Fortuna-Continuum post San Jose resource (April 02, 2007)

Vancouver — Joint-venture partners Fortuna Silver Mines (FVI-V, FVITF-O) and Continuum Resources (CNU-V, CUURF-O) have tabled a new resource estimate at their San Jose project in Oaxaca state, Mexico, that contains a huge increase in silver and gold.

The joint-venture partners detailed an indicated resource of 1.47 million tonnes grading 262.6 grams silver per tonne and 2.2 grams gold (primarily in the Trinidad and Bonanza veins) containing about 12.4 million oz. silver and 103,500 oz. gold.

An additional 3.9 million tonnes of inferred resource averaging 260.6 grams silver and 2.6 grams gold were also estimated, giving around 32.7 million contained ounces silver and 321,500 oz. gold.

The study, focused on the Trinidad zone, used a 150-gram silver-equivalent cutoff grade based on a 51:1 silver-to-gold ratio (factored from a US$10.30 per oz. price for silver and US$525 per oz. for gold).

The updated resource significantly surpasses the previous tally of 527,283 inferred tonnes grading 396 grams silver and 3.5 grams gold, about 6.7 million contained ounces silver and 59,000 oz. gold.

“San Jose now has nearly five times more silver-equivalent ounces in the inferred category than were contained in the previous resource estimate,” said Fortuna president Jorge Ganoza.

He also noted that the system remains open at depth and along strike.

The property partners believe the San Ignacio zone, located about 700 metres along strike and south of Trinidad, holds promise as well. Recent drilling has turned up decent silver and gold mineralization (including 12.75 metres of 2.33 grams gold and 182 grams silver). Fortuna says more drilling is necessary before any resource estimates can be made.

The JV partners are gearing up to resume drilling at Trinidad where they will focus on testing for additional mineralization at depth, as well as following up the recent high-grade results from San Ignacio.

San Jose is a high-grade silver-gold vein system located in the Taviche silver district of southern Mexico. Mineralization consists of silver sulphosalts (pyrargyrite, proustite and tetrahedrite), native silver and gold occurring within epithermal quartz veins and breccias, hosted in andesitic volcanics.

The main Trinidad vein has been traced over 3 km north-south with several northwest- to southeast-trending splays.

A number of historic underground workings are located on the Trinidad, San Ignacio and Corona zones. The previous underlying owner recently conducted small-scale mining (about 100 tonnes per day) from a shaft at Trinidad targeting the Bonanza and Fortuna vein splays, and the Bonanza Footwall zone. About 800 metres of the vein system was exploited in previous mining to about 180 metres depth.

San Jose is now owned 76% by Fortuna and 24% by Continuum under a new agreement; a previous deal had Continuum earning an 80% interest with Fortuna acquiring up to 70% of Continuum’s ownership. Under the revised deal, Fortuna paid a purchase price of US$8 million, US$250,000 worth of its shares and US$250,000 worth of Continuum shares it held.

Continuum, which holds options on additional concessions in the area, contributed those as well.

Looking to advance the project to production this year, the partners recently purchased the plant that previously processed ore from San Jose. The fully permitted operation is located about 12 km from the deposit and has a 150-tonne-per-day capacity. Upgrades are under way to bring the capacity up to 360 tonnes per day.

The previous operator produced silver-gold concentrates that were sold to Industrias Peoles’ (IPOAF-O) Met-Mex smelting-refining complex in Torreon. Records indicate metallurgical recoveries of 80% for silver and gold.

With both companies seeing recent stock price rallies, shares of Continuum recently traded at around 62 while Fortuna shares were around $3.25.

Fortuna also operates the Caylloma silver-zinc-lead mine in southern Peru, which restarted production in late 2006. The mine processes about 500 tonnes of ore per day.