8
FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
Investments will further reduce costs
Our all-in sustaining cash cost (AISCC) in 2014 was
$14.48 per silver ounce, net of by-product credits,
or 18% below our annual guidance of $17.14. We
continued to improve productivity and to reduce
costs by increasing mill throughput, reducing head
count, optimizing mine plans and prioritizing
exploration, among other initiatives. For example,
tonnes produced per man-hour, a standard industry
measure of productivity, increased to 0.24 tonnes,
or 35%, compared with 2013.
We expect our consolidated AISCC to continue to
decline, reaching about $10 per silver ounce when
the San Jose expansion is completed. For 2015, our
AISCC guidance is $16.61. This figure includes
approximately $4 in capital costs for large sustaining
projects that we are bringing forward to support the
San Jose expansion.
We invested $40 million in capital projects and
brownfields exploration in 2014. For 2015, our
capital budget is $70.5 million, which includes the
following primary investments:
• conversion of the tailings management system
at San Jose to filters and dry stacking for
$28.5 million,
• expansion of the San Jose plant for $12.6 million
of the $28 million total cost of the project,
• optimization of the Caylloma plant for $4 million,
and
• brownfields exploration in Mexico and Peru for
$4 million.
Capital expenditures fully funded
We believe that we are disciplined stewards of
capital. During the roaring upswing in the recent
commodity cycle, we focused on maintaining sound
business principles, generating organic growth and
ensuring prudent capital management. Today, in an
environment where deep value opportunities typically
start to emerge, that focus allows us to look for
growth opportunities from a position of strength.
Our focus must be placed on
human ca tal, set selection,
ca tal alloc ion, d covery, c t
control and r k management,
among her manageable pects
of r bu ness.
