U.S. Silver & Gold Corporate Presentation - February 2013


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U.S. Silver & Gold Corporate Presentation - February 2013

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U.S. Silver & Gold Corporate Presentation - February 2013

  1. 1. Low Risk, Low Capital, High GrowthFEBRUARY 2013TSX:USAOTCQX:USGIF
  2. 2. Forward Looking Statement – Safe HarbourCertain information in this presentation may contain forward-looking statements. This information is based on currentexpectations that are subject to significant risks, assumptions and uncertainties that are difficult to predict. Potential risksinclude: that U.S. Silver & Gold may not achieve anticipated synergies; loss of key personnel; reduction in the anticipated cashlevels; and, not achieving production goals stated. Actual results might differ materially from results suggested in any forward-looking statements. All statements, other than statements of historical fact, included in the presentation, including, withoutlimitation, statements regarding potential mineralization and reserves, exploration results, and future plans and objectives ofU.S. Silver & Gold, are forward-looking statements. Words such as “expect”, “anticipate”, “estimate”, “may”, “will”, “should”,“intend”, “believe” and other similar expressions are forward-looking statements. Forward-looking statements are notguarantees of future results and conditions but rather reflect our current views with respect to future events and are subject torisks, uncertainties, assumptions and other factors, and actual results and future events could differ materially from thoseanticipated in such statements. There can be no assurance that such forward-looking statements will prove to be accurate.U.S. Silver & Gold assume no obligation to update the forward-looking statements, or to update the reasons why actual resultscould differ from those reflected in the forward looking-statements unless and until required by securities laws applicable to theU.S. Silver & Gold. Additional information identifying risks and uncertainties is contained in filings by U.S. Silver & Gold withthe Canadian securities regulators, which filings are available at www.sedar.com.An additional Cautionary Note to Investors – In the event that we use certain terms in this presentation, such as “resource”,“measured resource”, “indicated resource” and “inferred resource”. U.S .investors are cautioned that, while such terms arerecognized and required by Canadian Securities Laws, the United States Securities and Exchange Commission does notrecognize them. Under U.S. standards, mineralization may not be classified as a “reserve” unless the determination has beenmade that the mineralization could be economically and legally produced or extracted at the time the reserve determinationhas been made. U.S. investors should not assume that all or any part of measured or indicated resources will ever beconverted into reserves. In addition, “inferred resources” have a great amount of uncertainty as to their existence and as towhether they can be mined legally or economically. Accordingly, information concerning descriptions of mineralization in thispresentation may not be comparable to information made public by companies that are subject to the SEC’s Industry Guide 7.Mr. Jim Atkinson, Vice President, Exploration and a Qualified Person under Canadian Securities Administrators guidelines hasapproved the applicable contents of this presentation.Please see SEDAR or www.us-silver.com for the 43-101 compliant Technical Report and Resource Estimate on theDrumlummon Mine Project dated April 9, 2012 and the Galena Project dated March 19, 2012. 2
  3. 3. USA - Today Established, Long-life Operating Asset2013 Forecast Strong Operating Cash Flow2.7 – 3.0M Significant Ongoing Brownfield Expansionoz Silver @ $17-19/ounce Dominant Land Position in the Prolific Silver Valley14 – 18K Favourable Environment for Accretive Acquisitionsoz Gold Proven Management & Board 2012 Production: 2.6M oz Ag and 20,432 oz Gold Au 3
  4. 4. Management Team: Experienced + Proven • Former SVP Corporate Development and Investor Relations for Barrick Gold, reported to President and CEODarren Blasutti • Led Barricks strategic development for over 13 years executing over 25 gold mining transactions including Sutton Resources,President and CEO, Homestake Mining, Placer Dome, consolidation of the Cortez property from Rio TintoDirector • Responsible for creation of Barrick Energy to hedge Barrick’s exposure to energy prices • Over 40 years of experience in operations, management, engineering, and exploration for underground and open-pit minesRobert Taylor • Most recently VP and President North American Operations for Kinross Gold where he was responsible for all operationsCOO and exploration • Former VP, Mine Operations at Stillwater Mining in Montana • Over 17 years of progressive financial leadership experience and brings extensive senior management expertiseWarren Varga • Most recently Senior Director, Corporate Development at Barrick Gold Corporation and former CFO of RX Gold & Silver Inc.CFO • Member of the Canadian Institute of Chartered Accountants and the Chartered Financial Analyst Institute • Over 35 years experience in mine engineering and managementSteve Long • Senior manager for underground mining operations for Newmont Mining Corporation, Barrick Gold, Echo Bay andSVP, Operations Homestake MiningJim Atkinson • Licensed Professional Geologist, over 40 years of experience in exploration geologyVP, Exploration • Completed more than a dozen exploration programs across North AmericaDaren Dell • Over 20 years experience and brings extensive knowledge gained from evaluating mining assets around the globeVP, Technical • Formerly Director, Corporate Development and Director, Technical Evaluations at Barrick Gold. Prior to joining Barrick Gold,Services Mr. Dell was at Placer Dome for 15 yearsPeter McRae • Most recently VP Corporate Counsel of RX Gold & Silver Inc. and in private practice at Weil, Gotshal & Manges LLP, a major international law firm based in NY with extensive experience on general corporate, securities law, and governance mattersVP, GeneralCounsel • Private practice focused on representing private equity funds, public and private companies in connection with complex commercial transactions including acquisitions, dispositions, minority investments, financings, joint ventures, and restructurings. 4
  5. 5. Board of DirectorsGordon Pridham • Over 30 years of experience as a global finance executiveChairman • Serves on the public company boards of Newalta Corporation and Titanium Corporation, where he is Chairman of the BoardHugh Agro • Retired in 2009 as EVP Strategic Development at Kinross Gold, where he oversaw corporate development and explorationDirector • Held senior positions with Placer Dome Canada and Deustche BankJohn Brock • Geologist with 40 years experience as an executive for 20 public junior exploration companies. CEO of Pacific Ridge ExplorationDirector • Participated in 12 major mineral deposit discoveries in north and western Canada, Nevada, Mexico, and Ecuador • Retired in 2009 as EVP Exploration and Corporate Development at Barrick GoldAlex Davidson • 2005 AO Dufresue Award to recognize exceptional achievement and distinguished contribution to mining exploration in CanadaDirector • In 2003 was named Prospector of the Year by PDAC for discovery of Alto Chicama in PeruLouis Dionne • Former Senior Vice President Underground Operations at Barrick GoldDirector • Currently a director of Detour Gold Corporation and Aurizon Mining Ltd.Alan Edwards • Board of directors for AuRico Gold Inc., Entrée Gold Inc., Copper One Inc., Oracle Mining Corp. and AQM Copper Inc. (Chairman)Director • Senior management positions with Frontera Copper, Apex Silver Mines, Kinross, Cyprus Amax and Phelps DodgeTom Ryley • Board of directors for Newalta Corporation, Tribute Resources and Benefuel Inc., where he is Chairman of the BoardDirector • Former Executive Vice President of Suncor Energy, where he worked for 25 years in a variety of rolesLorie Waisberg • Former Senior Partner at Goodmans LLP and EVP, Finance and Administration of Co-Steel Inc.Director • Accredited with Institute of Corporate Directors and sits on Boards of Tembec and Chemtrade Logistics IncDarren Blasutti • President and CEODirector 5
  6. 6. Asset Overview
  7. 7. Asset OverviewGalena Complex – 100%• High grade Cu-Ag and Pb-Ag• Produced over 240 M oz Ag historically• Over 23 M oz Ag in “Proven and Probable” Reserves and 12 M oz Ag in “Measured and Indicated” Resources*• Galena area operating• Coeur area now operating• Caladay Zone being assessed for highgrade conventional mining and bulk miningpotential• Excess hoisting and milling capacityDrumlummon Mine – 100%• High grade Au and Ag Galena Complex located in mining friendly Idaho• Produced over 1 M oz Au and 12 M oz Ag • Ranked 5th in the US by The Fraser Institute in 2011/2012**• Extensive mining infrastructure • Supportive local communities • Established mining state• Recently acquired adjacent Belmont mine • Experienced knowledgeable workforce• Evaluating milling of ore at Galena Complex *Descriptions of our mineral deposits are not comparable to similar information reported by U.S. companies which are subject to the reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder.* Descriptions of our mineral deposits are not comparable to similar information reported by ** See www.fraserinstitute.org for details.U.S. companies which are subject to the reporting and disclosure requirements under theUnited States federal securities laws and the rules and regulations thereunder. See www.us-silver.com for NI 43-101 Technical Report. Close Proximity Provides Synergies 7 7
  8. 8. Galena Complex Galena and Coeur Areas2nd • Galena 2012 production of 2.25M oz Ag @ ~$20/ounce from 25 production stopes • Productivity improvements being realized with adoption of new 24/7 shift schedule • Q4 silver production of 625,600 under new managementlargest • 2013 production increasing by 10% and reducing cash costs by 10-15% • Coeur re-development started February 2012 with small production in late 2012Primary silver • • $5 million budgeted in 2012 Forecast of 125,000 oz Ag in 2013 with 500,000 oz Ag by 2016producer in • • Current M&I resource is 3.3 million oz Ag* Drilling underway targeting 6.0 million oz by end of 2014the U.S. • Two separate mills with combined total 1,500 tons/day capacity, currently operating at 50%-60% • Mill recovery rates of 96% for silver-copper and 92% for silver-lead ores • Continued exploration success and mine life extension at Silver Vein, Caladay Zone and 350-370 Veins • Expect to replace silver reserves and significantly increase silver resources in February or March 2013. • Discovery of 350-370 vein system and Caladay expected to allow for ramp-up to 1,500 tons over next 3-4 years with modest capital outlays * See www.us-silver.com for NI 43-101 Technical Report Large Reserve and Resource Base 8 8
  9. 9. Galena Complex – Long Section Controlled by US Silver & Gold Western Coeur Mine Galena Targets Deep Caladay Coeur Mine Deep Silver-Lead Silver Zone Vein Opportunities for Significant Brownfield Expansion
  10. 10. Galena Complex Caladay Zone • Semi-continuous mineralized zone extending from Galena into Caladay Mine at depth • Caladay Zone Currently 2,800-3,000 vertical feet with estimated strike length of 1,200-3,600 feet and apparent widths of 200-400 feet • Mineralization comprises broad areas of Ag and Pb containing both higher and lower targeting grade areas • Global grades of 3-4 oz/ton Ag and 3-5% Pb • Higher grades are 30-40 % with continuous widths of 15-30 feet ranging from initial • 5-15 oz/ton Ag and 5-15% Pb Global tonnage target of 60-70 million tons and potential silver resource of 150-200 million ounces based on over 800 drill holes production in • Area is expected to support lower cost bulk mining methods • High grade silver copper areas discovered within the broader Caladay Zone are 2014 currently being evaluated and drilled • Test mining in recently identified high grade areas adjacent to infrastructure at 4900 level will commence in H2 2013 • A preliminary plan will be communicated first half of Q1 2013 • Phase 1 – “Fill the Mill” with high grade areas close to infrastructure* Some of the potential quantities and grades disclosed in this presentation are • Phase 2 – Caladay shaft expansion using bulk mining techniquesconceptual in nature. At the current stage of exploration, there is insufficientdrilling to determine the extent of continuity of the mineralization required to .define a mineral resource for all mineralization at the Galena Mine Complex andDrumlummon Mine. It is uncertain if further exploration will result in certainexploration targets being delineated as a mineral resource Supports Lower Cost Mining Techniques 10 10
  11. 11. Caladay Zone (Illustrative View) New High Grade Ag-Cu Discovery
  12. 12. Caladay Zone - 4900 Level Plan of Mineralization Close Proximity to Existing Mine Infrastructure
  13. 13. Galena Complex Operating Goals Focus 2013 and LOM plan on high-grade profitable ounces versus arbitrary ounce targets Increase 2013 productivity at the Galena Complex by movingLow risk, to a 24/7 shift schedule and enact labour and processing cost reductionslow capital, Evaluate milling of high gold and silver ore from the Drumlummon site at Galena Complex in early 2013high growth Coeur area re-started and ramping up to full production by end of 2015 “Fill the mill” strategy starting in 2014 Prepare preliminary analysis of the Caladay Zone bulk mining expansion case 5.0 M oz Ag by end of 2015 13 13
  14. 14. Drumlummon Mine• 2012 production of 20,070 oz Au and 316,194 oz Ag• Mill recoveries averaged ~ 91% for Au and 84% for Ag• Evaluating options to process Drumlummon ore in Idaho starting in early 2013 to achieve expected processing synergies• All current required permits in place under small miners exemption. In process of renewing appropriate water discharge permit.• 2012 exploration success at the Frankie Vein, the Northstar Vein, Sampson and Pixley areas of the Drumlummon Vein and the New Years Vein• Recently acquired Belmont Mine being reviewed for development late 2013, drilling commenced in Q4 2012 including • 3.5 feet of 0.50 oz/ton Au and 3.8 oz/ton Ag • 8.0 feet of 0.47 oz/ton Au and 0.9 oz/ton Ag • 3.0 feet of 2.67 oz/ton Au and 7.4 oz/ton Ag* See November 28th press release for more details and www.us-silver.com for complete drill results. High Grade Gold & Silver Production 14 14
  15. 15. Strategic Objectives
  16. 16. Strategic Objectives Exceed 5.0 M oz Ag by end of 2015:Roadmap For 1 Execute on operational improvements and brownfield expansionsSuccess Secure line of credit to support brownfield 2 initiatives Assess exploration, processing and capital 3 synergies with geographically focused assets Assess accretive per share acquisition 4 opportunities in North America Grow earnings and cash flow per share 16 16
  17. 17. Share Price Performance & Capital Structure $3.00 1,600,000 1,400,000 $2.50 Volume (TSX & OTCQX) 1,200,000 $2.00 1,000,000Share Price $1.50 800,000 600,000 $1.00 400,000 $0.50 200,000 $0.00 0 8/15/2012 9/15/2012 10/15/2012 11/15/2012 12/15/2012 1/15/2013 Symbol: USA-T Recent Price*: $1.67 Market Cap (CDN): $100.2 M Cash Balance: $19.0M Debt: $7.9M Shares Basic: 60 M Options : 5.7 M Warrants: 2.0 M Fully Diluted: 67.7 M *As of Feb. 19, 2013 17
  18. 18. Junior Silver Producer Multiples EV / M&I Resources* EV / 2013E EBITDA* $7.00 $12.00 $5.82 10.14x $6.00 $5.45 $10.00EV / M&I Resources (US$/oz AgEq) $5.00 $4.57 $8.00 7.24x Average: $3.77 Average: 6.12x EV / 2013E EBITDA $4.00 6.26x $3.19 $6.00 5.63x $3.00 $2.71 4.81x $2.31 $4.00 $2.00 $1.76 2.63x 2.11x $2.00 $1.00 $0.00 $0.00 FR FVI EDR USA HL SVM SPM SPM FR FVI HL EDR SVM USA *As of February 8, 2012 based on Cormark Securities Estimates Market data and other statistical information used in this presentation may be based on independent industry publications, government publications, reports by market research firms, or other published independent sources. Some data is also based on U.S. Silver & Gold’s good faith estimates that are derived from its review of internal data and information, as well as the sources listed above. Although U.S. Silver & Gold believes these sources are reliable, U.S. Silver & Gold has not independently verified the information and cannot guarantee its accuracy or completeness. Undervalued Relative To Peers 18
  19. 19. Re-Rating Potential U.S. Silver & Gold is attractively positioned amongst its mid-tier silver producer peers and could experience a significant re-rating $750 Mid-Tier Silver Producers Enterprise Value (US$ MM) $600 EDR $450 FVI SVM $300 $150 EXN SPM (1) U.S. Silver & Gold $0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 10.0 11.0 2013 Production Guidance (MM oz Ag Eq.)Companies Included: FVI – Fortuna Silver Mines Inc.; SVM – Silvercorp Metals Corp.; EDR – Endeavour Silver Corp.; EXN –Excellon Resources Inc.; SPM – Scorpio Mining Corp.1Research consensus2Enterprise Value is calculated on a fully-diluted ITM basis3Silver equivalent based on Cormark research 2013 metal prices of US$1,800/oz Au, US$35.00/oz Ag, US$0.90/lb Pb, US$0.95/lb Zn and US$4.00/lb Cu Attractively Positioned Among Peers 19
  20. 20. 2013 Milestones Q1 2013 Q2 2013 Q3 2013 Q4 2013Near-termCatalysts Reserve & Preliminary Test Mining Implement Resource Economic on Caladay Development Update Assessment begins Plans at Including on “Fill The Caladay First Mill” and Resource Caladay Zone Estimate for Caladay Delivering on Caladay’s Potential
  21. 21. Why U.S. Silver & Gold? 100% owned, royalty freeExecuting on Fully permittedoperational Near existing infrastructure Excess capacityimprovements and Increasing production and reducing costslow risk brownfield Experienced management teamexpansion Catalysts in place for improved valuation Focused on Unlocking Value 21
  22. 22. Contact Darren Blasutti President and CEO dblasutti@us-silver.com 416-848-9503 www.us-silver.com
  23. 23. Appendix
  24. 24. Galena Complex Long Section Caladay Shaft CallahanCoeur Galena ShaftShaft Shaft No. 3 Shaft 1200 2400 2800 Sea Level 3000 3400 Silver 3700 Vein 4000 4300 4600 4900 5200 5500 0 2500 Ag - Pb Veins Ag - Cu Veins Major Production Areas feet
  25. 25. Galena Caladay Silver-Lead Zone(Illustrative View) No. 3 Galena Caladay Shaft Shaft Shaft 0 1000 Silver Vein feet 3000 Level 4000 Level Caladay Silver- Lead Zone 5500 Level
  26. 26. Drumlummon Vein Long Section (Looking Northwest)Nine-HourWorkings B D A/B Block 400 Level OPEN A South Decline Drumlummon C Zone 800 1000 Level OPEN 1200 Jubilee Deep Pixley Deep Target Area #1 South Deep Target Area 1400 Target Area 1600 Level #2 Shaft #1 Shaft Drilled (assays pending) Ore Shoots Grade x Thickness (oz.ft) Existing workings A Jubilee 1.5+ 0 1000 Ore shoots B Sampson 1.00 - 1.49 Drilling station C Pixley 1 0.50 - 0.99 feet Mined stopes D Pixley 4 0.20 - 0.49 D Block No significant intersection
  27. 27. Belmont Long Section 200 Level 0 250 feet300 Level 400 Level * * 600 Level * * 750 Level 1 Phase 1 proposed drillingZone 1 2 Phase 2 proposed drilling19,000T @ Possible Ore *0.81 oz/ton Au Existing Workings2.66 oz/ton Ag Zone 2 (1) Historical Mineralization 32,300T @ Mined Out(1) Note that these are historical estimates that are not NI43-101 compliant. 0.42 oz/ton AuA qualified person has not done sufficient work to classify this historical estimateas current mineral resources or mineral reserves. 1.45 oz/ton Ag