Commodities

Commodities

Silver, gold, zinc, lead

Ownership

Ownership

100%

Land Package

Land Package

36,312 hectares

Operation

Operation

1,430 tpd underground operation

Deposit Type

Deposit Type

Intermediate sulphidation epithermal deposit

Mining Method

Mining Method

Overhand cut-and-fill

Highlights

  • 2018 silver production of 0.9 million ounces
  • 2018 lead and zinc production of 28.3 million pounds and 45.5 million pounds, respectively

The silver- and base metal-rich epithermal deposits of the Caylloma Mining District of southern Peru have been mined intermittently for over 500 years since the times of the Inca Empire. Located within one of the most important metallogenic provinces of the Andes, past production is estimated at more than 200 million ounces of silver.

Fortuna purchased a 100% interest in the Caylloma Mine and related mining concessions in 2005. Following significant expansion and modernization of the mill, the mine resumed production in the final quarter of 2006. The mill is currently operating at a rate of 1,430 tpd with production sourced primarily from the silver-polymetallic Animas Vein.

Location

Callyoma is located approximately 225 kilometers northwest of Arequipa, Peru at an elevation of 4,500 meters (Latitude: 15° 12' 15" S, Longitude: 71° 51' 40" W). The mine, processing plant and related infrastructure are located in the Caylloma Mining District, 14 kilometers northwest of the town of Caylloma. The mine is connected to the national power grid and water is locally available.

Geology and Mineralization

The silver-base metal rich epithermal vein deposits of the Caylloma Mining District are hosted by Tertiary calc-alkaline andesitic pyroclastic tuffs and tuff breccias, flows and laharic deposits that unconformably overlie a folded marine sequence of quartzite, shale and limestone of the Jurassic Yura Group. More than 15 major mineralized veins have been identified within the district with the veins typically trending northeasterly and dipping moderately to steeply to the southeast or northwest.

The veins range from 1 to 25 meters in width and range up to 4 kilometers in length. Ore grade shoots are generally subvertical in orientation within the plane of the vein, having lengths of tens to hundreds of meters and extending to more than 300 meters in a downdip direction. Principal ore minerals include sphalerite, galena, chalcopyrite and tetrahedrite with subordinate polybasite, stephanite, argentite, native silver, pyrargyrite, miargyrite, chalcocite, native gold, and other Pb and Ag sulfosalts. Principal gangue minerals are quartz, manganese-rich silicates (dominantly rhodonite), rhodocrosite, and calcite with variable quantities of adularia, illite and barite present locally (Echavarria et al, 2006)

2019 Production and Cost Guidance

Silver Production
(Moz)

0.9 - 1.0

Lead Production
(Mlbs)

26.1 - 28.8

Zinc Production
(Mlbs)

39.8 - 44.0

Cash Cost1
(US$/t)

80.0 - 88.4

AISC2
(US$/oz Ag Eq)

11.8 - 14.5

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

The Brownfields exploration program budget for 2019 at the Caylloma Mine is US$0.8 million. Work planned includes mapping and sampling on additional mineralized silver-base metal structures.

Reserves and Resources

Mineral Reserves - Proven and Probable

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Pb
(%)
Zn
(%)
Contained Metal
Ag
(Moz)
Au
(koz)
Caylloma Mine, Peru
Silver VeinsProven11,0420.580.180.320.00.0
 Probable924840.800.210.301.42.4
 Proven + Probable934910.790.210.301.52.4
Polymetallic VeinsProven148770.252.103.250.41.2
 Probable2,385610.152.193.854.711.6
 Proven + Probable2,533620.162.183.815.112.8
Combined-All VeinsProven149850.262.093.230.41.2
 Probable2,477770.182.123.716.113.9
 Proven + Probable2,626770.182.113.696.515.2

Mineral Resources - Measured and Indicated

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Pb
(%)
Zn
(%)
Contained Metal
Ag
(Moz)
Au
(koz)
Caylloma Mine, PeruMeasured524730.321.162.231.25.3
 Indicated1,633770.291.232.254.115.4
 Measured + Indicated2,157760.301.222.245.320.7

Mineral Resources - Inferred

PropertyClassificationTonnes
(000)
Ag
(g/t)
Au
(g/t)
Pb
(%)
Zn
(%)
Contained Metal
Ag
(Moz)
Au
(koz)
Caylloma Mine, PeruInferred5,3451020.322.403.8317.655.8

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 August 31, 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.: Caylloma Mine, Caylloma District, Peru” with an effective date of March 8, 2019 prepared by Eric Chapman, P.Geo. and Amri Sinuhaji, P.Eng
  6. Mineral Reserves for the Caylloma Mine are reported above NSR breakeven cut-off values based on the proposed mining method for extraction including; mechanized (breasting) at US$ 82.90/t; mechanized (enhanced) at US$ 70.30/t; semi-mechanized at US$ 93.10/t; and conventional at US$ 173.70/t using assumed metal prices of US$18.25/oz Ag, US$1,320/oz Au, US$2,270/t Pb and US$2,750/t Zn; metallurgical recovery rates of 84 % for Ag, 17 % for Au, 91 % for Pb and 90 % for Zn with the exception of high zinc oxide areas that use metallurgical recovery rates of 57 % for Ag, 17 % for Au, 57 % for Pb and 35 % for Zn; and the Ramal Piso Carolina vein that uses a metallurgical recovery rate of 75 % for Au. Mining, processing and administrative costs used to determine NSR cut-off values were estimated based on first half of 2018 actual operating costs. Mining recovery is estimated to average 92 % with mining dilution ranging from 10 % to 40 % depending on the mining methodology. Mineral Resources are reported based on estimated NSR values using the same metal prices and metallurgical recovery rates as detailed for Mineral Reserves; and an NSR cut-off grade based on mine to mill operational costs of US$50/t for veins classified as wide (Animas, Animas NE, Nancy, San Cristobal) and US$135/t for veins classified as narrow (all other veins)
  7. Eric 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: March 8, 2019

Maps and Sections

Maps and Sections

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