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Caylloma mine, Peru

19th February 2016

By: Sheila Barradas

Creamer Media Research Coordinator & Senior Deputy Editor

  

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Name: Caylloma mine.

Location: Caylloma is located about 225 km by road from Arequipa, in the Caylloma region of southern Peru.
Controlling Company: The Caylloma property is 100 %-owned by Fortuna Silver Mines (formerly Fortuna Ventures).

Brief History: The earliest documented mining activity in the Caylloma district dates back to that of Spanish miners in 1620. English miners conducted activities in the late 1800s and early 1900s. Numerous companies have been involved in mining the district of Caylloma, but limited records that detail these activities are available.
The Caylloma property was acquired by Compania Minera Arcata (CMA), a wholly owned subsidiary of Hochschild Mining, in 1981. Fortuna acquired the property from CMA in 2005.

Brief Description: The property is located within the historical mining district of Caylloma, north-west of the Caylloma caldera complex and south-west of the Chonta caldera complex. Host rocks on the Caylloma property are volcanic in nature, belonging to the Tacaza group. Mineralisation is in the form of low- to intermediate-sulphidation epithermal vein systems.

The property comprises mining concessions, surface rights, a permitted flotation plant, connection to the national power grid, permits for camp facilities for 890 workers and the infrastructure necessary to sustain mining operations.

Products: Silver/gold/lead/zinc.

Geology/Mineralisation: The Caylloma property is predominantly characterised by a series of faulted vein structures trending in a north-east to south-west direction.

There are two distinct types of mineralisation at the property – the predominately elevated silver values of the San Cristobal, La Plata, Bateas, San Carlos, Apostoles, San Pedro, El Toro and Trinidad veins; and the elevated silver, lead, zinc, copper and the gold polymetallic values of the Animas, Nancy and Santa Catalina veins.

A supergene oxide horizon has been identified, which contains secondary minerals – psilomelane, pyrolusite, goethite, hematite, chalcocite, covelite and realgar (Corona and Antimonio veins). The oxide zone is thin, with no evidence of any secondary silver enrichment.

Quartz-adularia, quartz-illite and propylitic hydrothermal alterations have been identified at the Caylloma property. The quartz alteration is restricted to the margins of the veins, with the thickness of the altered zone being generally proportional to the thickness of the vein. The width varies from a few centi- metres to a few metres. Quartz replaces the volcanic matrix in the rocks, while quartz and adularia occur as small veinlets. Pyrite is disseminated in the veinlets and in iron-manganese minerals in the wall rock. Illite is a product of alteration of the plagioclase and matrix of the volcanic host rocks. Quartz adularia is absent in the upper part of the vein system. The alteration assemblage in the upper area consists of a narrow selvage of quartz illite near the vein. Quartz illite grades into quartz adularia at depth. Propylitic alteration is widespread throughout the property and may be regional and perhaps unrelated to mineralising events. The propylitic alteration is a fine aggregate of chlorite, epidote, calcite and pyrite.

Reserves: Proven and probable reserves as at June 30, 2014, were estimated at 3.03-million tonnes, grading 189 g/t of silver and 1.15 g/t of gold.

Resources: Measured and indicated resources as at June 30, 2014, were estimated at 1.7-million tonnes, grading 76 g/t of silver, 0.31 g/t of gold, 0.95% lead and 1.88% zinc. Inferred resources were 4.36-million tonnes, grading 133 g/t of gold, 0.59 g/t of gold, 1.98% lead and 3.17% zinc.

Mining Method: Overhand cut-and-fill.

Major Infrastructure and Equipment: The Caylloma property has a well-established infrastructure used to sustain the operation. The infrastructure includes roads, 1 300 t/d tailings disposal facilities, mine waste disposal facilities, mine ore stockpiles, camp facilities, concentrate transportation using 30-t-capacity trucks, power generation and communications systems.
Prospects: The team at Caylloma has successfully executed the plan to shift mining to high-grade polymetallic zones at the Animas vein. Zinc and lead output have increased 42% and 51% respectively, compared with that of 2014, as mining has been focused on zones that provide higher operating margins.
Contact Person: Investor relations manager Carlos Baca.

Contact Details:
Fortuna Silver Mines,
tel +51 1 616 6060, ext 0,
fax +51 1 422 9108,
email info@fortunasilver.com, and
website http://www.fortunasilver.com.

Edited by Tracy Hancock
Creamer Media Contributing Editor

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