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South American Silver Corp. (TSX:SAC - News)(PINK SHEETS:SOHAF - News) is pleased to
provide an update on the Malku Khota silver-indium project in Bolivia and the
Escalones copper-gold project in Chile. The Company moves into 2011 in a very
strong financial position with 18-24 months of funding in place to advance
the Malku Khota silver-indium project into feasibility and to advance the
Escalones copper-gold project to the resource definition stage.
Malku Khota Silver Indium Project
South American Silver's most advanced
project is the 100% owned Malku Khota Silver-Indium project located in the
world- class silver mining district of central Bolivia, approximately 200
kilometres north of Potosi. Malku Khota is one of the world's large silver
and indium resources with an NI 43-101-qualified indicated resource of 144.6
million ozs of silver and 845 tonnes of indium and an additional inferred
resource of 177.8 million ozs of silver and 968 tonnes of indium. The
Preliminary Economic Assessment (PEA) prepared by Pincock Allen & Holt
Inc. in 2009 showed the potential for robust economics from a bulk-mineable
heap leach operation with the potential to become one of the largest new
silver and indium producing mines in development. The project is
road-accessible, with power available within 15 kilometres of site.
Drilling and field activities on the
Malku Khota project were completed in late December in preparation for an
updated project resource and economic assessment. Resource modeling is
currently underway and is now anticipated to be completed as part of the
updated Preliminary Economic Assessment targeted for the end of Q1-2011.
Engineering activities are in progress on a number of optimization studies
looking at a range of operating scenarios that combine different production
rates and leaching approaches to be incorporated in the updated Preliminary
Economic Assessment.
With the advancement of the Malku Khota
project and the increased level of the Company's activities, discussions have
commenced with community leaders representing the local indigenous people
regarding the involvement of those communities in the development process.
During the scheduled project break period indigenous leaders requested that
the Company not restart field activities until discussions could take place
on community engagement. The government is assisting in these discussions and
the Company is working closely with local community leaders. On January 11th,
2011 a meeting was held at Malku Khota with the Company and local community
members, indigenous community leaders, representatives of regional government
including mayors from the larger communities and a delegate of the Governor
of Potosi, and a representative from the Minister of Mines. Based on that
meeting the Company anticipates additional future meetings with
representatives from the various stakeholder groups to further define the
process of community engagement for the ongoing project work and to define
ways to facilitate economic development in the region. Field work for the
Pre- Feasibility program will start up following conclusion of these
stakeholder discussions. The Company does not anticipate changes to its time
line for completion of the updated PEA or the start of the Pre-Feasibility
process in 2011 due to these stakeholder discussions. Current work is focused
on the completion of the engineering studies for the updated PEA study.
South American Silver has a history of
good relations with the surrounding local communities at Malku Khota which
have seen notable economic activity as exploration has been carried out on
the project over the past 3 years. As part of the Company's ongoing community
relations approach at Malku Khota, two full-time Community Relations
personnel have worked closely with each of the surrounding local communities
to facilitate economic benefit and involvement through the various stages of
project implementation while respecting the values and way of life of the
local people. The Company plans to continue to build on its community
relations programs as part of the advancement of the project toward
feasibility.
The Company's 2010 field programs
primarily focused on confirmation and in-fill drilling within the Limosna,
Wara Wara and Sucre zones at Malku Khota, to increase the density of drilling
and predictability of the geologic model in the areas that will be part of
the updated pit models. Several deeper holes designed to increase drill
definition lower in the pit models have confirmed the broadly mineralized
horizon remains open to further expansion. Additional results are still
pending and will be released as the results are compiled and quality checked.
To date, only about 30% of the known
prospective mineralized host stratigraphy on the 50 square kilometer property
at Malku Khota has been drill tested. Field activities and drilling to
support the Pre-Feasibility study in late 2011 will focus on further infill
work designed to convert in pit resources into reserves, and to undertake a
resource expansion program to include drilling to test several additional
near surface targets based on surface sampling and geophysics, along with
greater step out drilling laterally and to depth from the known
mineralization. The Company anticipates work to start with 3 to 4 drills with
the possibility to increase that number as necessary based on the timing for
the project.
Since completion of the PEA in March
2009, South American Silver has continued to refine the metallurgical
characteristics of the deposit through ongoing process-related test work to
refine the leach recovery characteristics of the silver, indium and
associated lead, zinc, copper and gallium mineralization in both heap leach
and milling options. The test work to date indicates the amenability of heap
leaching and/or milling of the mineralized material at Malku Khota applying
the same type of process as used in copper oxide SX-EW heap leach mining or
by the indium refineries that process by-product indium from zinc smelting.
These studies for project implementation will look to utilize local suppliers
and contractors as much as possible.
Escalones Copper Gold Project
The Escalones copper-gold porphyry
project is located approximately 100 kilometres south-east of Santiago by
road in central Chile. The 100% controlled 69 square kilometer property is 35
kilometres east of El Teniente, one of the world's largest underground copper
mines, and shows high grades at surface at over 1% copper with significant
gold and silver credits. Exploration has focused on a large, 4 square
kilometre area of alteration, and shallow drilling has intersected zones of
75 to 100 metres grading over 1% copper with a single deeper hole that
intercepted 176 metres of porphyry mineralization grading 0.6% copper. These
grades and significant widths of mineralization indicate the presence of a
strong mineralizing copper porphyry system at Escalones that the Company
believes has the potential to host a significant copper, gold and silver
deposit.
The Company has completed its initial
geological modeling and target definition and is developing an exploration
plan to include additional surface sampling, mapping, deep sensing geophysics
and diamond drilling to test the strength and scale of the mineralized
system. Based on drill rig availability, the Company is targeting drilling to
begin field work on the project in Q1-2011. With the completion of a drill
program an initial copper-gold-silver resource at this large scale, high
potential porphyry project would be targeted for completion in the second
half of 2011.
About South American Silver Corp.
South American Silver Corp. is a growth
focused mineral exploration company creating value through the exploration
and development of the 100% owned Malku Khota silver-indium project in
Bolivia, one of the world's largest undeveloped silver and indium deposits,
and the 100% owned large-scale Escalones copper-gold project in Chile. The
Company's approach to business combines the team's track record of discovery
and advancement of large projects, key operational and process expertise and
effective community relations to increase shareholder value. Management has
over 100 years of combined experience in the global exploration and mining
industry with much of that focused in Bolivia, Chile, Peru and Argentina. The
Company's shares are listed on the Toronto Stock Exchange under the symbol
"SAC" and on the US OTC market as "SOHAF." Additional
information related to South American Silver Corp. is available at www.soamsilver.com
and on SEDAR at www.sedar.com.
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", "suggests" and similar
expressions. This MD&A contains forward-looking statements. These
forward-looking statements are based on current expectations and various
estimates, factors and assumptions and involve known and unknown risks,
uncertainties and other factors. Information concerning mineral resource
estimates and the interpretation of drill results may also be considered as a
forward-looking statement; as such information constitutes a prediction of
what mineralization might be found to be present if and when a project is
actually developed. These forward-looking statements also include statements
regarding the proposed financing including the timing and terms thereof.
Readers are cautioned not to place undue
reliance on these statements as the Company's actual results, performance or
achievements may differ materially from any future results, performance or achievements
expressed or implied by such forward-looking statements if known or unknown
risks, uncertainties or other factors affect the Company's business, or if
the Company's estimates or assumptions prove inaccurate. Therefore, the
Company cannot provide any assurance that forward-looking statements will
materialize. Factors that could cause results or events to differ materially
from current expectations expressed or implied by the forward-looking
statements, include, but are not limited to, possible variations in mineral
resources, grade or recovery rates, silver or indium prices, operating or
capital costs; availability of sufficient financing to fund planned or
further required work in a timely manner and on acceptable terms; changes in
project parameters as plans continue to be refined; failure of equipment or
processes to operate as anticipated; ongoing positive community support; and
political, regulatory, environmental and other risks of the mining industry.
The material assumptions that were applied in making the forward looking
statements in this MD&A or referenced in this MD&A include, but are
not limited to: statements regarding estimated mineral resources and the
potential for delineation of additional resources through further exploration
at the Malku Khota project, as well as statements regarding estimated net
present value, internal rate of return, total and annual production, costs,
mineral grades, recovery rates, prices and by-product value; the accuracy of
current interpretation of drill and other exploration results; and execution
of the Company's existing plans or exploration programs for each of its
properties, either of which may change due to changes in the views of the
Company or if new information arises which makes it prudent to change such
plans or programs.
Subject to applicable laws, 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.
Unless otherwise indicated, forward-looking statements in this release
describe the Company's expectations as of January 12, 2011.
Contact:
Contacts:
South American Silver Corp.
Greg Johnson
President & CEO
604.681.6926 or Toll Free: 1.855.681.6926
South American Silver Corp.
Kristina Knopp
Investor Relations
604.681.6926 or Toll Free: 1.855.681.6926
www.soamsilver.com
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