Updated: Anti-mining protest fizzles at Fortuna’s San Jose mine

VANCOUVER — After boldly promising to indefinitely shut down Fortuna Silver Mines’ (FVI-T, FSM-N) San Jose mine in Mexico’s Oaxaca state, a group of between 80 and 120 protesters showed up at the mine site on Monday and were gone by the end of the day. 

The protesters, who according to Fortuna investor relations manager Carlos Baca did not return Tuesday, had apparently agreed to a call for dialogue by the Secretary General of the Government of Oaxaca, Jesus Martinez Alvarez. However, the protestors put out a statement saying they only agreed to the dialogue to ask again that the mine be closed and not to negotiate. 

The small group of anti-mining activists were marking the three-year anniversary of a police crackdown that ended a three-month stand-off at the mine. The activists were also trying to draw attention to two murders they say are linked to the mine, including Bernardo Vasquez Sanchez, the leader of a group opposed to the San Jose mine who was killed on March 15, and Bernardo Mendez Vasquez, who was fatally shot on January 19 while protesting a local water project unrelated to the mine.

But while there remains a core group wholly opposed to mining in the area, the San Jose mine has become a significant source of jobs in one of the poorest regions of Mexico. Since opening in 2011 the underground mine has operated smoothly and employed hundreds of locals, both at the mine site and with those supplying goods and services to the operation.

Some past opposition to the mine has centered on water use in this arid part of the country, though most water for the San Jose mine is sourced from the reservoir incorporated into the tailings pond and does not come from local water supplies. The rest of the water is supposed to come from a sewage treatment plant in San Jose that the company put back into working order, but one community has blocked the installation of the last 2 km of pipeline that will link the plant to the mine. The company currently trucks water for the final stretch.

Other concerns have come from an apparent lack of local consultation and approval for the mine that opponents claim sits on communal land. Local politics have also played a role in the opposition’s frustration, currently heightened because it is an election year in Mexico.

As to operations at San Jose itself, in the first quarter of 2012 the mine outperformed planned production with silver and gold output 15% and 29% above projections respectively. San Jose produced roughly 469,000 oz. silver and 5,000 oz. gold at averages grades of 198 grams silver per tonne and 1.92 grams gold per tonne.

Production at Fortuna Silver’s Caylloma mine in Peru came in at roughly 484,000 oz. silver, 640 oz. gold, 4.4 million lbs. lead and 5.3 million lbs. zinc in the quarter. The company is still waiting on a permit for a new tailings facility for the Caylloma mine.

Fortuna’s share price recently closed at $3.90, up from the recent 52-week low of $3.50 but still well off its 52-week high of $7.58 hit at the end of February. The company releases its first quarter financial results on May 9.