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FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
San Jose Mine Review
San Jose is an underground silver-gold mine located in southern Mexico in the State of Oaxaca. The table below shows
the main variables used by management to measure the operating performance of the mine: throughput, grade, recovery,
gold and silver production, and unit costs.
QUARTERLY RESULTS
YEAR TO DATE RESULTS
Three Months ended December 31,
Years ended December 31,
2014
2013
2014
2013
Mine Production
San Jose
San Jose
San Jose
San Jose
Tonnes milled
181,702
158,218
676,959
456,048
Average tonnes milled per day
2,019
1,741
1,928
1,296
Silver
Grade (g/t)
208
202
226
194
Recovery (%)
89
89
89
89
Production (oz)
1,083,215
917,668
4,396,760
2,527,203
Gold
Grade (g/t)
1.65
1.42
1.72
1.46
Recovery (%)
89
89
90
89
Production (oz)
8,561
6,420
33,496
19,031
Unit Costs
Production cash cost (US$/oz Ag)*
4.13
5.55
3.52
6.53
Production cash cost (US$/tonne)
60.41
63.38
62.99
71.41
Unit Net Smelter Return (US$/tonne)
129.12
147.76
157.55
160.76
All-in sustaining cash cost (US$oz/Ag)*
9.42
10.78
12.07
15.89
* Net of by-product credits from gold
Production for the year ended December 31, 2014 was 4,396,760 ounces of silver and 33,496 ounces of gold, 74%
and 76%, respectively, above the prior year’s production. The increases are the result of higher throughput of 48% and
of higher head grade for silver and gold of 17%. The San Jose Mine and processing plant were expanded to 2,000 tpd
in April 2014 (see Fortuna news release of April 14, 2014). Compared to guidance for the year, silver and gold production
were 10% and 9% higher, respectively.
Cash cost per tonne of processed ore for the year ended December 31, 2014 was $62.99/t, or 12% below the cost in
the prior year due mainly to higher throughput, a 4% devaluation of the peso, and lower mining cost related to support
and preparation, and below the annual guidance of $67.10/t. All-in sustaining cash cost per payable ounce of silver, net
of by-product credits, was $12.07 for the year ended December 31, 2014 (refer to non-GAAP financial measures), below
the annual guidance of $14.43.
Investments in property, plant and equipment and brownfields exploration, on a cash basis, were $29.0 million for the
year ended December 31, 2014, and included $4.8 million for mine development, $1.4 million for infill drilling, $6.0
million for brownfields exploration, and $16.8 million for equipment and infrastructure, including $12.3 million for tailings
dam expansion and evaporation control.
In light of the significant growth of resources over 2013 (see Fortuna news release dated September, 2014) the Company
has made the decision to proceed with mill expansion from 2,000 to 3,000 tonnes per day and the construction of a
filter facility and dry stack tailings deposit.
Cash cost per payable ounce of silver and cash cost per tonne of processed ore are non-GAAP financial measures (refer
to non-GAAP financial measures for the reconciliation of cash cost to the cost of sales).
On January 21, 2015, the Company announced results for step-out drilling of the Trinidad North zone at the San Jose
Mine in Oaxaca. Results are included for twenty-three drill holes completed subsequent to the Mineral Resource and
Mineral Reserve estimates reported as of June 30, 2014 (see Fortuna news releases dated August 27, 2014 and
September 30, 2014). The new drill results confirm that the Bonanza and Trinidad veins and the structurally and spatially
related Trinidad North Stockwork Zone all remain open to the north and to depth along the strike and plunge of the ore
shoots. See Fortuna news release dated January 21, 2015.
On March 10, 2015, the Company announced the updated Mineral Reserve and Mineral Resource estimate as of
December 31, 2014 for the San Jose Mine located in Oaxaca, Mexico. See Fortuna news release dated March 10, 2015.
