Fortuna sets goals for San Jose prefeasibility

It took longer than expected, but Fortuna Silver Mines (FVI-V) has more than doubled indicated resources at its San Jose project in Oaxaca state, Mexico, to 37.6 million silver-equivalent oz.

Part of the hold up was the result of a group of demonstrators who blocked the main access road for a few weeks in April and early May. Federal and state police forced them to end their demonstration at the request of the local officials.

Fortuna is aiming to complete engineering studies on the development of a mine, processing plant design, tailings dam engineering and evaluating power and water supply alternatives for a prefeasibility study. The company hopes to have those studies done by the end of the year.

“Although the resource estimation process suffered delays, the wait has been worthwhile,” said Fortuna CEO, Jorge Ganoza in a statement. “We look forward to the granting of environmental approvals and constructing permits in the coming weeks as the next milestones for the project.”

Indicated resources now stand at 2.69 million tonnes grading 295 grams silver per tonne and 2.27 grams gold, for 37.6 million silver-equivalent oz. The average silver grade for the new resource estimate is up 12% while the average gold grade is 4% higher.

Inferred resources stand at 2.41 million tonnes grading 262 grams silver per tonne and 2.11 grams gold per tonne for 30.4 million silver equivalent oz.

A cutoff grade of 150 grams silver was used for both indicated and inferred resources.

The company added 40,000 metres worth of drilling to the resource estimate, which incorporates a total of 64,200 metres of drilling and 908 underground channel samples.

Most of the recent drilling – about 33,000 metres –  was done at the Trinidad area of the San Jose project.

San Jose is a low-sulphidation epithermal vein system, located a one hour drive from the city of Oaxaca (about 47 km).

The deposit is characterized by mineralized multiphase quartz-carbonate-sulphide veins, hydrothermal breccias and stockwork veining, hosted within a sequence of tertiary andesitic volcanic and volcaniclastic rocks.

Fortuna has done some work on the San Ignacio zone as well. San Ignacio is located about 800 metres south of the Trinidad zone.

In addition to the engineering studies, Fortuna is trying to negotiate a collaborative agreement with the local community. The company expects to be granted some of the permits need to start building the mine by the end of the year.

Fortuna also operates the 100%-owned Caylloma silver-zinc-lead mine in the sourthern highlands of Arequipa, Peru. The company has been operating the 1,000 tonne-per-day operation for three years but its working towards increasing throughput to 1,500 tonnes per day. The company expects to produce 1.6 million oz. of silver in 2009.

Fortuna shares were trading 3¢ higher, mid-day today, at $1.67 apiece with a trading volume of 348,000 shares.