Fortuna Silver achieves production milestone

Fortuna Silver Mines Inc. [FVI-TSX; FSM-NYSE] said Friday September 13 that it has started pre-production mining at its 100%-owned Lindero gold project in Argentina.

Initial blasting on mineral reserves commenced in early September (2019) and the company said it is planning to build stockpiles of reserves ahead of stacking on the leach pad.

“The start of pre-production mining is one of the important milestones of the project as we go into the final stretch of construction,” said Fortuna President and CEO Jorge Ganoza.

“The Lindero mineralized body presents us with important economic benefits that can be captured right from the start of mining,” he said. “There is no pre-stripping required and high-grade gold mineral reserves will be accessed with a low strip ratio below one in the first year.”

In its first full year in operation, Lindero is expected to produce between 145,000 and 160,000 ounces of gold.

Fortuna is a fast-growing precious metals producer. It already operates two low-cost mines in Peru and Mexico.

The San Jose Mine in Mexico is located in Oaxaca State. It produced 8.0 million ounces of silver and 53,517 ounces of gold in 2018. The Caylloma Mine in Peru, produced 911,309 ounces of silver in 2018.

This year, the company is forecasting consolidated production of up to 9.0 million ounces of silver, up to 54,000 ounces of gold, up to 29 million bounds of lead, and up to 44 million pounds of zinc.

Lindero will be the company’s third mine, and the first in Argentina.

The project is a gold-rich porphyry system located in the Argentinian puna at an elevation of approximately 3,500 to 4,000 metres and 260 km west of Salta City. It takes about 7.5 hours to drive over a road distance of 420 km to the mine city from Salta City.

Lindero is an open pit, heap leach gold project with a completed feasibility study that has received all environmental and other major permits necessary for development. It has been designed as an 18,750 tonne-per-day owner-operated open pit mine with a pit life of 13 years, based on existing reserves.

Power will be generated on site, through an eight megawatt power plant, operated by a local contractor. More than 1,000 people are currently working on construction at the mine site.

For the first year of commercial production, Lindero’s mine plan has been optimized so that the operation will benefit from mining the higher grade mineralization out-cropping that was identified through infill drilling completed in 2018.

The feasibility study is based on a measured and indicated resource of 18.9 million tonnes, grading 0.50 g/t gold, 0.11% copper or 302,000 ounces of contained gold. On top of that is an inferred resource of 8.6 million tonnes, grading 0.38 g/t gold and 0.10% copper, or 106,000 ounces of contained gold. Proven and probable reserves stand at 1.7 million ounces gold.

Lindero remains on track with placement of mineral reserves on the leach pad scheduled for the fourth quarter of 2019 and the first doré bar planned for the first quarter of 2020.

As a result, Fortuna’s consolidated precious metals annual production is forecast in 2020 at between 7.5 million and 8.3 million ounces of silver and between 189,000 to 209,000 ounces of gold. That amounts to between 293,000 to 324,000 ounces of gold equivalent, the company said.

The overall project is 70% complete, and has provided employment for a work force of 2,350 people so far. The operational permits for the explosives magazine and the explosive delivery trucks were received in August, 2019.

All mine equipment is on site and is fully operational.

On Friday, Fortuna shares eased 0.21% or $0.01 to $4.58. The shares are trading in a 52-week range of $3.22 and $6.12.