Fortuna Begins Commercial Production at San Jose Mine, Mexico

VANCOUVER, Sept. 1, 2011 /PRNewswire/ - Fortuna Silver Mines Inc. (TSX: FVI / Lima Stock Exchange: FVI / www.fortunasilver.com) is pleased to announce that it began commercial production at its San Jose silver-gold mine in Oaxaca, Mexico today. Construction of the wholly-owned mine was initiated in March 2010 and was concluded on-time and on-budget, with total construction capital investment of approximately US$55 million.

San Jose is expected to produce 520,000 ounces of silver and 4,600 ounces of gold in 2011, and 1.7 million ounces of silver and 15,000 ounces of gold in 2012 at an estimated cash cost per silver ounce of US$5.04, net of by-products.

"This is a milestone for Fortuna.  Our entire organization, with a special mention to our team at San Jose, has performed exceptionally well by delivering the construction and commissioning of our second mine on-time and on-budget.  We now look forward to continue delivering production growth through the expansion of San Jose to 1,500 tonnes per day by third quarter of 2013.  In addition, we are scoping production expansion of our Caylloma mine for 2012." said Jorge A. Ganoza, Fortuna President, CEO and Director.

Commissioning of the processing plant began on July 15^th, 2011 treating low grade ore from development stock piles and was completed on August 31^st, 2011 with the mill and mine operating steadily at the initial design rate of 1,000 tonnes per day (tpd).  Metallurgical recoveries achieved for silver and gold are 75% and 80% respectively, both within eighty percent of design parameters.  Management expects that recoveries will continue to improve over the coming weeks to the targeted 88% recovery for silver and 90% for gold, as the process continues to be fine tuned and the plant is sourced with production ore.  The San Jose mine currently has approximately 51,000 tonnes in the coarse ore stockpile and 5,000 tonnes in fine ore stockpile.

Production on stopes K, L and M is proceeding as scheduled to support the initial design throughput rate of 1,000tpd.  Mine and processing plant ramp-up to design capacity of 1,500tpd is scheduled to be concluded in the third quarter of 2013.

For 2011, Fortuna's consolidated production guidance is 2.4 million ounces of silver, 7,530 ounces of gold plus approximately 38.4 million pounds of combined lead and zinc production. For the first two quarters of 2011, silver production at its Caylloma mine in Peru was 912,102 ounces, with 10.3 million pounds of lead and 11.9 million pounds of zinc as by products.  For 2012, the Company anticipates an increase in production to 3.7 million ounces of silver, 18,041 ounces of gold and approximately 39.8 million pounds of combined lead and zinc production.

Fortuna Silver Mines Inc.

Established in 2004, 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 mine in Mexico.  The Company is selectively pursuing additional acquisition opportunities.  For more information, please visit our website at www.fortunasilver.com.

ON BEHALF OF THE BOARD

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

Symbol: TSX: FVI / Lima Stock  Exchange: FVI

Forward-Looking Statements

Certain statements in this press release constitute forward-looking statements and as such are based on an assumed set of economic conditions and courses of action. These include estimates of the time of commencement, commissioning and full production, 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 estimation 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.

SOURCE Fortuna Silver Mines Inc.