SAC May Presentation 2012

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  • 1. VALUE. GROWTH. VISION Growing and advancing one of the world’s largest undeveloped silver and indium resources.Corporate Presentation TSX: SAC, US OTC: SOHAFMay 2012 www.soamsilver.com
  • 2. Cautionary NotesForward-looking statementsCertain statements contained herein constitute “forward-looking statements.” Forward-looking statements look into the future andprovide an opinion as to the effect of certain events and trends on the business. Forward-looking statements may include wordssuch 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 anduncertainties. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect ourbusiness, or if our estimates or assumptions prove inaccurate. Investors are advised to review the Company’s Annual InformationForm filed at www.sedar.com for a detailed discussion of investment risks. The Company assumes no obligation to update orrevise 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 inCanada, which differ from the requirements of U.S. securities laws. Unless otherwise indicated, all resource and reserveestimates included in this presentation have been prepared in accordance with National Instrument 43-101 Standards ofDisclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining and Metallurgy Classification System. NI 43-101is a rule developed by the Canadian Securities Administrators which establishes standards for all public disclosure an issuermakes of scientific and technical information concerning mineral projects. Canadian standards, including NI 43-101, differsignificantly from the requirements of the United States Securities and Exchange Commission (“SEC”), and resource and reserveinformation contained herein may not be comparable to similar information disclosed by U.S. companies. In particular, and withoutlimiting the generality of the foregoing, the term “resource” does not equate to the term “reserves”. Investors should alsounderstand that “inferred mineral resources” have a great amount of uncertainty as to their existence and great uncertainty as totheir economic and legal feasibility. It cannot be assumed that all or any part of an “inferred mineral resource” will ever beupgraded to a higher category. The estimation of quantities of resources and reserves is complex, based on significant subjectiveassumptions 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, includingnew information gained from development activities, evolving production history and a reassessment of the viability of productionunder different economic conditions.Changes in data and/or assumptions could cause reserve estimates to substantially change from period to period. No assurancecan be given that the indicated level of mineral will be produced. Actual production could differ from expected production and anadverse change in mineral prices could make a reserve uneconomic to mine. Variations could also occur in actual ore grades andrecovery rates from estimates. 2
  • 3. Investment Highlights South American Silver Corp. • Experienced management team with track record of successful project development and value creation • Two large-scale deposits in South America Malku 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 relationships1) $25/oz silver, $3/lb copper, $700/kg indium and gallium2) Net of base metal credits 3
  • 4. World-Class Deposits Two 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 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 33.041)Silver Equivalent (Ag Eq) calculated using total contained metalusing 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). 4
  • 5. World-Class Deposits Two large-scale assets in South America 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 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 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 0.491)Copper Equivalent (Cu Eq) calculated using total contained metalfor copper ($3/lb), gold ($1200/oz), silver ($22/oz), and molybdenum($16/lb) and has not been adjusted for metallurgical recoveries. 5
  • 6. Emerging Opportunity for Mining in BoliviaA developing resource based economy• 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• Local indigenous support is the key to project success• 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 Sumitomo’s San Cristobal mine: 3rd largest silver Pan American Silver, Coeur D’Alene and Sumitomo mine and 6th largest zinc mine in the world *• South American Silver’s management team has • SAC is seeing strong local support from nearly 20 yrs experience in Bolivia the Coalition of the local land owning• Bolivian government has expressed support for indigenous Allyus SAC’s projects and their strong interest in • Coalition lobbying on behalf of the project encouraging private investment in the mining sector with National and Provincial government *Image from : Sumitomo Metals and Mining http://www.sumitomocorp.co.jp/english/special/project_04/index.html 6
  • 7. Community RelationsA key to successful project development• Programs modeled after success at Sumitomo’s San Cristobal mine and Newmont’s Inti Raymi mines in Bolivia• Impact & Benefit agreements in place with land owning Allyus  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 • Instituting animal health initiatives to improve local economy which is based on subsistence farming and herding  Vaccination program and veterinary treatment of herd animals  Breeding program to improve herd quality and productivity • Working with local indigenous communities to facilitate economic and business development related to project services and supportTSX:SACUS OTC:SOHAF 7
  • 8. Share Capitalization TSX:SAC, US OTC:SOHAF Issued & Outstanding Options1 Warrants2 Fully Diluted3 114.6M 10.3M 8.2M 133.1M • ~$200 million I/O and in-the-money Market Capitalization(4)(5) • Average 3 mo. trading volume 150,000 shares/day • ~$38 million in cash(6) South American Silver Asian Technology Strategic Investment Investor Breakdown • High technology materials manufacturers and Indium/Gallium end users from Taiwan, Hong Management Kong, Korea, and Japan 8% 9% Asian Technology Groups 27% Private Equity Ownership 8% Zamin Private Equity • Zamin (UK) • Izurium (UK) 8% Izurium Private Equity Largest Institutional Ownership 22% Private Investors • Sprott Asset Management 18% Institutional • Front Street • US Global Retail(1) Weighted avg .exercise price $1.20 CAD (2) Weighted avg.exercise price $1.76 (3) As of April 30 2012 (4) As of April 26, 2012(5) Issued and 123.2 M outstanding shares+ in the money warrants 8and options (6) As of April 30, 2012
  • 9. Adding Value Through Resource Growth Total resources with value shown relative to silver Ag Moz In+Ga tonnes Cu Mlbs Ag Eq Inferred Resource (Ag+Au only) 8 Oz Ag 450 6000 Ag Eq M&I Resource (Ag+Au only) Eq/share 400 4 Oz Ag In & Ga Inferred Resource (In+Ga only) Eq/share 5000 In & Ga M&I Resource (In+Ga only) Tonnes of Indium and Gallium2 (combined) 350 Million Pounds of Copper Equivalent3 Million Ounces of Silver Equivalent1/ Cu Eq Inferred Resource (Cu+Pb+Zn only) 300 Cu Eq M&I Resource (Cu+Pb+Zn only) 4000 $36 M 250 Financing 3000 $3 M 200 6000 Financing 150 4500 2000 2 Oz Ag 100 3000 Eq/share 1000 50 1500 IPO $20 M 0 0Total 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 9($0.90/lb), and molybdenum ($16/lb) only
  • 10. Comparative Silver Resources in the Americas One of the largest development stage silver resources 500 450 Millions of Silver Ounces 400 M&I Resources Additional value 350 of Indium and Gallium Inferred Resources 300 250 200 150 100 50 0 Silvercrest US Gold Sulliden MAG Silver Orko Golden Wildcat Tahoe So.American Levon Bear Creek Minerals Resources Silver Mexico location Mexico Mexico Peru Mexico Mexico Mexico Guatemala Bolivia /Chile Mexico Peru PeruAvg Mine Grade 89.5 65 13 538 125 182 72 383 58 19 38 (g/t) Open PitMining Method OP/UG OP OP UG OP/UG UG OP UG OP OP Heap Leach Source: BMO Capital Markets,Canaccord and Intierra, for silver only Note: All companies have projects in South and/or North America 10
  • 11. Enterprise Value per Silver Resource Oz By project development stage $14.00 Advanced Development Stage Average ~$4/oz $12.00 EV of >$0.64 based on 230.3 million M&I oz Ag $10.00 $8.00 Development Stage Average ~$2/oz $6.00 $4.00 $2.00 $0.00 South So.American Golden Minerals Orko Tahoe Resources MAG Silver Aurcana International US Silver Corp Silver American Minerals Silver Corp.Source: Canaccord and Intierra,Share prices as of March 22 2012Note: All companies have projects in South and/or North 11America as shown on slide 11
  • 12. Development Stage Value Curve Potential value growth with project advancement Average Enterprise Value per Oz of Silver by Stage Production Take-Over offers or Partnerships common at this stage Construct $9/oz Increased value through resource Permits Increasing Market Value expansion FS Malku Khota Project 2x-3x potential PFS $4/oz Increase in Escalones Project Market cap PEA Resource Definition 2x-5x potential $2/oz Increase in Market cap Discovery Increasing value with project advancement Early Stage Advanced Production Exploration & Development Stage Development (Reserves)Source: Recent average enterprise value per ounce of silver atvarious development stages for North and South American-basedprojects. Canaccord, BMO Capital markets and Intierra 12
  • 13. Current Silver Company Market Valuations by Resource Size & Development Stage Size of circle represents market valuation premium in EV/oz Developers Adv. Developers Producers Silver Standard Allied Nevada MK Value at Avg Valuation for each development stage Pan American Silver 1000 2012 Coeur dAleneTotal Resource Size (Mozs) South American Silver 2011 Malku Khota PEA PFS/FS Production Bear Creek 500 Current Value First Majestic MK MK Tahoe MK Silvermex Hecla MAG Orko Hochschild 100 Silver Crest Arian Extorre Endeavour Troy Great Panther Alexco Golden Predator 10 $50 $100 $200 $300 $500 $1,000 $2,000 $5,000 Enterprise Value (US$ Millions) Total Resource Ag Equivalent using (Ag +Au only at $25/oz and $1000/oz values) Source: Canaccord and Intierra, Share prices as of May09 2012 13 Note: All companies have projects in South and/or North America
  • 14. Positive Silver Fundamentals A 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 • High levels of investment demand and industrial/technology demand continued in 2011 • Total annual mine production grew only 1.4% last year with a drop in primary silver production and reduced contribution of by-product silver from copper mining • Projected mine supply based on planned projects and declining production from many existing mines anticipated to move into future shortfall vs consumption for technology and other industrial use over the next several years • Few major new deposit discoveries and growing time lag from time of discovery to metal production are significant constraints to new supplySource: 1) GFMS World Silver Survey 20122) Byron Capital Markets Equity Research February 2012 14
  • 15. Silver Supply/Demand Fundamentals • 8 of the top 15 silver producers declined in production in 2011 vs. 2010(1) • Top two Ag producers dropped by 11 million ounces with global production up only 1.4% • Demand growth expected to continue to outstrip production growth(2) World Silver Supply World Silver Demand Industrial Applications 1200 Mine production 1200 Photography Secondary Supply and Scrap Jewelry and Silverware Government Sales Investment and Coins 1000 1000 Investment demand 800 800Million Ounces Million Ounces +1.4% mine production 600 600 400 400 Industrial demand 200 200 0 0 Source: 1) GFMS World Silver Survey 2012 2) BMO Capital Markets Global Mining Research April 2011 15
  • 16. Growing Demand for Silver in Technology Breakdown of key technology/industrial uses for silver 500 20 Moz/yr Avg technology Ag consumption increase Photovoltaic over last 10 years 400 Catalysts, alloys, solders and biocidesMillions of Silver Oz 300 Electronics 200 100 0 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 11p Source: CPM Silver Yearbook 2010 16
  • 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) 300 40 Lead/Zinc Primary 35 250 Copper Gold Silver Price 30 Millions of Ounces of Silver 200 Silver Price (US$) 25 150 20 15 100 10 50 5 0 0 2003 2004 2005 2006 2007 2008 2009 2010 2011Source: 1) GFMS World Silver Survey 2005-20122) BMO Capital Markets Global Mining Research April 2011 17
  • 18. Indium & Gallium – Two Key Strategic Metals Rapidly 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 * flat panel displays LED lighting thin film solar* Image from http://gotpowered.com 18
  • 19. Indium & Gallium Fundamentals Compelling 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 • Mainland China is estimated to control 60-70% of the global indium market through mining and as a by-product of smelting zinc • China is the largest consumer of indium and has imposed export quotas and tariffs like on other key high-technology specialty metals such as heavy rare earths • 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 $400-500/kg • Gallium market estimated to be a conservative 15% annual growth rate which could increase significantly with more rapid growth in LED lighting and photovoltaics Malku Khota annual indium and gallium production • Malku Khota projected to be one of the world’s largest indium & gallium producers (80 tonnes and 15 tonnes per year) • Potential to represent 10% or more of global mine supply of indium and over 5% of global supply for gallium • Opportunities for project financing from off-take agreements for indium & galliumSources: (1) US Dept. of Energy Critical Materials Strategy, Dec.2010. (2)United Nations Environment Programme (UNEP) Special 19Report on Strategic Metals ,May 2011 .
  • 20. Indium Supply Mine production by country 400 350 Mainland China estimated to control 300 60-70% of the global indium marketTonnes of Indium 250 through mining and smelting 200 150 100 50 0 Mexico USA Australia Canada Peru Bolivia China • Bolivia is the second largest producer of indium outside of mainland China • 60% of Indium consumption in 2011 from Japan USGS Mineral Commodity Summaries, January 2012 Roskill Indium report 2010 Other company reports 2011 20
  • 21. Indium Demand Growth Growing demand in high-tech markets 2500 Solar EnergyEnd-use Market Demand (tonnes) LED Lighting 5 year 2000 LCD Flat Panels projected demand growth 1500 1000 2010 total indium 500 production level 0 2010 2011E 2012E 2013E 2014E 2015E 2016E Growth assumptions based on data from Displaybank in LCD TV Association “LCD TV Matters”-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009 , Solarbuzz, Photon International, GFMS , Nanomarkets, and the US Department of 21 Energy Critical Minerals Strategy Report December 2010
  • 22. Indium Fundamentals World indium demand vs price (1969-2011*) 2500 2000 1800 US Dept of Energy Projections Indium Price/kg ($US) 2000 1600 Demand 1400Indium Demand Price Recent Indium Price 1500 1200 1000 1000 X 800 600 500 400 200 0 0 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
  • 23. Silver and Indium Mining in Bolivia One of the world’s premier silver and indium mining districts • One of the world’s largest historical producing regions with billions of ounces silver • Highly prospective & under-explored relative to other parts of the Andean region Coliquiri Glencore/Xtrata • 8 major mines since 2005: Glencore/Xtrata – Sinchi Wayra Mines 2005 • 5 mines – Comibol JV’s and 100% private Poopo Sumitomo - San Cristobal Mine 2007 Glencore/Xtrata • 100% Sumitomo private ownership Porco Glencore/Xtrata • World’s 3rd largest silver mine (19.4 Moz/yr), Bolivar 6th largest zinc mine with significant indium Glencore/Xtrata 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 BoliviaSources: Company reports and CPM 2011 Silver Yearbook 23
  • 24. Malku Khota Project One of the world’s largest silver-indium resources Malku Khota Project – 2011 Resource Estimate2 Silver Indium Gallium Copper Lead Zinc AgEq3 (Moz) (tonnes) (tonnes) (MLbs) (MLbs) (MLbs) (Moz) M&I 230 1,481 1,082 120 453 247 354 Inferred 140 935 1,001 102 362 246 240 Host rock sandstone with disseminated Enrichment starts at surface 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, 41) 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) 244) Economic cut-off grade comprised only of silver and indium
  • 25. Malku Khota Project Low 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 nearby1) Average for the first 5 years of production 25
  • 26. Malku Khota Drilling Grade thickness map • 115 drill holes in current resource with OPEN 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 Mineralized additional 140 M inferred Ag oz Sandstones • 2012 program to target conversion of in pit inferred resources to M&I resources and & test lateral and depth expansion OPEN • 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 OPENTSX:SAC 26US OTC:SOHAF
  • 27. 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 OPEN OPENTSX:SAC 27US OTC:SOHAF
  • 28. Production Processes From ore to metal Open Pit Mining • Large scale shovel and truck open pit mine • Oxide ore crushed in preparation for direct Crushing leaching • Four years of confirmatory metallurgical test work Leaching with SGS labs on acid leach process • Acid-chloride leaching captures silver, indium, copper, lead, zinc, gallium and gold Metal Recovery & Processing • Metal recovery in several steps: • Acid recovery • Silver-gold-copper cementation Silver, Gold, Copper • Indium-gallium precipitation • Lead and zinc sulfides Indium & Gallium ingots • Downstream processing to metal products Lead & Zinc concentratesTSX:SAC 28US OTC:SOHAF
  • 29. Malku Khota Economic June 2012 Updated Economic Assessment Anticipated Assessment, May 20111 Development Capex $411 million Metal Prices ($US)4 Mining Rate 40,000 tpd Heap Leach Base Case Mid Case Recent Life of Mine 15 years (3 yr avg) (2 yr avg) (1 yr avg) Ore Mined (LOM)2 200 M tonnes Silver : $18/oz $25/oz $35/oz Average Silver Grade 3 42.4 g/t Indium : $500/kg $570/kg $650/kg Average Indium Grade3 7.55 g/t Gallium: $500/kg $570/kg $730/kg Ag Eq grade 58 g/t First LOM Share of Gross Revenue Total Recovered Metals Silver (oz) 5 years Annual (at base case prices) 158 M 13.2 M 10.5 M Indium (tonnes) 1,184 80.7 Silver 5% 3% 78.9 Lead (lbs) 191 M 12.48 M 12.7 M Zinc (lbs) 6% 135 M 4.42 M 9M Indium & Copper (lbs) 88 M 5.64 M 5.87 M Gallium Gallium (kgs) 212,962 15,184 14,198 Copper Base Case Mid Case Recent 15% First 5 years cash flow $185 M/yr $287 M/yr $430 M/yr Net cash flow Lead $1,261 M $2,528 M $4,298 M 71% NPV (5% discount rate)1 $704 M $1482 M $2571 M Internal Rate of Return 37.7% 63% 92.9% Zinc Payback period (years) 27 months 19 months 15 months(1)In US dollars (4) Base Case: 3 yr avg prices as of May 2011(2)LOM = Life of Mine Mid Case: 2 yr avg prices as of May 2011(3)First 5 years of production Recent Case: 1 yr avg prices as of May 2011 29(avg/yr)
  • 30. Actual/Anticipated Annual Ag Production (Moz) 10.0 15.0 20.0 25.0 30.0 35.0 40.0 0.0 5.0 Coeur dAlene Pan American SilverSource: CPM Silver Yearbook 2011 Silver Standard Resources Silver Standard Resources Producing Mine Hecla Hochschild*Based on mine production of 13.2 Moz /year for first five years Development Stage Project Cia De Minas Buenavertura Yamana Gold Etibank30 Bear Creek Mining Hochschild Polymetal MNPO Xtrata South American Silver Corp. Goldcorp Inc. Industrias Penoles Pan American Silver Tahoe Resources Sumitomo Corp. Target to increase production to 18-20 Moz Barrick Gold Corp. Primary Silver Project Annual Production Rates Fresnillo Malku Khota one of largest emerging producers at over 13 Moz/yr BHP Billiton
  • 31. Global Silver Industry Cash Cost Curve High quality long-life, low-cost silver production Cumulative Percentile of Silver Mine Production Cost Total Cash Cost Per Ounce of Silver Lowest 25% Percentile Cash Costs Malku Khota Estimated Production Cost Industry Average Cash Cost $7.25/oz Source: GFMS World Silver Survey 2012(1) Avg first 5 years of production (2) Silver cash costs after credits ($US)/oz(3) 3 year average price: Ag $18, In $500, Ga $500, Cu $3, Pb $0.90, Zn $0.90 312 year average price: Ag $25, In $570, Ga $570, Cu $3.70, Pb $1, Zn $11 year average price: Ag $35, In $650, Ga $730, Cu $4.30, Pb $1.20, Zn $1.10 , all as of May 2011
  • 32. Escalones Copper-Gold-Silver project, Chile High potential, large-scale target Inferred Copper Gold Silver Moly Cu Eq Copper Gold Silver Moly Cu Eq1 Tonnes (%) (g/t) (g/t) (ppm) (%) (Mlbs) (Ozs) (Mozs) (Mlbs) (Mlbs) 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 underway1) 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 adjustedfor metallurgical recoveries 32
  • 33. Escalones Project Logistics Excellent existing infrastructureOwnership: 100% through lease SAC propertyLocation: 35km E of El Teniente Gas pipeline Access RoadElevation: 3800m• 70 square kilometer property• Road accessible located 100 km southeast of Santiago• Gas pipeline across propertyTSX:SAC 33US OTC:SOHAF 31
  • 34. Drill Results Grade Thickness Map Large-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 CuEq GT AuEq GTCopper (%) x Thickness (m) Gold (g/t) x Thickness (m) Metal Prices 0 – 10 CuEq% GT 0 – 17 AuEq GT Copper - $1/lb 10 – 50 CuEq% GT 17 – 85 AuEq GT Gold - $1000/oz 50 – 100 CuEq% GT 85 – 171 AuEq GT Silver - $15/oz 171 – 342 AuEq GT Moly - $15/lb 100 – 200 CuEq% GT >= 200 CuEq% GT >= 342 AuEq GT Pending 2012 HolesTSX:SAC 34US OTC:SOHAF 32
  • 35. Escalones Geological 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 Alto BajoTSX:SACUS OTC:SOHAF 35
  • 36. Current Copper Company Market Valuations by Resource Size & Development Stage Size of circle represents market valuation premium in EV/lb Developers Adv. Developers Producers Avg Value 2.1 cents/lb 2.7 cents/lb 10.4 cents/lb 100000 Northern DynastyTotal Resource Size (Mlbs Cu) Escalones Value at Avg Valuation for each development stage Quadra FNX Western Copper Taseko Imperial Nevada NGEx Candente Lumina 10000 Augusta Capstone Hana PFS/FS Copper Fox Panoro ESC ESC ESC Production Copper Mountain Redhawk Escalones Current Stage 1000 $50 $100 $300 $500 $1000 $2000 Enterprise Value (US$ Millions) Source: Canaccord Report Jan 2012 using Cu Eq 36
  • 37. Project MilestonesValue drivers over the next 6-12 months • Malku Khota, silver-indium-gallium project, Bolivia Updated 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 studies Exploration 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, Chile Phase I exploration and geophysics program completed Initial resource estimate completed Phase 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
  • 38. Leveraged to Silver Additional value Value of silver per dollar invested of Indium and Gallium Additional value of Copper Silver value per $1 invested70 SAC has some of the best leverage to silver of any development stage company with over $65 of silver value per $1 invested605040 Average value of silver ~$16 of silver per $1 invested*302010 0 Silver ETF Alexco Tahoe Sulliden MAG Silver Orko Silvercrest Golden Silver Bear Creek So.American South American Resources Minerals Standard Silver Corp. SilverSource: 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 = (silverresource/shares outstanding) x $25/oz silver) divided by share price 38Value only shown for silver with no contribution from other metals. Cu value calculatedusing $2.25
  • 39. 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 Company1) $25 /oz silver, $3 /lb copper, $700/kg indium and gallium 39 37
  • 40. TSX: SAC OTC: SOHAF Phone: 604.681.6926 1.855.681.6926 www.soamsilver.com AppendixTSX:SAC 40US OTC:SOHAF
  • 41. Emerging Opportunity for Mining in BoliviaEconomic Trends• World Bank/IMF supportive of economic policy GDP % Output Growth 3yr avg 6.0 changes resulting in one of the fastest growing economies in South America over past 3 years 5.0• Bolivia has joined the Mercosur trade organization 4.0 with Brazil as largest regional trading partner 3.0• Political relations with U.S. have been normalized 2.0• Moody’s & Fitch sovereign bond ratings upgraded 1.0• Strong emphasis by government on poverty reduction, through economic development, and 0.0 anti-corruptionForeign investment highlights• Kores of S.Korea to invest in Corocoro copper project Bolivia’s emerging resource based economy S• Recent announced investments by Citic of China • Three major silver mines built within last five and LG/Posco of S.Korea to develop major lithium years by Pan American Silver, Coeur D’Alene projects and Sumitomo• Petrobras of Brazil—Latin America’s largest • Planned $32 billion 5-7 year infrastructure publicly traded oil company – investing US$1B of build-out by Bolivian government to support new capital into the Bolivian gas fields resource industry• Repsol of Spain investing $1.6 billion to increase • One of the world’s premier silver districts with gas production in Bolivia billions of ounces of silver production• Petrobras and Repsol announced new exploration • Mining second largest economic sector initiatives in Bolivia in early 2011* Chart source: IMF Western Hemisphere Report Fall 2011 41
  • 42. Resource Summary MALKU KHOTA In Situ Grade Total Contained MetalApprox. 10 g/t Ag Cutoff1 Ag In Ga Cu Pb Zn Ag Eq2 Ag In Ga Cu Pb Zn Ag Eq2Resource Tonnes g/t g/t g/t % % % g/t Moz tonnes tonnes Mlbs Mlbs Mlbs MozCategory MillionsMeasured 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 48.55Indicated 224.0 27.30 5.80 4.30 0.02 0.07 0.05 43.20 196.96 1,293.00 943.0 106.4 405 231 311.45Total M&I 255.0 28.10 5.80 4.30 0.02 0.07 0.04 43.77 230.28 1,481.00 1,082.0 120.3 453 247 358.80Inferred 230.0 18.90 4.1 4.3 0.02 0.07 0.05 33.04 140.03 935 1,001 102 362 246 244.36Mineral 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, ofGeoVector 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). ESCALONES In Situ Grade Total Contained Metal Approx. 0.2% Cu Cutoff3 Cu Au Ag Mo Cu Eq4 Cu Au Ag Mo Cu Eq4Resource Tonnes % g/t g/t ppm % Mlbs Ozs Moz Mlbs MlbsCategory MillionsInferred 420.6 0.41 0.05 1.24 61.39 0.49 3,835 610,160 16.8 56.9 4,503Mineral 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 TOTAL RESOURCES Total Contained Metal - Malku Khota and Escalones Combined Ag Au Ag Eq5 In Ga In + Ga Cu Pb Zn Moly Cu Eq6Resource Moz Kozs Moz tonnes tonnes tonnes Mlbs Mlbs Mlbs Mlbs MlbsCategoryM&I 230.28 230.3 1,481.00 1,082.0 2,563.0 120.3 453 247 330Inferred 156.83 610.16 190.11 935.00 1001.00 1936.00 3937.02 362.16 246.15 56.87 4,4235) 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). 42
  • 43. Relative Stock PerformanceSAC vs. key silver & gold indices SAC Gold Price Peak Producer and Explorer/Developer Silver price peak Equities Peak December 2010 Silver Producers peak Correction in Explorer/Developers Accelerates into the end of the yearTSX:SAC 43US OTC:SOHAF
  • 44. Relative performance of Gold/Silver and theProducer/Development stage equity indicesExplorer/Developers and Producer Equities undervalued relative to metals Gold Price Peak Silver price peak Producer and Explorer/Developer Equities Peak December 2010 Historically, metals and miners move together Correction in Explorer/Developers Accelerates into the end of the year Potential value gain to equities to catch up with metals pricesTSX:SAC 44US OTC:SOHAF
  • 45. Long Term Silver Ratios with Copper & Gold Traditional benchmarks being challenged Silver showing relative strengthSource: 1) Ian McAvity’s Deliberations On WorldMarkets, May 4 2011 45
  • 46. Criticality Index for Clean Energy/Technology DevelopmentShowing Forecast Supply Shortages of Most Important Metals Short Term (0-5 Years) Long Term (5-15 Years) high high 4 Dy 4 Nd Dyto clean energy to clean energy Ce La In Nd Tb In Importance Importance Ga Ga Eu Y Tb 3 Te Eu Y 3 Li Te Ce Co Li Co Pr 2 2 La Pr Sm Sm low low 1 1 1 2 3 4 1 2 3 4 low Supply Risk high low Supply Risk high Important Near Critical CriticalSources: (1) US Dept. of Energy Critical Materials Strategy,Dec. 2010. 46
  • 47. ManagementGreg Johnson - President &CEO & 25 years mining industry experience in corporate finance, project development and exploration.Director 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 AmericaPhillip Brodie-Hall -Chief Operating Over 35 years experience in engineering construction and project development. He hasOfficer participated in nearly every aspect of evaluation, feasibility studies and project development in the mining industry.William Filtness -Chief Financial Officer Chartered Accountant with over 20 years of financial experience in the mining industry.David Dreisinger -Vice President of Professor and Industrial Research Chair in Hydrometallurgy at the University of BritishMetallurgy Columbia. He is actively involved in developing and commercializing hydrometallurgical process at a number of mines worldwide.Felipe Malbran - Vice President of Over 25 years experience in exploration management in South America including key roles inExploration the discovery of Malku Khota, Vizcachitas, and Escalones.James Mallory -Vice President of Over 30 years of mining industry experience in large-scale mine management, operations andOperations & Social Responsibility construction for companies including Barrick (Placer Dome), Silver Standard, and NovaGold.Andrew Clark -Manager of Project Over 30 years global industry experience in the development, design, management andImplementation construction of industrial mining projects.Richard Doran -Vice President & Extensive industry experience including with General Minerals and as Marketing Manager forCorporate Secretary Chevron Minerals.Xavier Gonzales Yutronic -General Experience in management, finance, and community relations in the mining industry includingManager Compañía Minera Malku Khota with Glencore, and Comsur S.A.S.A. TSX:SAC 47 US OTC:SOHAF
  • 48. DirectorsRalph 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 AmericaAntonio Canton Consultant and director to a number of international companies in marketing, finance and real estate.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.Greg Johnson – President & CEO 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.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. TSX:SAC 48 US OTC:SOHAF