South American Silver Q2, 2011 Corporate Presentation

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Value. Growth. Vision Growing and advancing one of the world’s largest undeveloped silver and indium resources. TSX: SAC, US OTC: SOHAF Corporate Presentation A Growth Focused Exploration & Development Company Q2 2011 www.soamsilver.com

Transcript of South American Silver Q2, 2011 Corporate Presentation

Value. Growth. Vision

Growing and advancing one of the world’s largest

undeveloped silver and indium resources.

TSX: SAC, US OTC: SOHAFCorporate Presentation

A Growth Focused Exploration & Development Company

Q2 2011

www.soamsilver.com

Value. Growth. Vision

Forward Looking Statements

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. 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.

TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Investment HighlightsSouth American Silver Corp.

TSX:SACUS OTC:SOHAF

• Experienced management team with track record of successful project development and value creation

• Two large-scale deposits in South America• Malku Khota: one of the world’s largest silver-indium resources• Escalones: high potential copper-gold deposit

• Updated 2011 PEA study doubles estimated production to 13.2 M oz silver and 80 tonnes of indium per year

• Measured and Indicated resources expanded 60% to 230 M oz silver• Well defined business plan to drive shareholder value• Leveraged to silver with over $40 of silver value per $1 invested• Attractive investment value relative to peers at low value per oz• Exposure to the high-tech indium and gallium market• Potential value from new copper-gold resource• Strong focus on community relations• Well financed into feasibility

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Value. Growth. Vision

Escalones

Malku Khota

World-Class DepositsTwo large-scale assets in South America Malku Khota, Bolivia, silver-indium project

• 100% owned, bulk mineable open-pit, sediment hosted deposit• Low capital and operating costs as a heap leach or milling operation• Update resource increases M&I 60% to 230 M oz silver

• Pre-Feasibility process to start in 2011 & Feasibility in 2012• Resource expansion potential with only 4 km of 50 sq km

property drill tested• Potential to be one of the top producing silver and indium mines• Funded into Feasibility

Escalones, Chile, copper-gold project• 100% controlled, large scale target in world-class mining district near

El Teniente• Exploration program and geophysics underway• Resource definition program in 2011• Potential significant copper, gold, silver deposit

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Silver(Moz)

Indium(tonnes)

Gallium (tonnes)

M&I 230 1,481 1,082

Inferred 140 935 1,001

Value. Growth. Vision

Share Capitalization2

TSX:SAC, US OTC:SOHAF

Issued & Outstanding

Fully Diluted1WarrantsOptions

98.3M 114.8M8.4M8.1M

• ~$260 million Market Capitalization (1)

•Average trading volume 500,000 shares/day

•Well financed with +$30 million in cash at year end2

•Potential NYSE-AMEX listing to increase visibility and liquidity

(1) As of November 8, 2010 with proposed $28 million financing

(1

(1) On a fully diluted basis

(2) As of December 31, 2010

Major Shareholders

•Zamin—19.7%

•Private Swiss investors--19%

•SAC Management1 --15%

Institutional Ownership

•Sprott Asset Management

•Front Street

•K2 funds

•Kudu Partners

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Value. Growth. Vision

Zamin Group - Strategic InvestmentA Key Regional Player

•Well funded regional player in South American resources industry with major projects in Brazil, Uruguay, Bolivia, and Chile

•Strategic 19.7% investment positions SAC in strong financial and operational position to advance projects to feasibility

•Track record of successfully facilitating South American project development through relationships with national and state governments in the region

•Portfolio of South American projects with strong government support in permitting, rail and port infrastructure

•Bamin Project-Brazil•Valintine Project-Uruguay•Acquiring assets in Bolivia over past year

TSX:SACUS OTC:SOHAF 4

Value. Growth. Vision

0

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Alexco Sulliden US Gold Golden Minerals

Silvercrest MAG Silver Orko ECU Sabina Tahoe Resources

So.American Silver

Bear Creek

Comparative Resources in the AmericasSecond largest development stage silver resource

Source: Canaccord Report resource numbers as of January 11, 2011Based on March 28, 2011 share priceNote: All companies have projects in South and/or North America

MexicoMexico

El. SalvadorMexicoMexico

Argentina

PeruMexico

Yukon Nunavut

Guatemala BoliviaChile

Peru

$37.35

$1.83

$0.54

$9.93$2.89

$2.13$2.28

$7.18$1.83$5.08$16.98

$10.42

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ces Millions of Silver Ounces &

Enterprise Value Per Oz

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Value. Growth. Vision

$0.00

$5.00

$10.00

$15.00

$20.00

$25.00

$0.88/oz EV based on 230 M M&I oz

Enterprise Value per Resource Oz By project development stage

Source: Canaccord Report January 17, 2011Share prices as of March 28, 2011,Note: All companies have projects in South and/or North America*EV/oz truncated to $25

Development Stage Average >$4/oz

**

Advanced Development Stage Average >$9/oz

ProducersAverage >$25/oz

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Value. Growth. Vision

Development Stage Value CurvePotential value growth with project advancement

Increased value through resource

expansion

Early StageExploration & Development

AdvancedDevelopment Stage

(Reserves)

Production

Average Enterprise Value per Oz of Silver by Stage

ResourceDefinition

PEA

PFS

FSPermits

Construct

Discovery

$4/oz

$9/oz

$25/oz

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.

Incr

eas

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Val

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Take-Over offers or Partnerships common

at this stage

Production

Increasing value with project advancement

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Value. Growth. VisionSource: Canaccord Report January 17, 2011Intierra, February 8, 2011Share prices as of March 28 2011,Note: All companies have projects in South and/or North America

Circle size represents EV/oz

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Current Silver Company Valuations by Stage

Aurcana

Esperanza

Sulliden

Silvercrest

Bear Creek

Endeavour

Arian

ECU

Golden Minerals

Kimber

MAG

Orko

Sabina ($2.66)

South American SilverTahoe

US Gold

Hecla

Great Panther

Alexco

Pan American Silver

Fortuna

First Majestic

10

100

1000

$50 $500 $5,000

Tota

l R

esourc

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ize (

Moz's

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Enterprise Value (US$ Millions)

Developers Adv Development Producers

Coeur D'Alene

Value. Growth. Vision

& ETFs

Silver Supply/DemandSurging investment demand plus improving industrial consumption suggests continued demand growth with flat total supply

Source: GFMS World Silver Survey 2010

Total Global Silver Supply Total Global Silver Demand

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Value. Growth. Vision

Indium—a key strategic metalRapidly growing market for high-tech uses

Uses• Indium-tin oxide (ITO) a key component of flat panel displays (FPDs) and touch

screens• High-efficiency thin film solar panels (CIGS Photo-Voltaics), and LED lighting • Fiber optics, specialized and transparent semiconductorsSupply• Global indium use growing rapidly and could surpass available supply from by-

product zinc refining at current price range• One of the most scarce strategic metals due to low recycling and few primary

producers

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Value. Growth. Vision

Indium FundamentalsCompelling supply/demand dynamics

Indium Supply/Demand dynamics• Indium highlighted in UN and US DOE studies as a critical technology metal

in potential shortage, along with several key rare earth metals, due to rapidly increasing growth, low recycling rates and low primary production

• China is largest producer and consumer of indium and has imposed export quotas and tariffs like other key high-technology specialty metals

• Zinc market growing at 1-3% annually with indium market estimated to be 15-20% annual growth

• Current price ~$600/kg with five-year prices from $400/kg to over $1000/kg

Malku Khota Annual Indium Production• Malku Khota projected to be one of the worlds largest indium producers• Potential to represent 10% or more of global mine supply

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Value. Growth. Vision

Indium FundamentalsWorld indium demand vs price (1969-2013*)

Source: Indium: Global Industry Markets and Outlook, 9th Edition 2010 (Roskill)*2011-2013 Data are estimates only

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Value. Growth. Vision

Indium DemandGrowing demand in high-tech markets

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

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2010 2011E 2012E 2013E 2014E 2015E 2016E

Solar Energy

LED Lighting

LCD Flat Panels

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Value. Growth. Vision

Opportunity in BoliviaAn emerging resource based economy

• Bolivia experiencing its best economy in 30 years

• Member of Mercosur Regional trade organization with Brazil as largest trading partner

• One of the world’s premier silver districts with billions of ounces of historical production

• Planned $32 billion 5-7 year infrastructure build-out by Bolivian government for new rail and road corridors and hydropower generation

• Three Major silver mines built within last four years by Pan American Silver, Coeur D’Alene, and Sumitomo

• Substantial resource industry investments in Bolivia

Jindal Steel of India investing US$2.3 billion for 50% interest in El Mutun iron ore deposit

Petrobras of Brazil—Latin America’s largest publicly traded oil company – investing US$1 billion of new capital into the Bolivian gas fields

Repsol of Spain investing $1.6 billion to increase gas production in Bolivia

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Value. Growth. Vision

Silver Mines in BoliviaOne of the world’s premier silver mining districts

• Historical district production of billions of ounces of silver

• Highly prospective & under-explored

• Increase from 9th largest global silver producer to 5th largest with completion of three major silver mines in past four years:

Pan American Silver – San Vicente Coeur D’Alene - San Bartolome Sumitomo - San Cristobal

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Value. Growth. Vision

Malku Khota Project

• 50 square km, 100% owned, road accessible project• Low capital and operating costs on a per ounce basis• Potential to be one of the top primary silver and indium producing

mines at 13.2 M oz silver per year and 80 tonnes of indium*• Excellent resource expansion potential with just 4 km tested of trend • Moving into Pre-Feasibility in 2011 and Feasibility in 2012

One of the world’s largest silver-indium resources

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1) on average for the first 5 years of production2) See March 31, 2011 News Release for detailed resource estimate3) Total contained metal

Silver(Moz)

Indium(tonnes)

Gallium (tonnes)

Copper(MLbs)

Lead(MLbs)

Zinc(MLbs)

AgEq3

(Moz)

M&I 230 1,481 1,082 120 453 247 354

Inferred 140 935 1,001 102 362 246 240

Value. Growth. Vision

Established InfrastructureLow projected capital and operating costs

• Open pit, bulk mineable

• Accessible by road

• Commercial power within 15km

• Access to water

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Value. Growth. Vision

Enrichment starts at surface Host rock sandstone with disseminated silver, indium, gallium, lead, zinc and copper

MineralizationOpen pit, bulk mineable deposit

Average grade first five years:• Silver: 42.2 g/t (58 g/t Ag Eq) 1

• Indium: 7.55 g/t•Economic cut-off grade <15 g/t (at $18/oz Ag) 2

(1) AgEq comprised of all contained metals(2) Economic cut-off grade comprised only of silver and indium

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Value. Growth. Vision

MineralizationGeological formations looking south from Limosna

High Grade Sandstone

1160 g/t Silver

Wara WaraSandstone

Malku KhotaSandstone

Aroifilla Fm

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Value. Growth. Vision

Malku Khota DrillingGrade thickness map

• 115 drill holes in current resource with updated resource Q1-2011

• Updated resource results increase total M&I oz to 230 Moz Ag (a 60% increase in M&I oz) plus an additional 140 M inferred Ag oz

• 2011 program to target conversion from resources to reserves & expansion drilling

• Mineralization begins at surface

• Deposit open along trend and down dip with excellent potential for expansion

• New discovery of higher grade zones and down dip expansion of surface mineralization

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Value. Growth. Vision

New Exploration ResultsDiscovery of broad continuous mineralization horizonLMD048: 286 meters grading 76 g/t Ag Eq Grade thickness values of over 21,500 g-m AgEq

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Value. Growth. Vision

Malku Khota DepositOnly 4km of 50 sqkm property drill tested

• 2010 program focused on in-fill and confirmation drilling for PEA Update

• Excellent potential to expand resources

TSX:SACUS OTC:SOHAF

Continuation of favourable sedimentary host rocks

Wara Wara Area

Sucre Area

Limosna Area

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Value. Growth. Vision

Production ProcessesFrom ore to metal

• Large scale shovel and truck open pit mining operation

• Ore crushed in preparation for leaching

• Acid-chloride leaching in captures silver, indium, copper, lead, zinc, gallium and gold

• Metal recovery in several steps:• Acid recovery• Silver-gold-copper cementation• Indium-gallium precipitation• Lead and zinc sulfides

• Downstream processing to metal products

TSX:SACUS OTC:SOHAF

Crushing

Leaching

Metal Recovery & Processing

Open Pit Mining

Silver bars

Indium ingots

Lead and Zinc concentrates

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Value. Growth. Vision

Summary of PEA 2011

(1) In US dollars, March 2011, PEA(2) First 5 years of production (average)(3) LOM = Life of Mine

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Metal Prices ($US)

Base Case

Silver : $18/ozIndium : $500/kgGallium: $500/kg

$25/oz$570/kg$570/kg

Mining RateLife of MineOre Mined (LOM)3

Average Silver Grade 2

Average Indium Grade2

Ag Eq grade

158 M1,184191M135 M88 M212,962

10.5 M78.9 M 12.7 M9 M5.87 M14,198

Mid Case

Base Case$124M/yr$185M/yr$704M37.7%27 months

$208M/yr$287M/yr$1482M63%19 months

Mid Case

TotalLOM

Annual

40,000 tpd15 years200M tonnes42.2 g/t7.55 g/t58 g/t

First 5 years

Recent$325M/yr$430M/yr$2571M92.9%15 months

Recent

$35/oz$650/kg$730/kg

13.2 M80.7 12.48M4.42M5.64M15,184

71%

15%

6%5% 3%

Share of Gross Revenue

Silver Indium & Gallium

Copper Lead

Zinc

LOM Project cash flowFirst 5 years cash flow NPV (5% discount rate)1

Internal Rate of ReturnPayback period (years)

Recovered MetalsSilver (oz)Indium (tonnes)Lead (lbs)Zinc (lbs)Copper (lbs)Gallium (kgs)

Value. Growth. Vision

Advancing to ProductionDevelopment Timeline

TSX:SACUS OTC:SOHAF

The project is at the PEA stage and may change substantially in terms of size and costas further exploration, engineering and metallurgical testing are completed

20122011

Pre-Feasibility Studies

Feasibility Study

ProjectedMine

Development

2013-14

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Value. Growth. Vision

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Near Term Mine Development ProjectsSAC one of largest near-term producers at 40,000 tpd

• Annual estimated potential silver production of new development projects anticipated in the next 2-4 years

Source: CPM Silver Yearbook 2010*Data based on life of mine production rate of 10.5M oz/per yearProduction rate of 13.2 Moz /year for first five years

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Value. Growth. Vision

Global Silver Industry Cash Cost CurveAnticipated low-cost silver production

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Cumulative Percentile of Silver Mine Production Cost

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Industry AverageCash Cost$5.25/oz

Malku Khota13.25 Mozs/yr (1)

~ $2.94/oz (2)

Source: GFMS World Silver Survey 2010

(1) Average first 5 years of production

(2) Silver cash costs after credits ($US)/oz 27

Value. Growth. Vision

Escalones-Copper-Gold project, ChileHigh potential, large-scale target

• 70 square km,100% controlled, road accessible, large scale system

• Located in world-class copper mining district near El Teniente

• Historic drilling shows >1% copper grades at surface and untested porphyry system grading 0.6% copper

• Additional significant gold, silver and molybdenum credits

• Exploration program underway

• Resource estimate targeted for 2nd half of 2011

TSX:SACUS OTC:SOHAF 28

Value. Growth. Vision

Escalones

Ownership: 100% through Lease

Location: 35km E of El Teniente

Elevation: 3800m

• 6,889 hectares

• Escalones porphyry prospect located

97 km southeast of Santiago in

central Chile

• 12,666m drilled in 30 DDH

10,159m in the skarn

500m in the porphyry

Exploration

SAC propertyGas pipelineAccess Road

29TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Drill Results Grade Thickness MapLarge-scale porphyry system

• Open in all directions

• Strong historic results

TSX:SACUS OTC:SOHAF 30

Value. Growth. Vision

EscalonesGeological cross-section

• Enriched zones with high grades at surface at over >1% copper with significant gold and molybdenum

• Large scale porphyry target intercept of 176 m @ 0.6% copper with additional gold, silver and molybdenum

TSX:SACUS OTC:SOHAF

AltoBajo

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Value. Growth. Vision

Community RelationsA key to successful project development

• Assistance of BSR* to develop proactive community relations strategy• Two full-time indigenous community relations officers working in region• Objectives to facilitate economic development in communities• Project construction will require a peak construction workforce of over

1,000 with operational workforce of around 400, most of whom will be sourced from surrounding communities

*Business for Social Responsibility, San Francisco, CA 32

Value. Growth. Vision

Project MilestonesValue drivers over the next 6-12 months

• Malku Khota Silver and Indium Project, Bolivia Updated resource estimate & PEA doubles throughput to 40,000

tpd, increases annual production to 13.2 M oz of silver and 80.7 tonnes of indium per year 8 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 Pre-feasibility targeted to begin in Q2, 2011 and feasibility in 2012

• Escalones Copper and Gold porphyry project, Chile Exploration and Geophysics program underway Target for initial resource estimate in 2nd half of 2011 Potential for significant deposit of copper, gold and silver

33*Average first five years of production

Value. Growth. Vision

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Alexco US Gold Sulliden Tahoe Resources

MAG Silver Golden Minerals

Sabina Orko ECU Bear Creek Silvercrest So.American Silver

Leveraged to SilverValue of silver per dollar invested

SAC has some of the best leverage to silver of any development stage company with over $40 of silver value per $1 invested

Source: Canaccord as of January 17, 2011, Share prices updated March 28, 2011Note: all companies have projects in South and/or North AmericaCalculated using $25/oz Ag. Dollar value of silver per $1 invested = (silver resource/shares outstanding) x $25/oz silver) divided by share priceValue only shown for silver with no contribution from other metals

Silver value per $1 invested

Average value of silver <$7 of silver per $1 invested*

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Value. Growth. Vision

Why South American Silver?Investment highlights

• World-class scale projects with excellent expansion potential

• Track record of discovery and successful project development

• Growing shareholder value through resource expansion and advancing

projects up the development value curve toward feasibility

• Leveraged to silver with over $40 of silver value per $1 invested

• Attractive investment value relative to peers at low value per oz

• Exposure to rapidly growing indium and gallium high-technology market

• Potential new value from copper resource definition and expansion

• Continued investor outreach to broaden market awareness of Company

• Potential near-term NYSE-AMEX listing in the U.S.

TSX:SACUS OTC:SOHAF 35

Value. Growth. Vision

TSX: SACOTC: SOHAF

Phone: 604.681.69261.855.681.6926

www.soamsilver.com

Greg JohnsonPresident & CEO

TSX:SACUS OTC:SOHAF 36

Value. Growth. Vision

Relative Stock PerformanceSAC outperforming key silver & gold indices

•Trading liquidity increasing with average volume of 500,000 shares/day

• SAC undervalued relative to peers at >$0.55 Enterprise Value/oz vsaverage of more than $4/oz for early stage resources

TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Management TeamA track record of success

Ralph Fitch, Executive Chairman Co-founder of South American Silver, High Desert Gold, and General Minerals Key role in discovery of Collahuasi copper porphyry , Malku Khota, Vizcachitas, and Escalones deposits

Greg Johnson, President and CEO Co-founder of NovaGold, key role in growing company from $50 million to $2 billion market capitalization Recognized for discovery and advancement of the 40 M oz Donlin Creek gold deposit for NovaGold and Barrick

William Filtness, Chief Financial Officer Chartered Accountant with twenty plus years of financial experience, including Manager, Corporate Development at Aurizon Mines

Felipe Malbran, Vice President of Exploration Extensive experience in exploration management in Bolivia, Chile, Peru and Argentina Key role in discovery of Malku Khota, Vizcachitas, and Escalones deposits

Phillip Brodie-Hall, Vice President of Project Development Global industry experience in engineering construction and project development experience covering nearly every aspect of

evaluation, feasibility studies and project development in the mining and mineral processing industriesDavid Dreisinger, Vice President of Metallurgy

Professor and Industrial Research Chair in Hydrometallurgy at the University of British Columbia (UBC) Actively involved in developing and commercializing hydrometallurgical process at a number of operating mines in Australia and Southeast

Asia.Richard Doran, Vice President and corporate secretary

Former VP Investor Relations for General Minerals and Marketing Manager for Chevron ResourcesAndrew Clark, Manager of Project Implementation

Global industry experience in the design and management of industrial, mining, materials handling, chemical and petrochical projects from feasibility studies through to commissioning and handover of completed facilities.

Xavier Gonzales Yutronic, General Manager Compañía Minera Malku Khota S.A. Mining Industry experience in finance, accounting, logistics, human resources and community relations at Comsur S.A., Sinchi Wayra

(Glencore) from 2005-2007, and Compañía Minera Malku Khota S.A. from October 2008 to date

TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Board of DirectorsStrong industry and financial experience

Ralph Fitch, Executive Chairman Greg Johnson, President and CEO

Antonio Canton, Director - Mr. Canton is an independent consultant for international companies in marketing, finance and real estate. He is a director of a number of Swiss companies and brings to the board extensive experience in accounting and finance.

Peter Harris, Director - Mr. Harris is an engineer with over 40 years of mining industry experience including as Senior VP and Chief Operating Officer at Nova Gold Resources Inc., and Senior VP of Project Development at Placer Dome Inc. He has been involved in the construction and operation of over 20 different mines in North and South America, Africa, Australia and PapuaNew Guinea.

William Murray, Director - Mr. Murray is an engineer in the mining industry with over 33 years of experience in construction management and project evaluation in North America and Africa. He currently serves as the executive chairman and director of Polymet Mining Corp. Mr. Murray has been involved in numerous successful projects while working at Fluor Daniel, Denison Mines, Optimum Project Services and Anglo American Corp. in South Africa.

Paul Haber, Director - Mr. Haber is a Chartered Accountant and a Certified Public Accountant with a strong background in US/Canadian accounting and finance. Presently manages Haber & Co. Ltd. Has previously been Chief Financial Officer and Corporate Secretary of a TSX Venture listed company.

John Watson, Director - Mr. Watson has been the President of a TSX Venture Exchange listed company since 2002. He is also the manager/member of a limited liability corporation that owns and manages commercial real-estate.

Tina Woodside, Director - Ms. Woodside is currently the head of the corporate finance department in Gowlings’ Toronto office and a member of the firm’s National Executive Committee. Ms. Woodside practices corporate and securities law with particular emphasis on corporate finance, mergers and acquisitions and corporate governance matters.

TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Silver Fundamentals PositiveFor continued higher prices

•One of the only precious metals not yet to hit all-time nominal highs of ($50/oz) in 1980’s

•Bullish supply/demand outlook

•Continued increase in investment and industrial demand for silver

•Annual mine production vs total demand remains in short-fall

•Few new major deposit discoveries

•Projected new production by analysts have failed to have

been realized

TSX:SACUS OTC:SOHAF

Value. Growth. Vision

Indium FundamentalsGlobal Zinc Production vs. U.S. Indium Demand

Source: U.S Department of Energy: Critical Materials Strategy, December 2010; Global Zinc Production USGS Historical Statistics for Mineral and Material Commodities in the United States

Glo

bal Zin

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Key Metal Consumption vs ReservesYe

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