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Sac presentation january 24, 2011
 

Sac presentation january 24, 2011

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South American Silver Corporate Presentation: Q1, 2011

South American Silver Corporate Presentation: Q1, 2011

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    Sac presentation january 24, 2011 Sac presentation january 24, 2011 Presentation Transcript

    • A Growth Focused Exploration & Development Company
      Growing and advancing one of the world’s largest
      undeveloped silver and indium resources.
      TSX: SAC, US OTC: SOHAF
      Corporate Presentation
      Q1 2011
      www.soamsilver.com
    • Forward Looking Statements
      Certain 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. 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.
      TSX:SAC
      US OTC:SOHAF
    • 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 resources
      • Escalones: high potential copper-gold deposit
      • Well definedbusiness plan to drive shareholder value
      • Leveraged to silver with over $40 of silver value per $1 invested
      • Attractive investment value relative to peers at low value per oz
      • Exposure to the high-tech indium market
      • Potential value from new copper-gold resource
      • Strong focus on community relations
      • Well financed into feasibility
      TSX:SAC
      US OTC:SOHAF
    • World-Class Deposits
      Two large-scale assets in South America
      • Malku Khota, Bolivia, silver-indium project
      • 100% ownership
      • Bulk mineable open-pit, sediment hosted deposit
      • Low capital and operating costs and as a heap leach or heap leach/milling operation
      • Resource expansion potential with only 4 km of 50 sq km
      property drill tested
      • PEA and resource update in end of Q1-2011
      • Pre-Feasibility process to start in 2011 & Feasibility in 2012
      • Potential to be one of the top producing silver and indium mines
      • Funded into Feasibility
      • Escalones, Chile, copper-gold project
      • 100% controlled, large scale target in world-class mining district near El Teniente
      • Exploration program and geophysics to start Q1-2011
      • Potential significant copper, gold, silver deposit
       
      Malku Khota
      Escalones
      TSX:SAC
      US OTC:SOHAF
    • Share Capitalization2
      TSX:SAC, US OTC:SOHAF
      Issued & Outstanding
      Warrants
      Options
      Fully Diluted1
      97.8M
      114.8M
      8.6M
      8.4M
      Major Shareholders
      • Zamin—19.7%
      • Private Swiss investors--19%
      • SAC Management1 --15%
      Institutional Ownership
      • Sprott Asset Management
      • Front Street
      • K2 funds
      • Kudu Partners
      • U.S. Global Investors
      • ~$200 million Market Capitalization
      • Average trading volume 500,000 shares/day
      • Well financed with +$30 million estimated in cash at year end1
      • Potential NYSE-AMEX listing to increase visibility and liquidity
      As of November 8, 2010 with proposed $28 million financing
      (1)On a fully diluted basis
      (2) As of December 16, 2010
    • 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 19.7% 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 year
      TSX:SAC
      US OTC:SOHAF
    • Comparative Resources in the Americas
      Second largest development stage silver resource
      Millions of Silver Ounces
      Mexico
      El. Salvador
      Mexico
      Mexico
      Mexico
      Peru
      Mexico
      Yukon
      Argentina
      Nunavut
      Peru
      Guatemala
      Bolivia
      Chile
      Source: CanaccordReport as of January 11, 2011
      Note: All companies have projects in South and/or North America
    • Enterprise Value in the Americas
      Undervalued relative to peers
      Average EV/oz of companies with >200Moz silver resource: >$2.65/oz
      Average EV/oz for development stage silver companies: >$1.70/oz
      *
      Source: Canaccord Report January 17, 2011
      Share prices as of January 14, 2011,
      Note: All companies have projects in South and/or North America
      *EV/oz truncated to $10 . Alexco excluded from early stage average EV/oz AgEq $18/oz
    • Development Stage Value Curve
      Potential value growth with project advancement
      Enterprise Value per Oz of Silver by Stage
      Increased value with project advancement
      $
      /oz
      Increased value through resource expansion
      Construct
      Permits
      FS
      PFS
      $
      PEA
      Resource
      Definition
      $
      Discovery
      Production
      Early Stage
      Exploration & Development
      Advanced
      Development Stage (Reserves)
      Source: Recent average enterprise value per ounce of silver at various development stages for North and South American based projects. Canaccord, Wellington West and Company reports.
    • Silver Supply/Demand
      Surging investment demand plus improving industrial consumption suggests continued demand growth with flat total supply
      Total Global SilverSupply
      Total Global SilverDemand
      & ETFs
      & ETF
      Source: GFMS World Silver Survey 2010
    • Silver Fundamentals Positive
      For continued higher prices
      • One of the only precious metals not yet to hit all-time nominal highs from the 1980’s ($35s/oz and $50/oz 1980)
      • Bullish supply/demand outlook
      • Silver equities generally show a 3-5x leverage to silver price moves due to profit margins
      • Continued increase in investment and industrial demand for silver
      • Annual mine production vs total demand remains in short-fall
      • Few new major deposit discoveries
      • Projected new production by analysts have failed to have
      been realized
      TSX:SAC
      US OTC:SOHAF
    • Indium—a key strategic metal
      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 thin film solar panels (CIGS Photo-Voltaics), 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
      TSX:SAC
      US OTC:SOHAF
    • Indium Fundamentals
      Compelling supply/demand dynamics
      Indium Supply/Demand dynamics
      • Indium highlighted in UN and US DOE studies as a critical technology metal 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 other key high-technology specialty metals
      • Zinc market growing at 1-3% annually with indium market estimated at 15-20% growth
      • Current price ~$600/kg with five-year prices from $400/kg to over $1000/kg
      Malku Khota Annual Indium Production
      • Malku Khota projected to be one of the worlds largest indium producers
      • Potential to represent 10% or more of global mine supply
      TSX:SAC
      US OTC:SOHAF
    • Indium Demand
      Growing demand in high-tech markets
      2010 total indium production
      End-use Market Demand (tonnes)
      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
    • Indium Fundamentals
      Zinc Production vs. Indium Demand (U.S.)
      U.S. Indium Demand (tonnes)
      Zinc Production (thousand tonnes)
      Source: U.S Department of Energy: Critical Materials Strategy, December 2010;
      Zinc Production USGS Materials Flow of Zinc in the US. 1850-1990, USGS Minerals
      Yearbook 1994-2008
    • Key Metal Consumption vs Reserves
      Remaining Years of Supply
      Years of Supply
      INDIUM
    • Opportunity in Bolivia
      An emerging resource based economy
      • Bolivia experiencing its besteconomy in 30 years
      • Member of Mercosur Regional trade organization with Brazil as largest trading partner
      • One of the world’s premier silver districts with billions of ouncesof historical 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
      • Substantial resource industry investments in Bolivia
      • Jindal Steel of India investing US$2.3 billion for 50% interest in 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
      TSX:SAC
      US OTC:SOHAF
    • 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 Vincente
      • Coeur D’Alene - San Bartolome
      • Sumitomo - San Cristobal
      TSX:SAC
      US OTC:SOHAF
    • Malku Khota Project, Bolivia
      One of the world’s largest silver-indium resources
      Indicated: 145 M oz of silver & 845 tonnes of indium
      Inferred: 178 M oz of silver & 968 tonnes of indium
      • 50 square km, 100% owned, road accessible project, long life open pit mine
      • low capital and operating costs and high internal rate of return
      • Ongoing drill campaign with recent higher grade discoveries
      • Potential to be one of the top primary silver and indium producing mines
      TSX:SAC
      US OTC:SOHAF
    • Established Infrastructure
      Low projected capital and operating costs
      • Open pit, bulk mineable
      • Accessible by road
      • Commercial power within 15km
      • Access to water
      TSX:SAC
      US OTC:SOHAF
    • Mineralization
      Open pit, bulk mineable deposit
      Host rock sandstone with disseminated
      silver, indium, gallium, lead, zinc and copper
      Enrichment starts at surface
      Average grade first ten years:
      • Silver: 38.6 g/t (60 g/t Ag Eq)
      • Indium: 8.1 g/t
      • Economic cut-off grade <10 g/t(at $15/oz Ag)
      TSX:SAC
      US OTC:SOHAF
    • Mineralization
      High Grade Sandstone1160 g/t Silver
      Geological formations looking south from Limosna
      Malku Khota
      Sandstone
      Aroifilla Fm
      WaraWara
      Sandstone
      TSX:SAC
      US OTC:SOHAF
    • Malku Khota Drilling
      Grade thickness map
      • 75 drill holes in current resource with updated resource for Q1-2011
      • 2010 program focused on in-fill & confirmatory drilling
      • 2011 program to target conversion from resources to reserves & expansion drilling
      • 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
      TSX:SAC
      US OTC:SOHAF
    • New Exploration Results
      Discovery of broad continuous mineralization horizon
      LMD048: 286 meters grading 76 g/t Ag Eq Grade thickness values of over 21,500 g-m AgEq
      TSX:SAC
      US OTC:SOHAF
    • Malku Khota Deposit
      Only 4km of 50 sqkm property drill tested
      • 2010 program focused on in-fill and confirmation drilling for PEA Update
      • Excellent potential to expand resources
      TSX:SAC
      US OTC:SOHAF
    • Metallurgy Flow Sheet
      Acid-Chloride Leach
      Open Pit Mining
      Crushing
      • Similar process as used for SX-EW* copper-oxide heap leach and by zinc refineries for indium
      • Similar recoveries for silver/gold as for cyanide leach
      • Production of high purity silver bars and indium ingots on site
      • Additional production of by-product metals including lead, zinc, copper and gallium
      Heap Leach or Milling with Acid Solution
      Silver, Gold and Copper Recovery
      Indium and Gallium Recovery
      Lead Recovery
      Zinc Recovery
      Further refining with solvent extraction (SX-EW ) process to metal doreor high purity concentration
      * solvent extraction and electo-winning
      TSX:SAC
      US OTC:SOHAF
    • Summary of PEA 2009
      Updated PEA with expanded throughput for Q1 2011
      Pincock, Allan and Holt
      Heap Leach Operation – 20,000 Tonnes per Day
      Base Case Silver Price: US$13.30/oz
      Base Case Indium Price: US$530/kg
      In US dollars, March 2009, PEA by Pincock Allan and Holt. Updated study utilizing higher production levels and new cost estimates anticipated Q1-2011
      First ten years of production
    • Near Term Mine Development Projects
      SAC one of largest near-term producers at 20,000 tpd
      • Annual estimated potential silver production of new development projects anticipated in the next 2-4 years
      Barrick
      25
      Bear Creek
      Millions of Ounces
      So American Silver
      Alexco Resource Corp
      Fresnillo Plc
      Pan American
      Gold Resource
      Andean Resources
      Wildcat Silver Corp
      Bear Creek
      Minmetals, Jiangxi Copper
      Fortuna Silver
      Augusta Resource
      Silvermex Resources
      Greystar Resources
      Yukon Zinc Corp.
      Antofagasta plc
      Gabriel Resources
      CobarConsilidated
      China Minmetals
      Norsemont Mining
      Chariot Resources
      Jinchuan Group
      Antofagasta plc
      Intrepid Mines
      Oxiana
      Vale
      Source: CPM Silver Yearbook 2010
    • Global Silver Industry Cash Cost Curve
      Anticipated low-cost silver production
      Cumulative Percentile of Silver Mine Production Cost
      Malku Khota
      6.4 Mozs/yr
      ~ $3.75/oz
      Total Cash Cost Per Ounce of Silver
      Industry AverageCash Cost
      $5.25/oz
      Source: GFMS World Silver Survey 2010
    • Escalones-Copper-Gold project, Chile
      High potential, large-scale target
      • 70 square km,100% controlled, road accessible, large scale system
      • Located in world-class copper mining district near 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 drill program targeted for Q1 2011
      • Resource estimate targeted for 2nd half of 2011
      TSX:SAC
      US OTC:SOHAF
    • Drill Results Grade Thickness Map
      Large-scale porphyry system
      • Open in all directions
      • Strong historic results
      TSX:SAC
      US OTC:SOHAF
    • Escalones
      Geological cross-section
      • Enriched zones with high grades at surface at over >1% copper with significant gold and molybdenum
      • Large scale porphyry target intercept of 176 m @ 0.6% copper with additional gold, silver and molybdenum
      TSX:SAC
      US OTC:SOHAF
    • Community Relations
      A key to successful project development
      • Assistance of BSR* to develop proactive community relations strategy
      • Two full-time indigenous community relations officers working in region
      • Objectives to facilitate economic development in communities
      *Business for Social Responsibility, San Francisco, CA
    • Project Milestones
      Value drivers over the next 6-12 months
      • Malku Khota Silver and Indium Project, Bolivia
      • Drill campaign underway with additional drills being mobilized
      • Updated resource estimate targeted Q1 2011
      • Updated Preliminary Economic Assessment at higher throughput Q1-2011
      • Pre-feasibility targeted for 2011 and feasibility for 2012
      • Escalones Copper and Gold porphyry project, Chile
      • Target for initial resource estimate in 2nd half of 2011
      • Potential for significant deposit of copper, gold and silver
      TSX:SAC
      US OTC:SOHAF
    • Leveraged to Silver
      Value of silver per dollar invested
      Silver value per $1 invested
      SAC has some of the best leverage to silver of any development stage company with over $40 of silver value per $1 invested
      Average value of silver <$8 of silver per $1 invested*
      Source: Canaccord as of January 17, 2011, Share prices updated January 14, 2011
      Note: all companies have projects in South and/or North America
      Calculated using $25/oz Ag. Dollar value of silver per $1 invested = (silver resource/shares outstanding) x $25/oz silver) divided by share price
      Value only shown for silver with no contribution from other metals
    • 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 over$40 of silver value per $1 invested
      • Attractive investment value relative to peers at low value per oz
      • Exposure to rapidly growing Indium high-technology market
      • Potential new value from copper resource definition and expansion
      • Continued investor outreach to broaden market awareness of Company
      • Potential near-term NYSE-AMEX listing in the U.S.
      TSX:SAC
      US OTC:SOHAF
    • TSX: SAC
      OTC: SOHAF
      Phone: 604.681.6926
      1.855.681.6926
      www.soamsilver.com
      Greg Johnson
      President & CEO
      TSX:SAC
      US OTC:SOHAF
    • Relative Stock Performance
      SAC outperforming key silver & gold indices
      • Trading liquidity increasing with average volume of 550,000 shares/day
      • SAC undervalued relative to peers at $0.50/oz vs average of more than $1.70/oz for early stage resources and $2.65/oz for >200Moz resources
      TSX:SAC
      US OTC:SOHAF
    • Management Team
      A track record of success
      Ralph Fitch, Executive Chairman
      • Co-founder of South American Silver, High Desert Gold, and General Minerals
      • Key role in discovery of Collahuasi copper porphyry , Malku Khota, Vizcachitas, and Escalones deposits
      Greg Johnson, President and CEO
      • Co-founder of NovaGold, key role in growing company from $50 million to $2 billion market capitalization
      • Recognized for discovery and advancement of the 40 M oz Donlin Creek gold deposit for NovaGold and Barrick
      William Filtness, Chief Financial Officer
      • Chartered Accountant with twenty plus years of financial experience, including Manager, Corporate Development at Aurizon Mines
      Felipe Malbran, Vice President of Exploration
      • Extensive experience in exploration management in Bolivia, Chile, Peru and Argentina
      • Key role in discovery of MalkuKhota, Vizcachitas, and Escalones deposits
      Phillip Brodie-Hall, Vice President of Project Development
      • Global industry experience in engineering construction and project development experience covering nearly every aspect of evaluation, feasibility studies and project development in the mining and mineral processing industries
      David Dreisinger,Vice President of Metallurgy
      • Professor and Industrial Research Chair in Hydrometallurgy at the University of British Columbia (UBC)
      • Actively involved in developing and commercializing hydrometallurgical process at a number of operating mines in Australia and Southeast Asia.
      Richard Doran, Vice President and corporate secretary
      • Former VP Investor Relations for General Minerals and Marketing Manager for Chevron Resources
      Andrew Clark,Manager of Project Implementation
      • Global industry experience in the design and management of industrial, mining, materials handling, chemical and petrochical projects from feasibility studies through to commissioning and handover of completed facilities.
      Xavier Gonzales Yutronic,General Manager Compañía Minera Malku Khota S.A.
      • Mining Industry experience in finance, accounting, logistics, human resources and community relations at Comsur S.A., SinchiWayra (Glencore) from 2005-2007, and CompañíaMinera Malku Khota S.A. from October 2008 to date
      TSX:SAC
      US OTC:SOHAF
    • Board of Directors
      Strong industry and financial experience
      Ralph Fitch, Executive ChairmanGreg Johnson, President and CEO
      Antonio Canton, Director - Mr. Canton is an independent consultant for international companies in marketing, finance and real estate. He is a director of a number of Swiss companies and brings to the board extensive experience in accounting and finance.
      Peter Harris, Director - Mr. Harris is an engineer with over 40 years of mining industry experience including as Senior VP and Chief Operating Officer at Nova Gold Resources Inc., and Senior VP of Project Development at Placer Dome Inc. He has been involved in the construction and operation of over 20 different mines in North and South America, Africa, Australia and Papua New Guinea.
      William Murray, Director - Mr. Murray is an engineer in the mining industry with over 33 years of experience in construction management and project evaluation in North America and Africa. He currently serves as the executive chairman and director of Polymet Mining Corp. Mr. Murray has been involved in numerous successful projects while working at Fluor Daniel, Denison Mines, Optimum Project Services and Anglo American Corp. in South Africa.
      Paul Haber, Director - Mr. Haber is a Chartered Accountant and a Certified Public Accountant with a strong background in US/Canadian accounting and finance. Presently manages Haber & Co. Ltd. Has previously been Chief Financial Officer and Corporate Secretary of a TSX Venture listed company.
      John Watson, Director - Mr. Watson has been the President of a TSX Venture Exchange listed company since 2002. He is also the manager/member of a limited liability corporation that owns and manages commercial real-estate.
      Tina Woodside, Director - Ms. Woodside is currently the head of the corporate finance department in Gowlings’ Toronto office and a member of the firm’s National Executive Committee. Ms. Woodside practices corporate and securities law with particular emphasis on corporate finance, mergers and acquisitions and corporate governance matters.
      TSX:SAC
      US OTC:SOHAF