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South
American Silver
SAC.TO;
SOHAF.PK, 855-681-6926, soamsilver.com
In my initial and ongoing
recommendations of South American Silver, the primary impetus for my
addition of this company
to our list was Malku Khota, a Bolivia-based
silver-indium-gallium project
that hosts one of the world's
largest undeveloped
deposits of said
metals.
That impetus still exists, but it recently got a huge boost from the first-ever resource estimate released on the company's
Escalones copper-gold
project in Chile. The estimate,
which came out shortly
after we issued last month's letter, pegs Escalones' inferred resources at 420
million tonnes of mineralized material containing
3.8 billion pounds of copper, 56.9
million pounds of moly, 610,000 ounces of
gold and 16.8 million ounces of silver.
The estimate assumes a 0.2% copper-equivalent
grade and a long-term copper
price of approximately
$2.50/pound. According to the company, this resource contains copper-equivalent content of 4.5 billion pounds
of copper grading
0.49% (using three-year
average metals prices of $3.00/pound copper,
$1,200/ounce gold, $22/ounce silver and
$16/pound moly).
The deposit outlined at Escalones is open laterally and
down dip and lies within
a world-class mining district in Chile.
That district hosts nearby El Teniente, the largest
underground copper mine on the planet.
A Phase II drilling program will
soon be underway. Drilling is scheduled to be complete by April
of this year
and should run
to about 7,000 meters.
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Simply put, this resource estimate confirms that South American Silver
now controls two world-class assets,
with Escalones
and Malku Khota
being roughly equivalent in terms
of value, size and scale. The near-term goal for Escalones
is further drilling and resource
expansion; the goal for Malku Khota is to advance the project
to the prefeasibility level.
In addition to
the aforementioned follow-up
drilling program on the existing resource at Escalones, the project will also see geochemical and geophysical
testing to identify
new targets.
The market continues to deny
South American its due in terms of market capitalization. The current
discount has much to do with Bolivia's perceived country risk
and a volatile market for the metals in general.
But remember, this company has big, well-connected money backing
its efforts to get
Malku Khota developed in Bolivia and, sooner
or later, investors
are going to realize
that South American Silver
is well on its way to turning this huge silver-indium-gallium
deposit into an
operating mine.
Combine that with a newly-outlined,
multi-billion-pound copper deposit at Escalones, and you
have the recipe for one severely under-valued
company. It remains
a strong buy.
South
American Silver Corp.
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Recent Share Price:
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C$1.87
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Shares Outstanding:
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99.9
million
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Market Cap:
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C$186.8
million
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Shares Outstanding
Fully Diluted:
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117.3
million
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Market Cap
Fully Diluted:
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C$219.4
million
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