Triple Gold Summer Conference-Strategic Metals & Rare Earths

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  • 1. VALUE.GROWTH.VISION
    Growing and advancing one of the world’s largest undeveloped silver and indium resources.
    TSX: SAC, US OTC: SOHAF
    Corporate Presentation
    Q2 2011
    www.soamsilver.com
  • 2. Cautionary Notes
    2
    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. Investors are advised to review the Company’s Annual Information Form filed at www.sedar.com for a detailed discussion of investment risks. The Company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events or any other reason.
  • 3. Investment Highlights
    3
    South American Silver Corp.
    • Experienced management team with track record of successful project development and value creation
    • 4. Two large-scale deposits in South America
    • 5. Malku Khota: one of the world’s largest silver-indium-gallium resources
    • 6. Escalones: high potential copper-silver-gold deposit
    • 7. 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
    • 8. Measured and Indicated resources expanded 60% to 230 M oz silver
    • 9. Well definedbusiness plan to drive shareholder value
    • 10. Leveraged to silver nearly 4 oz of silver per share (6 oz silver equivalent)
    • 11. Attractive investment value relative to peers at low value per oz
    • 12. Exposure to the high-tech indium and gallium market
    • 13. Potential value from new copper-silver-gold resource
    • 14. Strong focus on community relations
    • 15. Well financed into feasibility
  • World-Class Deposits
    4
    Two large-scale assets in South America
    Malku Khota, silver-indium project, Bolivia (100%)
    • Bulk mineable open-pit, sediment hosted deposit
    • 16. Low capital and operating costs as a heap leach or milling operation
    • 17. Update resource increases M&I 60% to 230 M oz silver
    • 18. Pre-Feasibility process to start in 2011 & Feasibility in 2012
    • 19. 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
    • 20. Funded into Feasibility
    Escalones, copper-silver-gold project, Chile (100%)
    • Large scale target in world-class mining district near El Teniente
    • 21. Exploration program and geophysics underway
    • 22. Resource definition program in 2011
    • 23. Potential significant copper, gold, silver deposit
    *AgEq=total contained metal
  • 24. Indium & Gallium – Two Key Strategic Metals
    5
    Rapidly growing market for high-tech uses
    Uses
    • Indium-tin oxide (ITO) a key component of flat panel displays (FPDs) and touch screens
    • 25. High-efficiency CIGS (copper, indium, gallium, selenide) photo-voltaic thin-film solar panels, and LED lighting
    • 26. 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
    • 27. One of the most scarce strategic metals due to low recycling and few primary producers
    TSX:SAC
    US OTC:SOHAF
  • 28. Indium & Gallium Fundamentals
    6
    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
    • 29. China is largest producer and consumer of indium and has imposed export quotas and tariffs like other key high-technology specialty metals
    • 30. Indium market estimated to see 15-20% annual growth with most indium produced as by product of zinc refining growing at 1-3% annually
    • 31. Current indium and gallium price ~$900-1000/kg up from global economic lows during 2008-2009 of $400-500/kg
    • 32. Gallium market estimated to be a conservative 15% annual growth rate which could increase significantly with more rapid growth in LED lighting and photovoltaics
    Malku Khota annual indium and gallium production
    • Malku Khota projected to be one of the world’s largest indium & gallium producers (80 tonnes and 15 tonnes per year)
    • 33. Potential to represent 10% or more of global mine supply of indium and over 5% of global supply for gallium
    • 34. Opportunities for project financing from off-take agreements for indium & gallium
    TSX:SAC
    US OTC:SOHAF
  • 35. 7
    Indium Supply
    Mine Production and Refining
    Source: 1)Roskill ‘s Indium:Global Industry Markets and Outlook ,2010
  • 36. Indium Demand Growth
    8
    Growing demand in high-tech markets
    5 year projected demand growth
    End-use Market Demand (tonnes)
    2010 total indium production level
    Growth assumptions based on data from Displaybank in LCD TV Association “LCD TV Matters”-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009 , Solarbuzz, Photon International, GFMS , Nanomarkets, and the US Department of Energy Critical Minerals Strategy Report
  • 37. Indium Fundamentals
    World indium demand vs price (1969-2013*)
    Current Indium Price
    X
    Indium Demand
    Indium Price/kg ($US)
    Source: Indium: Global Industry Markets and Outlook, 9th Edition 2010 (Roskill) *2011-2013 Data are estimates
    16
  • 38. Positive Silver Fundamentals
    10
    A paradigm shift for silver?
    • Major shift in supply/demand dynamic over past several years
    • 39. Silver still well below inflation adjusted highs of $140/oz ($50 in 1980)
    • 40. 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
    • 41. Price increases driven by 40% increase in investment demand and 21% increase in industrial demand for a total increase of 17% in 2010
    • 42. Total annual mine production growth only 2.5% last year with reduced contribution of by-product silver from copper and gold production
    • 43. Projected new mine supply anticipated to be consumed by new industrial demand through at least 2015
    • 44. 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
    • 45. Few major new deposit discoveries and growing time lag from time of discovery to metal production
    Source: 1) GFMS World Silver Survey 2011
    2) BMO Capital Markets Global Mining Research April 2011
  • 46. Silver Supply/Demand Fundamentals
    • Dramatically increased demand growth driven by strong investment demand plus increased industrial consumption(1)
    • 47. Demand growth expected to continue to outstrip production growth(2)
    +17% total demand growth
    +40% investment demand
    +2.5% mine production
    +21% industrial demand
    Source: 1) GFMS World Silver Survey 2011
    2) BMO Capital Markets Global Mining Research April 2011
    11
  • 48. Fabrication Demand for Silver by Sector
    12
    Growing technology uses for silver
    Millions of Silver Oz
    Source: CPM Silver Yearbook 2010
    Not for reproduction without written CPM Group consent
  • 49. Thin Film/Thick Film Demand Growth
    13
    Growing demand in solar technology
    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
  • 50. Comparative Resources in the Americas
    14
    Second largest development stage silver resource
    Millions of Silver Ounces
    Source: Canaccord Report resource numbers as of January 11, 2011
    Note: All companies have projects in South and/or North America
  • 51. Enterprise Value per Resource Oz
    15
    Producer Average
    >$24/oz
    By project development stage
    EV of >$0.80 base on 230.3 million M&I oz Ag
    Advanced Development Stage Average ~$7/oz
    Development Stage
    Average ~$4/oz
    Source: Canaccord & Intierra as of June 9, 2011,
    Note: All companies have projects in South and/or North America
  • 52. Development Stage Value Curve
    16
    Potential value growth with project advancement
    Production
    Average Enterprise Value per Oz of Silver by Stage
    Take-Over offers or Partnerships common at this stage
    $24/oz
    Construct
    Increased value through resource expansion
    Permits
    FS
    Increasing Market Value
    $7/oz
    PFS
    Resource
    Definition
    PEA
    $4/oz
    Advanced
    Development Stage (Reserves)
    Early Stage
    Exploration & Development
    Production
    Discovery
    Increasing value with project advancement
    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.
  • 53. Current Silver Company Valuations by Resource Size & Development Stage
    17
    Size of circle represents market valuation premium in EV/oz
    500
    EARLY DEVELOPER STAGE
    SAC
    SAC
    SAC
    ADVANCED DEVELOPER STAGE
    PRODUCER STAGE
    Esperanza
    $2,000
    Source: Canaccord Report July, 2011
    Intierra, July, 2011
    Share prices as of July 2011,
    Note: All companies have projects in South and/or North America
  • 54. Silver Mines in Bolivia
    18
    One of the world’s premier silver mining districts
    • Historical district production of billions of ounces of silver
    • 55. Highly prospective & under-explored
    • 56. Increase from 9th largest global silver producer to 5th largest with completion of three major silver mines in past four years:
    • 57. Pan American Silver – San Vicente
    • 58. Coeur D’Alene - San Bartolome
    • 59. Sumitomo - San Cristobal
    TSX:SAC
    US OTC:SOHAF
  • 60. Mineralization
    19
    Open pit, bulk mineable silver-indium deposit
    Host rock sandstone with disseminated
    silver, indium, gallium, lead, zinc and copper
    Enrichment starts at surface
    Average grade first five years:
    • Silver: 42.2 g/t (58 g/t Ag Eq) 1
    • 61. Indium: 7.55 g/t
    • 62. Economic cut-off grade <15 g/t(at $18/oz Ag) 2
    AgEq comprised of all contained metals
    Economic cut-off grade comprised only of silver and indium
  • 63. Malku Khota Drilling
    20
    Grade thickness map
    OPEN
    • 115 drill holes in current resource with updated resource Q1-2011
    • 64. Updated resource results increase total M&I oz to 230 Moz Ag (a 60% increase in M&I oz) plus an additional 140 M inferred Ag oz
    • 65. 2011 program to target conversion from resources to reserves & expansion drilling
    • 66. Mineralization begins at surface
    • 67. Deposit open along trend and down dip with excellent potential for expansion
    • 68. New discovery of higher grade zones and down dip expansion of surface mineralization
    Mineralized
    Sandstones
    OPEN
    OPEN
    TSX:SAC
    US OTC:SOHAF
  • 69. Malku Khota Mineralization
    21
    • Broad zones of continuous sediment hosted mineralization
    • 70. Open at depth and along trend
    LMD048: 286 meters grading 76 g/t AgEq Grade thickness values of over 21,500 g-m AgEq
    OPEN
    OPEN
    TSX:SAC
    US OTC:SOHAF
  • 71. 2011 Economic Assessment
    22
    Metal Prices ($US)
    Mid Case
    Recent
    Base Case
    Mining Rate
    Life of Mine
    Ore Mined (LOM)3
    Average Silver Grade 2
    Average Indium Grade2
    Ag Eq grade
    40,000 tpd
    15 years
    200M tonnes
    42.2 g/t
    7.55 g/t
    58 g/t
    $35/oz
    $650/kg
    $730/kg
    Silver : $18/oz
    Indium : $500/kg
    Gallium: $500/kg
    $25/oz
    $570/kg
    $570/kg
    LOM
    Annual
    First
    5 years
    Total
    Recovered Metals
    Silver (oz)
    Indium (tonnes)
    Lead (lbs)
    Zinc (lbs)
    Copper (lbs)
    Gallium (kgs)
    158 M
    1,184
    191M
    135 M
    88 M
    212,962
    13.2 M
    80.7
    12.48M
    4.42M
    5.64M
    15,184
    10.5 M
    78.9 M
    12.7 M
    9 M
    5.87 M
    14,198
    Base Case
    Mid Case
    Recent
    First 5 years cash flow
    Net cash flow
    NPV (5% discount rate)1
    Internal Rate of Return
    Payback period (years)
    $185M/yr
    $1,261M
    $704M
    37.7%
    27 months
    $287M/yr
    $2,528M
    $1482M
    63%
    19 months
    $430M/yr
    $4,298M
    $2571M
    92.9%
    15 months
    In US dollars, March 2011, PEA
    First 5 years of production (average)
    LOM = Life of Mine
  • 72. Near Term Mine Development Projects
    23
    Malku Khota one of largest emerging producers at over 13 Moz/yr
    Barrick Gold
    Estimated potential annual silver production of new development projects anticipated within the next 2-4 years
    South American Silver
    Pan American Silver
    Bear Creek Mining
    Gold Resource Corp
    Silver Standard
    Polymetal MNPO
    Bear Creek Mining
    Fortuna Silver Mines
    Hochschild Mining
    Minco Silver Corp
    Andean Resources
    Wildcat Silver Corp.
    Continental Minerals Corp
    Aurcana Corp
    Yamana Gold
    Cobar Consolidated
    Alexco Resource
    Augusta Resource
    Malachite Resources
    Kimberley Metals
    CS T Mining Group
    Silvercorp Metals Ltd
    Silver Standard
    Hellas Gold SA
    CBH Resources
    Argent Minerals
    Silvercorp Metals
    Conquest Mining
    Troy Resources
    Antofagasta
    Source: CPM Silver Yearbook 2011
    *Based on mine production of 13.2 Moz /year for first five years
  • 73. Global Silver Industry Cash Cost Curve
    24
    Anticipated low-cost silver production
    Cumulative Percentile of Silver Mine Production Cost
    Lowest 25% Percentile Cash Costs
    Malku Khota
    13.2 Mozs/yr (1)
    ~ $2.94/oz (2)
    Total Cash Cost Per Ounce of Silver
    Industry AverageCash Cost
    $5.27/oz
    Source: GFMS World Silver Survey 2011
    Average first 5 years of production
    Silver cash costs after credits ($US)/oz
  • 74. Escalones Copper-Silver-Gold project, Chile
    25
    High potential, large-scale target
    • 70 square km, road accessible, large scale system in well established mining district
    • 75. Located near one of the worlds largest underground copper mines at El Teniente
    • 76. Historic drilling shows >1% copper grades at surface and untested porphyry system grading 0.6% copper
    • 77. Additional significant gold, silver and molybdenum credits
    • 78. Exploration program underway
    • 79. Resource estimate targeted for 2nd half of 2011
    TSX:SAC
    US OTC:SOHAF
    30
  • 80. Escalones Project Logistics
    26
    Excellent existing infrastructure
    Ownership: 100% through lease
    Location: 35km E of El Teniente
    Elevation: 3800m
    70 square kilometer property
    Road accessible located 100 km southeast of Santiago
    Gas pipeline across property
    30 Drill holes completed to date
    SAC property
    Gas pipeline
    Access Road
    TSX:SAC
    US OTC:SOHAF
    31
  • 81. Drill Results Grade Thickness Map
    27
    Large-scale copper-silver-gold system
    • Open to expansion down dip and laterally
    • 82. Strong historic drill results
    • 83. Limited testing of porphyry system with most holes in replacement /skarn style mineralization
    TSX:SAC
    US OTC:SOHAF
    32
  • 84. Community Relations
    28
    A key to successful project development
    • Recent key additions to community relations team:
    • 85. Jim Mallory, VP Operations and Social Responsibility – 35 years industry experience previously with Silver Standard, NovaGold, & Barrick (Placer Dome)
    • 86. Miguel Reynaga, Director of Community Relations - 16 years experience with Newmont at their Inti-Raymi (Kori Kollo) Mine in Bolivia
    • 87. Objectives to facilitate economic development in communities as part of project exploration, development and construction activities
    • 88. Project construction will see workforce of over 1,000 with mine workforce of over 400 or more
    *Business for Social Responsibility, San Francisco, CA
  • 89. Project Milestones
    29
    Value drivers over the next 6-12 months
    • Malku Khota, silver-indium-gallium project, Bolivia
    • 90. 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*
    • 91. 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
    • 92. Cash flows, project valuations and rates of return significantly expanded over previous studies
    • 93. Pre-Feasibility work has started for the second half of 2011
    • 94. Feasibility work to begin in 2012
    • 95. Escalones, copper-silver-gold porphyry project, Chile
    • 96. Exploration and Geophysics program underway
    • 97. Target for initial resource estimate in 2nd half of 2011
    • 98. Potential for significant deposit of copper, gold and silver
    *Average first five years of production
  • 99. Leveraged to Silver
    30
    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 nearly $45 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 May 24, 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
  • 100. Share Capitalization2
    31
    TSX:SAC, US OTC:SOHAF
    Issued & Outstanding
    Warrants
    Fully Diluted1
    Options
    117.3M
    7.2M
    10.0M
    99.9M
    Major Shareholders
    • Zamin—19.7%
    • 101. Private Swiss investors--19%
    • 102. Management1 --15%
    Institutional Ownership
    • Sprott Asset Management
    • 103. Front Street
    • 104. K2 funds
    • 105. Kudu Partners
    • 106. ~$220 million Market Capitalization (1)
    • 107. Average 3 mo. trading volume +500,000 shares/day
    • 108. Well financed with +$30 million in cash(2)
    • 109. Potential US listing to increase visibility and liquidity
    As of May 24, 2011
    As of July 18, 2011
  • 110. Why South American Silver?
    32
    Investment highlights
    • World-class scale projects with excellent expansion potential
    • 111. Track record of discovery and successful project development
    • 112. Growing shareholder value through resource expansion and advancing projects up the development value curve toward feasibility
    • 113. Leveraged to silver with nearly 4 oz of silver per share (6 ozs Ag equivalent)
    • 114. Attractive investment value relative to peers at low value per oz
    • 115. Exposure to rapidly growing indium and gallium high-technology market
    • 116. Potential value from new copper-silver-gold resource definition and expansion at Escalones
    • 117. Continued investor outreach to broaden market awareness of Company
    • 118. Potential for NYSE-AMEX listing in the U.S.
    TSX:SAC
    US OTC:SOHAF
    37
  • 119. 33
    TSX: SAC
    OTC: SOHAF
    Phone: 604.681.6926
    1.855.681.6926
    www.soamsilver.com
    Greg Johnson
    President & CEO
    TSX:SAC
    US OTC:SOHAF
  • 120. Relative Stock Performance
    34
    SAC outperforming key silver & gold indices
    • Trading liquidity increasing with average volume of 500,000 shares/day
    • 121. SAC undervalued relative to peers at >$0.80 Enterprise Value/oz vs average of more than $4/oz for early stage resources
    TSX:SAC
    US OTC:SOHAF
  • 122. Management & Directors
    35
    Ralph Fitch (Executive Chairman)is an explorationist with over 40 years of global experience, a co-founder of South American Silver and former Chief Geologist for Chevron Minerals credited with several major discoveries in South America.
    Antonio Canton (Director) is consultant and director to a number of international companies in marketing, finance and real estate.
    Tony Cau (Director) is COO at Zamin Ferrous. With over 30 years of experience in the mining, construction and heavy manufacturing industries, he has been involved in mine development and expansion projects around the world for groups like BHP, SNC-Lavalin, and Bateman Engineering.
    Jeffrey Couch (Director) is the Head of Business Development at ENRC and has held various financial advisory positions including for private equity groups such as Campbell Lutyens, was Director of Metals & Mining Investment Banking for Credit Suisse, and a key member of the capital markets team for Citigroup European Investment Bank.
    Paul Haber (Director) is a 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 (Director) is a mining engineer with over 40 years of industry experience including construction and operation of over 20 mines around the world with groups such as Barrick (Placer Dome) and NovaGold.
    William Murray (Director) is an 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 (Director) is President of a TSX -V listed company and Manager of a limited liability corporation in commercial real-estate.
    Tina Woodside (Director) is the head of Gowlings’ corporate finance department and practices corporate and securities law focused on corporate finance, M&A and corporate governance matters.
    Greg Johnson (President/CEO & Director)has over 25 years mining industry experience in corporate finance, project development and exploration. A s a co-founder of NovaGold, he played a key role in growing that company from $50 million in value to over $2 billion market capitalization advancing 3 major projects through to Feasibility.
    William Filtness (Chief Financial Officer)is a Chartered Accountant with over 20 years of financial experience in the mining industry.
    Phillip Brodie-Hall (Vice President of Project Development) has over 35 years experience in engineering construction and project development. He has participated in nearly every aspect of evaluation, feasibility studies and project development in the mining industry.
    James Mallory (Vice President of Operations & Social Responsibility) hasover 30 years of mining industry experience in large-scale mine management, operations and construction for companies including Barrick (Placer Dome), Silver Standard, and NovaGold.
    Felipe Malbran (Vice President of Exploration)has over 25 years experience in exploration management in South America including key roles in the discovery of Malku Khota, Vizcachitas, and Escalones.
    David Dreisinger (Vice President of Metallurgy) is Professor and Industrial Research Chair in Hydrometallurgy at the University of British Columbia. He is actively involved in developing and commercializing hydrometallurgical process at a number of mines worldwide.
    Andrew Clark (Manager of Project Implementation) has over 30 years global industry experience in the development, design, management and construction of industrial mining projects.
    Richard Doran, (Vice President & Corporate Secretary) has extensive industry experience including with General Minerals and as Marketing Manager for Chevron Minerals.
    Xavier Gonzales Yutronic (General Manager Compañía Minera Malku Khota S.A.) has experience in management, finance, and community relations in the mining industry including with Glencore, and Comsur S.A.
    TSX:SAC
    US OTC:SOHAF