Mine Snapshot

Commodities	Silver, Zinc, Lead and Gold
Location	Arequipa, Peru (Latitude: 15° 13" S, Longitude: 71° 49" W)
Deposit Type	Intermediate-sulfidation epithermal deposit
Status	Mine and processing plant in operation at over 1,000 tpd level; exploration activities include testing of high grade bonanza type silver veins and base metal targets within the Caylloma Mining District

Overview
The silver- and base metal-rich epithermal deposits of the Caylloma Mining District of southern Peru have been worked intermittently since the start of the Spanish colonial period. Located within one of the more important metallogenic provinces of the Andes, past production is estimated at over 200 million of ounces of silver. Fortuna Silver, through its wholly owned Peruvian subsidiary, Minera Bateas S.A.C., controls over 12,000 hectares encompassing the Caylloma Mining District and the nearby Sukuytambo District.

Fortuna Silver purchased a 100% interest in the Caylloma Mine and related mining concessions in 2005 and returned the mine to production in October of 2006 following a significant upgrading and modernization of the ore processing plant. The mine and processing plant are currently operating at a rate of over 1,000 tpd. Lead+silver and zinc concentrates are delivered on a weekly basis to port facilities in Callao for sale in the international markets. Production is currently sourced from the base metal-silver rich Animas vein. Exploration of the Caylloma District is ongoing and upgrading and expansion of the existing reserve and resource base is anticipated.

Fortuna Silver is committed to the responsible development of the Caylloma Mine while working to assure the safeguarding of the environment, the safety and welfare of the work force and through fostering of sustainable development activities in nearby communities.


Location
The Caylloma Mine is located 225 road kilometers or approximately 4 hour driving time northwest of Arequipa, Peru in mountainous highlands at an elevation of 4500 meters above sea level. The mine, processing plant and related infrastructure are located in the Caylloma Mining District, 14 kilometers northwest of the town of Caylloma. The mine is connected to the national power grid and water is locally available.

Mineral Reserves Estimate

(see Resource Tables)

PROVEN

Vein	Tonnes	Ag g/t	Au g/t	Pb %	Zn %	Contained Ag oz.
San Cristobal	145,851	422	0.3	0.0	0.0	1,980,562
San Pedro	52,102	407	1.0	0.0	0.0	682,646
San Carlos	5,392	622	0.2	0.3	0.7	107,751
La Plata	8,537	478	2.1	0.2	0.1	131,184
Cimoide (La Plata)	30,269	575	3.4	0.0	0.1	560,075
Paralela	11,200	592	0.1	0.0	0.0	213,294
Total Proven Reserves	253,351	451	0.9	0.0	0.0	3,675,513

PROBABLE

Vein	Tonnes	Ag g/t	Au g/t	Pb %	Zn %	Contained Ag oz.
San Cristobal	35,989	507	0.4	0.2	0.3	586,410
San Pedro	33,650	340	0.9	0.0	0.1	368,157
San Carlos	7,921	656	0.1	0.3	0.7	167,020
La Plata	1,954	720	4.1	0.1	0.1	45,213
Cimoide (La Plata)	5,691	414	3.0	0.0	0.1	75,814
Paralela	4,491	688	0.0	0.1	0.2	99,339
Total Probable Reserves	89,695	465	0.8	0.1	0.2	1,341,953

TOTAL	Tonnes	Ag g/t	Au g/t	Pb %	Zn %	Contained Ag oz.
Proven + Probable	343,046	454	0.8	0.1	0.1	5,017,466

To estimate mining recovery, it has been assumed that a 3 meter high support sill occurs at every 50 meter level (± 6 % reduction in reserve tonnage).

Mineral Resources Estimate

MEASURED AND INDICATED

Classification	Tonnes	Ag g/t	Au g/t	Pb %	Zn %	Contained Ag oz.
Measured	484,540	152	0.8	2.3	4.2	2,388,782
Indicated	688,786	137	0.5	2.3	4.2	3,037,544
Measured + Indicated	1,173,326	143	0.7	2.3	4.2	5,426,326

INFERRED

Vein	Tonnes	Ag g/t	Au g/t	Pb %	Zn %	Contained Ag oz.
San Cristobal	135,513	407	0.2	0.3	0.4	1,771,635
San Pedro	92,896	369	0.2	0.7	1.4	1,100,000
San Carlos	16,626	766	0.2	0.5	1.2	409,654
La Plata	40,540	663	2.5	0.2	0.7	863,893
Cimoide (La Plata)	7,326	231	2.0	0.0	0.1	54,330
Paralela	52,473	563	0.0	0.2	0.3	950,452
Ramal Paralela	90,094	362	0.1	0.3	0.7	1,049,011
Animas	980,032	243	0.5	2.7	4.2	7,626,114
Total Inferred	1,415,499	305	0.4	2.0	3.1	13,825,919

Technical Report for Caylloma Project: October 3, 2006

Geology and Mineralization
The silver-base metal rich epithermal vein deposits of the Caylloma Mining District are hosted by Tertiary calc-alkaline andesitic pyroclastic tuffs and tuff breccias, flows and laharic deposits that unconformably overlie a folded marine sequence of quartzite, shale and limestone of the Jurassic Yura Group. More than 15 major mineralized veins have been identified within the district with the veins typically trending northeasterly and dipping moderately to steeply to the southeast or northwest.

The veins range from 1 to 25 meters in width and range up to 4 kilometers in length. Ore grade shoots are generally subvertical in orientation within the plane of the vein, having lengths of tens to hundreds of meters and extending to more than 300 meters in a downdip direction. Principal ore minerals include sphalerite, galena, chalcopyrite and tetrahedrite with subordinate polybasite, stephanite, argentite, native silver, pyrargyrite, miargyrite, chalcocite, native gold, and other Pb and Ag sulfosalts. Principal gangue minerals are quartz, manganese-rich silicates (dominantly rhodonite), rhodocrosite, and calcite with variable quantities of adularia, illite and barite present locally (Echavarria et al, 2006)
 
Maps and Sections

Click here for the maps in PDF format (2.51mb)

	Soledad & Silvia (Level 8) Sample Map
	Bateas Vein - Plan Map
	District Geologic Map
	Bateas Vein - Longitudinal Section