south american silver corp. april 2012 corporate presentation
DESCRIPTION
South American Silver Corp. corporate presentation April 2012TRANSCRIPT
Growing and advancing one of the world’s largest undeveloped silver and indium resources.
VALUE. GROWTH. VISION
Corporate PresentationApril 2012
TSX: SAC, US OTC: SOHAF www.soamsilver.com
2
Cautionary NotesForward-looking statementsCertain statements contained herein constitute “forward-looking statements.” Forward-looking statements look into the future and provide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include words such as “plans,” “intends,” anticipates,” “should,” “estimates,” “expects,” “believes,” “indicates,” “targeting,” “suggests,” “potential,” and similar expressions. These forward-looking statements are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. Investors are advised to review the Company’s Annual Information Form filed at www.sedar.com for a detailed discussion of investment risks. The Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.
Cautionary note regarding reserve and resource estimatesThe material in this presentation has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all resource and reserve estimates included in this presentation have been prepared in accordance with National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining and Metallurgy Classification System. NI 43-101 is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differ significantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and resource and reserve information contained herein may not be comparable to similar information disclosed by U.S. companies. In particular, and without limiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. Investors should also understand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever be upgraded to a higher category. The estimation of quantities of resources and reserves is complex, based on significant subjective assumptions and forward-looking information, including assumptions that arise from the evaluation of geological, geophysical, engineering and economic data for a given ore body. This data could change over time as a result of numerous factors, including new information gained from development activities, evolving production history and a reassessment of the viability of production under different economic conditions.Changes in data and/or assumptions could cause reserve estimates to substantially change from period to period. No assurance can be given that the indicated level of mineral will be produced. Actual production could differ from expected production and an adverse change in mineral prices could make a reserve uneconomic to mine. Variations could also occur in actual ore grades and recovery rates from estimates.
3
Investment Highlights
• Experienced management team with track record of successful project development and value creation
• Two large-scale deposits in South AmericaMalku Khota: one of the world’s largest silver-indium-gallium resources
o Updated 2011 PEA study doubles estimated production to 13.2 M oz silver, 80 tonnes of indium and 15 tonnes of gallium per year, for first 5 yrs
o NI 43-101-qualified Indicated resource of 230.3 million ozs silver, 1,481 tonnes of indium and 1,082 tonnes of gallium and an Inferred resource of 140 million ozs silver, 935 tonnes indium and 1,001 tonnes gallium.
Escalones: high potential copper-gold-silver deposit with an Inferred resource of 3.8 billion lbs of copper and 610,000 oz of gold and 16.8 million ozs silver
• Well-defined business plan to drive shareholder value• More than $230 worth of metal in the ground per share (>$100 of silver, >$100 of
copper, and >$30 of indium and gallium1
• Attractive investment value relative to peers at low value per oz• Anticipated low cost silver production at approximately $2.94/oz of silver2 • Strong focus on community relations to proactively facilitate mutually beneficial
relationships
South American Silver Corp.
1) $25/oz silver, $3/lb copper, $700/kg indium and gallium2) Net of base metal credits
4
World-Class DepositsTwo large-scale assets in South America
Malku Khota, silver-indium project, Bolivia (100%)
• Pre-Feasibility level update in Q2 2012 with Feasibility work starting in H2 2012
• Bulk mineable open-pit, sediment hosted deposit• Low capital and operating costs as a heap leach
or milling operation• Potential to be one of the worlds top producing
silver and indium mines• Resource expansion potential with only 4 km of a
15 km trend drill tested on the 50 sq km property
1)Silver Equivalent (Ag Eq) calculated using total contained metal using base case metal pricing (Ag at $18/oz, In at $500/kg , Ga at $500/kg, Cu at $3/lb, Pb at $0.90/lb, and Zn at $0.90).
Total Contained Metal
Silver Indium Gallium Aq Eq1
Moz Tonnes Tonnes Moz
M&I 230 1,481 1,082 354
Inferred 140 935 1,001 240
In Situ Grade
Tonnes Silver Indium Gallium Aq Eq1
Millions g/t g/t g/t g/t
M&I 255 28.10 5.8 4.3 43.77
Inferred 230 18.9 4.1 4.3 33.04
5
World-Class DepositsTwo large-scale assets in South America
1)Copper Equivalent (Cu Eq) calculated using total contained metal for copper ($3/lb), gold ($1200/oz), silver ($22/oz), and molybdenum ($16/lb) and has not been adjusted for metallurgical recoveries.
Escalones, copper-gold-silver project, Chile (100%)
• Inferred Resource of 3.8 billion lbs of Cu, 56.9 million lbs of Mo, 610,000 ozs of Au and 16.8 million ozs of Ag
• Phase II exploration program underway to include up to 7,000 meters of follow-up drilling
• Step-out testing of the known mineralized zones and testing of new geophysical targets
• Located within a world-renowned copper district near the world’s largest underground copper mine, El Teniente
In Situ Grade
Tonnes Copper Gold Silver Moly Cu Eq1
Millions % g/t g/t ppm %
420.6 0.41 0.05 1.24 61.39 0.49
Total Contained Metal
Copper Gold Silver Moly Cu Eq1
Mlbs Ozs Moz Mlbs Mlbs
Inferred 3,835 610,000 16.8 56.9 4,503
Emerging Opportunity for Mining in Bolivia
6
• Bolivia has been undergoing significant change over the past 6 years under the Morales administration including a new constitution with indigenous rights
• The Andean social movement toward greater local and indigenous autonomy is well developed in Bolivia
• Mining is Bolivia’s second largest economic sector after Oil/Gas and is seen as a fundamental industry
• Three major silver mines have been built within last 5 years under the current administration by Pan American Silver, Coeur D’Alene and Sumitomo
Sumitomo’s San Cristobal mine: 3rd largest silver mine and 6th largest zinc mine in the world *
• South American Silver’s management team has nearly 20 yrs experience in Bolivia
• Bolivian government has expressed support for SAC’s projects and their strong interest in encouraging private investment in the mining sector
• SAC is seeing strong local support from the coalition of land owning Ayllus in the area
*Image from : Sumitomo Metals and Mining http://www.sumitomocorp.co.jp/english/special/project_04/index.html
A developing resource based economy
Community Relations
7
A key to successful project developmentPrograms modeled after success at Sumitomo’s San Cristobal mine and Newmont’s Inti Raymi mines in Bolivia • Significantly expanded community relations team in 2011/2012• Impact & Benefit agreements in place with local land owning Allyus• Development of a inclusive community relations program:
Scholarships/ Contributions to local schools Support for community health initiatives Involvement of the community in environmental monitoring Exploration related job training with local communities Promotion of traditional and cultural activities
TSX:SACUS OTC:SOHAF
Instituting animal health initiatives to improve local economy which is based on subsistence farming and herding
Stage 1 animal health initiative completed with vaccination and treatment of animals within the land owning Allyus covering 43 communities and 381 families
Stage 2 program underway to work with local families to improve herd quality and productivity
Working with local indigenous communities to facilitate economic and business development at the various stages of the project
Exploration & development stage service business such as drilling support, catering and transportation
Construction phase potential to create 1,000 new jobs Mine operation likely 400 full time workers direct employment with
a multiple of that from indirect and associated businesses
8
Share CapitalizationTSX:SAC, US OTC:SOHAF
Issued & Outstanding Fully Diluted3Warrants2Options1
104.6M 118.1M3.2M10.3M•~$160 million FD Market Capitalization (4)(5)
•Average 3 mo. trading volume 150,000 shares/day•$26.6 million in cash(6)
Major Shareholders •Zamin/Izirium --18%•Private investors--18%•Management7 -- 9%
Institutional Ownership•Sprott Asset Management•Front Street•US Global
(1) Weighted avg .exercise price $1.20 CAD (2) Weighted avg. exercise price $1.03 (3) As of March 20 2012 (4) As of March 21, 2012 (5) Issued and outstanding shares+ in the money warrants and options (6) As of Dec 31, 2011(7) Direct ownership only
9%9%
9%
19%19%
34%
South American Silver Investor Breakdown
Management
Zamin
Izurium
Private Investors
Institutional
Retail
Adding Value Through Resource Growth
9
Total resources for both Malku Khota and Escalones1) Ag Eq calculated using total contained metal for silver ($22/oz) and gold ($1200/oz) only2) Total combined tonnes of indium and gallium3) Cu Eq calculated using total contained metal for copper ($3/lb), lead ($0.90/lb), zinc ($0.90/lb), and molybdenum ($16/lb) only
20072008
20092010
20112012
0
50
100
150
200
250
300
350
400
450
0
1000
2000
3000
4000
5000
6000
Mill
ion
Ou
nc
es
of
Silv
er
Eq
uiv
ale
nt1
/T
on
ne
s o
f In
diu
m a
nd
Ga
lliu
m2
(c
om
bin
ed
)
Mill
ion
Po
un
ds
of
Co
pp
er
Eq
uiv
ale
nt3
In & Ga Inferred Resource (In+Ga only)
In & Ga M&I Resource (In+Ga only)
Ag Eq Inferred Resource (Ag+Au only)
Ag Eq M&I Resource (Ag+Au only)
Cu Eq M&I Resource (Cu+Pb+Zn only)
Cu Eq Inferred Resource (Cu+Pb+Zn only)
IPO $20 M
Ag Moz In+Ga tonnes
6000
4500
3000
1500
Cu Mlbs
Total resources with value shown relative to silver
$3 MFinancing
$36 MFinancing
2 Oz Ag Eq/share
4 Oz Ag Eq/share
8 Oz Ag Eq/share
10
Silver
cres
t
US Gol
d
Sullid
en
MAG S
ilver
Orko
Golde
n M
iner
als
Wild
cat
Taho
e Res
ourc
es
So.Am
erica
n Silv
er
Levo
n
Bear C
reek
Silver
Sta
ndar
d
0
50
100
150
200
250
300
350
400
450
500
M&I Resources
Inferred Resources
Comparative Silver Resources in the Americas
Source: BMO Capital Markets,Canaccord and Intierra, for silver onlyNote: All companies have projects in South and/or North America
One of the largest development stage silver resourcesM
illio
ns
of
Silv
er O
un
ces
Additional value of Indium and Gallium
location Mexico Mexico Peru Mexico Mexico Mexico Peru Mexico GuatemalaBolivia Chile
Mexico Peru
Ag Grade (g/t) 89.5 65 13 538 125 182 72 419 24 19 38
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$0.00
$2.00
$4.00
$6.00
$8.00
$10.00
$12.00
$14.00
Enterprise Value per Silver Resource Oz By project development stage
Source: Canaccord and Intierra,Share prices as of March 22 2012Note: All companies have projects in South and/or North America as shown on slide 11
Development Stage Average ~$2/oz
Advanced Development Stage Average ~$4/oz
EV of >$0.64 based on 230.3 million M&I oz Ag
South American
Silver Corp.
12
Increasing value with project advancementDiscovery
ResourceDefinition
PEA
PFS
FSPermits
Construct
Production
Increased valuethrough resource
expansion
2x-5x potentialIncrease inMarket cap
Take-Over offers orPartnerships common
at this stage
2x-3x potentialIncrease inMarket cap
Early StageExploration &Development
AdvancedDevelopment Stage
(Reserves)
Production
EscalonesProject
Malku KhotaProject
$2/oz
$4/oz
$9/oz
Average Enterprise Value per Oz of Silver by Stage
Incr
eas
ing
Ma
rke
t Val
ue
Source: Recent average enterprise value per ounce of silver at various development stages for North and South American-based projects. Canaccord, BMO Capital markets and Intierra
Development Stage Value CurvePotential value growth with project advancement
$50 $500 $5,00010
100
1000
Alexco
Allied Nevada
Coeur d’Alene
First Majestic
Great Panther
Hecla
Hochschild
Pan American Silver
Silver Standard
Arian
Extorre
Golden Predator
Silver Bull Resources
Tahoe
Bear Creek
Esperanza
Silvermex Resources
Troy
MAG
Enterprise Value (US$ Millions)
To
tal R
eso
urc
e S
ize
(M
oz'
s)
Total Resource Ag Equivalent using (Ag +Au only at $25/oz and $1000/oz values) Source: Canaccord and Intierra,Share prices as of March 22 2012Note: All companies have projects in South and/or North America
Current Silver Company Market Valuations by Resource Size & Development Stage
13
Size of circle represents market valuation premium in EV/oz
500
$2,000
Developers Adv. Developers Producers
$1,000$100 $200 $300
MK MK MK
2011 PEA
2012PFS/FS Production
MK Value at Avg Valuationfor each development stage
South American SilverMalku Khota
Current Value
14
Positive Silver FundamentalsA paradigm shift for silver?• Major shift in supply/demand dynamic over past several years
• Silver still well below inflation adjusted highs of $140/oz ($50 in 1980)
• Silver is a “hybrid” precious and industrial metal due to its scarcity and unique properties including superior electrical and thermal conductivity, malleability, reflectance, and catalytic/biologic reactivity
• Price increases driven by 40% increase in investment demand and 21% increase in industrial demand for a total increase of 17% in 2010
• Total annual mine production growth only 2.5% last year with reduced contribution of by-product silver from copper and gold production
• Projected new mine supply anticipated to be consumed by new industrial demand through at least 2015
• Chinese imports up 4x since 2009 with change from net sellers of more than 100 M oz of silver in 2005 to net buyers of more than 120 M oz in 2010
• Few major new deposit discoveries and growing time lag from time of discovery to metal production
Source: 1) GFMS World Silver Survey 20112) BMO Capital Markets Global Mining Research April 2011
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
200
400
600
800
1000
1200
World Silver Demand
Industrial Applications
Photography
Jewelry and Silverware
Investment and Coins
Mill
ion
Ou
nce
s
Silver Supply/Demand Fundamentals
15
• Dramatically increased demand growth driven by strong investment demand plus increased industrial consumption(1)
• Demand growth expected to continue to outstrip production growth(2)
Source: 1) GFMS World Silver Survey 20112) BMO Capital Markets Global Mining Research April 2011
+17% total demand growth
+40% investment demand
+21% industrial demand
+2.5% mine production
+8% total supply growth
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
0
200
400
600
800
1000
1200
World Silver Supply
Mine production
Secondary Supply and Scrap
Government Sales
Mill
ion
Ou
nc
es
16
Growing Demand for Silver in TechnologyBreakdown of key technology/industrial uses for silver
Source: CPM Silver Yearbook 2010Not for reproduction without written CPM Group consent
Mill
ions
of S
ilver
Oz
77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11p0
100
200
300
400
500
Photovoltaic
Catalysts, alloys, solders and biocides
Electronics
17
Silver Primary & By-Product Production(1)
• 70% of silver is by-product production from base metals and gold• By-product silver production is largely silver price inelastic • Reduced by-product silver production anticipated going forward from base metals(2)
Source: 1) GFMS World Silver Survey 2005-20112) BMO Capital Markets Global Mining Research April 2011
2003 2004 2005 2006 2007 2008 2009 20100
50
100
150
200
250
300
0
5
10
15
20
25Lead/Zinc
Primary
Copper
Gold
Silver Price
Mill
ion
s o
f O
un
ce
s o
f S
ilve
r
Silv
er
Pri
ce
(U
S$
)
18
Indium & Gallium – Two Key Strategic MetalsRapidly growing market for high-tech uses
Uses• Indium-tin oxide (ITO) a key component of flat panel displays (FPDs) and touch screens• High-efficiency CIGS (copper, indium, gallium, selenide) photo-voltaic thin-film solar
panels, and LED lighting • Fiber optics, specialized and transparent semiconductors
Supply
• Global indium use growing rapidly and could surpass available supply from by-product zinc refining at current price range
• One of the most scarce strategic metals due to low recycling and few primary producers
*
* Image from http://gotpowered.com
flat panel displays LED lighting thin film solar
19
Indium & Gallium FundamentalsCompelling supply/demand dynamics
Indium and Gallium Supply/Demand dynamics
• Indium and gallium highlighted in UN and US DOE studies as a critical technology metals in potential shortage, along with several key rare earth metals, due to rapidly increasing growth, low recycling rates and low primary production
• China is largest producer and consumer of indium and has imposed export quotas and tariffs like on other key high-technology specialty metals
• Indium market estimated to see 15-20% annual growth with most indium produced as by product of zinc refining growing at 1-3% annually
• Current indium and gallium price ~$600-700/kg up from global economic lows during 2008-2009 of $400-500/kg
• Gallium market estimated to be a conservative 15% annual growth rate which could increase significantly with more rapid growth in LED lighting and photovoltaics
Malku Khota annual indium and gallium production• Malku Khota projected to be one of the world’s largest indium & gallium producers
(80 tonnes and 15 tonnes per year)• Potential to represent 10% or more of global mine supply of indium and over 5% of
global supply for gallium• Opportunities for project financing from off-take agreements for indium & gallium
Sources: (1) US Dept. of Energy Critical Materials Strategy, Dec. 2010. (2)United Nations Environment Programme (UNEP) Special Report on Strategic Metals ,May 2011 .
20
2010 2011E 2012E 2013E 2014E 2015E 2016E0
500
1000
1500
2000
2500Solar Energy
LED Lighting
LCD Flat Panels
Indium Demand GrowthGrowing demand in high-tech markets
Growth assumptions based on data from Displaybank in LCD TV Association “LCD TV Matters”-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009 , Solarbuzz, Photon International, GFMS , Nanomarkets, and the US Department of Energy Critical Minerals Strategy Report December 2010
End-
use
Mar
ket
Dem
and
(ton
nes)
2010 total indium
production level
5 year projected demand growth
19701972
19741976
19781980
19821984
19861988
19901992
19941996
19982000
20022004
20062008
20102012
20140
500
1000
1500
2000
2500
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Demand
Price
Indium FundamentalsWorld indium demand vs price (1969-2011*)
Source: (1) Indium: Global Industry Markets and Outlook, 9th Edition 2010 (Roskill) *2011-2013 Data are estimates (2) 2011-2015 Estimates US Dept. Of Energy Critical Materials Strategy Dec. 2010. 16
Indi
um D
eman
dIndium
Price/kg ($US)
X
Recent Indium Price
US Dept of Energy Projections
22
Silver and Indium Mining in BoliviaOne of the world’s premier silver and indium mining districts• Historical district production of billions of
ounces of silver• Highly prospective & under-explored relative
to other parts of the Andean region• Notable political and economic changes have
developed in the region over the past 5-6 years including significant investment by Brazilian and Asian companies
• Bolivia has increased from 9th largest to 5th largest global silver producer with completion of three major silver mines in past 5 years:Sumitomo - San Cristobal Mine 2007
• 100% Sumitomo private ownership• World’s 3rd largest silver mine (19.4 Moz/yr),
6th largest zinc mine with significant indium
Coeur D’Alene - San Bartolome 2008• JV with State Mining Company Comibol • CDE’s second largest mine at 7.5 Moz/yr
Pan American Silver – San Vicente 2009• 50%-50% JV with Comibol• 4th largest mine for PAAS at 3.1 Moz/yr
South American Silver – Malku Khota• 100% SAC private ownership• Positioned to be next major mine in Bolivia
Sources: Company reports and CPM 2011 Silver Yearbook
23
Malku Khota ProjectOne of the world’s largest silver-indium resources
1) Average for the first 5 years of production2) See March 31, 2011 News Release for detailed resource estimate3) Total contained metal using base case prices (Ag: $18/oz, In: $500/kg,
Ga: $500/kg, Cu: $3/lb, Pb: $0.90/lb, Zn: $0.90/lb USD)4) Economic cut-off grade comprised only of silver and indium
Silver(Moz)
Indium(tonnes)
Gallium (tonnes)
Copper (MLbs)
Lead(MLbs)
Zinc(MLbs)
AgEq3
(Moz)
M&I 230 1,481 1,082 120 453 247 354
Inferred 140 935 1,001 102 362 246 240
Malku Khota Project – 2011 Resource Estimate2
Enrichment starts at surface Host rock sandstone with disseminated silver, indium, gallium, lead, zinc and copper
Average grade first five years:• Silver: 42.2 g/t (58 g/t Ag Eq)1 • Indium: 7.55 g/t• Economic cut-off grade <15 g/t (at $18/oz Ag)2, 4
24
Malku Khota ProjectLow projected capital and operating costs with established infrastructure• 50 square km, 100% owned, road accessible project• Low capital and operating costs on a per ounce basis• Potential to be one of the top primary silver and indium producing mines at 13.2 Moz
silver per year and 80 tonnes of indium1 • Project base case annual cash flows and NPV’s more than doubled• Open pit, bulk mineable and very scalable• Commercial electricity and natural gas nearby
1) Average for the first 5 years of production
25
Malku Khota DrillingGrade thickness map
• 115 drill holes in current resource with updated resource 2011
• Updated resource results increase total Measured and Indicated oz to 230 Moz Ag (a 60% increase in M&I oz) plus an additional 140 M inferred Ag oz
• 2012 program to target conversion of in pit inferred resources to M&I resources and & test lateral and depth expansion
• Wide zones of disseminated, sediment hosted mineralization begins at surface with deposit open along trend and down dip with excellent potential for expansion
• New discovery of higher grade zones and down dip expansion of surface mineralization
TSX:SACUS OTC:SOHAF
Mineralized
Sandstones
OPEN
OPEN
OPEN
26
Malku Khota Mineralization• Broad zones of continuous sediment hosted mineralization• Open at depth and along trend
LMD048: 286 meters grading 76 g/t AgEq Grade thickness values of over 21,500 g-m AgEq
TSX:SACUS OTC:SOHAF
OPEN
OPEN
27
Production ProcessesFrom ore to metal
• Large scale shovel and truck open pit mine
• Oxide ore crushed in preparation for direct leaching
• Four years of confirmatory metallurgical test work with SGS labs on acid leach process
• Acid-chloride leaching captures silver, indium, copper, lead, zinc, gallium and gold
• Metal recovery in several steps:• Acid recovery• Silver-gold-copper cementation• Indium-gallium precipitation• Lead and zinc sulfides
• Downstream processing to metal products
TSX:SACUS OTC:SOHAF
Crushing
Leaching
Metal Recovery & Processing
Open Pit Mining
Silver, Gold, Copper
Indium & Gallium ingots
Lead & Zinc concentrates
28
Malku Khota Economic Assessment, May 20111
(1)In US dollars(2)LOM = Life of Mine(3)First 5 years of production (avg/yr)
Development CapexMining RateLife of MineOre Mined (LOM)2
Average Silver Grade 3
Average Indium Grade3
Ag Eq grade
158 M1,184191 M135 M88 M212,962
10.5 M78.9 12.7 M9 M5.87 M14,198
Base Case$185 M/yr$1,261 M$704 M37.7%27 months
$287 M/yr$2,528 M$1482 M63%19 months
Mid Case
TotalLOM
Annual
$411 million40,000 tpd Heap Leach15 years200 M tonnes42.4 g/t7.55 g/t58 g/t
First 5 years
Recent$430 M/yr$4,298 M$2571 M92.9%15 months
Metal Prices ($US)4
Base Case(3 yr avg)
Silver : $18/ozIndium : $500/kgGallium: $500/kg
$25/oz$570/kg$570/kg
Mid Case(2 yr avg)
Recent(1 yr avg)
$35/oz$650/kg$730/kg
13.2 M80.7 12.48 M4.42 M5.64 M15,184
71%
15%
6%5%3%
Share of Gross Revenue(at base case prices)
Silver
Indium & Gallium
Copper
Lead
Zinc
First 5 years cash flow Net cash flow NPV (5% discount rate)1
Internal Rate of ReturnPayback period (years)
Recovered MetalsSilver (oz)Indium (tonnes)Lead (lbs)Zinc (lbs)Copper (lbs)Gallium (kgs)
(4) Base Case: 3 yr avg prices as of May 2011Mid Case: 2 yr avg prices as of May 2011Recent Case: 1 yr avg prices as of May 2011
29
San B
arto
lome
(Boli
via)
Alamo
Dorad
o (M
exico
)
La P
itarill
a (M
exico
)
Diablill
os (A
rgen
tina)
Green
s Cre
ek (U
SA)
Arcat
a (P
eru)
Uchuc
chac
ua (P
eru)
El Pen
on (C
hile)
Gümüs
köy
(Tur
key)
Coran
i (Per
u)
Pallan
cata
(Per
u)
Dukat
(Rus
sia)
Hacke
tt Rive
r (Can
ada)
Malk
u Kho
ta (B
olivia
)
Peñas
quito
(Mex
ico)
Juan
icipio
(Mex
ico)
Navida
d (A
rgen
tina)
Escob
al (G
uate
mala
)
San C
risto
bal (
Bolivia
)
Pascu
a La
ma
(Chil
e)
Fresn
illo (M
exico
)
Cannin
gton
(Aus
tralia
) 0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
Ac
tua
l/An
tic
ipa
ted
An
nu
al A
g P
rod
uc
tio
n (
Mo
z)Primary Silver Project Annual Production Rates
Source: CPM Silver Yearbook 2011*Based on mine production of 13.2 Moz /year for first five years
Malku Khota one of largest emerging producers at over 13 Moz/yr
Producing Mine
Development Stage Project
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Gol
d
Cia
De
Min
as
Bue
nave
rtur
a
Hoc
hsch
ild
Hec
laSilv
er S
tand
ard
Res
ourc
es
Silv
er S
tand
ard
Res
ourc
es
Pan
Am
eric
an
Silv
er
Coe
ur
d'A
lene
Taho
e R
esou
rces
Mal
ku K
hota
(Boliv
ia)
Target to increase production to 18-20 Moz
30
Global Silver Industry Cash Cost CurveHigh quality long-life, low-cost silver production
Cumulative Percentile of Silver Mine Production Cost
Total C
ash C
ost P
er Ou
nce o
f Silver
Industry AverageCash Cost$5.27/oz
Malku Khota13.2 Mozs/yr (1)
~ $2.94/oz at 3 yr avg prices(2)(3)
~ $2.01/oz at 2 yr avg prices(2)(3)
~ $0.86/oz at 1 yr avg prices(2)(3)
Source: GFMS World Silver Survey 2011(1) Avg first 5 years of production (2) Silver cash costs after credits ($US)/oz(3) 3 year average price: Ag $18, In $500, Ga $500, Cu $3, Pb $0.90, Zn $0.902 year average price: Ag $25, In $570, Ga $570, Cu $3.70, Pb $1, Zn $1 1 year average price: Ag $35, In $650, Ga $730, Cu $4.30, Pb $1.20, Zn $1.10 , all as of May
2011
Lowest 25% Percentile Cash Costs
31
Escalones Copper-Gold-Silver project, ChileHigh potential, large-scale target
InferredCopper
(%)Gold(g/t)
Silver (g/t)
Moly(ppm)
Cu Eq(%)
Copper(Mlbs)
Gold(Ozs)
Silver (Mozs)
Moly(Mlbs)
Cu Eq1
(Mlbs)Tonnes
420 M 0.41 0.05 1.24 61.39 0.49 3,835 610,000 16.8 56.9 4,503
• 70 square km, road accessible, large scale system in well established mining district
• Located near one of the worlds largest underground copper mines at El Teniente
• Inferred Resource of 3.8 billion lbs of copper, 56.9 million lbs of molybdenum, 610,000 ozs of gold and 16.8 million ozs of silver
• Phase II exploration program underway
1) Cu Eq calculated using total contained metal at $3.00/lb Cu, $1200/oz Au, $22/oz Ag, and $16/lb Mo and has not been adjusted for metallurgical recoveries
32
Escalones Project Logistics
Ownership: 100% through leaseLocation: 35km E of El TenienteElevation: 3800m
• 70 square kilometer property
• Road accessible located 100 km southeast of Santiago
• Gas pipeline across property
Excellent existing infrastructure
SAC propertyGas pipelineAccess Road
31TSX:SACUS OTC:SOHAF
33
Drill Results Grade Thickness MapLarge-scale copper-gold-silver system• Open to expansion down dip
and laterally
• 30 diamond drill holes (12,666 meters) and 43 channel and road cuts (>2,100 meters) with >10,934 assay values collected through 2011
• Limited testing of porphyry system with most holes in replacement /skarn style mineralization
TSX:SACUS OTC:SOHAF 32
CuEq GT AuEq GTCopper (%) x Thickness (m) Gold (g/t) x Thickness (m)
0 – 10 CuEq% GT10 – 50 CuEq% GT
50 – 100 CuEq% GT
100 – 200 CuEq% GT
>= 200 CuEq% GT
0 – 17 AuEq GT17 – 85 AuEq GT
85 – 171 AuEq GT
171 – 342 AuEq GT
>= 342 AuEq GT
Metal Prices
Copper - $1/lbGold - $1000/ozSilver - $15/ozMoly - $15/lb
Pending 2012 Holes
34
EscalonesGeological cross-section• Enriched zones with high grades of replacement style mineralization starting at surface
at over >1% copper with significant gold and silver
• Large scale porphyry target with intercept of 176 m @ 0.6% copper with additional credits from gold, silver, and molybdenum
TSX:SACUS OTC:SOHAF
AltoBajo
35
$50 $5001000
10000
100000
Hana
LuminaNGEx
Northern Dynasty
Panoro
Redhawk
Western Copper
Enterprise Value (US$ Millions)
To
tal R
eso
urc
e S
ize
(M
lbs
Cu
)Current Copper Company Market Valuations by Resource Size & Development StageSize of circle represents market valuation premium
in EV/lb Developers Adv. Developers Producers
EscalonesCurrent Stage
$100
2.1 cents/lbAvg Value 2.7 cents/lb 10.4 cents/lb
PFS/FS
Production
Escalones Value at Avg Valuationfor each development stage
$300 $1000 $2000
ESC ESC ESC
Source: Canaccord Report Jan 2012 using Cu Eq
36
Project MilestonesValue drivers over the next 6-12 months
• Malku Khota, silver-indium-gallium project, BoliviaUpdated resource estimate & PEA more than doubles annual production to
13.2 M oz of silver, 80.7 tonnes of indium and 15 tonnes of gallium per year*Cash flows, project valuations and rates of return significantly expanded over
previous studiesExploration program underway to support a planned 20,000 meters of in-fill
and expansion drilling• Updated Economic Assessment in Q2 2012• Feasibility work to begin in H2 2012
•Escalones, copper-gold-silver porphyry project, ChilePhase I exploration and geophysics program completedInitial resource estimate completedPhase II exploration program underway to support a planned 7,000 meters of
drilling• Resource update mid-2012• Preliminary Economic Assessment in Q4 2012
*Average first five years of production
37
Silve
r ETF
Alexco
Tahoe R
esource
s
Sullid
en
MAG Silve
rOrko
Silve
rcrest
Golden M
inerals
Silve
r Stan
dard
Bear C
reek
So.Ameri
can Si
lver
0
10
20
30
40
50
60
70
Leveraged to SilverValue of silver per dollar invested
SAC has some of the best leverage to silver of any development stage company with over $65 of silver value per $1 invested
Source: Canaccord as of January 24, 2012, Share prices updated Feb 2 2012Note: all companies have projects in South and/or North AmericaCalculated using $25/oz Ag. Dollar value of silver per $1 invested = (silver resource/shares outstanding) x $25/oz silver) divided by share priceValue only shown for silver with no contribution from other metals. Cu value calculated using $2.25
Silver value per $1 invested
Average value of silver ~$16 of silver per $1 invested*
Additional value of Indium and Gallium
South AmericanSilver Corp.
Additional value of Copper
38
Why South American Silver?Investment highlights
• World-class scale projects with excellent expansion potential
• Track record of discovery and successful project development
• Growing shareholder value through resource expansion and advancing projects up the development value curve toward feasibility
• More than $230 worth of metal in the ground per share (>$100 of silver, >$100 of copper, and >$30 of indium and gallium)1
• Attractive investment value relative to peers at low value per oz
• Exposure to rapidly growing indium and gallium high-technology market
• New copper-gold-silver resource and expansion at Escalones
• Continued investor outreach to broaden market awareness of Company
371) $25 /oz silver, $3 /lb copper, $700/kg indium and gallium
39
TSX: SACOTC: SOHAF
Phone: 604.681.69261.855.681.6926
www.soamsilver.com
Appendix
TSX:SACUS OTC:SOHAF
Emerging Opportunity for Mining in Bolivia
40
Bolivia has been undergoing significant change over the past 6 years under the Morales administration including a new constitution with indigenous rights• World Bank/IMF supportive of economic policy
changes resulting in one of the fastest growing economies in South America over past 3 years
• Bolivia has joined the Mercosur trade organization with Brazil as largest regional trading partner
• Political relations with U.S. have been normalized• Moody’s & Fitch sovereign bond ratings upgraded to
same level as Argentina• Strong emphasis by government on poverty reduction,
through economic development, and anti-corruption
Sumitomo’s San Cristobal mine: 3rd largest silver mine and 6th largest zinc mine in the world *
Mining is Bolivia’s second largest economic sector after Oil/Gas and is seen as a fundamental industry• Three major silver mines built within last five years by
Pan American Silver, Coeur D’Alene and Sumitomo• Jindal Steel of India investing US$2.1 billion in El Mutun
iron ore deposit • Kores of S.Korea to invest in Corocoro copper project• Recent announced investments by Citic of China and
LG/Posco of S.Korea to develop major lithium projects• Planned $32 billion 5-7 year infrastructure build-out by
Bolivian government to support resource industry
South American Silver’s Management has nearly 20 yrs experience in Bolivia
• Bolivian government has expressed support for SAC’s projects and their strong interest in encouraging private investment in the mining sector
• The Andean social movement toward greater local and indigenous autonomy is well developed in Bolivia
• SAC is seeing strong local support from the coalition of land owning Ayllus
*Image from : Sumitomo Metals and Mining http://www.sumitomocorp.co.jp/english/special/project_04/index.html
41
Resource Summary
Mineral resources in the above table were estimated as of March 30, 2011 for the Preliminary Economic Assessment Update Technical Report for Malku Khota by Allan Armitage, Ph.D., P.Geo, of GeoVector Management Inc. 1) The resource cut-off grade of 10 g/t silver equivalent is based only on the values of silver at $16/oz and indium at $550/kg.2) The silver equivalent calculation uses base case metal pricing ( Ag at $18/oz, In at $500/kg , Ga at $500/kg, Cu at $3/lb, Pb at $0.90/lb, and Zn at $0.90).
Mineral resources in the above table are as reported in the Dec 19 2011 Press Release using estimates prepared by Allan Armitage, Ph.D., P.Geo, and J. Campbell, BSc, PGeo of GeoVector Management Inc.3) An economic cut-off grade of 0.2% copper equivalent represents a metal price of approximately $2.50/lb copper. 4) Copper Equivalent (Cu Eq %) calculations use $3.00/lb Cu, $1200/oz Au, $22/oz Ag, and $16/lb Mo and have not been adjusted for metallurgical recoveries
5) Ag Eq is calculated using total silver and gold contained metals at $1200/oz Au and $22/oz Ag6) Cu Eq is calculated using total Cu, Pb, Zn, and Mo contained metals at $3/lb (Cu), $0.90/lb (Pb), $0.90/lb (Zn) and $16/lb (Mo).
MALKU KHOTA In Situ Grade Total Contained MetalApprox. 10 g/t Ag
Cutoff1 Ag In Ga Cu Pb ZnAg Eq2 Ag In Ga Cu Pb Zn
Ag Eq2
Resource Tonnes g/t g/t g/t % % % g/t Moz tonnes tonnes Mlbs Mlbs Mlbs Moz
CategoryMillion
s
Measured 31.0
33.40
6.10 4.50 0.02 0.07 0.02 49.00
33.32
188.00
139.0
13.9 49 16 48.55
Indicated 224.027.30 5.80 4.30 0.02 0.07 0.05 43.20 196.96 1,293.
00 943.0
106.4 405 231311.4
5
Total M&I 255.0
28.1
0
5.80
4.30
0.02
0.07
0.04 43.77
230.28
1,481.
00
1,082.
0
120.3 453 247358.8
0
Inferred 230.018.90 4.1 4.3 0.02 0.07 0.05 33.04 140.03 935 1,001 102 362 246244.3
6ESCALONES In Situ Grade Total Contained MetalApprox. 0.2% Cu
Cutoff3 Cu Au Ag Mo Cu Eq4 Cu Au Ag MoCu Eq4
Resource Tonnes % g/t g/t ppm % Mlbs Ozs Moz Mlbs MlbsCategory Millions
Inferred 420.6 0.41 0.05 1.24 61.39 0.49 3,835610,1
60 16.8 56.9 4,503
TOTAL RESOURCES Total Contained Metal - Malku Khota and Escalones Combined
Ag Au Ag Eq5 In Ga In + Ga Cu Pb Zn MolyCu Eq6
Resource Moz Kozs Moz tonnes tonnes tonnes Mlbs Mlbs Mlbs Mlbs MlbsCategory
M&I 230.28 230.3
1,481.0
0
1,082.0
2,563.0
120.3 453 247 330
Inferred 156.83610.1
6 190.11 935.00 1001.00 1936.00 3937.02362.16 246.15 56.87 4,423
42TSX:SACUS OTC:SOHAF
Relative Stock PerformanceSAC vs. key silver & gold indices
Silver price peakProducer and Explorer/DeveloperEquities Peak December 2010
Silver Producers peak
SAC
Gold Price Peak
Correction in Explorer/DevelopersAccelerates into the end of the year
43TSX:SACUS OTC:SOHAF
Relative performance of Gold/Silver and the Producer/Development stage equity indices
Silver price peak
Gold Price Peak
Correction in Explorer/DevelopersAccelerates into the end of the year
Producer and Explorer/DeveloperEquities Peak December 2010
Explorer/Developers and Producer Equities undervalued relative to metals
Historically, metals and miners move together
Potential value gain to equities to catch up with metals prices
44
Long Term Silver Ratios with Copper & GoldTraditional benchmarks being challenged
Source: 1) Ian McAvity’s Deliberations On World Markets, May 4 2011
Silver showing relative strength
45
Criticality Index for Clean Energy/Technology DevelopmentShowing Forecast Supply Shortages of Most Important Metals
Sources: (1) US Dept. of Energy Critical Materials Strategy, Dec. 2010.
Dy
Ga Ce La Te
In Eu
Nd Tb Y
Li Co Pr
Sm
Nd Dy
Ga In Li Te
Eu Y Tb
Ce Co La Pr
Sm
Short Term (0-5 Years) Long Term (5-15 Years)
4
3
2
1
4
3
2
1
1 2 3 4
Impo
rtan
ce
to c
lean
ene
rgy
Impo
rtan
ce
to c
lean
ene
rgy
1 2 3 4
low
low
hig
h
hig
h
Supply Risk Supply Risklow lowhigh high
Important Near Critical Critical
46
Indium SupplyMine Production and Refining
Source: 1)Roskill ‘s Indium: Global Industry Markets and Outlook ,2010BLEU: Belgium, Luxembourg Economic Union
China; 45%
Peru; 9%
Canada; 9%
Australia; 6%
USA; 4%
Mexico; 3%
Other Coun-tries; 23%
Indium Mine Production
China
Peru
Canada
Australia
USA
Mexico
Other Countries
China; 52%
S.Korea, 13%
Canada; 8%
Japan; 8%
BLEU; 6%
Germany; 3%
Russia; 3% Peru; 1% Others; 6%
Indium Refining
China
S.Korea
Canada
Japan
BLEU
Germany
Russia
Peru
Others
47
Management
TSX:SACUS OTC:SOHAF
Greg Johnson - President /CEO & Director
25 years mining industry experience in corporate finance, project development and exploration. Co-founder of NovaGold; played a key role in growing that company from $50 million in value to over $2 billion market capitalization, advanced 3 major projects through to Feasibility.
Ralph Fitch -Executive Chairman Explorationist with Over 40 years of global experience, a co-founder of South American Silver Former Chief Geologist for Chevron Minerals. Several major discoveries in South America
Phillip Brodie-Hall -Chief Operating Officer
has over 35 years experience in engineering construction and project development. He has participated in nearly every aspect of evaluation, feasibility studies and project development in the mining industry.
William Filtness -Chief Financial Officer is a Chartered Accountant with over 20 years of financial experience in the mining industry.
David Dreisinger -Vice President of Metallurgy
is Professor and Industrial Research Chair in Hydrometallurgy at the University of British Columbia. He is actively involved in developing and commercializing hydrometallurgical process at a number of mines worldwide.
Felipe Malbran - Vice President of Exploration
has over 25 years experience in exploration management in South America including key roles in the discovery of Malku Khota, Vizcachitas, and Escalones.
James Mallory -Vice President of Operations & Social Responsibility
Over 30 years of mining industry experience in large-scale mine management, operations and construction for companies including Barrick (Placer Dome), Silver Standard, and NovaGold.
Andrew Clark -Manager of Project Implementation
Over 30 years global industry experience in the development, design, management and construction of industrial mining projects.
Richard Doran -Vice President & Corporate Secretary
has extensive industry experience including with General Minerals and as Marketing Manager for Chevron Minerals.
Xavier Gonzales Yutronic -General Manager Compañía Minera Malku Khota S.A.
has experience in management, finance, and community relations in the mining industry including with Glencore, and Comsur S.A.
48
Directors
TSX:SACUS OTC:SOHAF
Antonio Canton is consultant and director to a number of international companies in marketing, finance and real estate.
Tony Cau COO at Zamin Ferrous. With over 30 years of experience in the mining, construction and heavy manufacturing industries, he has been involved in mine development and expansion projects around the world for groups like BHP, SNC-Lavalin, and Bateman Engineering.
Jeffrey Couch Managing Director and Head of Investment & Corporate Banking, Europe and London for BMO Capital Markets. Various financial and business development positions. Extensive investment banking and capital markets experience with Credit Suisse, Citigroup, and Klienwort Benson.
Paul Haber Chartered Accountant and a Certified Public Accountant, and previously CFO of a TSX-V company and Chairman of the Audit Committee for South American Silver.
Peter Harris Mining engineer with over 40 years of industry experience including construction and operation of over 20 mines around the world with groups such as Barrick (Placer Dome) and NovaGold.
William Murray Engineer in the mining industry with over 35 years of experience in construction management and project evaluation with groups including Fluor Daniel, Denison Mines, Optimum Project Services and Anglo American Corp.
John Watson President of a TSX -V listed company and Manager of a limited liability corporation in commercial real-estate.
Tina Woodside head of Gowlings’ corporate finance department and practices corporate and securities law focused on corporate finance, M&A and corporate governance matters.