Fortuna Silver Mines Inc. - QwikReport

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Caylloma Mine, Peru

Commodities	Silver, Zinc, Lead, Gold, Copper
Location	Arequipa, Peru (Latitude: 15° 13" S, Longitude: 71° 49" W)
Deposit Type	Intermediate-sulfidation epithermal deposit
Status	- Mine and processing plant operating at over 1,200 tpd - Conducting exploration activities for high-grade silver veins

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)

Category	Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Cu (%)	Width (m)
Proven Reserves	3,701,420	136	0.55	1.80	2.74	-	3.17
Probable Reserves	331,500	387	0.51	0.58	0.81	-	2.09
Proven + Probable Reserves	4,032,920	156	0.55	1.70	2.58	-	3.08

	Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Cu (%)	Width (m)
Measured Resources	247,070	63	0.31	1.19	2.23	0.11	1.69
Indicated Resources	20,400	71	0.29	1.00	1.40	0.15	2.74
Measured + Indicated Resources	267,470	64	0.31	1.18	2.17	0.11	1.77

Category	Tonnes	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Cu (%)	Width (m)
Inferred Resources	1,279,000	187	0.29	1.92	3.25	-	2.58

Caylloma NI 43-101 report Aug 11, 2009

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

	Don Luis II
	Silver Exploration Targets and Current Production Areas
	Animas Vein Longitudinal Section (NW), Level 6

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This page was created on Fri Sep 10, 2010 at 12:37:31 PM Pacific Time.