Greetings. And welcome to the Fortuna Silver Mines' 2013 Year End Financial and Operation Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Carlos Baca, Investor Relations Manager for Fortuna Silver Mines. Thank you. You may now begin.

Thank you. Good morning, ladies and gentlemen. I would like to welcome you all to Fortuna Silver Mines and to our 2013 year end financial and operations result call. Jorge Alberto Ganoza, President and CEO; and Luis Dario Ganoza, Chief Financial Officer will be hosting the call from Lima, Peru. Before I turn the call over to Jorge, I would like to indicate that certain information contained or incorporated by reference in this earnings call, including any information as to our strategy, projects, plans or future financial or operating performance constitutes forward-looking statements. All statements other than statements of historical facts are forward-looking statements, the words, believes, expect, anticipate, contemplate, target, plan, intend, continue, budget, estimate, will, schedule and similar expressions identify forward-looking statements. Forward-looking statements are necessarily based upon a number of estimates and assumptions that while consider reasonable by the company are inherently subject to significant business, economic and competitive uncertainties and contingencies. Known and unknown factors could cause actual results to differ materially from those projected in the forward-looking statements. We disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as required by applicable law. I would now like to turn the call over to Mr. Jorge Ganoza, President, CEO and Co-Founder of Fortuna. Thank you once again to everyone for joining us.

Thank you, Carlos, and good morning to all. I am joined on the call today by Luis Ganoza, our CFO. I will initiate the conference call and with assistance of Luis we will be giving a summary and analysis of our operations and financial results for the fourth quarter and year end 2013. Once concluded, we will address your questions. The evolving story around Fortuna during 2013 has been the story of the Trinidad North discovery and the San Jose mine in mix. Well, there is nothing like higher grade discovery to energize our mining organization and struck to the attention and imagination of mining analyst and investors at large. The operation success has been underpinned by year-on-year of solid operational and financial performance in a difficult year. So, 2013, we have seen a continuation in the steady decline of precious metal prices from their peak in mid 2011. The average realized metal prices in 2013 were $23.50 per ounce silver and $1,395 per ounce for gold. Grow over by 24% and 16%, respectively when compared to 2012. This has been a driving year for mining industry, companies in the sector have been implementing change to operate in the lower price environment and in the process we have seen personnel lay-offs, starting exploration and capital spending, reserve reductions and balance sheet adjustments through impairment charges. Although, we have not been immune, I am pleased to report that our company has been able not only to adjust to this new environment but position ourselves to drive in the years to come. At the San Jose mine, as of December 31st, we reported a year-over-year increase in reserve of 12% for silver and 15% for gold, after production-related depletion and taking into consideration 18% lower silver price used in estimation. Silver reserves…

Thank you. For 2013, we recorded a net loss of $19.1 million compared to net income of $31.5 million in 2012. The loss was driven by an impairment charge at our Caylloma mine in Peru of $30 million pre-tax or $20.4 million after-tax, and a $7.7 million one-time non-cash income tax provision, reflecting the initial recognition of the Mexican Tax Reform. Adjusting for impairment, write-offs and the initial recognition of this Mexican Tax Reform, our adjusted net income for 2013 was $9.4 million or $0.08 per share compared to $34.1 million in 2012. The main driver for the reduction in adjusted net income was decreasing sales of 15% with respect to 2012, which was in turn the result of lower realized silver and gold prices of 24% and 15% respectively. Our recorded sales came down from $161 million in 2012 to $137.4 million in 2013, despite our increased total ounces of silver sold by 16%. Our mine operating earnings decreased 41% to $41.8 million, reflecting the native impact of lower metal prices. For the fourth quarter of 2013, we recorded adjusted net income of $3 million compared to $8.5 million in 2012. To understand the comparative performance for the quarter, however, it is better to compare adjusted income before taxes, which for 2013 was $6.5 million versus $8 million in 2012. The more modest drop we see in adjusted earnings before taxes in the context of a sharp fall in metal prices is a result of a material increase in ounces sold of silver and gold quarter-over-quarter and a significant reduction of unit cash cost at San Jose mine again when compared with a prior year period. Lead realized prices for silver and gold fell 37% and 26%, while ounces of silver and gold sold increased 49% and 64% respectively…

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 Benjamin Asuncion from Haywood Securities.

Hey, guys. Thanks for taking my questions. I just have few things here. Just to elaborate on the Caylloma impairments that you took in Q4. Can you give me a sense of what your, if you can on a cost per tonne kind of assumption that you had baked in going forward and as what you’re looking at to drive that impairment charge?

The cash cost -- the forecasted cash cost per tonne in exercise done in Q2 and the exercise done at the year end are quite similar and in the range of $88 per tonne to $89 per tonne going forward, Ben.

Okay. So it was predominantly driven by lower future metal prices that you had layered in, plus the updated reserves. Is that correct?

Yes. We saw a reduction in reserves at Caylloma and at year end we were using somewhat more conservative metal price (indiscernible).

Okay, perfect. And just looking at the fourth quarter cost at San Jose, and it looks like you delivered sort of the $63 per tonne, that improvement in cost, was that solely attributed to the increase in throughput from kind of 1,100 to 1,700 tonnes?

You mean the reduction in unit cost in Q4 San Jose compared to previous year?

Sorry, I am looking at compared to third quarter, you’re around 72, so obviously timing the fourth quarter you’re around 63?

Yes. Absolutely it reflects the increase in throughput capacity as well as some more, I would say controlled gains in efficiencies also the result of the measures undertaken throughout Q3 in order to contain operating and capital costs.

Okay. So is it safe to say then, I mean can you give us the sense of what as the 2000 tonne per day level when you get there kind of the end or the beginning of second quarter what sort of normalized cost per tonne level that you are going to looking at?

Yes. We are forecasting $65 per tonne for -- excuse me 2,000 tonne per day throughput mix, cash cost per tonne should stay within those ranges throughout most of 2014.

Okay, perfect. And thanks for answering my questions. I will hop back in line if you are connecting else.

(Operator Instructions) Our next question comes from Chris Thompson from Raymond James.

Good morning, guys. Thanks for taking my question. Jorge, I just want to understand, maybe you can just provide a bit of color on what’s happening as far as surface access in the Magdalena community and how that sort of layers into the company’s ability to continue to I guess the strike length extension at Trinidad North?

Good morning, Chris. We are engaged in negotiation process with the community of Magdalena to gain access to Surface rights that will allow us to pursue the exploration of a North strike extension of the main Trinidad vein System. Negotiation is taking place with the new authorities, with new elected authorities that took office in January. And we are working with the assistance of the state government representative, which we view as favorable. And that is how this negotiation took place. It is same dynamics and the same structure that took place a couple of years ago when we negotiated the pipeline for the ward that had to close in Magdalena town. It was the Magdalena representatives, company representatives and our neighbor from the state government, so that’s taking place. There is this working negotiating team. The three parties have agreed on a deadline of late April, early May to negotiate an agreement that will allow us to have access to Surface rights. And the objective is not only to gain access to do drill platforms. And also start looking into building more long-term infrastructure that we could require for the future. We can carry the work. We plan to look forward to 2014 and for 2015 from the existing underground access. So, 2014 program does not require any additional permits and for Surface rights. But, yes, of course, we would like to have -- we would like to gain the Surface rights to continue, we could -- extending the exploration beyond the immediate 500 meters that we can currently cover from underground access. And we have identified potential strike length of roughly a kilometer and a half to two kilometers from the existing new boundary of resources to the North. There is a solidified outgrowth that we have recognized 2 kilometer for long strike. This is well within Magdalena surface rights and that’s why it is key to gain access from Magdalena. I’m hopeful that we will be able to reach an agreement. We just have to go through the process with them.

Great quarter. Thanks for the very comprehensive answer. Thank you.

(Operator Instructions) Our next question comes from the Chris Lichtenheldt from Dundee Capital Markets.

Good afternoon everyone. Thanks for the call. Actually just follow-up on Chris’ last question there about the surface rights, you mentioned the deadline, late April and May, if that comes and goes, does that mean that didn’t the option of the possibility of getting land access is over or you start over with the new negotiation. How does that work?

What I have conveyed to you regarding a suggested date for the completion of the negotiations is what these three-party group has produced, with the three-party group being confirmed by Magdalena representative, a company representatives and the state government representative. Of course, this can stretch for longer, yes it could. It does not mean that there is a break and we start functioning again. But they believe that within a couple of months, few weeks, we can however reach an agreement. Past performance is no measure of future success but we look at our past dealings with Magdalena. It took us six, seven months the first time we engaged them to be in access to build two kilometers of pipeline through the property, once we engage in negotiations like we are now. At the time, what we agreed to as to contribute in the range of $50,000 to $100,000 in infrastructure projects and system with purchase of one vehicle for the municipality that's part of the agreement. So we have dealt with them in the past successfully and a win-win situation for all. And I expect that this time will be the same. I have no reason to believe that we should not be able to reach an agreement for all parties.

Okay. And if the negotiation is successful, is that enough to allow you to then put a drill hole like a 1.5 kilometer out to test what you think might be the boundary, you'll have enough access to do that?

I can’t tell you what we aspired to get out of this one negotiation and now depending on how this plays out at the end, it can be structured in different way. So I don't want to get ahead of myself. I can tell you what results that we would like to get in this negotiation with our neighbors here. We’d like to get access, not only to drill holes but gain access to drill holes and eventually we'll built some permanent supporting infrastructure for example a ventilation raise for us, for example and things like that. The core for our infrastructure will always be in the near area of the San Jose Mine where we control the surface right. But potentially we continue pursuing the North extent with underground workings, it will be helpful to have ventilation rig bores and other small infrastructure as we stretch to further to the North, not just drill last content.

Okay. And then just lastly for me. Outside of this negotiation, can you just remind us when we would expect to see more assay results from the separate drilling that you're continuing to do, what’s the timing of that?

News flow will be steady throughout the year. We're drilling from underground so that goes a little bit slower. So every three months, at least, I would expect that every three months we can be releasing information.

Okay. That's great. Thanks a lot.

Okay.

Thank you. Our next question comes from Marco LoCascio from Equinox Partners.

Good morning, guys. My question relates to the estimated CapEx at San Jose for 2014. I'm wondering how much of that is you have marked for just in course the Trinidad North discovery and working towards bringing that into the mine plant?

If you look at our budget, we have a mine development of -- budget of $7 million for 2014. The capital budget allocated to incorporate to build infrastructure -- to initially incorporate Trinidad North to the existing infrastructure is roughly $5 million over two years.

Okay. So the 2014 portion is included in that $7 million of mine development?

Excuse me speakers, can you hear that.

Yes. I think they lost lines.

They may have muted I think.

(Indiscernible) Hello?

Yes. I am here.

You are back. Okay.

Sorry about that. I was just asking, so the -- in the $7 million of mine development for this year that includes the portion of that $5 million that only spend in 2014?

The $7 million mine development figure for 2014 includes roughly $2 million to $2.5 million that articulated to the work-related to incorporate in Trinidad North into a 15 network of underground infrastructure.

Okay. That's all I have. Thank you, guys.

Thank you. At this time, we have no further questions. I would like to turn the call back over to our speaker for closing comment.

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.

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