Fortuna Silver Mines Inc. (NYSE:FSM) (TSX:FVI) is
pleased to provide an update on construction activities at its 100
% owned Lindero gold Project located in Salta, Argentina.
Jorge A. Ganoza, President, CEO and Director,
commented, “The start of construction activities for a new mine is
always an energizing event for an organization.” Mr. Ganoza
continued, “We are fully funded, key positions in the project team
are in place and the Company feels very welcome in the Province of
Salta.” Mr. Ganoza concluded, “We are looking forward to building
and commissioning on time and within budget the first modern large
scale precious metals mine in Salta.”
In September 2017, the Company announced a
positive construction decision for Lindero with commissioning
expected in the second quarter of 2019 (see Fortuna news release
dated September 21, 2017). Lindero has been designed as an
18,750 tpd1 owner operated open pit mine with a pit life of 13
years based on existing reserves. Crushed ore will be placed on a
leach pad with the pregnant solution pumped to SART2 and ADR3
plants prior to electrowining and refining where gold will be
poured to doré bars. The technical report of the Lindero Project is
available on the Company's website at
https://fortunasilver.com/site/assets/files/4098/lindero-project-technical-report-effective-date-31-oct-2017.pdf
With Lindero in its first year of full
production, Fortuna’s consolidated precious metals annual
production is expected to increase to 190,000 ounces of gold and 9
million ounces of silver or 340,000 gold equivalent4 ounces.
Note:
- Tonnes per day
- Sulphidization-Acidification-Recycle-Thickening
- Adsorption, Desorption and Recovery
- Gold equivalent is calculated using a gold to silver ratio of 1
to 60 and does not include lead nor zinc
Project Update
In September 2017, the commencement of
construction at Lindero was officially launched. As of the end of
November, initial contracts have been awarded for approximately
US$14 million or 6 percent of the project´s capital
expenditure.
Detailed Engineering
Engineering, procurement, and construction
management (EPCM) was awarded in October 2017 to SAXUM Ingeniería,
an Argentinian company with international experience in
infrastructure and mining. Detailed engineering work has been
launched, procurement packages are being prepared and the bidding
process initiated.
Advanced basic engineering of the SART plant is
being completed by Kestrel Engineering, an American firm that will
work under the direction of Mr. Mike Botz, a qualified engineer
with extensive experience of the SART process.
The construction of the leach pad, a critical
path of the project, is in the bidding process. Mass earth moving
activities are scheduled to commence in February 2018 and are
estimated to conclude with the commissioning of the pad in March
2019. Detailed engineering and construction supervision has been
awarded to Anddes Argentina, a company specialized in geotechnical
engineering and leach pad design and construction.
Mine Equipment
Mine fleet and other heavy equipment are in the
process of being awarded. The principal components of the initial
mine fleet include six 100 ton trucks, two 17 cubic yard wheel
loaders, two bulldozers and two drill rigs.
The Company is evaluating a non-recourse vendor
financing of US$15 million for the purchase of mining
equipment.
Initial Site Activities
The project requires the upgrading of the
existing exploration camp in order to host the initial workforce
who will be responsible for building the temporary construction
camp. On site activities commenced in November and the temporary
facilities will be ready to host the inflow of construction
personnel in January 2018. The construction workforce who will
build the permanent facilities is estimated to gradually increase
and peak at 600 people. The permanent camp facilities will
accommodate 320 people.
The Company is in the process of obtaining
municipal approval from the town of Tolar Grande for the start of
construction activities on new infrastructure. Formal authorization
is expected in January 2018.
Project Funding and Financing
The estimated fully scoped capital cost for the
construction of Lindero is US$239 million. Capital expenditures are
estimated at US$200 million for 2018, and US$36.5 million for 2019;
amounts do not include VAT which is expected to be recovered in the
first 24 months from the start of mining operations.
The Company plans to fund the construction from
a combination of existing cash reserves, projected cash flow
generation and an upsized US$120 million credit facility.
Project Construction
Milestones
The Company is providing the following selected
milestones from the project construction schedule:
2018
- February: Start mass earthworks
- April: First concrete for permanent installations
- August: Start of equipment installation, including HPGR
tertiary crusher
- November: Construction of roads and platforms in preparation
for initiation of mining activities
2019
- January: Commissioning of power plant
- March: Placing of first ore on the leach pad
- May: First doré poured as part of commissioning
Construction updates will be provided on a
regular basis throughout the development of Lindero.
Qualified Person
Eric N. Chapman, Vice President of Technical
Services of Fortuna, is the Qualified Person for Fortuna Silver
Mines Inc. as defined by National Instrument 43-101. Mr. Chapman is
a Professional Geoscientist of the Association of Professional
Engineers and Geoscientists of the Province of British Columbia
(Registration Number 36328) and is responsible for ensuring that
the information contained in this news release is an accurate
summary of the original reports and data provided to or developed
by Fortuna Silver Mines.
About Fortuna
Silver Mines Inc.
Fortuna is a growth oriented, precious metal
producer with its primary assets being the Caylloma silver mine in
southern Peru, the San Jose silver-gold mine in Mexico and the
Lindero gold Project in Argentina. The company is selectively
pursuing acquisition opportunities throughout the Americas and in
select other areas. For more information, please visit its
website at www.fortunasilver.com.
ON BEHALF OF THE BOARD
Jorge A. Ganoza President, CEO and
DirectorFortuna Silver Mines Inc.
Trading symbols: NYSE: FSM | TSX: FVI
Investor Relations:
Carlos BacaT (Peru): +51.1.616.6060, ext. 0
Forward looking Statements
This news release contains forward looking
statements which constitute “forward looking information” within
the meaning of applicable Canadian securities legislation and
“forward looking statements” within the meaning of the “safe
harbor” provisions of the Private Securities Litigation Reform Act
of 1995 (collectively, “Forward looking Statements”). All
statements included herein, other than statements of historical
fact, are Forward looking Statements and are subject to a variety
of known and unknown risks and uncertainties which could cause
actual events or results to differ materially from those reflected
in the Forward looking Statements. The Forward looking Statements
in this news release may include, without limitation, statements
about the Company’s plans for its mines and mineral properties,
including the Lindero gold Project; the Company’s business
strategy, plans and outlook; the merit of the Company’s mines and
mineral properties; mineral resource and reserve estimates;
timelines; the future financial or operating performance of the
Company; expenditures; approvals and other matters. Often, but not
always, these Forward looking Statements can be identified by the
use of words such as “estimated”, “potential”, “open”, “future”,
“assumed”, “projected”, “used”, “detailed”, “has been”, “gain”,
“planned”, “reflecting”, “will”, “containing”, “remaining”,
“to be”, or statements that events, “could” or “should” occur or be
achieved and similar expressions, including negative
variations.
Forward looking Statements involve known and
unknown risks, uncertainties and other factors which may cause the
actual results, performance or achievements of the Company to be
materially different from any results, performance or achievements
expressed or implied by the Forward looking Statements. Such
uncertainties and factors include, among others, whether the
Company’s activities at the Lindero gold Project will proceed as
planned; changes in general economic conditions and financial
markets; changes in prices for silver and other metals;
technological and operational hazards in Fortuna’s mining and mine
development activities; risks inherent in mineral exploration;
uncertainties inherent in the estimation of mineral reserves,
mineral resources, and metal recoveries; governmental and other
approvals; political unrest or instability in countries where
Fortuna is active; labor relations issues; as well as those factors
discussed under “Risk Factors” in the Company's Annual Information
Form. Although the Company has attempted to identify important
factors that could cause actual actions, events or results to
differ materially from those described in Forward looking
Statements, there may be other factors that cause actions, events
or results to differ from those anticipated, estimated or
intended.
Forward looking Statements contained herein are
based on the assumptions, beliefs, expectations and opinions of
management, including but not limited to: that the Company’s
activities at the Lindero gold Project will proceed as planned;
expectations regarding mine production costs; expected trends in
mineral prices and currency exchange rates; the accuracy of the
Company’s current mineral resource and reserve estimates; that the
Company’s activities will be in accordance with the Company’s
public statements and stated goals; that there will be no material
adverse change affecting the Company or its properties; that all
required approvals will be obtained; that there will be no
significant disruptions affecting operations and such other
assumptions as set out herein. Forward looking Statements are made
as of the date hereof and the Company disclaims any obligation to
update any Forward looking Statements, whether as a result of new
information, future events or results or otherwise, except as
required by law. There can be no assurance that Forward looking
Statements will prove to be accurate, as actual results and future
events could differ materially from those anticipated in such
statements. Accordingly, investors should not place undue reliance
on Forward looking Statements.
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