The San Jose Mine is located in the Taviche Mining District, Oaxaca, Mexico. The mineralization at San Jose is mainly silver with some gold, contained within epithermal veins. The ratio of silver to gold is around 100:1 so San Jose is considered to be a silver deposit as the value of silver mined surpasses the value of gold.
The San Jose mine is operated by Compania Minera Cuzcatlan S.A. de C.V., a Mexican subsidiary 100% owned by Fortuna Silver Mines Inc. Fortuna is listed on the New York Stock Exchange (FSM), Toronto Stock Exchange (FVI), Bolsa de Valores de Lima (FVI) and Frankfurt Stock Exchange (F4S.F). The company has its headquarters in Vancouver, Canada and has offices in Lima, Peru.
The host rocks for the mineralisation in the San Jose area are intermediate volcanic host rocks. These lava flows and ash layers were deposited during the Paleogene period, 65 to 23.8 million years ago. Overlying these rocks are younger silica-rich volcanic ash layers and material called ignimbrite which are derived from extremely violent volcanic eruptions between 23.8-5.32 million years ago (Ma), during the Miocene period. The basement rock underlying these volcanic sequences consists of highly metamorphosed granulite-facies rock of the Zapoteco terrane. This rock unit is very old and is believed to be of Mesoproterozoic age, which is 1.6-1.0 billion years old. To the east of the mine, the basement rock changes to Cuicateco terrane, which is a west-dipping fault-bounded mass of strongly deformed Jurassic (200-145 Ma) and Cretaceous (145-65 Ma) oceanic and arc volcanic rocks.
The volcanic rocks of the San Jose Mine area are thought to have been extruded during a period of subduction along the convergent southern Mexico plate boundary. Localised extension in the area resulted in normal faulting and rifting and the formation of pull-apart basins. During this extensional phase, hydrothermal fluids containing precious metals were injected into host structures.
The mineralisation is hosted within a low sulfidation epithermal vein system contained within a thick sequence of intermediate volcanic host rocks, ranging in composition from andesite to dacite.
The host rocks have been displaced along major N-NW striking extensional faults. This extension has resulted in the opening up of conduits and pathways within the rock where hot mineralized fluids containing silver and gold have been injected. In places, this forceful injection of fluids has locally broken up the rock and formed breccias during a number of pulses. Quartz-carbonate-sulfide veins containing silver-gold were also formed during the same episodes.
The main zone of mineralization in the area is structurally controlled and extends for more than 3 km in a N-S direction. The mineralization has been subdivided into the northern Trinidad deposit area and the southern San Ignacio area.
Fortuna Silver Mines Inc. appears to be financially stable, with no long-term debt or any programs with hedging. Fortuna has two low-cost operating mines and land holdings of more than 95,600 hectares in Peru and Mexico. Silver and gold production has been increasing for the past six years, attaining 4 million ounces (Moz) of silver and over 20,699 ounces (oz) of gold in 2012. Production for the 2013 is expected to be 5.4 Moz silver and 31,600 oz gold. Fortuna claims they do this at a cost of around US$6 per oz of silver mined. Should the price of silver remain at current levels of around US$24 per oz then this will allow for the continuation of a profitable business. Fortuna claims that they have US$68 M in cash with an additional US$40 M untapped credit facility, so there appears to be plenty of accessible money for further exploration and development.
The company’s strategy of organic growth, although conservative, is safe in the current uncertain global economic climate.
Recent exploration drilling at the Trinidad North discovery is very encouraging with a wide high-grade mineralized zone identified. Fortuna claims that this zone is open at depth and to the north. The zone is apparently accessible from the existing underground mine development.
With an inferred mineral resource at the San Jose Mine of 25.3 Moz of silver and 214,900 oz of gold, there seems to be plenty of life left in the mine.
Fortuna Silver Mines Inc. (Corporate Site)