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U.S. Silver and Gold Corporate Presentation - November 2 2012


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U.S. Silver and Gold Corporate Presentation - November 2 2012

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U.S. Silver and Gold Corporate Presentation - November 2 2012

  1. 1. A New Company Built For GrowthNOVEMBER 2012TSX: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 and the risk thatregulatory approvals may not be obtained or that conditions of closing will not be satisfied or waved within the timeframecontemplated. Additional potential risks include: that U.S. Silver & Gold may not achieve anticipated synergies; loss of keypersonnel; reduction in the anticipated cash levels; and, not achieving production goals stated. Actual results might differmaterially from results suggested in any forward-looking statements. All statements, other than statements of historical fact,included in the presentation, including, without limitation, statements regarding potential mineralization and reserves,exploration results, and future plans and objectives of U.S. Silver & Gold, are forward-looking statements. Words such as“expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “intend”, “believe” and other similar expressions are forward-lookingstatements. Forward-looking statements are not guarantees of future results and conditions but rather reflect our current viewswith respect to future events and are subject to risks, uncertainties, assumptions and other factors, and actual results andfuture events could differ materially from those anticipated 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-lookingstatements, or to update the reasons why actual results could differ from those reflected in the forward looking-statementsunless and until required by securities laws applicable to the U.S. Silver & Gold. Additional information identifying risks anduncertainties is contained in filings by U.S. Silver & Gold with the Canadian securities regulators, which filings are available 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. 2
  3. 3. USA – Today Established, Long-life Operating Assets2.6 - 2.8Moz Silver (Ag) Strong Operating Cash Flow Significant Ongoing Brownfield Expansion20,000- 25,000 Dominant Land Position in the Silver Valleyoz Gold (Au) Favourable Environment for Accretive Acquisitions Proven Management & Board 5 M oz Ag by 2014 3
  4. 4. Management Team Overview • 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 Tinto. Responsible for creation of Barrick EnergyDirector to hedge Barrick’s exposure to energy prices • Over 35 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 15 years of progressive financial leadership experience and brings extensive senior management expertiseWarren Varga • Most recently Senior Director, Corporate Development at Barrick Gold CorporationCFO • Member of the Canadian Institute of Chartered Accountants and a member of the Chartered Financial Analyst Institute • Over 33 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 AmericaPeter McRae • Most recently at Weil, Gotshal & Manges LLP, a major international law firm based in NYVP, General • Focused on private equity funds, public and private companies acquisitions and divestituresCounsel 4
  5. 5. Board of Directors OverviewGordon 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 Board • Former EVP Strategic Development at Kinross Gold, where he oversaw corporate development and exploration until hisHugh Agro retirement in 2009Director • Held senior positions with Placer Dome Canada and Deustche Bank • Geologist with over 40 years experience as an executive for 20 public, junior exploration companies , CEO of Pacific RidgeJohn Brock 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 of 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 Mine 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 andIndicated” Resources*•Galena area operating• Coeur area re-starting in Q4 2012• Lead Zone being assessed for bulk miningpotential• Excess hoisting and milling capacity• Experienced work forceDrumlummon Mine – 100%• High grade Au and Ag• Produced over 1 M oz Au and 12 M oz Ag• Extensive mining infrastructure• Recently acquired adjacent Belmont mine• Plan to process ore at Galena Complex in 2013* Descriptions of our mineral deposits are not comparable to similar information reported by U.S. companies which aresubject to the reporting and disclosure requirements under the United States federal securities laws and the rules andregulations thereunder. Geographic Concentration Of Assets 7 7
  8. 8. Galena Mine Complex Galena and Coeur Areas2ndlargest • Galena first half 2012 production of 1.08 M oz Ag @ $20.20/ounce from 25 production stopes, includes almost a month of lost time due to shaft and mill re-habilitation • Coeur re-development started February 2012 with production starting late 2012 - $5 million budgeted in 2012 - Ramping up over the course of 2013 to 500,000 oz Ag / annumPrimary silver - Current silver M&I resource is 3.3 million oz Ag* with drilling underway targeting 6.0 million oz Ag by end of 2013producer in • Two separate mills with total 1,500 tons/day capacity, currently operatingthe U.S. at 60% • Consistent mill recovery rates of 96% for silver-copper and 92% for silver- lead ores • Continued exploration success and mine life extension at Silver Vein and 350-370 Vein - Veins extending at depth - 2 newly discovered veins in 2012 - Focus on increasing resources near existing infrastructure • Expect to increase silver reserves and resources in 2012; extending mine life * See for NI 43-101 Technical Report Large Reserve and Resource Base 8 8
  9. 9. Galena Mine Complex Lead Zone • Semi-continuous mineralized zone extending from Galena into Caladay Mine at depth - Currently 2,800 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 mineralization oftenAdditional associated with high grade veins containing both high and lower grade areas - Global grades of 3-4 oz/ton Ag and 3 to 5% PbProduction - Higher grades are 30-40 percent with continuous widths of 15-30 feet ranging from 5-10 oz/ton Ag and 5-11% Pb • Global tonnage target of 60-70 million tons and potential silver resource of 150-200 million ounces • Re-habilitation completed and drilling commenced in the 3rd quarter • Area supports lower cost bulk mining methods • Update expected by year-end on economic potential of mineralized area Reducing cash costs in 2013 and beyond 9 9
  10. 10. Galena Mine Complex Exploration Upside Controlled by US Silver & Gold CDA “GAP” Argentine Western Vein Coeur Mine Deep Coeur Mine Lead Zone Deep Silver Vein 10
  11. 11. Galena Complex Lead Zone (Looking North)W E #3 Shaft Galena Caladay1600 Higher grade areas (block modelled)2400 Lead Zone Downdip projection of3200 lead zone (2013 Target)4000 0 2500 feet 4900 5500 11
  12. 12. Drumlummon Mine First half 2012 production of 12,100 oz Au and 216,200 oz Ag First half 2012 mill recoveries averaged 91% for Au and 84% for Ag 2012 Plan estimates 110,000 tons of ore at 0.25/t Au and 4 oz/t Ag Labour and cost reductions began in Q3 2012 Plan in place to process Drumlummon ore in Idaho starting at the beginning of 2013 to achieve stated processing synergies All current required permits in place under small miners exemption. In process of renewing appropriate water discharge permit Continued resource expansion and mine life extension success at Drumlummon and the recently acquired Belmont mine 2012 exploration success at the Frankie Vein, Sampson area of the Drumlummon Vein, the New Years Vein and high grade silver veins in the Neenan area near Bald Butte moly projectProcess synergies achievable given excess Galena milling capacity 12 12
  13. 13. 13Drumlummon Mine – Claims and Property Boundaries
  14. 14. Near Term Operating GoalsUSA -Tomorrow Ensure an effective and efficient integration while maximizing operating synergies of ~$6-7 million5.0Moz Ag by 2014 Deliver Coeur area re-development on time and on budget in Q4 2012 Prepare preliminary analysis of the Lead Zone for future bulk mining development by end of year Assess the Belmont property for mid to late 2013 development Build and communicate to the investment community the 1-year, 3-year and Life of Mine operating plan Unlocking value of existing operating assets 14 14
  15. 15. Capital Structure and Key Operating Metrics Symbol/Exchange USA-T Market Cap (CDN$ M) – close Oct 15, 2012 146.2 Shares Basic (M) 59.8 Options & Warrants 7.5 Fully Diluted 67.3 Cash (US$ M)* $ 21.1 Working Capital (US$ M)* $ 32.2 Debt (US$ M)* $ 8.2 First half Production oz (Ag) 1,295,300 First half cash costs per oz (Ag)* $ 20.36 First half Production oz (Au)* 12,100 Recoveries (Ag)* 90.0% Recoveries (Au)* 91.0% * As at June 30 , 2012Corporate office synergies of $3 million/annum achieved in 2013 budget 15
  16. 16. Strategic Objectives
  17. 17. Strategic Objectives Exceed 5.0 M oz Ag by end of 2014:Roadmap For 1 Execute on brownfield expansionsSuccess 2 Assess exploration, processing and capital synergies with geographically focused assets 3 Assess accretive per share acquisition opportunities in North America 4 Secure line of credit to support future growth initiatives Grow earnings and cash flow per share 17 17
  18. 18. Junior Silver Producer Multiples EV / M&I Resources* EV / 2013E EBITDA* $7.00 8.00x 7.48x $6.27 $5.87 $5.75 7.00x $6.00EV / M&I Resources (US$/oz AgEq) 6.00x 5.79x $5.00 5.06x 4.93x EV / 2013E EBITDA 5.00x $4.00 $3.28 Average: $3.25 4.00x 3.72x Average: 3.79x $3.00 $2.68 $2.59 3.00x 2.15x $2.00 1.78x 2.00x $1.10 1.05x $1.00 1.00x $0.54 $0.00 0.00x FVI FR EDR SVM USA HL SPM RVM FR EDR HL FVI SVM RVM USA SPM * As at October 1, 2012 Increase visibility within investment community 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 $1,200 Mid-Tier Silver ProducersEnterprise Value (US$ MM) EDR $900 SVM $600 FVI $300 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 2012 Production Guidance (MM oz Ag Eq.)Companies Included: FVI – Fortuna Silver Mines Inc.; SVM – Silvercorp Metals Corp.; EDR – Endeavour Silver Corp.1Enterprise Value is calculated on a fully-diluted ITM basis2Silver equivalent based on Cormark research 2012 metal prices of US$1,800/oz Au, US$32.50/oz Ag, US$0.90/lb Pb, US$0.89/lb Znand US$3.71/lb Cu3U.S. Silver & Gold production guidance is sum of RX Gold Q1 results annualized and latest U.S. Silver production guidance Attractively Positioned Among Peers
  20. 20. Why USA?We’re 2nd largest primary silver producer in the U.S. Strong operating and market fundamentalsbuilt for Executing on brownfield expansion opportunitiesgrowth Disciplined strategy for targeted acquisitions Large land package with significant organic upside Experienced management team Catalysts in place for improved valuation 20
  21. 21. Contact Darren Blasutti President and CEO 416-848-9503
  22. 22. Appendix
  23. 23. GALENA COMPLEX LONG SECTION LEGEND Ag - Pb Veins 0 2500 Caladay Shaft Ag - Cu Veins feet Callahan Shaft Major Production Areas No. 3 Shaft Galena ShaftCoeur Shaft 1200 2400 2800 Sea Level 3000 3400 Silver 3700 Vein 4000 4300 4600 4900 5200 5500 1
  24. 24. 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 2
  25. 25. FRANKIE SECTION 6000’ Veins 5900’ Drill holes 5800’ Elevations 5700’ 5600’ 5500’Frankie Structural Zone Periodic Veining and Pod 400 LEVEL (5430’) 5400’ Shaped Ore Zonation 200 Feet Wide 5300’ 600 LEVEL (5230’) 5200’ 0 250 5100’ feet 5000’ 3
  26. 26. NORTH STAR VEIN LONG SECTION (Looking North) 4
  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 Historical Resources 32,300T @ Mined Out 0.42 oz/ton Au 1.45 oz/ton Ag 5