Fortuna Silver Mines Inc.
TSX VENTURE : FVI
BVLAC : FVI

Fortuna Silver Mines Inc.

May 25, 2009 13:26 ET

Fortuna Provides San Jose Project Update

VANCOUVER, BRITISH COLUMBIA--(Marketwire - May 25, 2009) - Fortuna Silver Mines Inc. (TSX VENTURE:FVI)(BVLAC:FVI) is pleased to provide an update on its 100% owned San Jose silver-gold project in Oaxaca, Mexico.

The road blockade reported in a Company news release dated April 16th, was brought to an end on May 6th by Federal and State police, as a result of a call to action by local Municipal and Ejido authorities. The Company and local authorities are engaged in dialogue with the fringe group of demonstrators in order to ensure an equitable long term solution to their concerns.

A police detachment remains on-site to assure there are no further disruptions on the access road to the town and Project. The Company is in the process of gradually reinstating its ground activities.

Project Update

Fortuna has been carrying out exploration and engineering work at San Jose since 2006. This work has been fully permitted by the Mexican authorities and the local communities have been kept fully informed about the Project through regular community meetings and briefings. There has been significant community support for the Project.

The San Jose Project has an approved Environmental Impact Statement for all its current on-site activities granted by the "Secretaria de Medio Ambiente y Recursos Naturales" (SEMARNAT, Mexican Environment Agency). As San Jose is not currently in production, Fortuna's activities at the site are not generating any industrial effluents. The Company's compliance with environmental regulations was verified at the beginning of the year, by the "Procuraduria Federal de Proteccion al Ambiente" (PROFEPA, Mexican Federal Environmental Protection Entity) as part of the latest environmental audit.

Exploration drilling concluded in January 2009 and the Project is currently undergoing engineering studies. Some of the key design features that Fortuna envisages are:

- San Jose will be an underground operation. The Company plans to permit a 1,500 tonnes per day underground mine. There are no plans for development of an open pit mine.

- San Jose will not use cyanide to process its precious metal ore. The metallurgical process will use conventional flotation to recover silver and gold from sulphide ore in the form of a concentrate. This is the process route that was used by previous local operators at San Jose who were in production for many years until Fortuna purchased the mine in October 2006.

- Since the start of the project, the Company has been very conscious of the sensitive situation of the hydrologic resource in the Ocotlan Valley area. For this reason, water sourcing alternatives for the project are being developed around the treatment and use of sewage from neighboring towns. The San Jose mine will most likely draw much of its water from sewage, rather than from ground water sources, in day-to-day mining and processing operations. This will also benefit local communities and reduce the negative impact caused by pumping raw sewage into the Atoyac River.

- The San Jose mine will likely back-fill old workings with waste rock. Much of the waste rock produced from the mine will be returned to the underground workings, reducing the footprint of the project and its visual impact.

In accordance with Mexican laws and Ejido authorities, the Company has signed agreements with the land-parcel owners for the surface rights, covering the approximately forty-five hectares required for future on-site infrastructure.

On April 28th, the "Comision Federal de Electricidad" (Mexican Federal Energy Commission) approved the feasibility study for power consumption at the San Jose Project, allowing for connection to the national power grid for up to five megawatts.

Fortuna Silver Mines Inc.

Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Our primary assets are the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is selectively pursuing additional acquisition opportunities. For more information, please visit our website at www.fortunasilver.com.

ON BEHALF OF THE BOARD

Jorge Ganoza, President, CEO and Director

Fortuna Silver Mines Inc.

Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Fortuna Silver Mines Inc. - Lima office
    Carlos Baca
    Investor Relations
    51.1.616.6060
    or
    Fortuna Silver Mines Inc. - Vancouver office
    Erin Ostrom
    Investor Relations
    604.484.4085
    604.484.4029 (FAX)
    info@fortunasilver.com
    www.fortunasilver.com