Location

Taviche Mining District, Oaxaca, Mexico
Latitude: 16° 41' 40" N, Longitude: 96° 42' 00" W

Commodities

Commodities

Silver, gold

Ownership

Ownership

100%

Land Package

Land Package

64,422 hectares

Operation

Operation

3,000 tpd underground operation

Deposit Type

Deposit Type

High-grade, low sulphidation epithermal vein deposit

Mining Method

Mining Method

Overhand cut-and-fill

Highlights

2018 production: 8.0 million ounces of silver and 53,517 ounces of gold

The San Jose mine was commissioned in July 2011 and began commercial production in September 2011 at a rate of 1,000 tpd. In September of 2013, the mill was expanded from 1,150 tpd to 1,800 tpd and in April 2014, the mill was further expanded to 2,000 tpd without incurring in additional capital investments. Expansion of the mill from 2,000 tpd to 3,000 tpd was initiated in the first quarter of 2015 and successfully commissioned on time and under budget in July 2016.

Location

San Jose is located in the Taviche Mining District (Latitude 16° 41' 40" N, Longitude: 96° 42' 00" W) in the southern portion of the state of Oaxaca, approximately 47 road kilometers (one hour drive) south of the city of Oaxaca. Access to the property is excellent and local infrastructure is good.

Geology and Mineralization

The San Jose deposit is a low sulfidation epithermal vein system characterized by mineralized multiphase quartz-carbonate-sulfide veins, hydrothermal breccias and stockwork veining. The mineralized system is hosted within a sequence of Tertiary andesitic volcanic and volcaniclastic rocks.

2019 Production and Cost Guidance

Silver Production
(Moz)

7.3 - 8.1

Gold Production
(koz)

49 - 54

Cash Cost1
(US$/t)

63.5 - 70.1

AISC2
(US$/oz Ag Eq)

8.3 - 10.2

Notes:

  1. Cash cost per tonne includes all on-site direct and indirect production costs, community relations expenses, concentrate transportation and corporate management fees. It excludes government royalties and workers participation.
  2. All-In Sustaining Cost (AISC) is a non-GAAP financial measure; AISC per ounce of silver equivalent, including by-products, estimated at metal prices of US$1,250/oz Au, US$15.00/oz Ag, US$2,100/t Pb and US$2,700/t

Exploration

Brownfields exploration program budget for 2019 at the San Jose Mine is US$4.3 million, which includes 11,500 meters of diamond drilling and 450 meters of underground development for drilling access and platforms. Exploration drilling will focus on the sub-parallel Victoria mineralization zone.

Reserves and Resources

Mineral Reserves - Proven and Probable

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Contained Metal
Ag
(Moz)
Au
(koz)
San Jose, MexicoProven3932371.973.025
 Probable4,7792351.5136.0232
 Proven + Probable5,1722351.5539.0257

Mineral Resources - Measured and Indicated

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Contained Metal
Ag
(Moz)
Au
(koz)
San Jose, MexicoMeasured49770.560.11
 Indicated272840.590.75
 Measured + Indicated321830.590.96

Mineral Resources - Inferred

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Contained Metal
Ag
(Moz)
Au
(koz)
San Jose, MexicoInferred2,4151961.4415.2112

Notes:

  1. Mineral Reserves and Mineral Resources are as defined by the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves
  2. Mineral Resources are exclusive of Mineral Reserves
  3. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
  4. Factors that could materially affect the reported Mineral Resources or Mineral Reserves include; changes in metal price and exchange rate assumptions; changes in local interpretations of mineralization; changes to assumed metallurgical recoveries, mining dilution and recovery; and assumptions as to the continued ability to access the site, retain mineral and surface rights titles, maintain environmental and other regulatory permits, and maintain the social license to operate
  5. Mineral Resources and Mineral Reserves are estimated as of June 30, 2018 and reported as of December 31, 2018 taking into account production-related depletion through December 31, 2018. Refer to technical report titled “Fortuna Silver Mines Inc.: San Jose Mine, Oaxaca, Mexico” with an effective date of February 22, 2019 prepared by Eric Chapman, P.Geo. and Amri Sinuhaji, P.Eng.
  6. Mineral Reserves for the San Jose Mine are estimated using an NSR break-even cut-off grade of US$65.90/t, equivalent to 131 g/t Ag Eq based on assumed metal prices of US$18.25/oz Ag and US$1,320/oz Au; estimated metallurgical recovery rates of 92 % for Ag and 91 % for Au and mining costs of US$31.48/t; processing costs of US$16.55/t; and other costs including distribution, management, community support and general service costs of US$17.91/t based on actual operating costs. Mining recovery is estimated to average 89% and mining dilution 12%. Mineral Resources are estimated at a 100 g/t Ag Eq cut-off grade using the same metal prices and metallurgical recoveries as for Mineral Reserves and a mine to mill operating cost of US$52.50/t. Proven and Probable Mineral Reserves include 3.20 Mt containing 26.9 Moz of silver and 164 koz of gold reported at a 134 g/t Ag Eq cut-off grade, in addition to Inferred Resources totaling 1.32 Mt containing 7.1 Moz of silver and 49 koz of gold reported at a 100 g/t Ag Eq cut-off grade, located in the Taviche Oeste concession and subject to a 2.5 % royalty
  7. EEric Chapman, P. Geo. (APEGBC #36328) is the Qualified Person for resources and Amri Sinuhaji (APEGBC #48305) is the Qualified Person for reserves, both being employees of Fortuna Silver Mines Inc.
  8. Totals may not add due to rounding procedures
Technical Report

Technical Report

Effective Date: February 22, 2019

Maps and Sections

Maps and Sections

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