver and
10,101 ounces of gold , plus base metal by -products. Government-mandated constraints on business to
curb the spread of COVID -19 in the countries that host our operations, ha ve resulted in reduced
production at the Caylloma Mine during the first quarter of 2020, and subsequent to the end of the
quarter, have resulted in the suspension of operations at the San Jose Mine. Due to the uncertainties
related to the impact of these constraints on the Company’s business and operations, the Company has
withdrawn its production and cost guidance for 2020 u ntil further notice (refer to Fortuna news release
dated April 2, 2020).
First Quarter Production Highlights
▪ Silver production of 1,819,312 ounces; 19 percent decrease over Q1 2019
▪ Gold production of 10,101 ounces; 24 percent decrease over Q1 2019
▪ Lead production of 7,722,793 pounds; 8 percent increase over Q1 2019
▪ Zinc production of 11,821,186 pounds; 5 percent increase over Q1 2019
▪ Cash cost1 for San Jose is US$71.1/t, in line with Q1 2020 budget
▪ Cash cost1 for Caylloma is US$80.8/t, in line with Q1 2020 budget
Consolidated Operating Highlights
First Quarter 2020 First Quarter 2019
Caylloma,
Peru
San Jose,
Mexico
Consolidated
Caylloma,
Peru
San Jose,
Mexico
Consolidated
Processed Ore
Tonnes milled 132,741 246,826 130,150 256,643
Average tpd milled 1,491 2,837 1,479 2,984
Silver2
Grade (g/t) 70 216 66 267
Recovery (%) 83.53 91.66 84.06 90.76
Production (oz) 249,111 1,570,201 1,819,312 233,836 1,999,495 2,233,331
Gold
Grade (g/t) 0.24 1.33 0.28 1.71
Recovery (%) 46.39 91.34 48.74 90.14
Production (oz) 471 9,630 10,101 573 12,741 13,314
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First Quarter 2020 First Quarter 2019
Caylloma,
Peru
San Jose,
Mexico
Consolidated
Caylloma,
Peru
San Jose,
Mexico
Consolidated
Lead
Grade (%) 2.96 N/A 2.74 N/A
Recovery (%) 89.28 N/A 91.34 N/A
Production (lbs) 7,722,793 N/A 7,722,793 7,172,202 N/A 7,172,202
Zinc
Grade (%) 4.58 N/A 4.37 N/A
Recovery (%) 88.22 N/A 90.07 N/A
Production (lbs) 11,821,186 N/A 11,821,186 11,295,244 N/A 11,295,244
Notes:
1. Preliminary estimates of cash operating costs per tonne, subject to modification on final cost consolidation
2. Metallurgical recovery for silver at the Caylloma Mine is calculated based on silver content in lead concentrate
3. Totals may not add due to rounding
San Jose Mine, Mexico
The San Jose Mine produced 1,570,201 ounces of silver and 9,630 ounces of gold in the first quarter of
2020, 11 percent and 16 percent below budget respectively. Average head grades for silver and gold were
216 g/t and 1.33 g/t, 6 percent and 12 percent below budget respectively.
Lower silver and gold production in the first quarter was attributed to a decrease in processed tonnes and
to a variation in head grades . The decrease in processed tonnes is due to a stoppage in mining and
processing operations caused by illegal road blockades in the vicinity of the mine, including access to the
mine (refer to Fortuna news releases dated March 24, 2020 and March 25, 2020). The variation in head
grades is related to a planned modification in the mining sequence to allow preparation work to be
conducted for pillar recovery. This restricted access to high -grade material and resulted in mining more
variable peripheral stopes during the quarter. The decrease in metal production due to the modification
of the mining sequence is planned to be recovered throughout the remainder of the year, once
government-imposed restrictions on the mining industry are lifted and production at the mine
recommences.
Caylloma Mine, Peru
The Caylloma Mine produced 249,111 ounces of silver in the first quarter of 20 20, 17 percent above
budget. Average head grade for silver was 70 g/t, 17 percent above budget.
Lead and zinc production for the first quarter of 20 20 was 7,722,793 pounds and 11,821,186 pounds,
17 percent and 3 percent above budget respectively. Average head grades for lead and zinc were 2.96 %
and 4.58 %, 19 percent and 6 percent above budget respectively.
On Sunday, March 15, 2020, the Government of Peru introduced a series of measures to contain the rapid
spread of COVID-19. The Company, in compliance with the regulatory framework issued by the Ministerio
de Energía y Minas (MINEM) and the Ministerio del I nterior (MININTER), proceeded to demobilize non -
critical personnel and continued to operate, using essential personnel at Caylloma, by drawing ore from
its coarse ore stockpiles (refer to Fortuna news release dated March 17, 2020 ). In the first quarter,
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86 percent of treated ore was sourced from the Animas vein grading 70 g/t Ag, 2.95% Pb and 4.57 % Zn
and 14 percent was sourced from coarse ore stockpiles grading 71 g/t Ag, 2.91% Pb and 4.65 % Zn.
Lindero Project, Argentina
Mining activity ramped up in the first quarter of 2020 with a total of 718,000 tonnes of mineralized
material and 1,766,000 tonnes of waste mined until March 19, 2020, when operations were suspended
due to a government declared period of mandatory national social isolation in relation to COVID-19 (refer
to Fortuna news release dated April 2, 2020 ). Prior to the shut-down, t he operation had successfully
achieved a mining rate of 40,000 tonnes per day which is required to support full production.
The table below details material movements from the pit as estimated from the grade control model
versus the Mineral Reserve block model for comparable volumes.
Grade Control Model1, 3 Mineral Reserve Model2, 3 Difference
Stockpile Tonnes 718,000 675,000 6.4 %
Au (g/t) 0.51 0.56 -8.9 %
Au (oz) 11,700 12,200 -4.1 %
Waste Dump Tonnes 1,766,000 1,801,000 -1.9 %
Notes:
1. Grade control model numbers are based on estimates from blast holes
2. Mineral Reserve model numbers are based on the updated 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 cut-off grade of 0.26 g/t Au
Since the start of pre -production in September 2019, mining has focused on extracting medium to low -
grade material for stockpiling and preparing the mine through additional waste stripping, while actively
avoiding high-grade zones so that this material will be available as direct feed upon plant commissioning.
The main reason for the differences between the two models is related to the focus on extracting low
grade mineralized material and waste in the first quarter, as demonstrated by a high strip ratio of 2.46.
Mining predominantly in waste areas results in higher levels of dilution than would on average be
experienced. This level of dilution is not expected to be observed when mining switches to higher grade
areas.
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 ref erence 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.
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Qualified Person
Amri Sinuhaji, Technical Services Director – Mine Planning, for the Company is a Qualified Person as
defined by National Instrument 43 -101- Standards of Disclosure for Mineral Projects. Mr. Sinuhaji is a
Professional Engineer registered with the Association of Professional Engineers and Geoscientists of the
Province of British Columbia (# 48305) 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 metals producer focused on mining opportunities in Latin America.
Our primary assets are the Caylloma silver Mine in southern Peru, the San Jose silver-gold Mine in Mexico
and the Lindero gold Project , currently unde r construction, in Argentina. The company is selectively
pursuing acquisition opportunities throughout the Americas and in select other areas. For more
information, please visit our website at www.fortunasilver.com.
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 variet y 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; the duration and impacts of COVID-19 on the Company’s production, workforce, business,
operations and financ ial condition; the duration of the suspension of operations at the Company’s mines and the
Lindero Project; the Company’s business strategy, plans and outlook; the merit of the Company’s mines and mineral
properties; mineral resource and reserve estimates; production costs; 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”, “pote ntial”, “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.
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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, changes in general economic conditions and financial markets; the duration and impacts of COVID-19
on the Company’s production, workforce, business, operations and financial condition, and the risks relating to a
global pandemic, which unless contained could cause a slowdown in global economic growth; the duration of the
suspension of operations at the Company’s mines and the Lindero Project, the impact of the suspension of operations
on production and the Company’ business operations and financial condition; 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; changes to current estimates of mineral reserves and resources; changes to production and cost
estimates; governmental and other approvals; changes in government, 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-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 the duration and impacts of COVID -19 on the Compan y’s production,
workforce, business, operations and financial condition, and the risks relating to a global pandemic, which unless
contained could cause a slowdown in global economic growth; the duration of the suspension of operations at the
Company’s min es and the Lindero Project, the impact of the suspension of operations on production and the
Company’ business operations and financial condition; the 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 the reconciliation of mineral reserves at the Lindero Project
remains consistent with the mineral reserve model; that all required approvals will be obtained; that there will be no
significant disruptions affecting operations and such other assumptions as set out herein. Forwa rd-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 n o assurance that these 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.
Cautionary Note to United States Investors Concerning Estimates of Reserves and Resources
Reserve and resource estimates included in this news release have been prepared in accordance with National Instrument 43-101
Standards of Disclosure for Mineral Projects ("NI 43 -101") and the Canadian Institute of Mining, Metallurgy, and Petroleum
Definition Standards on Mineral Resources and Mineral Reserves. NI 43 -101 is a rule developed by the Canadian Securities
Administrators that establishes standards for public disclosure by a Canadian company of scientific and technical information
concerning mineral projects. Equivalent U.S. reporting requirements are currently governed by the United States Securities and
Exchange Commission ("SEC") Industry Guide 7 (“Industry Guide 7”) under the U.S. Securities Act of 1933, as amended. Canadian
standards, including NI 43-101, differ significantly from the requirements of the SEC currently in effect under Industry Guide 7, and
reserve and resource information contained in this news release may not be comparable to similar information disclosed by U.S .
companies. In particular, the term "resource" does not equate to the term "reserves". Under the SEC's disclosure standards
currently in effect under Industry Guide 7, mineralization may not be classified as a "reserve" unless the determination has been
made that the min eralization could be economically and legally produced or extracted at the time the reserve determination is
made. While the SEC recognizes the reporting of mineral deposits which do not meet the Industry Standard Guide 7 definition of
“reserve” as of Febr uary 25, 2019, the effective adoption of the Modernization of Property Disclosures for Mining Registrants,
such rules are not required to be compiled with until the first fiscal year beginning on or after January 1, 2021. As a result, the
SEC's disclosure standards currently in effect normally do not permit the inclusion of information concerning "measured mineral
resources", "indicated mineral resources" or "inferred mineral resources" or other descriptions of the amount of mineralization in
mineral deposits that do not constitute "reserves" by U.S. standards in documents filed with the SEC. You are cautioned not to
assume that resources will ever be converted into reserves. You should also understand that "inferred mineral resources" have a
great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. You should also
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not assume that all or any part of an "inferred mineral resource" will ever be upgraded to a higher category. Under Canadian
rules, estimated "inferred mineral resources" may not form the basis of feasibility or pre -feasibility studies except in rare cases.
You are cautioned not to assume that all or any part of an "inferred mineral resource" exists or is economically or legally mineable.
Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC's disclosure
standards currently in effect under Industry Guide 7 normally only permit issuers to report mineralization that does not constitute
"reserves" by such standards as in -place tonnage and grade without reference to unit measures. The requirements of NI 43 -101
for identification of "reserves" are also not the same as those of the SEC's disclosure standards currently in effect under I ndustry
Guide 7, and reserves reported in compliance with NI 43-101 may not qualify as "reserves" under such SEC standards. Accordingly,
information concerning mineral deposits set forth in this news release may not be comparable with information made public b y
companies that report in accordance with U.S. standards.