fortuna july13pres
TRANSCRIPT
July 2013
Regulatory Disclaimer
Certain statements in this presentation constitute forward‐looking statements and as suchare based on an assumed set of economic conditions and courses of action. These includeestimates 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 conditionsand financial markets, changes in prices for silver and other metals, technological andoperational hazards in Fortuna’s mining and mine development activities, risks inherent inmineral exploration, uncertainties inherent in the estimation of mineral reserves, mineralresources, and metal recoveries, the timing and availability of financing, governmental andother approvals, political unrest or instability in countries where Fortuna is active, laborrelations and other risk factors.
Thomas I. Vehrs, Ph.D., Vice President of Exploration, is the Qualified Person for FortunaSilver Mines Inc. as defined by National Instrument 43‐101. Dr. Vehrs is a FoundingRegistered Member of The Society for Mining, Metallurgy, and Exploration, Inc. (SMERegistered Member Number 3323430RM) and is responsible for ensuring that the technicalinformation contained in this presentation is an accurate summary of the original reportsand data provided to or developed by Fortuna Silver Mines Inc.
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Caylloma Mine, Peru
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VisionTo be valued by our workers, the community and our shareholders as a leading silver mining company in Latin America
Core Assets
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Proven mine builders and operators in the Americas
Production• San Jose Mine, Mexico• Caylloma Mine, Peru
Exploration• New Trinidad North discovery at San Jose Mine • 51,000 meter brownfields drill program in 2013 at San Jose and Caylloma
Key Milestones
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Foundations of a leading silver mining company
• Fortuna Silver Mines established
• Commenced production at Caylloma on time and on budget
• Acquired 100 % interest in San Jose project
• Construction and commercial production at San Jose Mine, on time and on budget
• Trinidad North discovery at San Jose Mine
• Commissioning of 1,800 tpd mill expansion at San Jose Mine in the third quarter
2005‐2007 2009‐2011 2013
Trinidad North Discovery – San Jose Mine
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Bonanza‐style Ag‐Au grades and widths
• Average grade and widths in excess of those found in the San Jose reserves and resources
• Close proximity to existing operation
• Open to depth and to north
Trinidad North Discovery – San Jose Mine
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Drill hole SJO‐283
556.20 – 569.20 m: 13.00 m averaging 1,789 g/t Ag, 10.10 g/t Au, 2,328 g/t Ag Eq
Trinidad North Discovery – San Jose Mine
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Northernmost drill holes – Section 1847400N
• Banded ore textures indicate episodicmineralizing events
• Consistently high‐grade over wide widths
• Robust mineralized system with strong potential for lateral and vertical extensions
• Vertical extension of Trinidad system exceeds 500 m ‐ open to depth
• Potential for discovery of additional mineralized shoots along strike to north
Trinidad North Discovery – San Jose Mine
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Drilling highlights
Hole_IdFrom To Interval Est. True Ag Au Ag Eq
(m) (m) (m) Width (m) (g/t) (g/t) (g/t)
SJO-261510.45 528.65 18.20 10.7 241 1.57 325
549.55 553.70 4.15 2.4 1,370 7.89 1,791
SJO-266
469.80 489.00 19.20 12.3 427 2.77 575
494.00 497.80 3.80 2.4 532 3.44 716
513.50 516.30 2.80 1.8 867 4.36 1,100
SJO-268 531.20 545.00 13.80 7.2 320 1.45 397
SJO-275 515.70 537.75 22.05 13.7 510 3.32 687
SJO-276 448.95 465.35 16.40 12.3 520 3.69 717
SJO-279 501.70 513.75 12.05 7.4 406 1.75 499
SJO-283 556.20 569.20 13.00 7.3 1,789 10.10 2,328
SJO-288551.85 591.10 39.25 19.3 736 4.76 990
596.70 602.80 6.10 3.0 529 4.69 779
SJO-295515.00 523.80 8.80 5.9 1,240 6.94 1,610
533.20 544.00 10.80 7.2 731 3.84 936
• Estimated true widths of up to 19 meters
• Ag Eq values range to 2.3 kg/t
• Initial NI 43‐101 resource estimation targeted forOctober 2013
• Exploration and infill drilling to continue throughout H2 2013 and 2014
• Initial production projected for Q1 2015
Ag Eq values calculated at Au:Ag ratio of 53.37 based on Au price of US$1572.19 and Ag price of US$29.46 and metallurgical recoveries of 89 % for both Au and Ag
‐40%‐30%‐20%‐10%0%10%20%30%40%50%60%70%
2.05
2.45
2.85
3.25
3.65
4.05
4.45
4.85
5.25
5.65
6/29/2012
7/29/2012
8/28/2012
9/27/2012
10/27/2012
11/26/2012
12/26/2012
1/25/2013
2/24/2013
3/26/2013
4/25/2013
5/25/2013
6/24/2013
FVI‐T SLV
Capital structure and share performance
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Solid balance sheet to support disciplined growth
Strong Balance Sheet• US$68 million in cash (Q1 2013)• US$40 million credit facility (untapped)• No long term debt• No hedging
Share Structure (as of June 17)Outstanding: 125.3 millionFully diluted: 132.5 million
Share Price
Performance %
Relative Performance (%) of FVI.T and Spot Silver Price (through 6‐28‐13)
ExchangesNYSE: FSMTSX: FVIBVL: FVIFrankfurt: F4S.F
3.483.50
+1%+1%
‐29%‐29%
Senior Management
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Demonstrated operational expertise
Jorge A. GanozaPresident, CEO and Director Co‐founder of Fortuna. Peruvian geological engineer. Identified and negotiated purchase of Caylloma, built the Fortuna team. Jorge also serves as Chairman of the Board of AticoMining Corporation.
Dr. Thomas I. VehrsVice President, ExplorationOver 35 years experience managing exploration programs in the Americas. Tom also serves as an independent director for AQM Copper Inc.
Cesar PeraVice President, Human & Organizational DevelopmentOver 25 years experience in organizational development and change in Latin American companies.
Luis Dario GanozaChief Financial Officer Over 15 years experience in the operations and financial management of public mining companies. Luis also serves as a Director of Atico Mining Corporation.
Manuel Ruiz‐ConejoVice President, OperationsOver 25 years experience in the execution of multi‐million dollar mining projects and the implementation of community relations programs.
Robert BrownVice President, Corporate Development20 years experience in exploration, project development and finance. Former CEO of Calibre Mining Corp. and senior manager at Barrick Gold in exploration and business development.
Directors
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Industry leaders with expertise in the Americas
Simon RidgwayChairman of the BoardCo‐founder of Fortuna. Vancouver‐based mining financier. Also founded Focus Ventures, Radius Gold, Mar West Resources and Northland Resources.
Jorge A. GanozaPresident and CEO Co‐founder of Fortuna. Peruvian geological engineer. Identified and negotiated purchase of Caylloma, built the Fortuna team. Jorge also serves as Chairman of the Board of Atico Mining Corporation.
Robert R. Gilmore30 years of experience working with resource companies and currently serves as Chairman of the Board for Eldorado Gold Corporation and as a Director for Layne Christensen Company.
Tomas GuerreroGeological engineer with over 30 years experience. Served as Director of Explorations for the Hochschild Group.
Michael IversonChief Executive Officer of Fortuna from 1998 to January 2005. President and Director of Niogold Mining Corp. since 1998.
Thomas Kelly36 years of experience in mine production, minerals industry consulting and corporate management in various Latin American countries. Currently serves as COO of AticoMining Corporation.
Mario SzotlenderCo‐founder of Fortuna. Financier, businessman and Director of Radius Gold, Endeavour Silver, Magellan, Focus Ventures and Iron Creek.
Solid Reserve and Resource Base
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Consistent resource growth
0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
2005 2006 2007 2008 2009 2010 2011 2012
Containe
d Metal ‐Ag
Eq(M
oz) *
Proven & Probable Reserves
Measured & Indicated Resources
Inferred Resources
* Ag Eq for Resources calculated using Ag = US$25.14/oz and Au = US$1,391.63/ozAg Eq for Reserves calculated using Ag = US$29.36/oz and Au = US$1,544.00/ozMineral Resources are exclusive of Mineral Reserves
3,300 2,200 2,700 2,6007,000
20,70023,600
31,600 32,200 33,20031,100
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
oz
0.40.8
1.7 1.92.5
3.94.5
5.4 5.4 5.7 5.7
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2007 2008 2009 2010 2011 2012 2013E 2014E 2015E 2016E 2017E
M oz
Increasing Silver and Gold ProductionLow cost, organic growth in Peru and Mexico
2013 base metal revenue estimate = US$30M; Pb = US$1,973/t and Zn = US$2,197/t
Ag Production
Au Production
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24
39
62
69
2010 2011 2012 2013E*
51
74
110
161174
2009 2010 2011 2012 2013E*
Cash Flow from Operations(US$ M)
Financial Snapshot
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Consistent revenue and cash flow growth
Revenue(US$ M)
(*) 2013 forecast (using 3‐month trailing average): Ag = US$28.11/oz, Au = $1,569/oz, Pb = 1,973/t and Zn = 2,197/t
0.03
0.06
0.07
0.05
0.00
0.01
0.02
0.03
0.04
0.05
0.06
0.07
0.08
Q2 2012 Q3 2012 Q4 2012 Q1 2013
0.13
0.16
0.10
0.13
0.00
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
Q2 2012 Q3 2012 Q4 2012 Q1 2013
Cash Flow Per Share (US$)
Financial Snapshot
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Quarterly earnings and cash flow per share performance
Earnings Per Share (US$)
Caylloma Mine
PRODUCTIONPRODUCTIONDEVELOPMENTPROJECTS
DEVELOPMENTPROJECTS
EARLY STAGEEARLY STAGE DRILL TARGETSDRILL
TARGETS
Project Pipeline
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Over 95,600 hectare land package in Peru and Mexico
San Jose MineCarolinaCailloma 6
Don Luis
San Pedro Oeste
Trinidad NorthCerro Vilafro, Vilafro Sur
DISCOVERYDISCOVERY
0.4
1.9
2.4
3.4 3.33.7 3.6
0.00.51.01.52.02.53.03.54.04.55.0
4,600
17,900
20,900
28,400 28,200
30,200 29,100
4,000
8,000
12,000
16,000
20,000
24,000
28,000
32,000
San Jose Mine, Mexico
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OverviewCommoditiesSilver, goldOperation1,050 tpd underground mineReserve Life9 YearsLocationTaviche Mining District Oaxaca, Mexico
Ownership100 %Deposit TypeHigh‐grade, low sulphidation epithermal vein deposit2013E Cash Cost/tUS$702013E Cash Cost/oz Ag, net of by‐product AuUS$2.90
491
1,949
2,403
2,993
0
500
1000
1500
2000
2500
3000
3500
2011 2012 2013E 2014E
Ag Production Au Production
ozMoz
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San Jose Mine, Mexico1,800 tpd mill expansion – Commissioning in Q3 2013
San Jose Mine Brownfields Exploration
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Anomaly evaluation, mapping, sampling & target identification
• 64,400 ha concession area• US$7.5 M 2013 exploration budget
2.0 2.0
2.1
2.0
2.1
2.0
2.1
1.5
1.6
1.7
1.8
1.9
2.0
2.1
2.2
2011 2012 2013E 2014E 2015E 2016E 2017E
Caylloma Mine, Peru
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Overview
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CommoditiesSilver, gold, zinc, leadOperation1,300 tpd underground mineReserve Life8 YearsLocationArequipa, Peru
Ownership100 %Deposit TypeIntermediate sulphidation epithermal deposit2013E Cash Cost/tUS$962013E Cash Cost/oz Ag, net of by‐products Pb and ZnUS$7.70
Ag Production
Moz
Caylloma Mine Brownfields Exploration
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High‐grade silver‐gold mineralization intercepted in drilling at Carolina Ramal Piso and Don Luis veins
• 31,200 ha concession area• US$6.7 M 2013 exploration budgetExploration drilling highlights:Ramal Piso Carolina Vein
Hole_IdFrom(m)
To (m)
Int(m)
Est. True Width (m)
Ag(g/t)
Au(g/t)
CARS005213 243.20 244.00 0.80 0.6 39 13.95
CARS005313 248.50 249.65 1.15 0.7 1,759 18.28
CARS005513 306.40 308.85 2.45 1.7 105 21.28
CARS005613202.35 203.20 0.85 0.6 1,759 1.77
215.50 216.70 1.20 0.8 430 30.25
Hole_IdFrom(m)
To (m)
Int(m)
Est. True Width (m)
Ag(g/t)
Au(g/t)
DLUS002413 189.75 191.45 1.70 1.5 1,294 3.56
DLUS002613 317.00 319.80 2.80 1.3 946 0.07
Don Luis Vein
Growth Strategy
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Three‐pronged approach to create shareholder value
Capitalize on brownfields exploration opportunities
• Post discovery, pre‐development opportunities in the Americas
• Below industry median for cash cost
• 51,000 meter exploration program between Peru and Mexico
• Defining new discoveries at San Jose and Caylloma
• Commanding land packages in Peru and Mexico
• Commissioning of San Jose expansion to 1,500 tpd in Q3 2013
• Focus on operational efficiencies to reduce cash costs
Pursue selectiveM&A opportunities
Maximize production,profitability and cashflow of current mines
Commitment to Sustainability
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Forging strategic partnerships
• Programs are based on respect for ethno‐cultural diversity, open communication and effective interaction with all stakeholders
• We work with communities towards self‐development of economically sustainable activities to improve their quality of life
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Proven mine developers and operators
Exploration success• Trinidad North discovery at San Jose Mine, Mexico• Carolina discovery at Caylloma Mine, Peru
Strong treasury• US$68 M in cash (1Q 2013)• US$40 M credit facility (untapped)
In line to meet 2013 guidance• 4.5 million ounces of silver production• 23,600 ounces of gold production
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A leading silver mining company in the AmericasInvestment Highlights
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MANAGEMENT HEAD OFFICECarlos BacaInvestor Relations ManagerT: +51.1.616.6060, ext. 0
CORPORATE OFFICEHolly HendershotInvestor RelationsT: +1.647.725.0813
Classification Tonnes (000)
Ag(g/t)
Au(g/t)
Contained Metal
Ag(Moz)
Au(koz)
Proven & Probable Reserves 3,335 190 1.58 20.4 169.5
Inferred Resources 4,257 185 1.57 25.3 214.9
Appendix
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San Jose Mine NI 43 – 101 Reserves and Resources
Mineral Reserve and Mineral Resource estimates prepared in accordance with NI 43 ‐ 101: • Mineral Reserves and Mineral Resources are as defined by the CIM Definition Standards on Mineral Resources and Mineral Reserves
• Mineral Resources are exclusive of Mineral Reserves• Measured and Indicated Resources exclusive of Mineral Reserves are not material and are not included in table• Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability• San Jose Mineral Resources & Mineral Reserves are reported as of December 31, 2012• Refer to www.fortunasilver.com for full disclosure
Appendix
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Caylloma Mine NI 43 – 101 Reserves and Resources
Classification Tonnes (000)
Ag(g/t)
Au(g/t)
Pb(%)
Zn(%)
Contained Metal
Ag(Moz)
Au(koz)
Proven & Probable Reserves 4,308 130 0.37 1.52 2.15 17.9 51.1
Measured & Indicated Resources 1,601 79 0.33 0.79 1.43 4.1 17.0
Inferred Resources 6,633 101 0.27 1.84 2.58 21.5 58.5
Mineral Reserve and Mineral Resource estimates prepared in accordance with NI 43 ‐ 101: • Mineral Reserves and Mineral Resources are as defined by the CIM Definition Standards on Mineral Resourcesand Mineral Reserves
• Mineral Resources are exclusive of Mineral Reserves• Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability• Caylloma Mineral Resources and Mineral Reserves are reported as of December 31, 2012• Refer to www.fortunasilver.com for full disclosure