SILVER NEWS

Power woes, lower recoveries hit Fortuna Q1 silver production

Fortuna Silver Mines' 2011 production guidance is 2.4 million silver ounces, 7,530 gold ounces, 25.2 million pounds of zinc, 16.6 million pounds of lead, and 760,000 pounds of copper.

RENO, NV - 

Fortuna Silver Mines (TSX: FVI) reported silver production declined 8.9% to 473,123 ounces for the first quarter of this year, compared to 479,821 ounces of silver production for the first-quarter 2010.

The company attributed the drop in silver production to lower mill throughput related to power outages as the result of unusual weather conditions at the Caylloma Mine in Arequipa, Peru, as well as 2% lower than anticipated metallurgical recoveries.

Lead production declined 14.8% from 5,920,140 pounds in the first-quarter 2010 to 5,744,798 pounds for the first quarter of this year.

Fortuna reported zinc production declined 16.4% from 6,868,811 pounds in the first quarter of last year to 5,744,798 pounds for the first-quarter 2011.

Production of copper-silver concentrate at Caylloma was discontinued in January "due to an unfavorable material change in smelter reining and treatment charges with respect to 2010." Fortuna said it is "periodically evaluating market conditions to assess the reinitiating of the circuit."

Earlier this month Fortuna announced proven and probable reserves increased to 45.1 million ounces of silver and 238,900 ounces of gold, while measured and indicated resources increased to 10.4 million ounces of silver and 44,600 ounces of gold.

"Both the Caylloma Mine in Peru and the San Jose Project in Mexico offer excellent potential for additions to our current reserve and resource base and we are pursuing a number of targets which if successful, could have material impact on the two properties," said Thomas Vehrs, Fortuna's vice president of exploration.