SAC October 2011 Corporate Presentation

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South American Silver Corp. October 2011 corporate presentation. Contains information about the company's silver-indium-gallium project in Bolivia and copper-silver-gold project in Chile.

South American Silver Corp. October 2011 corporate presentation. Contains information about the company's silver-indium-gallium project in Bolivia and copper-silver-gold project in Chile.

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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: SOHAFOctober 2011 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 HighlightsSouth 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 • Escalones: high potential copper-silver-gold deposit• 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• Measured and Indicated resources expanded 60% to 230 M oz silver• Well defined business plan to drive shareholder value• Leveraged to silver nearly 4 oz of silver per share (6 oz silver equivalent)• Attractive investment value relative to peers at low value per oz• Exposure to the high-tech indium and gallium market• Potential value from new copper-silver-gold resource• Strong focus on community relations• Well financed into feasibility 3
  • 4. World-Class Deposits Two large-scale assets in South AmericaMalku Khota, silver-indium project, Bolivia (100%) • Bulk mineable open-pit, sediment hosted deposit • Low capital and operating costs as a heap leach or milling operation • Update resource increases M&I 60% to 230 M oz silver Silver Indium Gallium AgEq (Moz) (tonnes) (tonnes) (Moz) M&I 230 1,481 1,082 354 Inferred 140 935 1,001 240 • Pre-Feasibility process started in 2011 & Feasibility in 2012 • Resource expansion potential with only 4 km of 50 sq km property drill tested • Potential to be one of the top producing silver and indium mines • Funded into Feasibility Escalones, copper-silver-gold project, Chile (100%) • Large scale target in world-class mining district near El Teniente • Exploration program and geophysics underway • Resource definition program in 2011 • Potential significant copper, silver, gold deposit*AgEq=total contained metal 4
  • 5. Share Capitalization2 TSX:SAC, US OTC:SOHAF Issued & Outstanding Options Warrants Fully Diluted2 100.3M 10.6M 6.8M 117.9M • ~$200 million Market Capitalization (1) Major Shareholders • Average 3 mo. trading volume 350,000 shares/day •Zamin --19% • Well financed with +$30 million in cash(2) •Private investors--18% • Potential US listing to increase visibility and liquidity •Management3 -- 15% Institutional Ownership •Sprott Asset Management •Front Street •K2 funds •Kudu Partners(1) As of July 18, 2011, (2) As of June 30, 2011(3) Fully diluted basis 5
  • 6. Adding Value Through Resource Growth 400 8000 350 7000 Tonnes of Indium and Gallium (Combined) Ag Inferred Resource 300 Ag M&I Resource 6000Million Ounces of Silver In & Ga Inferred Resource 250 5000 In & Ga M&I Resource 200 4000 150 3000 100 2000 50 1000 0 IPO 0 6
  • 7. Comparative Silver Resources in the Americas Second largest development stage silver resource 500 Additional value 450 of Indium and Gallium Inferred Resources 400Millions of Silver Ounces M&I Resources 350 300 250 200 150 100 50 0 Alexco Silvercrest US Gold Golden Sulliden MAG Silver Orko ECU Sabina Tahoe South So.American Bear Creek Minerals Resources American Silver Silver Yukon Mexico Mexico Mexico Peru Mexico Mexico Mexico Nunavut Guatemala Bolivia Peru (Canada) El Salvador Peru (Canada) Chile Source: Canaccord Report resource numbers as of January 11, 2011 Note: All companies have projects in South and/or North America 7
  • 8. Enterprise Value per Silver Resource Oz Producer By project development stage Average ~$20/oz $20.00 $18.00 $16.00 EV of >$0.80 base on 230.3 million M&I oz Ag $14.00 Advanced Development $12.00 Stage Average ~$6/oz $10.00 Development Stage $8.00 Average ~$3/oz $6.00 $4.00 $2.00 $0.00Source: Canaccord & Intierra as of June 9, 2011,Note: All companies have projects in South and/or North America 8
  • 9. 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 Construct $20/oz Increasing Market Value Increased value common at this through resource stage expansion Permits FS PFS $6/oz Resource PEA Definition $3/oz Early Stage Advanced Production Discovery Exploration & Development Development Stage (Reserves) Increasing value with project advancementSource: Recent average enterprise value per ounce of silver atvarious development stages for North and South American based 9projects. Canaccord, Wellington West and Company reports.
  • 10. 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 Pan American Silver 1000Total Resource Size (Mozs) Bear Creek Coeur dAlene 500 South American Silver SAC SAC SAC Sulliden Tahoe Silver Bull First Majestic Silvermex Hecla Silver Quest Hochschild MAG 100 US Gold Aurcana Endeavour Esperanza Intl Minerals US Silver Arian Troy Extorre Castle Great Panther Alexco Golden Predator 10 $50 $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 Report July, 2011 and Intierra, July, 2011 Share prices as of Sept 7 2011, 10 Note: All companies have projects in South and/or North America
  • 11. 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 • 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 productionSource: 1) GFMS World Silver Survey 20112) BMO Capital Markets Global Mining Research April 2011 11
  • 12. Silver Supply/Demand Fundamentals • Dramatically increased demand growth driven by strong investment demand plus increased industrial consumption(1) • Demand growth expected to continue to outstrip production growth(2) World Silver Supply World Silver Demand +17% total +8% total demand supply 1200 Industrial Applications growth 1200 Mine production growth Photography Secondary Supply and Scrap Jewelry and Silverware +40% 1000 Government Sales 1000 Investment and Coins investment demand 800 800Million Ounces Million Ounces +2.5% mine 600 600 production 400 400 +21% industrial demand 200 200 0 0Source: 1) GFMS World Silver Survey 20112) BMO Capital Markets Global Mining Research April 2011 12
  • 13. Growing World Investment Demand For Silver 300 World Silver Investment Demand 250 Investment Coins & Medals Millions of Ounces 200 150 100 50 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Source: GFMS World Silver Survey 2011 13
  • 14. Growing Demand for Silver in Technology Breakdown of key technology/industrial uses for silver 500 Photovoltaic 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 Not for reproduction without written CPM Group consent 14
  • 15. Thin Film/Thick Film Demand Growth Growing demand in solar technology 20 50 Thin film cell production PV related silver consumption Photovoltaic cell production (Gigawatts) Thick film cell production Silver fabrication (million ounces) 40 15 30 10 20 5 10 0 0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010Growth assumptions based on data from Displaybank in LCD TV Association ―LCDTV Matters‖-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009, Solarbuzz, Photon International, GFMS , Nanomarkets, and the US Department of 15Energy Critical Minerals Strategy Report
  • 16. 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 25 Lead/Zinc Primary Copper 250 Gold 20 Silver Price Millions of Ounces of Silver 200 Silver Price (US$) 15 150 10 100 5 50 0 0 2003 2004 2005 2006 2007 2008 2009 2010Source: 1) GFMS World Silver Survey 2005-20112) BMO Capital Markets Global Mining Research April 2011 16
  • 17. 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 producersTSX:SAC 17US OTC:SOHAF
  • 18. 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 • 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 ~$900-1000/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 18Report on Strategic Metals ,May 2011 .
  • 19. 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. 19
  • 20. Indium Supply Mine Production and Refining Indium Mine Production Indium Refining Peru, 1% Russia, 3% Others, 6% Germany, 3 % China China Peru S.Korea Other Countries, 23 BLEU, 6% Canada % Canada China, 45% Japan, 8% Japan Mexico, 3% Australia China, 52% BLEU USA, 4% USA Canada, 8% Germany Mexico S.Korea, 13 Russia Other % Peru, 9% Countries PeruAustralia, 6% Others Canada, 9% Source: 1)Roskill ‗s Indium: Global Industry Markets and Outlook ,2010 20 BLEU: Belgium, Luxembourg Economic Union
  • 21. Indium Demand Growth Growing demand in high-tech markets 2500End-use Market Demand (tonnes) Solar Energy 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 Indium Price/kg ($US) 2000 1600 DemandIndium Demand 1400 Price 1500 1200 Current Indium Price X 1000 1000 800 600 500 400 200 0 0Source: (1) Indium: Global Industry Markets and Outlook, 9th Edition 2010 (Roskill)*2011-2013 Data are estimates (2) 2011-2015 Estimates US Dept. Of EnergyCritical Materials Strategy Dec. 2010. 16
  • 23. Silver Mines in Bolivia One of the world’s premier silver mining districts • Historical district production of billions of ounces of silver • Highly prospective & under-explored • Increase from 9th largest global silver producer to 5th largest with completion of three major silver mines in past four years:  Pan American Silver – San Vicente  Coeur D‘Alene - San Bartolome  Sumitomo - San CristobalTSX:SAC 23US OTC:SOHAF
  • 24. Opportunity in Bolivia An emerging resource based economy • Bolivian government encouraging private investment • Member of Mercosur Regional trade organization with Brazil as largest trading partner • Government bond ratings upgraded by Moody‘s & Fitch • Mining second largest economic sector • One of the world‘s premier silver districts with billions of ounces of silver production • Planned $32 billion 5-7 year infrastructure build-out by Bolivian government for new rail and road corridors and hydropower generation • Three Major silver mines built within last four years by Pan American Silver, Coeur D‘Alene, and Sumitomo • Substantial resource industry investments in Bolivia  Jindal Steel of India investing US$2.1 billion in giant El Mutun iron ore deposit  Petrobras of Brazil—Latin America‘s largest publicly traded oil company – investing US$1 billion of new capital into the Bolivian gas fields  Repsol of Spain investing $1.6 billion to increase gas production in Bolivia  Petrobras and Repsol have announced new exploration initiatives in Bolivia in early 2011  Recently announced investments by Chinese and South Korean companies to develop lithium resourcesTSX:SAC 24US OTC:SOHAF
  • 25. Malku Khota Project One of the world’s largest silver-indium resources Malku Khota Project – 2011 Resource Estimate 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 2401) Average for the first 5 years of production2) See March 31, 2011 News Release for detailed resource estimate 253) Total contained metal
  • 26. 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 26
  • 27. Mineralization Open pit, bulk mineable silver-indium depositHost rock sandstone with disseminated Enrichment starts at surfacesilver, 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 $18/oz Ag) 2 (1) AgEq comprised of all contained metals (2) Economic cut-off grade comprised only of silver and indium 27
  • 28. Malku Khota Drilling Grade thickness map • 115 drill holes in current resource with OPEN updated resource Q1-2011 • Updated resource results increase total M&I oz to 230 Moz Ag (a 60% increase in M&I oz) plus an additional 140 M inferred Mineralized Ag oz Sandstones • 2011 program to target conversion from resources to reserves & expansion drilling OPEN • Mineralization begins at surface • Deposit open along trend and down dip with excellent potential for expansion • New discovery of higher grade zones and down dip expansion of surface mineralization OPENTSX:SAC 28US OTC:SOHAF
  • 29. Malku Khota Mineralization • Broad zones of continuous sediment hosted mineralization • Open at depth and along trend LMD048: 286 meters grading 76 g/t AgEq Grade thickness values of over 21,500 g-m AgEq OPEN OPENTSX:SAC 29US OTC:SOHAF
  • 30. Production Processes From ore to metal Open Pit Mining • Large scale shovel and truck open pit mining operation Crushing • Ore crushed in preparation for leaching • Acid-chloride leaching captures Leaching silver, indium, copper, lead, zinc, gallium and gold • Metal recovery in several steps: • Acid recovery Metal Recovery • Silver-gold-copper cementation & Processing • Indium-gallium precipitation • Lead and zinc sulfides Silver, Gold, Copper • Downstream processing to metal products Indium & Gallium ingots Lead & Zinc concentratesTSX:SAC 30US OTC:SOHAF
  • 31. 2011 Economic Assessment Metal Prices ($US) Base Case Mid Case Recent Mining Rate 40,000 tpd Silver : $18/oz $25/oz $35/oz Life of Mine 15 years $650/kg Indium : $500/kg $570/kg Ore Mined (LOM)3 200 M tonnes Gallium: $500/kg $570/kg $730/kg Average Silver Grade 2 42.4 g/t Average Indium Grade2 7.55 g/t Ag Eq grade 58 g/t Share of Gross Revenue First LOM (at base case prices)Recovered Metals Total 5 years AnnualSilver (oz) 158 M 13.2 M 10.5 MIndium (tonnes) 1,184 80.7 78.9 5% 3% SilverLead (lbs) 191 M 12.48 M 12.7 M 6%Zinc (lbs) 135 M 4.42 M 9MCopper (lbs) Indium & 88 M 5.64 M 5.87 MGallium (kgs) Gallium 212,962 15,184 14,198 15% Copper Base Case Mid Case RecentFirst 5 years cash flow $185 M/yr $287 M/yr $430 M/yr 71%Net cash flow $1,261 M $2,528 M $4,298 M LeadNPV (5% discount rate)1 $704 M $1482 M $2571 MInternal Rate of Return 37.7% 63% 92.9%Payback period (years) 27 months 19 months Zinc 15 months (1) In US dollars, March 2011, PEA (2) First 5 years of production (average) 31 (3) LOM = Life of Mine
  • 32. Malku Khota PEA Update Projected Production Levels 22 Production - Silver Equivalent Ounces Copper 20 Zinc 18 Lead 16 Indium & Gallium (Million) 14 Silver 12 10 8 6 4 2 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 Production YearSource: March 2011 Malku Khota PEAValues in US$ 32
  • 33. Malku Khota NPV and Cash Flow $4,000 $600 Net Present Value $3,500 $500 NPV @ 5% Discount Rate (US$M) $3,000 Average Net Cash Average Net Cash Flow Flow 1st 5 years (US$M) $400 $2,500 $2,000 $300 $1,500 $200 $1,000 $100 $500 $0 $0 $15 $20 $25 $30 $35 $40 $45 $50 Ag Price ($/oz)Source: March 2011 Malku Khota PEAValues in US$ 33
  • 34. Silver Producer Price to Cash Flow Multiples (P/CF @ $30/oz) 25 Malku Khota 23.2 23.4 23.5 PEA Projected Cash Flows 20 $18/oz $25/oz $35/oz 19.3 $185M $287M $430M 17 16.2 15.6 15 2011E P/CF 12.3 11.1 10.5 10 8.4 6.5 5 0Source: BMO Capital Markets Global Mining ResearchReport, April 3, 2011 (share prices as of March 31 2011) 34
  • 35. Actual/Anticipated Annual Ag Production (Moz) 0.0 5.0 10.0 15.0 20.0 25.0 30.0 35.0 40.0 Coeur dAlene Pan American SilverSource: CPM Silver Yearbook 2011 Silver Standard Resources Producers Developers Silver Standard Resources Malku Khota Hecla Hochschild*Based on mine production of 13.2 Moz /year for first five years Cia De Minas Buenavertura Yamana Gold Etibank35 Bear Creek Mining Hochschild Polymetal MNPO Sabina Gold & Silver South American Silver Corp. Goldcorp Inc. Industrias Penoles Pan American Silver Tahoe Resources Sumitomo Corp. Barrick Gold Corp. Primary Silver Project Annual Production Rates Fresnillo Malku Khota one of largest emerging producers at over 13 Moz/yr BHP Billiton
  • 36. Global Silver Industry Cash Cost Curve Anticipated low-cost silver production Cumulative Percentile of Silver Mine Production Cost Lowest 25% Total Cash Cost Per Ounce of Silver Percentile Cash Costs Malku Khota 13.2 Mozs/yr (1) ~ $2.94/oz (2) Industry Average Cash Cost $5.27/oz Source: GFMS World Silver Survey 2011(1) Average first 5 years of production(2) Silver cash costs after credits ($US)/oz 36
  • 37. Escalones Copper-Silver-Gold project, Chile High potential, large-scale target• 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• Historic drilling shows >1% copper grades at surface and untested porphyry system grading 0.6% copper• Additional significant gold, silver and molybdenum credits• Exploration program underway• Resource estimate targeted for 2nd half of 2011TSX:SAC 37US OTC:SOHAF 30
  • 38. 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 property• 30 Drill holes completed to dateTSX:SAC 38US OTC:SOHAF 31
  • 39. Drill Results Grade Thickness Map Large-scale copper-silver-gold system• Open to expansion down dip and laterally• Strong historic drill results• Limited testing of porphyry system with most holes in replacement /skarn style mineralization TSX:SAC 39 US OTC:SOHAF 32
  • 40. Escalones Geological cross-section • Enriched zones with high grades of replacement style mineralization starting at surface at over >1% copper with significant silver, and gold • Large scale porphyry target with intercept of 176 m @ 0.6% copper with additional credits from silver, gold, and molybdenum Alto BajoTSX:SACUS OTC:SOHAF 40
  • 41. Community Relations A key to successful project development • Recent key additions to community relations team: • Jim Mallory, VP Operations and Social Responsibility – 35 years industry experience previously with Silver Standard, NovaGold, & Barrick (Placer Dome) • Miguel Reynaga, Director of Community Relations - 16 years experience with Newmont at their Inti-Raymi (Kori Kollo) Mine in Bolivia • Objectives to facilitate economic development in communities as part of project exploration, development and construction activities • Project construction will see workforce of over 1,000 with mine workforce of over 400 or more*Business for Social Responsibility, San Francisco, CA 41
  • 42. 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* Updated resource results show 60% increase in M&I ounces to 230 M oz of silver with an additional 140M oz inferred, and indium to 1,481 tonnes M&I and 935 tonnes inferred Cash flows, project valuations and rates of return significantly expanded over previous studies Pre-Feasibility work has started for the second half of 2011 • Major camp expansion to support up to 6-8 drills • Feasibility work to begin in 2012 • Escalones, copper-silver-gold porphyry project, Chile Exploration and Geophysics program underway • Drill program to begin late in 2011 • Target for initial resource estimate by end of 2011 • Potential for significant deposit of copper, gold and silver*Average first five years of production 42
  • 43. Leveraged to Silver Value of silver per dollar invested Additional value of Indium and Gallium Silver value per $1 invested SAC has some of the best leverage to silver of any development 45 stage company with nearly $45 of silver value per $1 invested 40 35 30 25 Average value of silver <$16 of silver per $1 invested* 20 15 10 5 0Source: Canaccord as of January 17, 2011, Share prices updated May 24, 2011Note: 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 43Value only shown for silver with no contribution from other metals
  • 44. 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• Leveraged to silver with nearly 4 oz of silver per share (6 ozs Ag equivalent)• Attractive investment value relative to peers at low value per oz• Exposure to rapidly growing indium and gallium high-technology market• Potential value from new copper-silver-gold resource definition and expansion at Escalones• Continued investor outreach to broaden market awareness of Company• Potential for NYSE-AMEX listing in the U.S.TSX:SAC 44US OTC:SOHAF 37
  • 45. TSX: SAC OTC: SOHAF Phone: 604.681.6926 1.855.681.6926 www.soamsilver.com Greg Johnson President & CEOTSX:SAC 45US OTC:SOHAF
  • 46. Relative Stock PerformanceSAC outperforming key silver & gold indices• Trading liquidity increasing with averagevolume of 350,000 shares/day• SAC undervalued relative to peers at >$0.80Enterprise Value/oz vs average of more than$4/oz for early stage resourcesTSX:SAC 46US OTC:SOHAF
  • 47. Zamin Group - Strategic Investment A key regional player• Well funded regional player in South American resources industry with major projects in Brazil, Uruguay, Bolivia, and Chile• Strategic 19% investment positions SAC in strong financial and operational position to advance projects to feasibility• Track record of successfully facilitating South American project development through relationships with national and state governments in the region• Portfolio of South American projects with strong government support in permitting, rail and port infrastructure • Bamin Project-Brazil • Valintine Project-Uruguay • Acquiring assets in Bolivia over past yearTSX:SAC 47US OTC:SOHAF
  • 48. Management & Directors Ralph Fitch (Executive Chairman) is an explorationist with over 40 years of global experience, a co-founder of South American Silver andGreg Johnson (President/CEO & Director) has over 25 years mining former Chief Geologist for Chevron Minerals credited with several industry experience in corporate finance, project development and major discoveries in South America. exploration. A s a co-founder of NovaGold, he played a key role in Antonio Canton (Director) is consultant and director to a number of growing that company from $50 million in value to over $2 billion market international companies in marketing, finance and real estate. capitalization advancing 3 major projects through to Feasibility. Tony Cau (Director) is COO at Zamin Ferrous. With over 30 years ofWilliam Filtness (Chief Financial Officer) is a Chartered Accountant with experience in the mining, construction and heavy manufacturing over 20 years of financial experience in the mining industry. industries, he has been involved in mine development and expansionPhillip Brodie-Hall (Vice President of Project Development) has over 35 projects around the world for groups like BHP, SNC-Lavalin, and years experience in engineering construction and project development. He Bateman Engineering. has participated in nearly every aspect of evaluation, feasibility studies and Jeffrey Couch (Director) is the Head of Business Development at project development in the mining industry. ENRC and has held various financial advisory positions including forJames Mallory (Vice President of Operations & Social Responsibility) private equity groups such as Campbell Lutyens, was Director of has over 30 years of mining industry experience in large-scale mine Metals & Mining Investment Banking for Credit Suisse, and a key management, operations and construction for companies including Barrick member of the capital markets team for Citigroup European (Placer Dome), Silver Standard, and NovaGold. Investment Bank.Felipe Malbran (Vice President of Exploration) has over 25 years Paul Haber (Director) is a Chartered Accountant and a Certified Public experience in exploration management in South America including key Accountant, and previously CFO of a TSX-V company and Chairman roles in the discovery of Malku Khota, Vizcachitas, and Escalones. of the Audit Committee for South American Silver.David Dreisinger (Vice President of Metallurgy) is Professor and Industrial Peter Harris (Director) is a mining engineer with over 40 years of Research Chair in Hydrometallurgy at the University of British Columbia. industry experience including construction and operation of over 20 He is actively involved in developing and commercializing mines around the world with groups such as Barrick (Placer Dome) hydrometallurgical process at a number of mines worldwide. and NovaGold.Andrew Clark (Manager of Project Implementation) has over 30 years William Murray (Director) is an engineer in the mining industry with global industry experience in the development, design, management and over 35 years of experience in construction management and project construction of industrial mining projects. evaluation with groups including Fluor Daniel, DenisonRichard Doran, (Vice President & Corporate Secretary) has extensive Mines, Optimum Project Services and Anglo American Corp. industry experience including with General Minerals and as Marketing John Watson (Director) is President of a TSX -V listed company and Manager for Chevron Minerals. Manager of a limited liability corporation in commercial real-estate.Xavier Gonzales Yutronic (General Manager Compañía Minera Malku Tina Woodside (Director) is the head of Gowlings’ corporate finance Khota S.A.) has experience in management, finance, and community department and practices corporate and securities law focused on relations in the mining industry including with Glencore, and Comsur S.A. corporate finance, M&A and corporate governance matters. TSX:SAC 48 US OTC:SOHAF