Fortuna Silver Mines Inc.
TSX VENTURE : FVI

Fortuna Silver Mines Inc.

November 17, 2008 15:57 ET

Fortuna Reports for Q3 2008: Net Loss of $0.31 Million, Positive Operating Cash Flow of $0.17-Million, Cash Position of $41.23-Million, Working Capital of $52.99-Million

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Nov. 17, 2008) - Fortuna Silver Mines Inc. (TSX VENTURE:FVI)(BVL:FVI) reports it has filed its financial statements for the three months ended September 30, 2008. The financial statements are available on SEDAR and have been posted on the Company's website at www.fortunasilver.com. Third quarter 2008 highlights:

- Revenue of $7.79 million for the quarter and $22.47 million for the accumulated nine month period.

- Net loss of $0.31 million, compared to net loss of $3.39 million in the same quarter of 2007.

- Quarterly operating cash flow of $0.17 million, and $1.50 million before changes in non-cash working capital items.

- Record throughput; 89,827 t of treated ore for the quarter, 37% higher than the same period for 2007.

- Record metal production; 243,280 oz of silver, 2,139 T of lead, and 2,877 T of zinc. Up 84%, 104%, and 68% respectively over the same period of 2007.

- Record metallurgical recoveries; Ag 80.07% (lead concentrate), Pb 92.19%, and Zn 88.11%.

- Q3 cash production cost per tonne of US$44.43 and corresponding unit net smelter return of US$80.40

Operating Results

During the third quarter of 2008 the Company's Caylloma mine achieved its seventh consecutive quarter of growth in throughput and metal production along with record metallurgical recoveries in all three metals produced. Silver head grade was above 3 oz for the first time since the mine started operations and is scheduled to continue increasing as production from stopes mining high grade silver veins start sourcing the mill later this year. Silver production is projected to be approximately 820,000 ounces for 2008, rising to 1.4 million oz Ag in 2009, compared to 486,465 ounces produced in 2007.

Financial Results

During the third quarter of 2008 the Company generated $7.79 million of sales compared to $9.20 million in the same period of 2007. With respect to the first nine months of 2008 the Company generated $22.47 million compared to $23.74 million in the same period of 2007. Higher concentrate tonnage sales of 74% with respect to the same period of 2007 were weighted down in terms of sales value by a combination of lower realized zinc and lead prices and an increment in smelter treatment charges.

Operating income for the first nine months of 2008 was $0.63 million after deducting $0.66 million of stock-based compensation charges, where operating income solely for the operating subsidiary was $3.45 million.

Positive cash settlements from the Company's base metal hedging programme for the first nine months of 2008 amounted to US$1.46 million.

Net cash provided from operating activities before changes in working capital for the first nine months of 2008 amounted to $6.31 million ($2.60 million after considering changes in working capital). The Company's cash position and working capital as at September 30, 2008 stand at $41.23 million and $52.99 million respectively.

Background

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

ON BEHALF OF THE BOARD

Jorge Alberto Ganoza Durant, President, CEO and Director

Fortuna Silver Mines Inc.

The TSX Venture Exchange has not reviewed and does not take responsibility for the adequacy or accuracy of this release.

Contact Information

  • Fortuna Silver Mines Inc.
    Carlos Baca
    Investor Relations - Lima Office
    (511) 616-6060
    or
    Fortuna Silver Mines Inc.
    Erin Ostrom
    Investor Relations - Vancouver Office
    (604) 484-4085
    (604) 484-4029 (FAX)
    Email: info@fortunasilver.com
    Website: www.fortunasilver.com