april 2008 - Fortuna Silver Mines

APRIL 2008
Forward – Looking Statements
Certain statements in this presentation constitute forward-looking statements and as such are based on an assumed
set of economic conditions and courses of action. These include estimates of future production levels, expectations
regarding mine production costs, expected trends in mineral prices and statements that describe Fortuna’s future
plans, objectives or goals. There is a significant risk that actual results will vary, perhaps materially, from results
projected depending on such factors as 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 calculation of mineral reserves, mineral
resources, and metal recoveries, the timing and availability of financing, governmental and other approvals, political
unrest or instability in countries where Fortuna is active, labor relations and other risk factors.
Qualified Persons
Mr. Gregory Smith, M.Sc. P.Geo., exploration consultant, is the Qualified Person for Fortuna, as defined by National
Instrument 43-101. Mr. Smith was also responsible for ensuring that the information contained in this presentation is an
accurate summary of the original reports provided to Fortuna.
The 43-101Technical Report
for the San Jose project resource estimate was co-authored by Michael
Hester, FAusIMM, of Independent Mining Consultants, Inc. and Gerry Ray, Qualified Person.
Mr. Robert Sandefur, P.E of Chlumsky, Armbrust and Meyer, is the Qualified Person, as defined by National Instrument
43-101, and is the responsible person for the resource and reserve estimation for the Caylloma mine.
2
Location
Strategically
established in the
two largest silver
producing
countries in the
world
3
Highlights
Animas Vein-- Mechanized underground production
•
Silver - base metal producer, profitable at the
operating company level
•
Operating one mine and developing a second
•
Once San Jose starts operations, we are
targeting 5.5 M oz Ag Eq. of annual metal
production
•
Fully funded- US $46 M cash
•
Estimated 2007 gross revenue- US $30 M
•
Estimated 2007 EBITDA- US $13 -14 M
•
Mandate to acquire advanced exploration
projects / producing mid – size mines in Latin
America
•
Focused on building a Mid - Tier silver mining
company
4
Creating Value
•
•
•
Current Production
–
Caylloma Mine, Peru (100% ownership)
–
Profitable Ag + Pb - Zn mining operation
–
800 tpd
–
Mining district-scale exploration potential
Advanced Exploration & Development
–
San Jose Project, Mexico (76% ownership)
–
17.7 M oz Ag Eq. (Measured & Indicated = 1.4 M
tonnes at 263 g/t Ag + 2.2 g/t Au)
–
49 M oz Ag Eq. (Inferred = 3.9 M tonnes at 261 g/t Ag
+ 2.6 g/t Au)
–
Engineering, Design and Development programs
Project Pipeline
–
Over 70,000 hectares of exploration ground
–
Aggressively exploring new targets
5
Financial and Operating Highlights
Operating Income Less Stock Based
Compensation Charge
10,000
8,000
6,000
4,000
2,000
0
4,000,000
2,000,000
US$
US$ (000)
Revenue
4Q06
1Q07
2Q07
0
-2,000,000
3Q07
Quarter
-4,000,000
Base Metal Production
1Q07
2Q07
3Q07
Quarter
Silver Production
2,000
150,000
1,500
1,000
Zinc
500
Lead
0
4Q06
1Q07
2Q07
Quarter
3Q07
Ounces
Tonnes
4Q06
100,000
50,000
0
4Q06
1Q07
2Q07
3Q07
Quarter
6
Attributable Reserves and Resources (NI 43-101 Compliant)
MINE / PROJECT
PROV. / PROB.
RESERVES
MEAS. / IND.
RESOURCES
INFERRED
RESOURCES
Caylloma Mine
(Ag)
5.0 M
5.4 M
13.8 M
13.4 M
37.3 M
18.9 M
51.1 M
San Jose Project
(Ag Eq.)
Total
(Ag + Ag Eq.)
5.0 M
Note: All figures (oz) are contained metal and represent Fortuna´s interest. San Jose reports Ag Eq. ounces with a Ag : Au ratio = 51:1
7
San Jose Project - Mexico
San Jose Project, Oaxaca
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Highlights
•
Expected plant throughput- 1,500 to 2,000 tpd
•
High grade silver-gold mining district
•
Exploration upside in greater land package
•
2006 / 2007- 40,000 meters drilled
•
2008 Exploration, Engineering and Development
budget- US $23 M
•
Scoping Study & Pre-Feasibility Study- AMEC
•
Environmental Impact Study- Clifton Associates
•
Hydrogeologic Study- Water Management
Consultants
•
Underground Development- JOMARGO
SJO-051: 16m @ 1483 g/t Ag + 14.6 g/t Au
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NI 43-101 Resource Estimate
Category
Tonnes
Ag
(g/t)
Au
(g/t)
Ag (oz)
Contained
Au (oz)
Contained
Grade Ag Eq.
(g/t)
Ag Eq. (oz)
Contained
Indicated
1.5 M
263
2.2
12 M
0.1 M
374
17.7 M
Inferred
3.9 M
261
2.6
33 M
0.32 M
392
49 M
Note: NI 43-101 Resource Estimate, March 31st, 2007, based on a cutoff grade of 150 g / t Ag Eq. Ag-Au equivalency at 51:1
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Timeline
•
Updated resource estimation- Q2 2008
•
Pre-Feasibility Study- Q4 2008
•
Environmental Impact Study- Q4 2008
•
Mine construction- Q1 2009
•
Expected commercial production- Q1 2010
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Concessions
12
2007 Drill Program Results
Open at depth
13
Trinidad Zone Drill Highlights
DDH
OCW-001
SJO-003
SJO-018
SJO-051
SJO-054
SJO-060
SJO-084
SJO-108
Interval (m)
25.60
29.40
16.70
24.25
104.80
25.10
7.95
18.2
Ag g/t
436
508
525
892
283
588
487
503
Au g/t
3.3
5.3
6.2
10.1
2.5
10.9
9.4
4.9
Ag Eq. g/t
602
776
840
1407
410
1141
965
752
Au g/t
2.4
2.2
2.5
3.4
8.5
3.4
6.3
Ag Eq. g/t
297
546
354
418
1299
567
433
San Ignacio Zone Drill Highlights
DDH
SJO-023
SJO-024
SJO-026
SJO-027
SJO-036
Interval (m)
12.75
4.25
1.25
3.00
1.80
1.20
1.02
Ag g/t
180
433
225
244
868
395
112
14
Trinidad Mine
Good rock conditions and broad widths of mineralization favour bulk mechanised underground
mining methods
15
Caylloma Mine - Peru
•
100% owned operating mine
•
Estimated 2007 Gross Revenue- US $30 M
•
Estimated 2007 EBITDA- US $13 - 14 M
•
Commercialization of Ag + Pb - Zn concentrates
•
Currently operating at 800 tpd
•
Targeting increase capacity to 1,200 tpd
Caylloma Mine, Peru
16
Growth
•
Q2 2008- New crushing circuit
•
Q3 2008- Increase throughput to 950 tpd
•
New paste plant to increase tailings capacity
•
Mechanized underground production
•
Exploration, Development, Plant
Improvement and Tailing
Disposal budget for 2008 = US $10 M
17
Exploration Potential
Mining camp at 4,500 meters above sea level
•
26,700 hectare land package
•
30 known veins
•
Current production from Animas Vein
Drill rig at 5,100 meters above sea level
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Management / Board of Directors
•
Simon Ridgway - Explorationist
Chairman of the Board
•
Jorge Ganoza Durant - Geological Engineer
President and Director
•
Thomas Vehrs - PhD Geology
VP Geology and Exploration
•
Jorge Ganoza Aicardi - Engineer
VP Operations
•
Mark Moseley-Williams – Mine Engineer, MBA
VP Project Development
•
Manuel Ruiz-Conejo, Mine Engineer
VP Business Development
•
Luis Ganoza Durant - Mine Engineer, MSc. Finance
CFO
•
Tomas Guerrero - Geological Engineer
Director
•
Buck Morrow - Mine Engineer
Director
•
Mike Iverson
Director
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Share Structure
•
Shares Issued
85.3 M
•
Warrants (July 9.7 M expire)
12.2 M
•
Options
6.9 M
•
Fully Diluted
104.4 M
•
Cash
US $46 M
•
Potential cash from Warrants
and Options
CAD $39.9 M
Long term debt
Zero
•
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Share Price March 2007 - March 2008
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Summary
•
Development of existing assets will position Fortuna as a Mid - Tier silver producer
•
Mandate to acquire advanced exploration projects / producing mid-size mines in
Latin America
•
Fully funded to accomplish its 2008 objectives at San Jose and Caylloma
•
Targeting 5.5 M oz Ag Eq. in annual metal production from existing assets
•
Management has unique experience in Exploration, Mine Operations and Project
Financing in Latin America
Fortuna is on track to deliver growth
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