MALKU KHOTA

                         Overview

The information regarding the Malku Khota silver-indium project, contained herein should be considered in context of our October 23, 2012 news release "South American Silver Notifies the Bolivian Government of an Investment Dispute over the Expropriation of Malku Khota Mining Concessions"

The Malku Khota project located in Bolivia, is one of the world’s largest undeveloped silver and indium resources with an NI 43-101-qualified Indicated resource of 230.3 million ozs silver and 1,481 tonnes of indium and an Inferred resource of 140 million ozs silver and 935 tonnes indium.

An updated Preliminary Economic Assessment Study ("PEA”) was prepared in March 2011 which showed robust economics for a bulk mineable heap leach operation. The project is road accessible and commercial power is within 15 kilometres of site.

 

RESOURCES CHART

MALKU KHOTA

Approx. 10 g/t Ag Cutoff1

In Situ Grade

Total Contained Metal3

Resource

Tonnes

Ag

In

Ga

Cu

Pb

Zn

Ag Eq2

Ag

In

Ga

Cu

Pb

Zn

Ag Eq

Category

Millions

g/t

g/t

g/t

%

%

%

g/t

Moz

tonnes

tonnes

Mlbs

Mlbs

Mlbs

Moz

Measured

31.0

33.40

6.10

4.50

0.02

0.07

0.02

49.00

33.32

188.00

139.0

13.9

49

16

48.55

Indicated

224.0

27.30

5.80

4.30

0.02

0.07

0.05

43.20

196.96

1,293.00

943.0

106.4

405

231

311.45

Total M&I

255.0

28.10

5.80

4.30

0.02

0.07

0.04

43.77

230.28

1,481.00

1,082.0

120.3

453

247

358.80

Inferred

230.0

18.90

4.1

4.3

0.02

0.07

0.05

33.04

140.03

935

1,001

102

362

246

244.36

Mineral resources in the above table were estimated as of March 30, 2011 for the Preliminary Economic Assessment Update Technical Report for Malku Khota by Allan
Armitage, Ph.D., P.Geo, of GeoVector Management Inc. 

1) The resource cut-off grade of 10 g/t silver equivalent is based only on the values of silver at $16/oz and indium at $550/kg.

2) The silver equivalent calculation in the above table uses base case metal pricing with value for silver at $18/oz (Ag), indium at $500/kg (In), gallium at $500/kg (Ga), copper at $3/lb (Cu), lead at $0.90/lb (Pb),and zinc at $0.90 (Zn).

3) Contained metal values may vary from calculated values due to rounding. Estimated metal content does not include any consideration of mining, mineral processing, or metallurgical recoveries.

 

Malku Khota NI 43-101 Preliminary Economic Assessment Summary

Heap Leach Operation 40,000 tonnes per day    
Recovery Silver 80% Indium 70%  
Annual Production* 13.2* M oz Silver 80* tonnes of Indium  



  Base Case Mid Case Recent
Silver Price Per Oz $18/oz $25/oz $35/oz
Indium Price Per Kg $500/kg $570/kg $650/kg
Gallium Price Per Kg $500/kg $570/kg $730/kg
Net Annual Cash Flow* $185 M/year $287 M/year $430 M/year
Internal Rate of Return 37.7% 63% 92.9%
NPV at 5% discount $704M $1482M $2571M
       
Years to Pay Back 27 months 19 months 15 months

*average first 5 years of production

     

Gross Revenue Distribution

Gross Revenue Distribution

View and download the May 2011 Malku Khota Preliminary Economic Assessment Update Report in pdf format.