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South American Silver’s most advanced project is the Malku Khota Silver-Indium project located in Bolivia. Malku Khota is one of the world’s largest underdeveloped silver and indium resources with an NI 43-101-qualified Indicated resource of 144.6 million ozs silver and 845,000 kgs indium (151 million tonnes grading 29.7 g/t silver and 5.6 g/t indium) and an Inferred resource of 177.8 million ozs silver and 968,000 kgs indium (230 million tonnes grading 24.0 g/t silver and 4.2 g/t indium). A Preliminary Economic Assessment Study ("PEA”) was prepared by Pincock Allen & Holt Inc. ("PAH”) in March 2009 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.
Silver and indium mineralization at Malku Khota begins at surface and remains open to further expansion laterally and at depth. Recent drilling has identified a new higher-grade zone which may result in an expanded near-surface resource. In late February, the Company announced the discovery of a potentially significant new high-grade silver-gold-indium vein system at Malku Khota that may join the highly mineralized, sediment hosted Wara Wara and Sucre Zones. This new discovery is in an area that was previously classified as unmineralized due to a lack of drilling in the area. The new zone of higher grade mineralization falls between the two previously identified zones at Wara Wara and Limosna and includes a well-mineralized silver-gold-indium vein system. The vein system consists of a number of sub-parallel veins and structures up that can exceed 100 metres in width. The most recent drill hole, WWD040, includes a significant 26 metre wide interval of high-grade silver mineralization in the Sucre Vein which has averaged 125.2 grams per tone (g/t) silver and 14.8 g/t indium. Drilling is ongoing on the project with periodic releases anticipated as results become available.
Metallurgical work is in on-going to refine the leach characteristics and physical properties of the currently defined mineralized zones. Test work is focused on the leach recovery responses at various grades and crush sizes to determine optimal approaches to processing for the deposit. Based on the size of the current resource and the presence of higher grade mineralized zones, additional engineering is looking at range of optimal mining and processing rates. These studies along with an updated resource will be incorporated into an updated economic assessment by the end of 2010.
As part of the Company’s on-going community relations approach to Malku Khota, SASC’s two full-time Community Relations personnel maintain regular contact with each of the surrounding local communities. Signed agreements of cooperation with each of the communities are in place and the Company will look for ways to facilitate economic development through the various stages of development for the project.
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