40
FORTUNA SILVER MINES INC. | 2014 ANNUAL REPORT
An Infill drilling program of 9,500 meters for the upgrading of Inferred Resources into Measured or Indicated Resources
is budgeted for the Caylloma Mine. The cost of the infill drilling program is budgeted at $0.83 million.
Caylloma Mine and San Jose Mine Concentrates
The table below shows the production and balance of commercial end-products at each of our operating mines.
QUARTERLY RESULTS
YEAR TO DATE RESULTS
Three months ended Decmber 31,
Years ended December 31,
2014
2013
2014
2013
Mine Concentrates
Caylloma
San Jose
Caylloma
San Jose
Caylloma
San Jose
Caylloma
San Jose
Silver-Gold
Opening Inventory (t)
–
198
–
433
–
617
–
466
Production (t)
– 5,081
–
4,580
– 20,014
– 13,152
Sales (t)
– 4,952
–
4,282
– 20,303
– 12,888
Adjustment (t)
–
–
–
(114)
–
1
–
(114)
Closing Inventory (t)
–
327
–
617
–
329
–
617
Zinc
Opening Inventory (t)
408
–
355
–
485
–
521
–
Production (t)
6,288
– 5,966
– 24,410
– 22,333
–
Sales (t)
6,256
– 5,843
– 24,501
– 22,384
–
Adjustment (t)
24
–
7
–
70
–
16
–
Closing Inventory (t)
464
–
485
–
464
–
485
–
Lead-Silver
Opening Inventory (t)
287
–
198
–
208
–
443
–
Production (t)
3,600
– 3,386
– 14,318
– 15,762
–
Sales (t)
3,689
– 3,406
– 14,411
– 16,094
–
Adjustment (t)
21
–
29
–
105
–
97
–
Closing Inventory (t)
220
–
208
–
220
–
208
–
Property Option Agreements
Tlacolula Property
Pursuant to an agreement dated September 14, 2009, as amended December 18, 2012 and November 10, 2014, the
Company, through its wholly owned subsidiary Cuzcatlan, holds an option (the “option”) to acquire a 60% interest (the
“interest”) in the Tlacolula silver project (the “property”) located in the State of Oaxaca, Mexico, from Radius Gold Inc.’s
wholly owned subsidiary, Radius (Cayman) Inc. (“Radius”).
The Company can earn the interest by spending $2.0 million, which includes a commitment to drill 1,500 meters within
12 months after Cuzcatlan has received a permit to drill the property, and by making staged payments totaling $0.30
million cash and providing $0.25 million in common shares of the Company to Radius according to the following schedule:
• $0.02 million cash and $0.02 million cash equivalent in shares upon stock exchange approval;
• $0.03 million cash and $0.03 million cash equivalent in shares by January 15, 2011;
• $0.05 million cash and $0.05 million cash equivalent in shares by January 15, 2012;
• $0.05 million cash and $0.05 million cash equivalent in shares by January 15, 2013;
• $0.05 million cash by January 19, 2015; and,
• $0.10 million cash and $0.10 million cash equivalent in shares within 90 days after Cuzcatlan has completed
the first 1,500 meters of drilling on the property.
Upon completion of the cash payments and share issuances and incurring the exploration expenditures as set forth
above, the Company will be deemed to have exercised the option and to have acquired a 60% interest in the property,
whereupon a joint venture will be formed to further develop the property on the basis of the Company owning 60% and
Radius 40%. Radius has the right to terminate the agreement if the option is not exercised by January 31, 2017.
As of December 31, 2014, the Company had issued an aggregate of 34,589 common shares, with a fair market value
of $0.15 million, and paid $0.15 million cash according to the terms of the option agreement. Subsequent to December
31, 2014, the Company paid $0.05 million under the option agreement.
