FoRtunA SIlVeR MIneS InC. | 2012 AnnuAl RepoRt
mitigate industry cost pressures. We are offering competitive retention plans for key positions,
we’ve reduced the number of mine contractors we employ and we’ve begun using lower-cost
ammonium nitrate explosives.
For 2013, we forecast that cash costs per tonne at San Jose will decrease by about 5 %
following the mill expansion. At Caylloma, we expect cash costs per tonne to increase by
approximately 10 %. Capital expenditures, meanwhile, are expected to begin to decline, as
Fortuna emerges from a period of intense capital expenditure activity that began with the
construction of the San Jose Mine in 2010. Capital expenditures in 2012 at both mines were
uS$31.1 million. For 2013, our capital budget is uS$52 million, which includes the San Jose
expansion and three one-time infrastructure projects at Caylloma.
Starting in 2014, we expect annual capital requirements at Caylloma and San Jose to drop
closer to sustainable levels of approximately uS$20 million to uS$25 million. Fortuna is
positioned to self-fund all foreseeable capital expenditures.
Brownfields exploration
In addition to the ever-increasing production at both of our mines, since 2005, we have been
steadily building Fortuna’s reserve and resource base. today, we project a mine life beyond
eight years at both operations, based on reserves of approximately 50 million silver
equivalent ounces.
In 2012, we continued to capitalize on brownfields exploration opportunities, completing more
than 40,000 meters of diamond drilling in an exploration program totaling uS$13 million. the
highlight of this program was the discovery at San Jose of a wide, high-grade extension of the
trinidad-Bonanza ore shoot, trinidad north. this mineralization is open to the north and at
depth, offering the opportunity to add high-grade resources in the immediate area of the mine.
For 2013, our uS$14 million budget for brownfields exploration includes over 50,000 meters
of diamond drilling. At San Jose and Caylloma our exploration teams will pursue new zones
with aggressive drill programs throughout the year.
Project pipeline
In August 2012, Robert Brown joined Fortuna, assuming the newly created position of Vice
president of Corporate Development. With more than 20 years of industry experience, he will
play a key role in implementing our growth strategy. our goal is to acquire attractive pre-
development stage silver-gold projects in the Americas that will add low-cost production,
enabling us to reach our objective of producing at an annual rate of 14 million silver
equivalent ounces in 2016. We will, as always, follow a disciplined approach, favoring peru
and Mexico, countries where we have well-established presence and infrastructure.
With annual production forecast to grow 9 % to 5.7 million silver equivalent ounces in 2013,
a commanding land position of more than 95,000 hectares and re-energized merger and
acquisition efforts, we are well equipped to reach our goal through organic growth and
acquisitions.
5
We continue to work
collaboratively with
communities in
Mexico and peru to
establish programs
that will benefit the
local population and
protect and preserve
the environment.
“Fortuna supported us in the building of water reservoirs, which has improved the
quality and quantity of our harvest. Both of our sons are employed by the mine.”
Epifanio Gonzalez Ramirez and Carlos Gonzalez Ramirez
San Jose del Progreso farmers, Oaxaca, Mexico
