Caylloma Mine, Peru

Steady performance from our smallest mine

Overview

Our Caylloma Mine in the Caylloma District of Arequipa, Peru, produces silver, gold, zinc, and lead. The underground mine is operated by Compania Minera Bateas S.A.C. (Bateas), a Peruvian subsidiary 100% owned by Fortuna. The deposit is a low to intermediate sulfidation epithermal vein system, and, based on December 31, 2023 reserves the operation has a mine life of five years.

People have historically mined silver in the Caylloma District for over 500 years. Fortuna acquired the Caylloma Mine in 2005 and relaunched operations the following year after expanding and modernizing the processing plant in 2006. In 2016, the processing plant was upgraded to process 1,430 tonnes per day. In 2023, the mine produced 1.23 million ounces of silver, and record base metal production of 40.8 million pounds of lead, and 55.1 million pounds of zinc.

For more than 16 years, our Caylloma Mine has provided jobs and economic benefits to support sustainable development in the district of Caylloma. In 2023, we employed 1,086 direct employees and contractors. We also partnered with 40 local suppliers.

Caylloma Mine Video

Commodities

Silver, zinc, lead

Ownership

100%

Operation

543,876

tonnes milled in 2023

Claim block area

36,000

hectares

Deposit type

Intermediate sulphidation epithermal deposit

Mining method

Underground cut-and-fill

Operating highlights	2023¹	2024E¹
Tonnes milled (000)	544	500
Average milled (tpd)	1,528	1,370
Silver production (Moz)	1.2	0.9 – 1.1
Gold production (koz)	–	–
Lead production (Mlbs)	40.8	29 – 34
Zinc production (Mlbs)	55.1	36 – 39
AISC^2,3,4 (US$/oz AgEq)	19.90	18.00 – 21.00

Notes

Refer to Fortuna news releases dated January 18, 2024, “Fortuna reports record 2023 production of 452 koz Au Eq and 2024 annual guidance of 457 to 497 koz Au Eq“
Cash Cost and all-in sustaining cost (AISC) are non-IFRS financial measures which are not standardized financial measures under the financial reporting framework used to prepare the financial statements of the Company and might not be comparable to similar financial measures disclosed by other issuers. Refer to the note under “Non-IFRS Financial Measures” on this website.

The following table provides the historical cash costs and historical AISC for the four operating mines for the year ended December 31, 2022, as follows:

Mine	Cash Cost^a,b,c	AISC^a,b,c
SILVER	($/oz AgEq)	($/oz AgEq)
San Jose, Mexico	10.56	15.11
Caylloma, Peru	12.34	17.97
GOLD	($/oz Au)	($/oz Au)
Lindero, Argentina	740	1,142
Yaramoko, Burkina Faso	840	1,529

Cash cost and AISC are non-IFRS financial measures; refer to the note under “Non-IFRS Financial Measures” on this website.
Silver equivalent was calculated at metal prices of $1,802/oz Au, $21.75/oz Ag, $2,161/t Pb and $3,468/t Zn for the year ended December 31, 2022
Further details on the cash costs and AISC for the year ended December 31, 2022 are disclosed on pages 38, 40, and 41 (with respect to cash costs) and pages 39 and 42 (with respect to AISC) of the Company’s management discussion and analysis (“MD&A”) for the year ended December 31, 2022 dated as of March 15, 2023 (“2022 MD&A”) which is available under Fortuna’s SEDAR+ profile at www.sedarplus.ca and is incorporated by reference into this news release, and the note under “Non-IFRS Financial Measures” on this website.

Cash cost includes production cash cost. AISC includes sustaining capital expenditures, worker’s participation (as applicable) commercial and government royalties mining tax, export duties (as applicable), subsidiary G&A and Brownfields exploration and is estimated at metal prices of $1,800/oz Au, $22/oz Ag, $2,000/t Pb, and $2,500/t Zn. AISC excludes government mining royalty recognized as income tax within the scope of IAS-12.

Location

Our Caylloma mine is located in the Caylloma mining district, approximately 225 kilometers northwest of Arequipa, Peru (Latitude: 15° 12’ 15” S, Longitude: 71° 51’ 40” W). The site is 4,500 meters above sea level and includes the mine, a processing plant, and related infrastructure. The mine is connected to the national power grid, and mining occurs year-round.

At Caylloma, our freshwater source is the Santiago River. We focus on minimizing water collection and maximizing water reuse and include the local authorities and community members in participatory monitoring multiple times per year.

The mine is located 14 kilometers northwest of the town of Caylloma, our nearest neighbor. Our relationship with the residents and local government in Caylloma is built on dialogue, engagement and transparency.

Learn more Learn more about our relationship with the Caylloma community

Geology and mineralization

More than 15 major silver and base metal-rich epithermal vein sets have been identified within the Caylloma district. The veins are hosted by Tertiary calc-alkaline andesitic volcanic sequences that unconformably overlie folded marine sediments. The veins are one to 25 meters wide, up to four kilometres long, typically trending north-easterly and dipping moderately to steeply to the southeast or northwest.

Mineral reserves

2.3 million tonnes

averaging 83 g/t Ag, 2.78% Pb, and 4.04% Zn

Refer to Mineral Reserves and Resources table below for full disclosure

Brownfields exploration

The Brownfields exploration program budget for 2024 at Caylloma is $2.0 million, supporting field exploration, regional geophysics, and ongoing studies of the structural controls to mineralization on the Animas vein.

Technical reports

Download the latest Caylloma Technical Report, effective date: December 31, 2023 (18 MB)

Mineral reserves and resources

								Contained Metal
Property	Classification	Tonnes (000)	Ag (g/t)	Au (g/t)	Pb (%)	Zn (%)	Ag (Moz)	Au (koz)
Mineral Reserves – Proven and Probable
Caylloma, Peru
Silver Veins	Proven	7	583	2.20	0.77	0.94	0.1	0.5
	Probable	48	447	1.40	0.72	0.82	0.7	2.2
	Proven + Probable	56	465	1.51	0.72	0.83	0.8	2.7
Polymetallic Veins	Proven	12	74	0.20	3.09	3.59	0.0	0.1
	Probable	2,220	73	0.10	2.83	4.13	5.2	7.1
	Proven + Probable	2,233	73	0.10	2.83	4.12	5.3	7.2
Combined-All Veins	Proven	20	261	0.94	2.23	2.62	0.2	0.6
	Probable	2,269	81	0.13	2.79	4.06	5.9	9.3
	Proven + Probable	2,288	83	0.13	2.78	4.04	6.1	9.9
Mineral Resources – Measured and Indicate
Caylloma, Peru
	Measured	524	98	0.30	2.09	3.16	1.6	5.0
	Indicated	1,262	82	0.21	1.47	2.54	3.3	8.5
	Measured + Indicated	1,786	87	0.24	1.65	2.72	5.0	13.6
Mineral Resources – Measured and Indicate
Caylloma, Peru	Inferred	4,505	99	0.43	2.43	3.70	14.4	62.8

Notes:

Mineral Reserves and Mineral Resources are as defined by the 2014 CIM Definition Standards for Mineral Resources and Mineral Reserves
Mineral Resources are exclusive of Mineral Reserves
Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability
Factors that could materially affect the reported Mineral Resources or Mineral Reserves include; changes in metal price and exchange rate assumptions; changes in local interpretations of mineralization; changes to assumed metallurgical recoveries, mining dilution and recovery; and assumptions as to the continued ability to access the site, retain mineral and surface rights titles, maintain environmental and other regulatory permits, and maintain the social license to operate
Caylloma Mineral Resources and Reserves are reported as of December 31, 2023
Mineral Reserves for the Caylloma Mine are reported above NSR breakeven cut-off values based on underground mining methods including: mechanized (breasting) that represents 91 % of Mineral Reserves planned for mining at $89.78/t, mechanized (uppers) at $79.70/t, semi-mechanized at $ 93.27/t, sub-level stoping at $88.81/t, and a conventional method at $170/t; using assumed metal prices of $21/oz Ag, $1,600/oz Au, $2,000/t Pb, and $2,600/t Zn; metallurgical recovery rates of 82 or 85 % for Ag, 22 or 55 % for Au, 87 or 89 % for Pb and 89 % for Zn. Mining, processing, and administrative costs used to determine NSR cut-off values were estimated based on actual operating costs incurred from July 2022 through June 2023. Mining recovery is estimated to average 94 % with average mining dilution of 17 % depending on the mining methodology. Mineral Resources are reported at an NSR cut-off grade of $75/t for veins classified as wide (Animas, Animas NE, Nancy, and San Cristobal) and $135/t for veins classified as narrow (all other veins) based on the same parameters used for Mineral Reserves, and a 15 % upside in metal prices
Eric Chapman, P. Geo. (EGBC #36328) is the Qualified Person for resources and Raul Espinoza (FAUSIMM (CP) #309581) is the Qualified Person for reserves, both being employees of Fortuna Mining Corp.
Totals may not add due to rounding procedures