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.

Construction of ancillary facilities such as the administrative offices, general warehouse and medic post among others is 78% complete.

Underground Mine Development

As of the end of May, the main ramp reached below the 1400 meter elevation and is expected to reach sub-level 1350 by the end of 2011, where production blocks A and B will be prepared.  Production blocks K, L and M have already been prepared for start-up of production in July at an initial mining rate of 1,000 tpd. The mineralization in these stopes is consistent with the geologic model.

As of April 30, 2011 the mine had built a development ore stockpile of 37,000 tonnes grading 131 g/t Ag and 1.2 g/t Au.

Water Sourcing

As of the end of May, make-up water balance for the operation is being met by precipitation captured in the project's water reservoirs. Negotiations are ongoing to install the remaining two kilometers of the water pipeline from the Ocotlan grey water treatment plant to the mine site.

Power Substation

In April 2011, the 8MW power substation connected to the national power grid and is currently providing power to the project.

Qualified Person

Mr. Miroslav Kalinaj, P. Geo., is the Company's Qualified Person as defined by the National Instrument 43-101 and has verified 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.

ON BEHALF OF THE COMPANY

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.