Name: San Jose mine.

Location: The project is located in the central area of the state of Oaxaca, in Mexico.
Controlling Company: The San Jose mine is operated by Compania Minera Cuzcatlan, a wholly owned subsidiary of Fortuna Silver Mines.
Brief History: The earliest recorded activity in the San Jose del Progreso area dates back to the 1850s when the mines were exploited on a small scale by the local hacienda (Alvarez, 2009). By the early 1900s, a large number of silver- and gold-bearing deposits were being exploited in the San Jeronimo Taviche and San Pedro Taviche areas, aided by a new mining law enacted in 1892 and support from foreign investment capital. Mining activity in the district diminished drastically with the onset of the Mexican Revolution in 1910, only to resume sporadically in the 1920s. Mining in the San Jose area was reactivated on a small scale in the 1960s and again in 1980 when the San Jose mine was acquired by Ricardo Ibarra. The mine was worked intermittingly by Ibarra through his company Minerales de Oaxaca SA to the end of 2006 when the property was acquired by Compañia Minera Cuzcatlán, a Mexican registered company jointly owned by Fortuna and Continuum Resources.

The mine was commissioned in July 2011 and began commercial production in September 2011 at a rate of 1 000 t/d. In September 2013, the mill was expanded from 1 150 t/d to 1 800 t/d and, in April 2014, the mill was further expanded to 2 000 t/d.

Brief Description: The San Jose project is located in the Taviche mining district of Oaxaca. The property comprises mining concessions, surface rights, a permitted flotation plant, connection to the national power grid and permits for the infrastructure necessary to sustain mining operations.

Products: Silver/gold.

Geology/Mineralisation: The mine area is underlain by a thick sequence of subhorizontal andesitic to dacitic volcanic and volcaniclastic rocks of presumed Paleogene age. These units have been significantly displaced along major north- and north-west-trending extensional fault systems, with the precious metals mineralisation being hosted in hydrothermal and crackle breccias, as well as sheeted and stockwork-like zones of quartz/carbonate veins emplaced within zones of high paleopermeability associated with the extensional structures.

The mineralised structural corridor extends for more than 3 km in a north-south direction and has been subdivided into the Trinidad deposit area and the San Ignacio area.

The major mineralised structures or vein systems recognised in the Trinidad deposit area are the Trinidad and Bonanza vein systems. In addition to the major veins, there are secondary veins and zones of sheeted and stockworked quartz-carbonate veins between the Trinidad and Bonanza systems and locally in the hanging wall adjacent to the Bonanza vein system.
Reserves: Proven and probable reserves as at June 30, 2014, were estimated at 3.77-million tonnes, grading 233 g/t of silver and 1.81 g/t of gold.

Resources: Measured and indicated resources as at June 30, 2014, were estimated at 992 000 t, grading 83 g/t of silver and 0.74 g/t of gold.

Mining Method: Overhand cut-and-fill.

Major Infrastructure and Equipment: The San Jose operation has a relatively small surface infrastructure consisting primarily of the concentration plant and electrical power station, water storage facilities, stockpiles and workshop facilities, all connected by unsealed roads.

Additional structures located at the property include offices, a dining hall, a laboratory and core logging and storage warehouses.

The tailings facility is about 1 500 m to the south-west of the concentration plant.

Water for the process plant and mining operations is sourced from the tailings facility, and from a wastewater treatment plant, in the town of Ocotlán de Morelos, operated by Minera Cuzcatlan since 2010.

The mine facilities are connected to the main electrical power supply managed by the Federal Electricity Commission, which supplies sufficient power for the operation. The mine also has a secondary power line in case of power failure in the main line.

Prospects: In December 2014, Fortuna announced the expansion of the San Jose mill to 3 000 t/d and the construction of a dry stack tailings deposit and filter facility. Construction activities for both projects are moving ahead according to plan and are below budget.

The first stage of the dry stack deposit has been built to provide storage capacity until the end of 2016. The deposit will be further expanded in 2016 to provide storage capacity until April 2017 and will continue to be expanded as required throughout the life-of-mine.

The expansion of the processing plant to 3 000 t/d is advancing according to schedule. Delivery of key equipment is ongoing.

The 2 000 t/d tailings filter facility will be expanded to 3 000 t/d through the addition of a third filter that is already on site. The third filter will be assembled and commissioned by the second quarter of 2016.

Commissioning of the expansion project is planned for mid-2016.

Contact Person: Investor relations manager Carlos Baca.

Contact Details:
Fortuna Silver Mines,
tel +5 1 616 6060,
fax +51 1 422 9108,
email info@fortunasilver.com, and
website http://www.fortunasilver.com.