Fortuna increases silver production by 96% in 2009, issues production
guidance for 2010

VANCOUVER, Jan. 18 /CNW/ - Fortuna Silver Mines Inc. (TSX: FVI/Lima Exchange: FVI) is pleased to report that the 2009 production performance figures for the Caylloma mine in Peru confirm the 3rd successive year of silver production growth for the Company. Production of all key metals increased substantially over 2008 as mine output, mill throughput and silver grades increased, and recoveries improved. A full table of metal production by quarter is attached at the end of this release. Full year production highlights include:

    
        -  In 2009 Caylloma produced 1,685,026 ounces of silver, a year-on-
           year increase of 96% over 2008 production (861,176 oz Ag).

        -  Production of zinc at 28.4M lbs and lead at 25.1M lbs increased
           22% and 52% respectively over 2008.

        -  Unaudited financial results indicate gross revenues in excess of
           US$50m for the full year 2009, an increase of at least 90% on
           2008's revenue of $26.3m.
    

Mr. Jorge Ganoza, CEO of the Company, commented: "The Caylloma Mine is a success story for Fortuna. It has delivered three consecutive years of silver production expansion and unit cost reduction. We expect to maintain production of all commodities at close to current levels during 2010 with the exception of copper, which should ramp up to 1M pounds. Future growth will come from the development of our San Jose Project in Mexico. We have all the required permits in place for San Jose and a strong treasury, which will enable us to launch the construction of Fortuna's second mine in the first quarter of 2010."

San Jose Project Update

With the recent granting of the Change of Land Use permit (see Fortuna news release dated December 14, 2009), Fortuna now has all of the key permits necessary to start construction at San Jose. The Company expects to publish a pre-feasibility and start construction activities during the first quarter of 2010. The Company looks forward to commissioning San Jose in 2011, which will drive further growth in Fortuna's silver production.

Fortuna has also signed a commitment letter to enter into a $20-million (U.S.) senior secured revolving credit facility with the Bank of Nova Scotia. The proceeds of the facility, which complement Fortuna's strong cash position, are intended in part for the development of the San Jose project in Mexico.

    
    Important developments for the San Jose project during the second half of
    2009 include:

        -  On October 23rd, the Environmental Impact Study was approved by
           the SEMARNAT (Mexican Environmental Agency) which allows for the
           construction of a 1,500 tpd underground operation with a
           processing plant that will use conventional flotation for
           production of high grade silver and gold concentrates.

        -  Metallurgical tests run by Metcon Research yield over 90%
           recoveries for both silver and gold without the use of cyanide.

        -  On October 26th, a new NI 43 - 101 compliant resource estimate was
           disclosed where the Indicated Resources increased by 112%.
           Currently, Indicated Resources are 37.6 million ounces of silver
           equivalent and Inferred Resources are 30.4 million of ounces of
           silver equivalent.
    

Production Guidance for 2010

Management is pleased to provide a 2010 production guidance for Caylloma. The Company expects to sustain silver production at 1,700,000 ounces, with base metal production also remaining level at current rates.

    
    2010 Production Guidance

    ------------------------------------------------------------------------
    Metal production     2010 (Forecast)       2009        2008        2007
    ------------------------------------------------------------------------
    Silver (oz)              1,700,000    1,685,000     860,000     480,000
    ------------------------------------------------------------------------
    Zinc (lb)               28,400,000   28,439,000  23,300,000  13,900,000
    ------------------------------------------------------------------------
    Lead (lb)               25,200,000   25,133,000  16,500,000   8,300,000
    ------------------------------------------------------------------------
    Copper (lb)              1,000,000      189,000           -           -
    ------------------------------------------------------------------------
    

A Technical Report on Reserves and Resources for the Caylloma Mine is available on the Company's website at www.fortunasilver.com.

Qualified Person

Mr. Miroslav Kalinaj, P. Geo., is the Company's Qualified Person as defined by National Instrument 43-101 and is responsible for the accuracy of the technical information in this news release.

Fortuna Silver Mines Inc.

Fortuna is a growth oriented, silver and base metal producer focused on mining opportunities in Latin America. Our primary assets are the Caylloma Silver Mine in southern Peru and the San Jose Silver-Gold Project in Mexico. The Company is selectively pursuing additional acquisition opportunities. For more information, please visit our website at www.fortunasilver.com.

Forward-Looking Statements

Certain statements in this presentation constitute forward-looking statements and as such are based on an assumed set of economic conditions and courses of action. These include estimates of future production levels, expectations regarding mine production costs, expected trends in mineral prices and statements that describe Fortuna's future plans, objectives or goals. There is a significant risk that actual results will vary, perhaps materially, from results projected depending on such factors as changes in general economic conditions and financial markets, changes in prices for silver and other metals, technological and operational hazards in Fortuna's mining and mine development activities, risks inherent in mineral exploration, uncertainties inherent in the calculation of mineral reserves, mineral resources, and metal recoveries, the timing and availability of financing, governmental and other approvals, political unrest or instability in countries where Fortuna is active, labor relations and other risk factors.

    
    ON BEHALF OF THE BOARD

    Jorge Ganoza
    President, CEO and Director
    Fortuna Silver Mines Inc.

    Symbol: TSX: FVI/Lima Exchange: FVI



    2009 Production Performance Figures for Fortuna's Caylloma Mine.

    -------------------------------------------------------------------------
                         Q I -     Q II -     Q III -     Q IV -
                          2009       2009        2009       2009        2009
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Processed ore (t)   91,449    100,881     105,241     97,989     395,561
    -------------------------------------------------------------------------

    -------------------------------------------------------------------------
    Head grade
    -------------------------------------------------------------------------
    Ag (g/t)            147.81     160.42      146.54     165.05      154.96
    -------------------------------------------------------------------------
    Zn (%)                3.83       3.82        3.58       3.42        3.66
    -------------------------------------------------------------------------
    Pb (%)                3.11       3.20        2.95       3.14        3.10
    -------------------------------------------------------------------------
    Cu (%)                0.23       0.26        0.26       0.24        0.25
    -------------------------------------------------------------------------
    Recovery(%)
    -------------------------------------------------------------------------
    Ag(1)                 84.6       86.5        84.2       86.4        85.4
    -------------------------------------------------------------------------
    Zn                    90.0       88.5        88.6       89.1        89.1
    -------------------------------------------------------------------------
    Pb                    93.0       92.5        93.2       93.3        93.0
    -------------------------------------------------------------------------
    Cu(2)                    -          -           -          -           -
    -------------------------------------------------------------------------
    Metal produced
    -------------------------------------------------------------------------
    Ag (oz)(3)         367,986    450,020     417,571    449,449   1,685,026
    -------------------------------------------------------------------------
    Zn (lb)          6,948,967  7,527,015   7,365,674  6,597,229  28,438,884
    -------------------------------------------------------------------------
    Pb (lb)          5,831,316  6,587,799   6,391,655  6,322,356  25,133,125
    -------------------------------------------------------------------------
    Cu (lb)                  -     49,865      44,848     94,227     188,940
    -------------------------------------------------------------------------
    (1) Silver recovery in lead and copper concentrate
    (2) Copper recovery not reported as circuit was fully commissioned in
        December 2009
    (3) Silver production in lead and copper concentrates
    

SOURCE Fortuna Silver Mines Inc.

For further information: For further information: Investor Relations: Lima office: Carlos Baca, Tel: 51.1.616.6060; Vancouver office: Erin Ostrom, Tel: (604) 484-4085

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