Fortuna Silver Calls for New Approach to Mining

Fortuna Silver Mines' Mexican subsidiary, Minera Cuzcatlán, has announced the early closure of its San Jose mine in Oaxaca. Originally scheduled for mid-2025, the closure has been moved forward by approximately six months due to rising costs. The company expressed its desire to continue operating in Mexico but emphasized the need for a more favorable government stance toward mining.

Fortuna Silver cited escalating costs, including the impact of the appreciation of the Mexican peso, higher contractor fees for transportation services, and increased labor costs, as reasons for the accelerated closure. Despite encouraging results from exploration at the Yessi vein, the future of Minera Cuzcatlán remains uncertain, pending further evaluation in 2H24.

Fortuna Silver Mines expressed the need for a change in the Mexican government's stance toward mining to consider sustained operations in the country. Since 2021, the company has predominantly invested outside Mexico, with only a fraction of its acquisitions and growth budget allocated to the country, which Jorge Ganoza, CEO, Fortuna Silver Mines, highlighted as a missed opportunity for Mexico. “We continue to see Mexico as a country where we would like to be operating and doing business for many more years, but we need to see a change in the government's attitude towards the industry,” Ganoza added. 

The company also emphasized the importance of its social and environmental projects in the region, including operating a wastewater treatment plant in Ocotlan de Morelos. However, the continuity of these projects depends on the operations of the miner. The San Jose mine closure puts at risk the livelihoods of 5,800 direct and indirect employees in San Jose del Progreso, the company said.

Minera Cuzcatlán began preparations at the San José mine in 2006 and commenced commercial production of silver concentrates with some gold content in September 2011. However, operational challenges, including a blockade in the 1H23, led to production shortfalls in 2023.