Greetings and welcome to the Fortuna Silver Mines’ First Quarter 2013 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Carlos Baca, Investor Relations Manager for Fortuna Silver Mines. Thank you. Mr. Baca you may begin.

Good morning, ladies and gentlemen. I would like to welcome you all to Fortuna Silver Mines and to our first quarter and operations results call. We are hosting the call from Lima and Vancouver. I would now like to turn the call over to the President, CEO and Co-Founder of Fortuna, Mr. Jorge Ganoza. Thank you once again to everyone for joining us this morning.

Thank you, Carlos. Good morning to all. I am joined on the call today by Luis Ganoza, our CFO. I will initiate the conference and with the assistance of Luis, we will be giving a summary and analysis of our operations and financial results for the first quarter of the year. Once concluded, we will address your questions. During the quarter, the company reported sales of $40.7 million, when comparing against Q1 2012 sales were initially flat. Cash generated by operations before changes in working capital increased by 11% to $16.3 million. We reported net income of $6.7 million, a drop of 40% and earnings per share were $0.05. Our mines produced 1 million ounces of silver and 4,500 ounces of gold. Silver production was inline with our budget and 4% above Q1 2012, while gold was 6% below budget and 13% below Q1 2012. The variation is attributable to a 9% drop in head grades for the quarter of the San Jose mine. The variability in rates is within the range of our model and attributable to both the variations in our production source. For 2013, average guidance is for silver production of 4.4 million ounces and gold of 23,300 gold ounce; we are on-track to meet our guidance. Our precious metal production for the quarter accounted for 81% of revenue. Silver represented 67% of revenue while gold accounted for 14%. The balance was made by byproduct grams in sales. Realized silver price for the quarter was $30 and $1,550 for gold is 6% and 2% lower respectively when compared against Q1 2012. Cash cost per ton at both of our operations was inline with guidance for the quarter. Caylloma, reported cash cost per ton of $94.20, 2% below guidance and 15% above Q1 2012; San Jose reported cash…

Thank you, Jorge. We reported $6.10 million of net income in the first quarter of 2013 compared to $11.1 million in the prior year period; when compared to the first quarter of 2012 net income was affected by a $2.8 million difference in final price and adjustment; a lower margin contribution from the San Jose mine and higher share based payments of $1.3 million. Sales were flat compared to 2012 and provision of sales actually increased 8% driven by higher silver sold of 13%. This however was offset by a lower realized silver price of 5% and the difference in final sales adjustments. This $2.8 million difference came from net adjustments of $1.4 million in Q1 of 2013 compared to positive adjustment of $1.4 million in Q1 of 2012. Our lower margin contribution from San Jose have to do more with an exceptional quarter (inaudible) with lack of performance in Q1 of 2013. Our (inaudible) compared to our budget exceeded silver production by 14% and was in line our unit cash cost with the gold production than planned of 5%. When compared to last year however production was 12% lower and unit cost 19% higher, therefore explaining lower volumes year-over-year. As a result of this our mine operating earnings were 20% below the prior year period. Down below the income statement, G&A increased $1.6 million mainly as a result of higher share based payments of $1.3 million when compared to Q1 of 2012. This difference stems from the recording of the credit of $0.3 million in 2012. And again finally net income was $6.7 million or $0.05 per share. Moving on to the cash flow statement, we had reported cash flow before changes in working capital and after taxes and interest rate of $16.3 million or $0.13 per share. This is an increase of 11% above the prior year period which was driven by comparatively lower effective state in 2013 of $4.9 million. Cash from (inaudible) and investment activities, mainly on the mineral properties, plant and equipment was $18.4 million and the net increase in cash in the period was $3.2 million after adjusting for provisions of short-term investments. Our planned capital project at both our mines this year should demand an additional $35 million to $40 million capital spending in 2013 as we concluded expansion of San Jose and other non-recurring infrastructure projects. At current metal prices, we expect to be able to fund (inaudible) requirements with a modest reduction in our treasury. Our cash position as of the end of the quarter including short-term investments was $68.7 million and we recently closed an expansion through our revolving credit facility for up to $40 million; it puts the company in a strong position to execute on it's investment plans and maintain necessary financial flexibility. Thank you. Back to you, Carlos.

Thank you very much for listening to us. We would now like to turn the call over to any questions that you may have. Please state your name clearly.

(Operator Instructions) Our first question comes from the line of Heiko Ihle with Euro Pacific Capital. Please proceed with your question.

Guys when we last spoke your course action was to maintain the status quo when it comes to overall labor force. I'm just trying to see if anything has changed, I mean obviously with the changes in the full year labor market. You described earlier there maybe quite a few selected hires that you may want to have on board. My first, are you thinking about instituting the layoff yourself, I mean obviously a lot of your peers in Mexico have already started to do so, but you guys have lower cost operation, but regardless I'm sure the thoughts entered your mind.

We are reviewing our capital project to see opportunities to be fair some of it, most of it. Fortuna is coming out of capital intensive phase this year in 2013. This year our largest capital budget is the $50 million basically requirement to expand the Compañía to these new triple capacities 1,800 tons per day and we also have [San] one-time capital for you at the Caylloma Mining in Peru. So when we look our measures, we talk to, we're looking on in the context of 2013, but in the context of both cash flows and [liquid] cash flows in this price scenario over 2013, 2014 and 2015. When we look at all inclusive cash cost of mine, Caylloma is in the mid-teens and Jose is in the low-teens. So when we and this is lower price in this new price environment, we're starting to see flex limitation on the cost side, mainly by the way of services and (inaudible). We're starting to see layers taking plain on the higher cost operation and that undoubtedly will start dealing through the year to easing of cost pressures in the sector, mainly labor and specialized services, contractors, engineering services or whatnot. So that will be to our benefit. So again, we are not moving quickly to make cost. We're looking at this in the context of three years or in terms of two to three years in a low price environment and opportunities that we can capture there taking advantage of the fact that our mines are low cost operations including cash flows. And what we could expect I think to the easing of the market is opportunities to just free cost reduction moving forward. So we are not moving at this moment to make aggressive layers and we are trying to see opportunity as we do every year to make our G&A more efficient and effective, better focus our exploration with the information we have on hand this year or what we -- all these budgets or budgets are prepared in October, November of the previous year. So in light of information we have today we can refocus our programs, refocus our capital project. So we are looking at a facilities to address. We are being very [hawkish], we are looking at our models closely and looking at the price we will have closely overall and we will be acting accordingly to favour, maintaining the company. We believe in this environment we can continue progressively pursue our strategic objectives and even pride in our environment like this.

That’s quite fair. Also given the gold production (inaudible) touched lower than what I had modelled and obviously lowered in your budget as well. Give me your mine plan, is it time to update longer term models for the analyst or is it just sort of one-item and a blip on the radar?

I have the benefit of stream or production out of metallurgical balance it's everyday and I can tell you that up to now, up to yesterday our gold production at the San Jose Mine is very much in line with budget. So we will not see a deviation in gold production at San Jose Mine, that's a trend. It's just part with normalization and within the range of models and we are not forecasting any deviations from our guidance. And in fact we are seeing opportunities to see guidance once again this year.

And then last question given the current share price is 2.86 and your $68 million work of the cash short term investment, I think the it's 64.4. At what point in time are you going to guys (inaudible) share repurchase program, does it mean certainly makes sense at the current price level, so just given the NAV of the stock and the current trading price?

We are working, we are looking at both initiatives we have now regarding buybacks or initiatives in long term of this time, the non-director speaker but is something that we are going to be discussing with the boards certainly this year. So on the current type environment we all start to feel ourselves cheap and that will prompt some initiatives likely but I cannot report anything additional.

Thank you. Our next question comes from the line Craig Johnston with Scotiabank. Please proceed with your question.

Just wondering if you could provide some color on the Union at Caylloma, just wondering to anticipate if labor cost to rise as a result and if you give us a sense of kind of what the percentage of labor force is under the Union?

Yes. First, let me give you some background. We were up now. For the seven years we have been operating in Caylloma, the only nine and other was non-unionized in entire area. We think 60 kilometers of Caylloma there five, six or mine operations. And what has brought it, the formation of the Union is the thought that last year the profit sharing will choose by (inaudible) 8% profit share for 2011 which was paid at the end of Q1 2012, averaged about 11 to 14 additional month of these salaries per worker between ‘11 and ‘12 monthly salaries per worker. This year that number has been renewed and from four to five monthly salaries per worker. So that reduction that they have seen in the profit sharing is what has prompted this movement to come together as a union and bring in the demands forward to company. The number of unionized workers right now is around 70 out of a population of close to 500. We can expect that figure to grow perhaps, and they have presented a list of demands many of which we have already complied with them under (inaudible). But there is going to be a negotiation. We had in our budget a 5% increase for this year on wages reducing our budget. Right now I would not be in a position to say that there will be an increase for mining for potential increase as we are just starting with the negotiations. And again even though there are some pressures to pay additional bonuses to contemplate the law they have on the profit sharing or their perceived loss on the profit sharing, it’s part of the reality of now and there are many other things we already fund for the workers and that we are trying to stress and put forward to the union. So we are not in a position right now to stay while we (inaudible) them mining to, obviously there will be a main impact here from the negotiation that are just starting.

Our next question comes from the line Benjamin Asuncion with Haywood Securities. Please proceed with your question.

I just had some questions, just wanted to touch back on some of your comments on San Jose and the expansion. Can you give us a sense of what the progression would look like? I believe you mentioned that it was going to be, commissioned in August. Would it be running at 1,500 ton per day run rate at that point in time?

Yes, the mine is well ahead of schedule to meet not only the 1,500 tons per day, but also take use of full nominal capacity of the plant at 1,800 tons per day starting in the ’13 of Q4, in the last quarter. So the mine is well ahead of schedule, and on top of that we have a large stockpiles on surface that we could always serve as a cushion for the mine. So we see no problem on the mine and to meet the 1,500 tons per day and quickly accelerate before the end of the year to a full nominal capacity of 1,800 tons per day.

Perfect and just touching on some of the more recent exploration results here on, I guess (inaudible) expansion, can you give a sense of how much drilling you would need in order to be able to start or when you would be in a position to start talking about how some of those results could be incorporated into a mine plan and wrap development around it.

Well, we were having a discussion here because the way things are moving and we see areas being so close to city (inaudible) structure we might start mining some of that before reserve is published. We currently have close to $7 million budgeted for exploration at San Jose and most of that is being final to a drilling of this new area. We currently have our two rigs working there, we are looking to at third and we are going to be drilling from surface, we are going to be drilling from underground. And these areas is only 200 meters north of an existing mine infrastructure. So it will be quickly - 200 meters is basically too much of drifting. So we are already moving in that direction, and I believe integration of business owned or production plant will be taking place even before we have time to publish our annual updated reserves which is scheduled for publication in early 2014. We do our publications every year in the first quarter. So we will have a cut date of June for the resources and from that we start working on the resource model, reserve model budget and then we probably (inaudible) on resources and reserves by Q1 of next year, but again what I see is that we are going to start developing and consider start construction and mining there before we have reserves published.

Okay, can you give us a sense of how far as down the road that would be in terms of when you would be in as expected within in that area that you could develop it?

Well, due to a consideration of our mine and we have our supporting infrastructure and develop through a decline on the footwork of mineralization. So most of the development that we will be doing in this new area will be in all once we branch out from the main (inaudible). So I would anticipate that a lot of that is just drifting on structure because of the width of mineralization will start forcing or melting. The width of mineralization are quite significant to width of 7 meters, 12 meters as you can see in the drilling. It is not strange, I mean its common for this area. So we are very excited about that and the potential means. So I expect we will start seeding the new ore from [business] before the end of the year before we results are published.

Okay, perfect and my question here, just given your balance sheet strength and increase credit facility that you have available to you, can you comment on some of the opportunities that you are looking at?

Yes, we continue to focus on predevelopment (inaudible) opportunities throughout America or team impacting the; we conducted two site visits this past month. We have to manage our strength and the strength that are low cost production gives a strength of clean balance sheet now that strong cash position, the availability of additional flexibility to (inaudible) facility. To use this environment, to go there and capture the good opportunities there are, there are not a lot of those. There are lot of companies, there are lot of (inaudible) are focusing on things that need a threshold, and we look at that we ask (inaudible) what we are bringing enhancing or detracting from our asset portfolio, the rest of mine we are having a portfolio (inaudible) and we bring has (inaudible) to complete financial metric (inaudible).

Just lastly can you give us a sense of the size in terms of what your (inaudible) or what you will be comfortable with in terms of valuation range.

Could you repeat that please?

Could you give us a sense of the size, how big of an opportunity or what’s the evaluation or range that you will be looking at is?

Well, you know we are looking more at incremental growth opportunities rather than transformation products that require large capital (inaudible) or balance sheet and put us in a risky position; you know we are gearing our efforts in the search for assets that are coherent with the financial position of the company and our more incremental growth for us while just trying to go out there and look for you know transactions that will require Fortuna to revalue on the basis of business development project rather than the (inaudible) base. So you know just to give you a sense of how we are thinking that's how we think.

Our next question comes from the line of Nicolas Campbell with Canaccord Genuity.

A lot of my questions already have been answered, but just on the expansion or extension into of the (inaudible) issue there is an additional $6 million option payments payable on the production decision to Pan American. Is that given that you are talking about getting or really getting in there before the end of the year; are you going to, when do you think you will be making that payment for the rest of the remaining interest on that asset?

Before the end of the year.

Okay, fair enough. Can you give us a little more color in terms of the expected core capital that we should see quarter-over-quarter and obviously it should be frontloaded given that you are still expanding San Jose, can you give us an idea as to how much capital you guys need in Q2.

Well, our capital budget for the year eating our guidance; we've not seen any material relations from our capital project. You know, sometime rates accelerate in the second half of the year or what not, but I think the fashion for your model is that is what we're looking for is to consider a steady execution of capital budget which is in our guidance. Now we are going to be looking in the coming, actually this week here in Lima we have a meeting with our Vice Presidents (inaudible) we're going to be reviewing capital project and see if there are any opportunities to differ some of our capital project are in or going through that exercise opportunities to project and we are not comparing in any way ability to continue for time being our growth, nor challenge the sustainability in any way. It’s something that we've been very diligent and has paid off is we have always kept our mines and infrastructure well ahead of production and that gives our mines tremendous flexibility that’s why I think we recommend out there in the market for as a company of visibility to meet guidance in a sustainable way for us. So we don’t want to lose that flexibility. But nevertheless, we will be reviewing our capital project and seeing the exploration how we can focus if there is opportunity for us, and the first time, some of this budget, but on the safe side for your models I will keep with the guidance we gave in the year and this through in your model.

Okay. So assume when you are going to your, you are in process, there is likely to be a little bit of a plans and savings in some areas but that’s probably going to be offset by some increased spending to develop and crept over into the new zone and if you can spare some increase in exploration spending at San Jose given the cuts you had?

I will not expect an increased spending exploration because probably something that we will likely be doing is or budget had already some breathing room for drilling and things that we can find, so we will be likely, again, focusing on drilling effort where we’re most successful today and where we can have a better impact in short to medium term. And so I do not expect increases in our drilling budget especially at San Jose and nor Caylloma at this moment, but in the case of additional development to bring this is news on is not material, it's not on a material amount, yes, it cover percent perhaps an increasing cost over to the second half of the year as we start developing new zones. But again, we already will have in that plant capacity to standard to nil so we should see higher production as well, and so on a cost per ounce basis cost, we, cost per ton basis should we net it off. The problem is when you start developing and you can advantage to your new or you are developing a very ahead production which have been to us in preparation for the 1500 transfer (inaudible).

Okay. And as start to pay; are you still expecting to start paying some cash taxes in 2014?

Could you repeat that please?

When do you expect to pay cash taxes at San Jose?

I am sorry Nick, you question was when do start, w plan to start turning cash to the shareholders, is that what are you telling?

When are you expecting to have to pay cash taxes in Mexico for San Jose?

Okay, I am sorry, probably your line is not dead, the second half of this year we should start incurring taxes at San Jose.

Our next question comes from the line of Jeff Wright with Global Hunter Securities.

I think most have been covered, but just a few as to the questions on the flexibility you have with capital deployment; if you were to either scale back or postpone some capital cable initiatives, what is your kind of outline, how did the $22 million, what do you think would be the low hanging opportunities would be with the [tail exam] or the power grid or camp infrastructure you know where do you think that post come up would be?

One of the things that we can have is the second phase of the [Campa] facility at Caylloma for example. Now we are basically concluded the first phase and the second phase is $3.5 million budget. It has not started yet. We are starting with the preparation of the leading process for that and that's certainly some low-hanging fruit. We could be heard that very, not at $3.5 million. We have some budget allocations for the reengineering of the (inaudible) facility for the concentrate at San Jose and to (inaudible) that we postponed already early in the year, but we can have some opportunities to be first of all cross small budget there $300,000 or $400,000. So opportunities like that now and release it always are G&A. I mean that's an exercise we do regularly but we can abandon initial regular this year. We are going to be doing nothing.

A lot of those lines and from the other questions it sounds like the $7.5 million in exploration in San Jose is very solid, do you have flexibility around the $6.7 million at Caylloma?

In Caylloma, we are currently enjoying success with our drilling in the north (inaudible) system. We should be releasing results, drill results for that program in the coming days. Something that we will be looking the exploration team is (inaudible) is again opportunities to focus on drilling, but our drilling exploration is that some people will look at exploration and the first thing you can cross and I do not necessarily sign up with that thinking as we are looking at opportunities to increase the average grade of resources and research right now. And that is the result of two, three years of hard work and exploration things to identify these (inaudible) and we are there right now. So and I mean if we won a battle of and send off from a low price environment, although you have to always bring higher grade ore to your resources and research and that is what we are doing right now and this is not spontaneous generation. This is the work of two, three years of continuing work. So we have refocused our word, but I'm very reluctant to just go out there and slash exploration costs. We have -- we can still fund exploration and I think that is the best medium long term and the best return we can give to shareholders. We had the cheapest growth, the kind of profitability we come from improved (inaudible) at our mines, the best returns for shareholders are there.

Our next question comes from the line of (inaudible). Please proceed with your question.

My question is, is silver prices continued kind of lag or even drop? In the next two to three years, where do you see growth coming from at Fortuna?

Our Caylloma mine is at a steady state of production is the nearest to us, 2 million ounces of silver and unless we make discoloring there that can help us to change that production profile. That mine continues steady state. The dealer opportunities are at San Jose Mine today. Again, we have a nominal capacity for 1,800 tons per day. That would keep our production profile growing in to 2015 while we see opportunity to take our production from our (inaudible) 4.4 million ounces of silver. Our guidance is to take it for -- what I would expect from this nominal -- from this expansion taking the plant and operations to 1,800 tons per day is that we are able to take our silver production to 6 million ounce threshold and our gold production to 35,000, 40,000 ounces of gold annually from the 223 for gold and 4.4 for silver that will take break over next two years 2014, 2015. Beyond that I believe that there are more opportunities for growth at San Jose, our limited factor into border. We have the rights already and initial solution for the water problem, which is what is allowing us to talk now about nominal capacity, reaching nominal capacity of plant at 1800 tons per day, which is through consolidative operation at a large reservoir that holds the water at other mine. We are moving ahead with a implementation of these solutions to control our operation and that will make more water available to us and that we talk about considerably 2,000 tons per day. Our flat economy has a budget of 1800, so we are going to be [hoping] expansions to 2000 tons per day based on the water we believe we have available from the moment we are running at this moment. So 2013, 2014, 2015 I see the driver for growth being San Jose through expansions that are already taking place and new expansions that are coming and also from the exciting new tons that we are discovering and we can swiftly integrate into a production plan. And based on these zones (inaudible) more ore but ore that have a mineralization that has high year average grade than the existing resources that we search, so we have an impact on the great profile of the mine as well.

Thank you. And do you have any long term kind of projections or expectation for production either annually or quarterly, now I am talking about (inaudible) next quarter five years?

We do not get to your question, I am sorry. Will you please?

Sure. Do you have any kind of expectations or estimate regarding their annual or quarterly production in the next four or five years like long term production goals?

Yes, and they are currently in our presentation. We have a production profile page on our presentation that will be information.

Thank you. Our next question comes from the line of Graeme Jennings, Cormark Securities. Please proceed with your question.

Hey, guys just want to touch on this expansion of the (inaudible) I know you are touching going for both controlling evaporation for your tailing to a lot of ago from 1500 to 1800 potentially 3000, why don't you just expand on that a little bit, I know there are wire line you have to install that wire line, you get to 1500 tons per day and then now we are just controlling of evaporation to get to this (inaudible)?

Yes, (inaudible) the project was regionally tried for 1500 tons per day and in the implementation of affiliate we decided to the mine (inaudible) mine due to its configuration and core and size of return and resources we believe can do well beyond 2,000 tons per day. So the infrastructure of the mine has been designed and built and I am talking specifically (inaudible) mine to allow for this and we decided to build the 1,600 ton per day. We acknowledged that there were opportunities to go beyond that. So in implementation phase, we overbuilt to a nominal capacity of 1,800 tons per day. Our problem was when we hit the water for this and one was the interconnection of the water pipeline which we were able to successfully complete and right now we have closed water system, it was the biggest loss, it’s through our operation as we store water in a large reservoir which is tailing facility. So we're implementing a solution which is some standard technology to cover the pond and controlling operation and that will allow us to have enough water available to grow even beyond 1,800 tons per day just looking at water availability. Right now our models indicate that we could be doing as much as 2,000 tons per day and the water is available. So in 2013, we're going to be pushing the mine hard to reach nominal capacity this year so we can be at 1,800 tons per day by the end of Q3, early Q4 and into 2014, we're going to be working to see how we can accommodate those additional 200 tons per day that will allow us to go to 2,000 tons per day and optimize the availability (inaudible) of operation.

And then what about how do you go up the next levels. How do you foresee if you are going through higher (inaudible) reconciliation. Can you expect to build continued line and (inaudible).

Basically what we would be seeing is the acceleration as we are operating 100 tons per day and 2000 tons per day of work that's already planned because of the configuration of the mine. And also it is very compact for San Jose and entire mineralization that's 5 million tons we have in reserves and resources occupy a space that has a longitudinal extent of 450 or 500 meters and a vertical extent of 450 meters. So this (inaudible) the acts of entire volume of resources and reserves to one decline and we ventilate entire area with far ventilation rates that we have been already built. We just have to continue deepening. So and the integration of these new (inaudible) that's why we believe can be swift because we can reach easily the branch from the main decline into these new zone, that will only be some 200 meters away. In fact we are already there with doing the twisting to build the drill chambers to accelerate the drilling through underground drilling. So the money would not be an issue. A lot of the capital to be spent is just acceleration of budgets in some instances, and we should be in a position that we have see a short lag between development and production.

Our next question comes from the line of George Shea, Cicada Investments. Please proceed with your question.

You mentioned in the MD&A that the lower house of Mexico voted in favor of a Mexico mining while reform for 5% increase in the tax and (inaudible) tax incentive. What would be the effect of that? Is it a large amount or is it?

So as you said, we understand today that 5% mining tax on taxable income, we understand as well that this would be deductible for income tax purposes. So the net effect at the subsidiary level would be 3.5 percentage points on the affective tax rate. So if you think of the impact on a consolidated basis, we're probably talking within 1.5 to 2 additional percentage points on our effective tax rate.

Our next question comes from the line of Andy Shelby, a private investor. Please proceed with your question.

Two questions for you. Jorge, first, I want to ask you to give some additional color or commentary concerning your expectation for cash cost for ounce of payable silver, net of byproducts for the rest of the year. Last year they were just under $6 per ounce, we had a discussion about the couple of extraneous factors that cause those cost to rise over 880 in the fourth quarter and (inaudible) hear it about 660 for this quarter? Do you have any guidance for us as to how those cost will track in the balance of the year?

Again when we analyse cost per ounce, firstly we need to look at the mere component of equation which is actual cost measured on a cost per tonne basis, and as you can see cost per tonne has been a very marching line with our guidance at both operations. Now when we look at cost per ounce, we will be subject to a probability coming from the by-products. 67% of revenue comes from silver and 14% of revenue is contributed by gold and the balance is made up by lead and zinc. So fluctuations in the price of gold and in this quarter for example the fluctuation in the configuration of gold in the equation had a main impact. We purposely refrained from dealing quarterly cost per ounce guidance, because of that reason our guidance has been on cost per tonne basis on a quarterly basis, and really gives a guidance on cost per ounce for the year because we believe that quarter-on-quarter we are exposed to (inaudible) evaluation but it is difficult to manage. Now we can manage our cost so we can manage our grades, but we cannot manage the grades of the byproduct. So we should go according to the equation. So our guidance for the year for silver for cash cost per ounce is $6 unchanged and again we do not, I would expect that in our lower price environment for gold, sorry $5.50 is cash cost guidance for the year. Cash cost per ounce net of (inaudible) for the year and I would expect that, if we see a reduction in gold in the price of gold, we will see an impact on our, that we will have an income on our guidance for cost per ounce.

Understood, okay. One other question I would like to direct to the Luis, have you noticed over the past couple of years that the share base compensation cost have been jumping around in a very erratic manner including some quarters in last year, when you had recoveries. I see about 900,000 of share based compensation expense for the first quarter here, you had $1.7 million last year and $3.6 million in such cost in 2011 I would like to understand, what the factors are that contribute to that and if you can gives any general guidance on the 2013, share based compensation cost?

Yes. The guidance based on our existing stock option plans and divesting schedule is in the range of $3 million for 2013 and the reason for the volatility has to do with certain outstanding share based instruments, and particularly these are used as our mark-to-market. So in particular with respect to Q1 of 2012, we saw sharp drop in the share price and that explains the credit I mentioned $0.3 million for the quarter, right. So there is unfortunately a bit of volatility coming from mark-to-market of as I mentioned particular certain instruments of time.

Is that’s likely to continue in the current year as well?

Yes, those instruments are still outstanding, and as long as there is volatility in the share price that will reflected on the share based statement line item of our income statement, but again outside of that effect the guidance is $3 million for the year.

Okay. That’s excellent. Once again I would like to request or remind you of the interesting meeting with (inaudible) on a Future trip into New York. I know I haven’t heard anything last couple of months, so...?

We will follow-up on that.

Thank you. Mr. Baca there are no further questions at this time. I would like to turn the floor back over to you for closing comments.

(Inaudible)

Mr. Baca do you have any closing comments?

Yes, remind to our last caller, remind sending us an email at info@fortunasilver.com please with your details so we can follow-up on your remark. I'll contact you personally. Thank you very much. So if there are no further questions, I would like to thank everyone for listening to today's earnings call. We look forward to you joining us next quarter. Thank you very much and have a very good day everyone.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.