Fortuna Silver September Investor Presentation

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Fortuna Silver September Investor Presentation

  1. 1. San Jose Mine, Mexicowww.fortunasilver.com September 2012
  2. 2. Regulatory DisclaimerCertain statements in this presentation constitute forward-looking statements and as such are based on anassumed set of economic conditions and courses of action. These include estimates of future productionlevels, expectations regarding mine production costs, expected trends in mineral prices and statements thatdescribe 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 economicconditions and financial markets, changes in prices for silver and other metals, technological and operationalhazards in Fortuna’s mining and mine development activities, risks inherent in mineral exploration,uncertainties inherent in the estimation of mineral reserves, mineral resources, and metal recoveries, thetiming and availability of financing, governmental and other approvals, political unrest or instability incountries where Fortuna is active, labor relations and other risk factors.Thomas I. Vehrs, Ph.D., Vice President of Exploration and Founding Registered Member of The Society forMining, Metallurgy, and Exploration, Inc. (SME Registered Member Number 3323430RM) and Edgar Vilela,Corporate Manager of Technical Services of Fortuna, are the Qualified Persons for Fortuna Silver Mines Inc.as defined by National Instrument 43-101. Dr. Vehrs is responsible for ensuring that the geological andscientific information contained in this presentation are an accurate summary of the original reports anddata provided to or developed by Fortuna Silver Mines. Mr. Vilela is responsible for ensuring that theinformation on reserves, production and costs contained in this presentation are an accurate summary ofthe original reports and data provided to or developed by Fortuna Silver Mines. 2
  3. 3. Vision To be valued by our workers, the community and ourshareholders as a leading silver mining company in Latin America Caylloma Mine, Peru 3
  4. 4. Core AssetsOperating and exploring in the AmericasProduction San Jose Mine, Mexico Caylloma Mine, PeruExploration Exploring in Mexico and Peru; two largest silver producing countries in the world 44,000 meter drill program for 2012 4
  5. 5. Company SnapshotStrong balance sheet Share structure (as of July 30 ) th Exchanges US$60.65 million in cash (Q2 2012)  Outstanding: 125.2 million US$20 million credit facility  Fully diluted: 131.0 million No long term debt No hedging Frankfurt: F4S.F FVI.TO vs. Ag (Sept. 2011 – Sept. 2012) 5
  6. 6. Financial Snapshot Strong financial performance Revenue US$ [´000s] Operating Income US$ [´000s] 154,122 43,402 38,065 110,004 27,728 74,056 51,428 14,383 2009 2010 2011 2012 2009 2010 2011 2012 FORECAST FORECAST2012 forecast: Ag = US$30/oz, Au = US$1,660/oz, Pb = US$2,300/t and Zn = US$2,000/t 6
  7. 7. Financial Snapshot Strong cash flow and sustainable growth Cash Flow Per Share Earnings Per Share0.14 0.140.12 0.120.10 0.100.08 0.080.06 0.060.04 0.040.02 0.02 - - Q2 2012 Q1 2012 Q4 2011 Q3 2011 Q2 2012 Q1 2012 Q4 2011 Q3 2011 (0.02) 7
  8. 8. Financial SnapshotRevenue by metal 1% 4% 7% 15% 9% 29% 23% Copper 14% 19% 7% Lead 21% 23% Zinc 3% 4% Gold 64% 65% 49% Silver 44% 2009 2010 2011 2012 FORECAST 2012 forecast: Ag = US$30/oz, Au = US$1,660/oz, Pb = US$2,300/t and Zn = US$2,000/t 8
  9. 9. Key Milestones Foundations of a Leading Silver Mining Company Commissioning of 1,500 tpd Plant plant expansion to expansion Shares begin 1,500 tpd at trading on San Jose Shares begin Commissioning NYSE trading on TSX of dore plant Acquired 100% Off-site dore Commenced plant interest in Reported Shares begin commercial construction San Jose positive trading production at at San Jose Successful pre-feasibility San Jose, on on BVL Received EIS drilling at study at time and on Commenced approval and San Jose San Jose Increased budget production at permits for significantly silver Company Caylloma on San Jose Started increased production established time and on construction Ag Eq by 85% budget Increased of San Jose resourcesShares trade silver Mineon the TSX.V Acquired stake production in by 96% Increased Acquired San Jose silverCaylloma Mine production by 13% 2005 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11 ‘12 2013 9
  10. 10. Investment Highlights 1 Emergence of a leading silver mining company in the Americas 2 Proven mine developers and operators 3 Strong cash flow and sustainable growth from existing mines 4 Brownfields exploration upside 5 Disciplined acquisition strategy 10
  11. 11. Emergence of a Leading Silver Mining CompanySustainable mineral reserve and resource growth 140.0 Inferred Resources Measured & Indicated Resources 120.0 Proven & Probable Reserves Contained Metal - Ag Eq (Moz) * 100.0 80.0 60.0 40.0 20.0 0.0 2005 2006 2007 2008 2009 2010 2011 * Ag Eq calculated using Ag = US$25.14/oz and Au = US$1,391.63/oz 11
  12. 12. Emergence of a Leading Silver Mining CompanyIncreasing Exposure to Precious Metals Ag Production 4.9 4.9 5.0 4.1 3.7 4.0 M oz 3.0 2.4 1.9 2.0 1.6 0.81 1.0 0.44 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 Production forecast Au Production 30,000 27,000 26,000 25,000 21,100 20,000 17,400 oz 15,000 10,000 7,000 3,300 5,000 2,100 2,300 2,500 - 2007 2008 2009 2010 2011 2012 2013 2014 2015 Production forecast 2012 base metal revenue estimate = US$26M; Pb = US$2,300/t & Zn = US$2,000/t 12
  13. 13. Proven Mine Builders and Operators Senior Management Jorge A. Ganoza Dr. Thomas I. Vehrs Cesar Pera Luis Dario Ganoza Manuel Ruiz-Conejo Robert Brown President, Vice President, Vice President, Chief Financial Vice President, Vice President, CEO and Director Exploration Human & Organizational Officer Operations Corporate Development DevelopmentCo-founder of Over 35 years Over 25 years Over 15 years Over 25 years 20 years experience inFortuna. Peruvian experience managing experience in experience in the experience in the exploration, projectgeological engineer. exploration organizational operations and execution of multi- development andIdentified and programs in the development financial million dollar finance. Former CEOnegotiated purchase Americas. Tom also and change in management of mining projects and of Calibre Miningof Caylloma, built serves as an Latin American public mining the implementation Corp. and senior the Fortuna team. independent director companies. companies. Luis of community manager at BarrickJorge also serves as for AQM Copper Inc. also serves as a relations programs. Gold in explorationChairman of the Director of Atico and businessBoard of Atico Mining Mining development.Corporation, a TSX.V Corporation, alisted company. TSX.V listed company. 13
  14. 14. Proven Mine Builders and OperatorsBoard of Directors Simon Ridgway Chairman of the Board Robert R. Gilmore Mario Szotlender Tomas GuerreroCo-founder of Fortuna. 30 years of experience working Co-founder of Fortuna. Geological engineer withVancouver-based mining with resource companies and Financier, businessman over 30 years experience.financier. Also founded currently serves as Chairman of and Director of Radius Served as Director ofFocus Ventures, Radius the Board for Eldorado Gold Gold, Endeavour Explorations for theGold, Mar West Resources Corporation and as a Director for Silver, Magellan, Focus Hochschild Group.and Northland Resources. Layne Christensen Company. Ventures and Iron Creek.Jorge A. GanozaPresident and CEO Thomas Kelly Michael IversonCo-founder of Fortuna. 36 years of experience in mine Chief Executive Officer of FortunaPeruvian geological production, minerals industry from 1998 to January 2005.engineer. Identified and consulting and corporate President and Director of Niogoldnegotiated purchase of management in various Latin Mining Corp. since 1998.Caylloma, built the Fortuna American countries; currentlyteam. Jorge also serves as serves as CEO of ApurimacChairman of the Board of Ferrum, a private companyAtico Mining Corporation, a developing iron ore assets in Peru.TSX.V listed company. 14
  15. 15. Caylloma Mine, Peru Overview Commodities Silver, gold, zinc, lead Operation 1,300 tpd underground mine Reserve Life 8 Years Location Arequipa, Peru Ownership 100% Intermediate sulfidation Deposit type epithermal deposit 2012E cash cost/t US$85.00 Ag Production 2,000 1,900 1,800k oz 1,700 1,600 1,500 2009 2010 2011 2012 Production forecast 15
  16. 16. Caylloma Mine, PeruSolid reserve and resource base Contained Metal Tonnes Ag Au Pb Zn Classification (000) (g/t) (g/t) (%) (%) Ag Au (Moz) (koz)Proven & Probable Reserves 4,642 135 0.33 1.33 1.93 20.2 49.5Measured & Indicated Resources 2,258 123 0.30 0.85 1.28 8.9 21.8Inferred Resources 3,258 112 0.36 0.99 1.50 11.8 37.9Notes 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 16
  17. 17. San Jose Mine, Mexico Overview Commodities Silver, gold Operation 1,050 tpd underground mine Reserve Life 9 Years Taviche Mining District, Location Oaxaca, Mexico Ownership 100% High-grade, low sulphidation Deposit type epithermal vein deposit 2012E cash cost/t US$75.00 Ag Production Au Production 3,000 25,000 20,000 2,000 15,000k oz oz 10,000 1,000 5,000 - - 2011 2012 2013 2014 2011 2012 2013 2014 Production forecast Production forecast 17
  18. 18. San Jose Mine, MexicoSolid reserve and resource base Contained Metal Tonnes Ag Au Classification (000) (g/t) (g/t) Ag Au (Moz) (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 18
  19. 19. San Jose Mine, MexicoUnderground mine design North South Service Raise L 1540 Main Ramp Auxiliary BranchAuxiliary Ramp L 1400 Ventilation Raise L 1360 L 1300 LEGEND Main Levels Projected Ramp Ore Pass Projected Level L 1200 Indicated Resources Inferred Resources Waste Pass Production block L 1100 19
  20. 20. Exploration Pipeline San Jose Mine PRODUCTION Caylloma Mine DEVELOPMENT PROJECTS Bateas Don Luis Tlacolula San Pedro, San Carlos, Animas NE/ DRILL TARGETS El Toro, Apóstoles Nancy Cerro Vilafro, Vilafr Cailloma 6 El Pochotle EARLY STAGE o Sur Over 87,000 hectares LAND PACKAGE 20
  21. 21. Exploration SnapshotBrownfields Peru 29,000 ha land package 4 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 21
  22. 22. Exploration SnapshotBrownfields PeruAnimas/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% Pb and 7.54 % Zn [Animas vein] - NANS002012: 9.55 m avg. 91 g/t Ag, 5.30% Pb and 7.62 % Zn [Nancy vein]  Generating updated resource modelCerro 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  Drill testing planned for 3rd/4th quarter of 2012 22
  23. 23. Exploration SnapshotSan Jose land package, Mexico 58,000 ha concession package Soil and stream sediment sampling 2 drill rigs in operation US$5.8 M 2012 exploration budget Significant resource growth potential within trucking distance to processing plant 23
  24. 24. Exploration SnapshotBrownfields MexicoTlacolula  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]  1,600 meter drill program in preparation stageEl Pochotle  100% owned  High-grade Ag – Au epithermal vein systems  6,000 meter drill program planned for 3rd /4th quarter of 2012 24
  25. 25. 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 25
  26. 26. Growth StrategyThree-pronged approach to create shareholder value Maximize  Execute on production ramp-up at San Jose by 4Q 2013production, profitabilit  Focus on operational efficiencies to reduce cash costs y and cash flow of current mines  Off-site Ag - Au concentrate leaching facility at San Jose Capitalize on  44,000 meter exploration program between Peru and Mexico brownfields  Two crews evaluating multiple Ag - Au anomalies at San Jose exploration opportunities  Commanding land packages in Peru and Mexico  Post discovery, pre-development opportunities in the Americas Pursue selective  Silver contribution of >50% of revenue M&A opportunities  Below industry median for cash cost 26
  27. 27.  Proven operators and mine builders in the Americas Organic growth potential Consistent cash generation Caylloma Mine Peru 27
  28. 28. Management Head OfficeCarlos BacaT: +51.1.616.6060, ext. 0Corporate OfficeHolly HendershotT (Toronto): +1.647.725.0813T (Vancouver): +1.604.484.4085 www.fortunasilver.com September 2012

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