Fortuna ties fortunes to silver

Vancouver – Fortuna Ventures (FVI-V) is purchasing the Caylloma silver mine from two Peruvian companies and is changing its name to reflect the shift in focus. The new name is Fortuna Silver Mines.

The purchase agreement was hammered out over the past six months during which time trading in Fortuna was halted on the TSX Venture Exchange.

Fortuna agreed to purchase shares in a company that holds the Caylloma assets and liabilities for US$7.55 million plus 10.803% of the fully-diluted capital of the company.

Caylloma lies 4.5 hours from Peru’s second largest city, Arequipa. Along with the NI 43-101-compliant reserves and resources comes a 600-tonne-per-day processing plant and over 80 sq. km of mining concessions.

Proven and probable reserves include 7.1 million oz. silver contained in 776,350 tonnes grading 286 grams silver and 0.55 gram gold per tonne, plus 1.83% lead, 2.91% zinc and 0.14% copper in silver and polymetallic veins.

There are another 1,146,599 tonnes in the inferred category grading 386 grams silver and 0.52 gram gold per tonne, with 2.31% lead, 3.59% zinc, and 0.37% copper. The resource contains 14.2 million oz. silver.

In 2003, production at the mine was halted owing to depressed silver prices.

The mine had produced 2.6 million oz. in 2002, its last year of operation. Following the shut-down, a stepped up exploration program in the mine area turned up more silver and base metal resources.

With required permits and infrastructure in place, plans call for restarting production within a year, at an annual rate of 2 million oz. and projected cash costs below US$4 per oz.

Caylloma has a 400-year history during which it produced over 250 million oz. of silver. The mine site lies within 60 km of four other locally-owned operating gold and silver mines.

Under-explored vein and high-grade shoot targets will be tested in the company’s planned 5,000-metre drilling program.

A 2% net smelter returns royalty is payable to the vendors after 21 million oz. of silver have been recovered from the property.

Fortuna is working on a US$10 million financing to pay the cash portion of the purchase and costs associated with reopening the mine.