7
BUILDING ON OUR STRENGTHS
Dear Shareholders,
Our discovery and ongoing expansion of
the high-grade Trinidad North zone at our
San Jose Mine in Mexico was the highlight
of 2013. Indeed, there is nothing like the
discovery of a robust mineralized system
to energize a mining organization and
capture the attention and imagination of
shareholders and mining analysts.
I am pleased to report that our exploration success
was underpinned by yet another year of solid
operational and financial performance despite
persistent challenging market conditions. Precious
metal prices continued to decline in 2013 after
peaking in mid-2011. Our average realized price per
ounce was $23.49 for silver and $1,394.91 for gold,
24% and 15% lower respectively compared with 2012.
2013 was a trying year for the entire mining industry.
A lower metal-price environment required many
companies to implement significant changes. In the
process, we have seen personnel layoffs, lower
exploration and capital spending, reductions in
reserve estimates and balance sheet adjustments
from asset impairment charges. Fortuna was not
immune to the impact of lower metal prices.
However, I am pleased to report that we have
adjusted to this new environment and we are well
positioned to generate sustainable free cash flow
and continue thriving in the years to come.
Expanding resources at San Jose
Silver reserves increased by 12% and gold by 16%,
after taking into consideration production-related
depletion and an 18% decline in silver prices since
the previous reserve estimate. Reserves now stand
at 23 million ounces of silver and 197,000 ounces
of gold.
In the inferred resource category, estimated
contained silver increased by 39% to 35 million
ounces and gold by 26% to 271,000 ounces.
Importantly, the inferred resource includes only that
portion of Trinidad North explored during the first six
months of drilling. Nevertheless, the higher grades of
Trinidad North added significantly to the resource,
contributing an estimated 16.3 million ounces of
silver (47%) and 101,000 ounces of gold (38%), at a
70 g/t silver equivalent cutoff.
Jorge A. Ganoza – President, CEO and Co-founder
Ceo’s letter
