MEXICO – Fortuna Silver Mines of Vancouver, operator of the San Jose underground silver mine 47 km south of Oaxaca, plans to increase mill throughput by 50% – to 3,000 from 2,000 t/d. The expansion will be accompanied by construction of a dry stack tailings facility.
The company will spend US$30 million on the mill expansion. The project has a 36% after-tax internal rate of return. Payback of capital is estimated to take two years. The change will boost the company's annual output to between 12 million and 14 million oz of silver equivalent and keep costs low. All-in sustaining cash costs after expansion are expected to be US$8 to US$9 per oz of silver, net of by-product gold.
Fortuna plans to begin construction in Q1 2015 and commission the bigger mill by mid-2016. All the necessary permits are in place.
The switch from conventional tailings impoundment to a dry stack method will cost US$32 million. Work has begun on the project, and purchase orders for filters and other major equipment have been placed. Construction should be complete by the end of next year, but the environmental impact study of the project has yet to be approved.
At the end of June 2014, the San Jose mine had proven and probable mineral reserves of 4.3 million tonnes containing 31.2 million oz of silver and 242,600 oz of gold. The adjacent Trinidad North discovery has yet to be included in resource estimates.
Learn more at FortunaSilver.com.
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