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FORTUNA SILVER MINES INC. | 2013 ANNUAL REPORT
Mineralization in Trinidad North remains wide open
and we continue to pursue it to the north, at depth
and for 300 meters toward surface above level
1200. The importance of the discovery is twofold.
First, it is located adjacent to San Jose’s underground
workings and plant infrastructure, making the resource
low risk in terms of capital cost, permitting and time
to production.
Second, it highlights the tremendous long-term
exploration potential of our contiguous 64,400
hectare mineral concession package at San Jose.
All of our reserves and resources at San Jose lie
within two sub-parallel vein systems, Bonanza and
Trinidad Veins. Based on evidence of additional veins
and gold anomalies throughout our land package, we
have excellent opportunities for more high-grade
silver-gold discoveries.
In 2014, we will continue to explore Trinidad North
starting with a 16,000-meter step-out drilling program.
We expect to update the resource estimate in the
second half of the year.
Sustaining organic growth
Our consolidated mine production for 2013 was 4.6
million ounces of silver and 21,242 ounces of gold,
3% above guidance for silver and 10% below for gold.
Silver accounted for 65% of sales and gold for 14%.
Guidance for 2014 is for silver production to rise by
30% to 6 million ounces and gold by 52% to 32,300
ounces. The increases are due to our recent mill
expansion at San Jose. Completed on time and on
budget in September 2013, we increased throughput
capacity by 57%, from 1,150 to 1,800 tonnes per
day (tpd), just two years after starting commercial
operations at 1,000 tpd.
During the 2013 expansion project, we identified
and captured opportunities for additional capacity
that led to a further mill expansion to 2,000 tpd,
which we completed in early April 2014.
The pace of discovery at Trinidad North and the
growing resource and reserve base at San Jose
suggest the potential for still higher production. In
2014, we will therefore assess the technical and
financial viability of an expansion to 3,000 tpd.
At the Caylloma Mine, production in 2014 is
scheduled to remain steady at 2 million ounces of
silver, plus 10,000 tonnes of zinc and 7,500 tonnes
of lead. In 2013, we recorded a year-over-year silver
reserve reduction of 24% to 14 million ounces, after
depletion. The main drivers were lower silver prices
and a 9% increase in the breakeven cutoff cost to
$87 per tonne. The silver grade in reserves
The pace of discovery at
Trinidad North and the growing
resource and reserve base at
San Jose suggest the potential
for still higher production.
CEO’S LETTER
