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Fortuna Upgrades Reserves to 20.3 Million Ounces of Silver at the Caylloma Mine

VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 07/16/09 -- Fortuna Silver Mines Inc. (TSX VENTURE: FVI)(BVLAC: FVI) is pleased to announce the release of an updated NI 43-101 compliant mineral resource and reserve estimate for the Caylloma Mine located in southern Peru. Caylloma is currently in production at a rate of 1,200 tpd and is forecast to produce 1.6 million ounces of pure silver in 2009. For the first half of 2009, Caylloma has produced 853,162 ounces of silver or 53.3% of annual forecast production. Silver production accounted for 48% of revenues in the first quarter of 2009 and Fortuna projects that silver revenues will remain at a similar percentage of total revenues for the remainder of the year.

- Proven and Probable Mineral Reserves are estimated at 4.03 million tonnes averaging 156 g/t Ag, 0.55 g/t Au, 1.70% Pb and 2.58% Zn.

- Contained silver is estimated at 20.3 million ounces, representing a 404% increase in silver ounces in the Proven and Probable reserve categories over the previous resource and reserve estimate (43-101 Technical Report published October 3, 2006).

- Inferred Mineral Resources are estimated at 1.3 million tonnes averaging 187 g/t Ag, 0.29 g/t Au, 1.92% Pb and 3.25% Zn.

- Contained silver in the Inferred Resource category is estimated at 7.7 million ounces.

Caylloma Resource and Reserve Estimate

The updated mineral resource and reserve estimate for Caylloma was prepared by the staff and consultants of Minera Bateas S.A.C., Fortuna Silver's wholly owned operating subsidiary. Robert Sandefur of Chlumsky, Armbrust & Meyer, LLC (CAM) has reviewed the resource and reserve estimate and acted as the independent qualified person as defined by Canadian National Instrument 43-101. The Mineral Resources and Reserves reported herein were estimated using the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) Standards on Mineral Resources and Reserves, Definitions and Guidelines prepared by the CIM Standing Committee on Reserve Definitions and adopted by CIM Council on December 11, 2005. This resource and reserve estimate is based on all data available through December 31, 2008 for all reported veins with the exception of the Bateas Vein which includes all data through March 31, 2009.

------------------------------------------------------------------------
                                     Ag     Au     Pb    Zn    Cu  Width
Category                   Tonnes  (g/t)  (g/t)    (%)   (%)   (%)    (m)
------------------------------------------------------------------------
Proven Reserves         3,701,420   136   0.55   1.80  2.74     -   3.17
------------------------------------------------------------------------
Probable Reserves         331,500   387   0.51   0.58  0.81     -   2.09
------------------------------------------------------------------------
Proven +                4,032,920   156   0.55   1.70  2.58     -   3.08
 Probable Reserves
------------------------------------------------------------------------


------------------------------------------------------------------------
                                     Ag     Au     Pb    Zn    Cu  Width
Category                   Tonnes  (g/t)  (g/t)    (%)   (%)   (%)    (m)
------------------------------------------------------------------------
Measured Resources        247,070    63   0.31   1.19  2.23  0.11   1.69
------------------------------------------------------------------------
Indicated Resources        20,400    71   0.29   1.00  1.40  0.15   2.74
------------------------------------------------------------------------
Measured +                267,470    64   0.31   1.18  2.17  0.11   1.77
 Indicated Resources
------------------------------------------------------------------------


------------------------------------------------------------------------
                                     Ag     Au     Pb    Zn    Cu  Width
Category                   Tonnes  (g/t)  (g/t)    (%)   (%)   (%)    (m)
------------------------------------------------------------------------
Inferred Resources      1,279,000   187   0.29   1.92  3.25     -   2.58
------------------------------------------------------------------------

Reported mineral resources are exclusive of reported mineral reserves. Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues. The quantity and grade of the Inferred resources reported in this estimation are conceptual in nature and it is uncertain if further exploration will result in upgrading of the Inferred resources to Indicated or Measured resources.

Resource and Reserve Estimation Methodology

For the Animas Central, Animas NE7, Animas NE8, Santa Cata, Soledad, Silvia and Bateas veins, three dimensional wireframe models were constructed for each vein system and drill hole and channel sample grades were composited to 2.5m or to the vein width for veins of less than 2.5m. Block models were constructed within each wireframe using the Datamine software package with block sizes varying according to vein dimensions and ranging to a maximum size of 5 x 5 x 2.5m. Sub-blocking was used as necessary to more precisely reflect actual vein geometry. Metal grades were estimated using Ordinary Kriging in sectors with channel sample data from stopes and crosscuts, and using Inverse Distance Squared in sectors with only drill hole data. A density factor of 3.00 g/cm3 was assumed for conversion of block volumes to tonnes. Resource classification was based on the number of composite samples used in estimation of the grade for each block with Measured Resources being estimated by 12 to 20 composite samples, Indicated Resources being estimated by 8 to 11 composite samples and Inferred Resources being estimated by 1 to 7 composite samples. An NSR value of US $37.15 was used as the lower cut-off value for the reporting of mineral resources.

For the San Cristobal, San Pedro, San Carlos, la Plata, Cimoide La Plata, Paralela and Ramal Paralela veins, mineral resources were estimated by inverse distance squared methods using density factors ranging from 2.82 g/cm3 to 2.95 g/cm3. Classification of resources was based on distance from development workings with Measured Resources being blocks extending up to 25m from horizontal or vertical workings, Indicated Resources are those blocks located beyond 25m but within 40m of development workings, and Inferred Resources being those blocks located at distances of greater than 40m from workings.

Proven and Probable Mineral Reserves were derived from the Measured and Indicated Resources by applying modifying factors related to mining methods, mining dilution and historical operating costs detailed as follows: mining (US $23.46/t), processing (US $7.90/t), power (US $3.92/t), maintenance (US $1.04/t), administration (US $0.83/t), additional costs (US $4.48/t) and concentrate shipping costs (US $6.17). Operating costs total US $47.80/t and comprise the lower NSR value for reserve reporting purposes. Minimum mining width was assumed at 2.1m for the Animas Vein and 1.0 to 1.5m for the narrower silver veins. Mining dilution was estimated at 10% with the exception of the Silvia and Soledad veins where mining dilution was included at 15%.

The resource and reserve models have been validated by reconciliation against actual mined production with reconciliation results being acceptable for all veins that have experienced a significant amount of production.

A full NI43-101 compliant report authored by R. Sandefur of CAM will be available on www.sedar.com within 45 days of 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.

Qualified Person

Robert Sandefur of Chlumsky, Armbrust & Meyer, LLC is a Qualified Person as defined by National Instrument 43-101 and is responsible for the accuracy of the technical information in this news release.

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 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.



Neither the TSX Venture Exchange nor the Investment Industry Regulatory Organization of Canada accepts responsibility for the adequacy or accuracy of this release.

Contacts:
Fortuna Silver Mines Inc. - Lima office
Carlos Baca
Investor Relations
51.1.616.6060

Fortuna Silver Mines Inc. - Vancouver office
Erin Ostrom
Investor Relations
604.484.4085
604.484.4029 (FAX)
[email protected]
www.fortunasilver.com

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