Fortuna Silver Mines December CP
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Transcript of Fortuna Silver Mines December CP
San Jose Mine, Mexico
December 2012www.fortunasilver.com
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Regulatory DisclaimerCertain statements in this presentation constitute forward‐looking statements and as such arebased on an assumed set of economic conditions and courses of action. These includeestimates of future production levels, expectations regarding mine production costs, expectedtrends in mineral prices and statements that describe Fortuna’s future plans, objectives orgoals. There is a significant risk that actual results will vary, perhaps materially, from resultsprojected depending on such factors as changes in general economic conditions and financialmarkets, changes in prices for silver and other metals, technological and operational hazards inFortuna’s mining and mine development activities, risks inherent in mineral exploration,uncertainties inherent in the estimation of mineral reserves, mineral resources, and metalrecoveries, the timing and availability of financing, governmental and other approvals, politicalunrest or instability in countries where Fortuna is active, labor relations and other risk factors.
Thomas I. Vehrs, Ph.D., Vice President of Exploration, is the Qualified Person for Fortuna SilverMines Inc. as defined by National Instrument 43‐101. Dr. Vehrs is a Founding RegisteredMember of The Society for Mining, Metallurgy, and Exploration, Inc. (SME Registered MemberNumber 3323430RM) and is responsible for ensuring that the information contained in thispresentation is an accurate summary of the original reports and data provided to or developedby Fortuna Silver Mines.
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To be valued by our workers, the community and our shareholders as a leading silver mining company in Latin America
To be valued by our workers, the community and our shareholders as a leading silver mining company in Latin America
CayllomaMine,Peru
VisionVision
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Core AssetsOperating and exploring in the Americas
Production San Jose Mine, Mexico Caylloma Mine, Peru
Exploration Exploring in Mexico and Peru; two largest silver producing countries in the world 44,000 meter drill program for 2012
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Company SnapshotStrong balance sheet US$62.75 million in cash (Q3 2012) US$20 million undrawn credit facility No long term debt No hedging
FVI.T vs. Ag (JUN 30th – NOV 30th)
Share structure (as of Nov. 9th) Outstanding: 125.2 million Fully diluted: 131.3 million
Exchanges
Frankfurt: F4S.F
90%
100%
110%
120%
130%
140%
150%
160%
170%
3.20
3.70
4.20
4.70
5.20
5.70
6/29/2012 7/29/2012 8/29/2012 9/29/2012 10/29/2012 11/29/2012
FVI‐T SLV
132%
121%
Relative perform
ance of FVI.T (%) &
SLV (%)
Shar
e pr
ice
FVI.T
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Proven Mine Builders and OperatorsSenior Management
Manuel Ruiz‐ConejoVice President, Operations
Dr. Thomas I. VehrsVice President, Exploration
Cesar PeraVice President,
Human & Organizational Development
Luis Dario GanozaChief Financial
Officer
Jorge A. GanozaPresident,
CEO and Director
Co‐founder of Fortuna. Peruvian geological engineer. Identified and negotiated purchase of Caylloma, builtthe Fortuna team.Jorge also serves as Chairman of the Board of Atico Mining Corporation, TSX.V: ATY
Over 35 years experience managing exploration programs in the Americas. Tom also serves as an independent director for AQM Copper Inc.
Over 25 years experience in organizational development and change in Latin American companies.
Over 15 years experience in the operations and financial management of public mining companies. Luis also serves as a Director of Atico Mining Corporation, TSX.V: ATY
Over 25 years experience in the execution of multi‐million dollar mining projects and the implementation of community relations programs.
Robert BrownVice President, Corporate
Development
20 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.
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Proven Mine Builders and OperatorsBoard of Directors
Simon RidgwayChairman of the Board
Co‐founder of Fortuna. Vancouver‐based mining financier. Also founded Focus Ventures, Radius Gold, Mar West Resources and Northland Resources.
Robert R. Gilmore
30 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.
Mario Szotlender
Jorge A. GanozaPresident and CEO
Co‐founder of Fortuna. Financier, businessman and Director of Radius Gold, Endeavour Silver, Magellan, Focus Ventures and Iron Creek.
Tomas Guerrero
Thomas Kelly Michael Iverson
36 years of experience in mine production, minerals industry consulting and corporate management in various Latin American countries; currently serves as CEO of Apurimac Ferrum, a private company developing iron ore assets in Peru.
Chief Executive Officer of Fortuna from 1998 to January 2005. President and Director of Niogold Mining Corp. since 1998.
Geological engineer with over 30 years experience. Served as Director of Explorations for the Hochschild Group.
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, TSX.V: ATY
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Commissioning of 1,500 tpd
plantexpansion at San Jose
Commissioning of dore plant for San Jose
mine
Plantexpansion to 1,500 tpd at San Jose mine
Off‐site doreplant
construction for San Jose
mine
Shares begin trading on
NYSE
Commenced commercial production at San Jose mine, on time and on budget
Shares begin trading on TSX
Reportedpositive
pre‐feasibilitystudy at San Jose
Started construction of San Jose
mine
Increased silver
productionby 13%
Acquired 100% interest in San Jose project
Received EIS approval and permits for San Jose
Increased silver
production by 96%
Shares begin trading on BVL
Increased silver
productionby 85%
Successful drilling at San Jose
significantly increased Ag Eq
resources
Commencedproduction at Caylloma on time and on
budget
Acquired stake in
San Jose project
Company established
Shares trade on the TSX.V
AcquiredCaylloma mine
Key MilestonesFoundations of a Leading Silver Mining Company
2005 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 2013
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Emergence of a Leading Silver Mining CompanySustainable mineral reserve and resource growth
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
2005 2006 2007 2008 2009 2010 2011
Containe
d Metal ‐Ag
Eq (M
oz) *
Inferred ResourcesMeasured & Indicated ResourcesProven & Probable Reserves
• Caylloma Mine Ag Eq calculated using Ag = US$26.59/oz and Au = US$1,279.31/oz• San Jose Mine Ag Eq calculated using Ag = US$15.12/oz and Au = US$897.51/oz
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Emergence of a Leading Silver Mining CompanyIncreasing Exposure to Precious Metals
2012 base metal revenue estimate = US$26M; Pb = US$2,300/t & Zn = US$2,000/t
Ag Production
Au Production
Moz
oz
Forecast
25,00030,000
20,00015,00010,0005,000
‐20082007 2009 2010 2011 2012 2013 2014 2015
3,300 2,100 2,300 2,500
7,000
17,40021,100
26,000 27,000
Forecast
4.0
5.0
3.0
2.0
1.0
‐20082007 2009 2010 2011 2012 2013 2014 2015
0.440.81
1.61.9
2.4
3.74.1
4.9 4.9
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Financial Snapshot
Revenue US$ [´millions’]
Strong financial performance
Operating Income US$ [‘millions’]
FORECAST FORECAST
51.474.1
110.0
160.4
2009 2010 2011 2012E
14.4
27.7
38.145.9
2009 2010 2011 2012E
2012 forecast: Ag = US$29.91/oz, Au = US$1,655/oz, Pb = US$1,980/t and Zn = US$1,889/t
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Financial SnapshotStrong cash flow and sustainable growth
Earnings Per Share US$ Cash Flow Per Share US$
‐
0.02
0.04
0.06
0.08
0.10
0.12
0.14
0.16
0.18
Q4 2011 Q1 2012 Q2 2012 Q3 2012 (0.02)
‐
0.02
0.04
0.06
0.08
0.10
0.12
0.14
Q4 2011 Q1 2012 Q2 2012 Q3 2012
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2012 Production GuidanceConsolidated production for the first nine months
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Project PipelineProject Pipeline
PRODUCTIONPRODUCTION
LAND PACKAGELAND PACKAGE
DEVELOPMENT PROJECTSDEVELOPMENT PROJECTS
EARLY STAGEEARLY STAGE
DRILL TARGETSDRILL TARGETS
Over 87,000 hectares
Caylloma Mine
San Jose Mine
Bateas
Animas NE/ Nancy
Don Luis
San Pedro, San Carlos, El Toro, Apóstoles
Tlacolula
Cerro Vilafro, Vilafro Sur
El PochotleCailloma 6
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Commodities Silver, goldOperation 1,050 tpd underground mine
Reserve Life 9 Years
Location Taviche Mining District, Oaxaca, Mexico
Ownership 100%
Deposit type High‐grade, low sulphidationepithermal vein deposit
2012E cash cost/t US$75.00
San Jose Mine, MexicoOverview
‐
1,000
2,000
3,000
2011 2012 2013 2014 ‐
5,000
10,000
15,000
20,000
25,000
2011 2012 2013 2014
k oz
oz
Ag Production Au Production
ForecastsForecasts
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San Jose Mine, MexicoSolid reserve and resource base
Classification Tonnes (000)
Ag(g/t)
Au(g/t)
Contained Metal
Ag(Moz)
Au(koz)
Probable Reserves 3,600 204 1.59 23.6 183.7
Indicated Resources 376 243 2.12 2.9 25.6
Inferred Resources 3,072 223 1.80 22.0 178.1
Notes to Mineral Reserve and Mineral Resource tables 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 Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Mineral Reserves and Mineral Resources reported as of December 31st, 2011 Refer to www.fortunasilver.com for full disclosure
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Projected ramp
Projected level
LEGEND
Production block
L 1400L 1400Auxiliary Ramp
Ore Pass
Ventilation Raise
Main Levels
L 1300L 1300
L 1200L 1200
L 1100L 1100
Waste Pass
Service RaiseL 1540L 1540
L 1360L 1360
SouthSouthNorthNorth
Main Ramp
Auxiliary Branch
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Exploration SnapshotSan Jose land package, Mexico
58,000 ha concession package Soil and stream sediment sampling 3 drill rigs in operation US$5.8 M 2012 exploration budget Significant resource growth potential within trucking distance to processing plant
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Tlacolula Option to acquire 60% interest from Radius
Large and untested low sulfidation epithermal vein system
Two main veins identified, Tlacolula and Guila:
‐ CH 136366: 6.30 m avg. 19.34 g/t Au and 986 g/t Ag (open) [Guila Vein]
‐ CH 135709: 9.60 m avg. 0.13 g/t Au and 295 g/t Ag (open) [Tlacolula Vein]
Drill program in permit and preparation stage
El Pochotle 100% owned
High‐grade Ag – Au epithermal vein systems
Drill program in‐progress
Exploration SnapshotBrownfields Mexico
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Commodities Silver, gold, zinc, leadOperation 1,300 tpd underground mine
Reserve Life 8 YearsLocation Arequipa, Peru
Ownership 100%
Deposit type Intermediate sulfidationepithermal deposit
2012E cash cost/t US$85.00
Caylloma Mine, PeruOverview
1,500
1,600
1,700
1,800
1,900
2,000
2009 2010 2011 2012Forecast
Ag Production
k oz
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Caylloma Mine, Peru Solid reserve and resource base
Classification Tonnes (000)
Ag(g/t)
Au(g/t)
Pb(%)
Zn(%)
Contained Metal
Ag(Moz)
Au(koz)
Proven & Probable Reserves 4,642 135 0.33 1.33 1.93 20.2 49.5
Measured & Indicated Resources 2,258 123 0.30 0.85 1.28 8.9 21.8
Inferred Resources 3,258 112 0.36 0.99 1.50 11.8 37.9
Notes to Mineral Reserve and Mineral Resource tables 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 Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability Caylloma Mineral Resources and Mineral Reserves are estimated as of June 30, 2011 and reported as of
December 31, 2011 Refer to www.fortunasilver.com for full disclosure
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Exploration SnapshotBrownfields Peru
29,000 ha land package
5 drill rigs in operation
US$7.2M 2012 exploration budget
Brownfields exploration program oriented at expanding resource base with priority given to silver‐rich veins
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Animas/Nancy Vein System 100% ownership
High‐grade polymetallic vein system with moderate Ag values:
‐ ANIM022012: 5.05 m avg. 106 g/t Ag, 6.90% Pband 7.54 % Zn [Animas vein]
‐ NANS002012: 9.55 m avg. 91 g/t Ag, 5.30% Pband 7.62 % Zn [Nancy vein]
Generating updated resource model
Cerro Vilafro 100% ownership
Epithermal system with a NE‐SW trending vein swarm, hosted by Cretaceous quartzites with potential to be a bulk‐mineable, open‐pit target:
‐ CH 503715: 0.40 m avg. 3.23 g/t Au and 827 g/t Ag
‐ CH 503708: 0.40 m avg. 2.14 g/t Au and 2,440 g/t Ag
Exploration SnapshotBrownfields Peru
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Growth StrategyThree‐pronged approach to create shareholder value
Execute on production ramp‐up at San Jose by 2Q 2013 Focus on operational efficiencies to reduce cash costs Off‐site Ag ‐ Au concentrate leaching facility for San Jose mine
Maximize production, profitability and cash flow of current mines
44,000 meter exploration program between Peru and Mexico Two crews evaluating multiple Ag ‐ Au anomalies at San Jose Commanding land packages in Peru and Mexico
Capitalize on brownfields exploration opportunities
Post discovery, pre‐development opportunities in the Americas Silver contribution of >50% of revenue Below industry median for cash cost
Pursue selectiveM&A opportunities
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Community Relations ProgramForging 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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Investment Highlights
Proven mine developers and operators
Strong cash flow and sustainable growth from existing mines
Disciplined acquisition strategy
Brownfields exploration upside
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33
55
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Emergence of a leading silver mining company in the Americas
Management Head OfficeCarlos BacaT: +51.1.616.6060, ext. [email protected]
Corporate OfficeHolly HendershotT (Toronto): +1.647.725.0813T (Vancouver): +1.604.484.4085
December 2012www.fortunasilver.com