Growing and advancing one of the world’s largest undeveloped silver and indium resources. South American Silver Corp's flagship project is the Malku Khota project in Bolivia, which hosts one of the largest silver-indium resources globally. Updated resources in 2011 doubled estimated production to 13.2 million ounces of silver and 80 tonnes of indium annually for the first 5 years. The project has potential for low costs and to become a top primary silver and indium producer.
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 September 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.
35. Comparative Silver Resources in the Americas 7 Second largest development stage silver resource Additional value of Indium and Gallium Inferred Resources M&I Resources Millions of Silver Ounces Mexico Peru Mexico El Salvador Yukon (Canada) Mexico Peru Mexico Mexico Mexico Nunavut (Canada) Guatemala Bolivia Chile Peru Source: Canaccord Report resource numbers as of January 11, 2011 Note: All companies have projects in South and/or North America
36. Enterprise Value per Silver Resource Oz 8 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
37. Development Stage Value Curve 9 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.
38. Current Silver Company Market Valuations by Resource Size & Development Stage Size of circle represents market valuation premium in EV/oz 10 Developers Producers Adv. Developers 500 SAC SAC SAC US Gold $2,000 $1,000 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, Note: All companies have projects in South and/or North America
39.
40. Silver still well below inflation adjusted highs of $140/oz ($50 in 1980)
41. 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
42. Price increases driven by 40% increase in investment demand and 21% increase in industrial demand for a total increase of 17% in 2010
43. Total annual mine production growth only 2.5% last year with reduced contribution of by-product silver from copper and gold production
44. Projected new mine supply anticipated to be consumed by new industrial demand through at least 2015
45. 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
46. Few major new deposit discoveries and growing time lag from time of discovery to metal productionSource: 1) GFMS World Silver Survey 2011 2) BMO Capital Markets Global Mining Research April 2011
47.
48. Demand growth expected to continue to outstrip production growth(2)+17% total demand growth +8% total supply 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 12
50. Growing Demand for Silver in Technology 14 Breakdown of key technology/industrial uses for silver Millions of Silver Oz Source: CPM Silver Yearbook 2010 Not for reproduction without written CPM Group consent
51. Thin Film/Thick Film Demand Growth 15 Growing demand in solar technology PV related silver consumption 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
54. Reduced by-product silver production anticipated going forward from base metals(2)Source: 1) GFMS World Silver Survey 2005-2011 2) BMO Capital Markets Global Mining Research April 2011
58. One of the most scarce strategic metals due to low recycling and few primary producersTSX:SAC US OTC:SOHAF
59.
60. China is largest producer and consumer of indium and has imposed export quotas and tariffs like other key high-technology specialty metals
61. Indium market estimated to see 15-20% annual growth with most indium produced as by product of zinc refining growing at 1-3% annually
62. Current indium and gallium price ~$900-1000/kg up from global economic lows during 2008-2009 of $400-500/kg
63.
64. Potential to represent 10% or more of global mine supply of indium and over 5% of global supply for gallium
65. Opportunities for project financing from off-take agreements for indium & gallium Sources: (1) US Dept. of Energy Critical Materials Strategy, Dec. 2010. (2)United Nations Environment Programme (UNEP) Special Report on Strategic Metals ,May 2011 .
66. Criticality Index for Clean Energy/Technology Development 19 Showing Forecast Supply Shortages of Most Important Metals Short Term (0-5 Years) Long Term (5-15 Years) 4 4 high high 3 3 Importance to clean energy Importance to clean energy 2 2 1 1 low low 1 2 3 4 1 2 3 4 high high low Supply Risk Supply Risk low Important Near Critical Critical Sources: (1) US Dept. of Energy Critical Materials Strategy, Dec. 2010.
67. 20 Indium Supply Mine Production and Refining Source: 1)Roskill ‘s Indium: Global Industry Markets and Outlook ,2010 BLEU: Belgium, Luxembourg Economic Union
68. Indium Demand Growth 21 Growing demand in high-tech markets 5 year projected demand growth End-use Market Demand (tonnes) 2010 total indium production level Growth assumptions based on data from Displaybank in LCD TV Association “LCD TV Matters”-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009 , Solarbuzz, Photon International, GFMS , Nanomarkets, and the US Department of Energy Critical Minerals Strategy Report December 2010
69. Indium Fundamentals World indium demand vs price (1969-2011*) Indium Demand Current Indium Price X Indium Price/kg ($US) Source: (1) Indium: Global Industry Markets and Outlook, 9th Edition 2010 (Roskill) *2011-2013 Data are estimates (2) 2011-2015 Estimates US Dept. Of Energy Critical Materials Strategy Dec. 2010. 16
89. Malku Khota Project 25 One of the world’s largest silver-indium resources Malku Khota Project – 2011 Resource Estimate Average for the first 5 years of production See March 31, 2011 News Release for detailed resource estimate Total contained metal
115. Downstream processing to metal productsCrushing Leaching Metal Recovery & Processing Silver, Gold, Copper Indium & Gallium ingots Lead & Zinc concentrates TSX:SAC US OTC:SOHAF
116. 2011 Economic Assessment 31 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
117. Silver Producer Price to Cash Flow Multiples (P/CF @ $30/oz) 32 Malku Khota PEA Projected Cash Flows Source: BMO Capital Markets Global Mining Research Report, April 3, 2011 (share prices as of March 31 2011)
118. Primary Silver Project Annual Production Rates 33 Malku Khota one of largest emerging producers at over 13 Moz/yr BHP Billiton Fresnillo Producers Barrick Gold Corp. Developers South American Silver Corp. Malku Khota Tahoe Resources Sumitomo Corp. Pan American Silver Cia De Minas Buenavertura Sabina Gold & Silver Industrias Penoles Silver Standard Resources Silver Standard Resources Polymetal MNPO Bear Creek Mining Goldcorp Inc. Pan American Silver Yamana Gold Hochschild Coeur d'Alene Hochschild Etibank Hecla Source: CPM Silver Yearbook 2011 *Based on mine production of 13.2 Moz /year for first five years BHP Billiton Fresnillo Barrick Gold Corp. South American Silver Corp. Sumitomo Corp. Tahoe Resources Pan American Silver Silver Standard Resources Silver Standard Resources Cia De Minas Buenavertura Sabina Gold & Silver Industrias Penoles Pan American Silver Polymetal MNPO Bear Creek Mining Goldcorp Inc. Coeur d'Alene Yamana Gold Hochschild Hochschild Etibank Hecla
119. Global Silver Industry Cash Cost Curve 34 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
120.
121. Located near one of the worlds largest underground copper mines at El Teniente
122. Historic drilling shows >1% copper grades at surface and untested porphyry system grading 0.6% copper
126. Escalones Project Logistics 36 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
129. Limited testing of porphyry system with most holes in replacement /skarn style mineralizationTSX:SAC US OTC:SOHAF 32
130.
131. Large scale porphyry target with intercept of 176 m @ 0.6% copper with additional credits from silver, gold, and molybdenumAlto Bajo TSX:SAC US OTC:SOHAF
132.
133. Jim Mallory, VP Operations and Social Responsibility – 35 years industry experience previously with Silver Standard, NovaGold, & Barrick (Placer Dome)
134. Miguel Reynaga, Director of Community Relations - 16 years experience with Newmont at their Inti-Raymi (Kori Kollo) Mine in Bolivia
135. Objectives to facilitate economic development in communities as part of project exploration, development and construction activities
136. Project construction will see workforce of over 1,000 with mine workforce of over 400 or more*Business for Social Responsibility, San Francisco, CA
137.
138. 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*
139. 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
140. Cash flows, project valuations and rates of return significantly expanded over previous studies
148. Potential for significant deposit of copper, gold and silver*Average first five years of production
149. Leveraged to Silver 41 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 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
150.
151. Track record of discovery and successful project development
152. Growing shareholder value through resource expansion and advancing projects up the development value curve toward feasibility
153. Leveraged to silver with nearly 4 oz of silver per share (6 ozs Ag equivalent)
159. 43 TSX: SAC OTC: SOHAF Phone: 604.681.6926 1.855.681.6926 www.soamsilver.com Greg Johnson President & CEO TSX:SAC US OTC:SOHAF
160.
161. SAC undervalued relative to peers at >$0.80 Enterprise Value/oz vs average of more than $4/oz for early stage resourcesTSX:SAC US OTC:SOHAF
162.
163. Strategic 19% investment positions SAC in strong financial and operational position to advance projects to feasibility
164. Track record of successfully facilitating South American project development through relationships with national and state governments in the region
165. Portfolio of South American projects with strong government support in permitting, rail and port infrastructure
169. Management & Directors 46 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