Tuesday, May 26, 2009

Fortuna FVI.v Provides San Jose Project Update. FVI.v, ASM.v, EPZ.v, OK.v, SSRI, SLW, PAA.to, HUI, XAU, GDX

This is a Mexican silver play with our Junior Investment cycle in action. Company is producing silver and developing the new mine, we have another chance to enter with low valuation into the cycle. Chances are that if Fortuna will not be able to become a consolidator it will be one of consolidation play with Silver Standard Resources SSRI, Silver Wheaton SLW and Pan American Silver PAA.to active in the area. Avino Silver and Gold mines ASM.v is doing nothing for years and its mill still have bigger replacement value then company's market cap. San Jose mine is based in Oaxaca, southern poor and less stable part of Mexico and Avino's property in Durango state can be a very good addition to the portfolio.

"May 25, 2009

Fortuna Provides San Jose Project Update

May 25, 2009: Fortuna Silver Mines Inc. (TSX.V: FVI / Lima Exchange: 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 UpdateFortuna 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 "Procuraduría Federal de Protección 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 "Comisión 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 http://www.fortunasilver.com/Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.ON BEHALF OF THE BOARDJorge Ganoza President, CEO and DirectorFortuna Silver Mines Inc."
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