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Fortuna's San Jose Mine On Schedule For Production In August 2011

VANCOUVER, June 20, 2011 /PRNewswire/ - Fortuna Silver Mines Inc. (TSX: FVI) (Lima Stock Exchange: FVI) is pleased to provide an update on construction activities at its San Jose silver-gold Project in Oaxaca, Mexico. Construction activities to date are on-time and on-budget with the commissioning of the San Jose mine scheduled for August of 2011.

Construction Highlights to May 31, 2011

  • Processing plant construction for start up at 1,000 tpd is 87% complete.
  • Three stage crushing circuit has been commissioned and crushing of stockpile ore is scheduled to take place in late June. Mounting and installation of the ball mill, flotation cells, thickeners and filters are complete. Piping, electrical and minor equipment mounting and installation are 92% complete.
  • Tailings dam has been commissioned and is currently storing water for the process.
  • New 8MW power substation is in operation and sourcing power to the project.
  • Mining of stopes K, L and M is scheduled to commence in July, in line to produce 520,613 ounces Ag and 4,584 ounces Au or 782,851 ounces Ag Eq* in 2011 and 1.7 million ounces Ag and 15,326 ounces Au or 2.6 million ounces Ag Eq* in 2012.
  • The mine has built a development ore stockpile of 37,000 tonnes grading 131 g/t Ag and 1.2 g/t Au.
  • To the end of May 2011, US$41.9 million invested in construction or 75% of CAPEX,    (*) 2011 Ag Eq based on US$23.60 / oz Ag and US$1,350 / oz Au.  2012 Ag Eq based on US$23.10 / oz Ag and US$1,340 / oz Au.

Jorge Ganoza, President and CEO, commented, "Construction of the San Jose mine to date has advanced according to plan. Our contractors continue to deliver high quality work on target and we are on-time and on-budget. In May, we kicked off a staged commissioning of the processing plant beginning with the crushing circuit. We have more than one month's worth of ore - over 37,000 tonnes - stockpiled ahead of full commissioning of the mine and processing plant in August.  Management looks forward to reporting to our shareholders the start up of commercial production of silver-gold concentrate in the third quarter of this year."

Construction Update

Processing Plant and Ancillary Facilities

Installation work for all major equipment has been completed and work is now focused on completing piping, electrical and minor equipment installation. There are at present no technical difficulties or budget over-runs in the commissioning of the processing plant.

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