Mexico
Press Release

Fortuna reports production of 1.8Moz silver and 10,101oz gold for 1Q20

Bnamericas Published: Tuesday, April 14, 2020

PRESS RELEASE

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 Company 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, have 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the uncertainties related to the impact of these constraints on the Company's business and operations, the Company has withdrawn its production and cost guidance for 2020 until further notice (refer to Fortuna news release dated April 2, 2020).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

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 2020, 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 2020 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 Interior (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, 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, the 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.

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 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, 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 under 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


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