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FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
San Jose Mine expansion highlights include:
• Silver and gold production: Annual production rate ranging from 6.7 – 8.3 million ounces of silver and 52.0 - 56.7
thousand ounces of gold or 9.8 – 11.7 million silver equivalent* ounces
• Capital expenditure: $30 million
• Economics: 36% after-tax Internal Rate of Return (“IRR”)**; payback period of 2 years
• All-in sustaining cash cost (“AISCC”)**: Expansion will position San Jose´s AISCC in the range of $8 - 9/oz Ag, net
of by-product gold
* Silver equivalent production estimated using silver-to-gold ratio of 60:1
** After-tax IRR and AISCC estimated using a flat price of US$16/oz Ag and US$1,200/oz Au
3,000 tpd mill expansion
The capital cost estimate for the plant expansion to 3,000 tpd is $30 million. The budget for 2015 is $12.6 million with
the balance to be disbursed in 2016. The capital figures are based on a feasibility level capital estimate prepared by M3
Engineering, the same firm that carried out the EPCM for the on-time and on-budget construction of the processing plant
in 2011.
Direct capital costs of major items include:
Crushing:
$ 2.5 million
Grinding:
$ 8.1 million
Flotation:
$ 3.9 million
Concentrate filter:
$ 1.7 million
Power supply:
$ 1.0 million
Project activities are scheduled to commence in the first quarter of 2015 with commissioning planned for mid-2016.
The expansion project is permitted.
The mine is well ahead of production with a 2.8 year projection of developed reserves by the end of 2015; sufficient to
comfortably source 3,000 tpd. No major infrastructure projects are required at the mine.
Dry stack tailings deposit and plant facility
The San Jose Mine will be shifting from conventional slurry tailings disposal to dry stack tailings deposit. The capital
projection is $32 million based on basic engineering estimates prepared by M3 Engineering.
The project was initiated during the fourth quarter of 2014; $1.0 million has been spent to-date with the balance to be
expended in 2015. Purchase orders for filters and other major equipment have already been placed.
Direct capital costs of major items include:
Filtration:
$13.7 million
Dry stack tailings deposit earthwork and preparation: $ 2.3 million
Thickening:
$ 1.3 million
Backfill plant:
$ 1.4 million
Construction of the project started in February 2015. The layout of the project has been adjusted so as to allow
commencement of construction in parcels for which it has the necessary permits. Full completion of the project will
require regularization of the change in land use of a single outstanding parcel. Completion of the dry stack tailings deposit
is projected for the fourth quarter of 2015.
Caylloma Mine, Peru
Caylloma plans to process 464,100 tonnes averaging 175 g/t Ag. Twenty-one per cent of mill feed in the plan is estimated
to come from current inferred resource which are planned to be converted to measured and indicated categories during
the year. Capital expenditure for 2015 is estimated to be $14.0 million.
Major investments include:
Mine development:
$ 6.1 million
Plant optimization:
$ 4.3 million
Exploration:
$ 0.7 million
