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MANAGEMENT’S DISCUSSION AND ANALYSIS
DRIVING GROWTH FROM WITHIN
The 2015 Brownfields exploration program at San Jose includes 12,000 meters of exploration drilling to further test the
potential for extensions of the high-grade silver-gold mineralization identified at Trinidad North (see Fortuna news release
dated March 10, 2015, and January 21, 2015 for fourth quarter 2014 drill results).
An Infill drilling program of 9,200 meters for the upgrading of Inferred Resources into Measured or Indicated Resources
is budgeted for the San Jose Mine. The cost of the infill drilling program is $1.59 million (see Fortuna news release
dated March 10, 2015).
Caylloma Mine Review
Caylloma is an underground silver, lead, and zinc mine located in southern Peru, in the Arequipa Department. Its
commercial products are silver-lead and zinc concentrates. The table below shows the main variables used by
management to measure the operating performance of the mine.
QUARTERLY RESULTS
YEAR TO DATE RESULTS
Three Months ended December 31,
Years ended December 31,
2014
2013
2014
2013
Mine Production
Caylloma
Caylloma
Caylloma
Caylloma
Tonnes milled
117,060
116,127
464,823
458,560
Average tonnes milled per day
1,301
1,290
1,302
1,284
Silver
Grade (g/t)
173
174
174
173
Recovery (%)
84
83
85
82
Production (oz)
544,977
542,457
2,202,540
2,104,061
Gold
Grade (g/t)
0.27
0.38
0.31
0.36
Recovery (%)
33
44
40
42
Production (oz)
335
632
1,820
2,212
Lead
Grade (%)
1.70
1.59
1.70
1.92
Recovery (%)
93
93
93
91
Production (000’s lbs)
4,084
3,770
16,152
17,780
Zinc
Grade (%)
3.03
2.88
2.97
2.83
Recovery (%)
89
91
90
88
Production (000’s lbs)
6,986
6,676
27,361
25,211
Unit Costs
Production cash cost (US$/oz Ag)*
7.70
8.29
7.02
7.65
Production cash cost (US$/tonne)
91.60
90.49
90.57
91.22
Unit Net Smelter Return (US$/tonne)
130.13
145.51
144.57
161.19
All-in sustaining cash cost (US$oz/Ag)*
14.64
18.55
14.13
20.83
* Net of by-product credits from, gold, lead and zinc
Silver production for the year ended December 31, 2014 was 5% above production in the prior year due to higher
metallurgical recovery and slightly higher head grade. Zinc production increased 9% as a result of higher head grade and
higher metallurgical recoveries. Lead production decreased 9% because of reduced head grade. Caylloma met its annual
production guidance of 2.0 million ounces of silver.
Cash cost per tonne at Caylloma for the year ended December 31, 2014 was $90.57 per tonne of processed ore, a
decrease of 1% from the prior year and 3% above annual guidance. All-in sustaining cash cost per payable ounce of silver,
net of by-product credits, at Caylloma for the year ended December 31, 2014 was $14.13, below the annual guidance
of $17.01 (refer to non-GAAP financial measures).
Investments in property, plant and equipment and brownfields exploration, on a cash basis, were $9.9 million for the
year ended December 31, 2014, and included $5.1 million for mine development, $0.8 million for brownfields exploration,
and $4.0 million for equipment and infrastructure, including $0.8 million for tailings dam.
On March 10, 2015, the Company announced the updated Mineral Reserve and Mineral Resource estimate as of
December 31, 2014 for the Caylloma Mine located in Arequipa, Peru. See Fortuna news release dated March 10, 2015.
