VANCOUVER, BRITISH COLUMBIA--(Marketwire - Mar 28, 2013) - South American Silver Corp. (SAC.TO)(SOHAF) reports the release of its audited consolidated financial statements for the year ended December 31, 2012 and the related management's discussion and analysis of financial position and results of operations ("MD&A"). In this press release, all amounts are expressed in U.S. dollars, unless otherwise indicated.
As at December 31, 2012, the Company had working capital of $23,018,910, including cash and cash equivalents of $24,242,113. With these funds in place, the Company is in a strong financial position to complete a successful drilling season and expand resources at Escalones; set up for a successful outcome in the investment treaty dispute with Bolivia; acquire new attractive exploration targets; and rebrand the Company to reflect its new strategic direction.
Further details including the full financial statements and information on each of the Company's projects, including the resource estimate at Escalones, the Bolivian arbitration case, and the 19.9% interest in High Desert Gold, are available on the Company's website at www.soamsilver.com and on SEDAR at www.sedar.com.
The Company has 3 diamond drills on site. The current drilling program is intended to fill gaps in the resource model in order to expand resources in the porphyry and skarn environments. Over 10,000 metres of diamond drilling were planned for the season, however progress has fallen behind schedule after a severe storm cut off road access to the property for approximately four weeks in February. As at March 28, 2013 over 6,200 metres have been drilled. The duration of the summer drilling program at Escalones is weather dependent and the season typically closes by around mid-April. If the drilling season ends in mid-April, it is expected that approximately 8,500 metres will have been drilled. An updated resource estimate is scheduled for completion by mid-year.
The estimated cost for the Escalones exploration plan is $10,700,000. It includes the 2013 drilling season program (November 2012-April 2013) of over 10,000 metres of diamond drilling, a $3,000,000 option payment to acquire Escalones which is due in June 2013 and an updated resource estimate scheduled for completion by mid-2013. As at December 31, 2012 the Company had spent $1,237,306 of the total amount planned.
Drill results from drill hole 36 (ES-36) indicate the existence of a previously unidentified zone of primary copper that has been enriched with secondary copper that has leached from the rock above. If further drilling shows that this style of mineralization continues throughout the Meseta, the previously reported resource of 3.8 billion pounds of copper at 0.41% could be greatly enhanced.
The results of drill holes 38, 39, and 41 (ES38, ES39 and ES41) continued to show a near horizontal zone of leached material that is generally gold rich, typically 50-100 metres thick, and underlain by an irregular near horizontal zone of 20-120 metres of copper enrichment. This copper enrichment zone is the top portion of a long column of copper mineralization which in hole ES-38 is more than 450 metres thick. Results analyzed so far indicate that this style of copper-gold mineralization exists over an area approximately 500 by 800 metres.
The Company currently has the financial and management capacity to take Escalones forward in the near term but is conscious that if Escalones reaches the potential that management believes it has, it will eventually become too big for the Company to advance alone, even in the exploration stage. South American Silver is currently evaluating the potential that joint venturing offers and has invited interested parties to review the exploration data and to visit Escalones with a view to joint venturing. The Company has not yet committed to joint venturing and will see how things develop with interested parties over the coming months.
Malku Khota, Bolivia
On October 23rd, South American Silver notified the Bolivian Government of an Investment dispute, arising from the expropriation of the Malku Khota mining concessions. This instigated a 6 months negotiation or cooling-off period. The company delivered subsequent letters to the Bolivian Government reiterating a willingness to attend meetings with Bolivian Government representatives to resolve the dispute amicably. The Government of Bolivia finally responded on February 21, 2013 requesting a meeting with company representatives on April 17, 2013 to discuss a potential amicable resolution to the investment dispute. The company responded on March 4, 2013 expressing its willingness to meet but subject to certain conditions. As at March 28, 2013, the Company has not received a response from the Government of Bolivia.
The cooling-off period ends on April 23, 2013. If settlement cannot be reached within the cooling-off period, South American Silver intends to file by May 2013 for international arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), and will seek compensation based on fair market value of the Malku Khota project. Unless there is a negotiated settlement during the process, arbitration cases such as this typically take around 3-4 years to get to the point of award.
Arbitration provides the forum for the Company to pursue fair compensation for the substantial losses suffered as a result of the expropriation. Since the expropriation Supreme Decree, the Company has appointed the international legal firm, King & Spalding, to prepare the claim. King & Spalding will be supported by prominent local counsel in Bolivia. Financial experts have been appointed to assess the value of damages for the purpose of the claim. South American Silver is also evaluating proposals for third-party litigation funders to finance the arbitration costs up to the collection of a potential arbitration award.
High Desert Gold Corporation - Gold Springs, Nevada
After the loss of Malku Khota it became very important to have other exploration targets on which to focus the Company's exploration and development expertise. The Company drew up its "wish-list" and started a search, aimed at finding a precious metals property or properties, preferably gold, located in a mining-friendly jurisdiction in the Americas, right-sized for the Company, preferably at an advanced exploration stage, in a near-surface deposit requiring conventional processing.
Amongst many other interesting prospects, the Company's efforts turned up the Gold Springs property, which straddles the Nevada-Utah border, both mining friendly jurisdictions. Gold Springs is owned 82% by High Desert Gold Corporation (HDG.V) and is another example of a potentially significant discovery by Ralph Fitch and team, who, as well as being the founder and Executive Chairman of the Company is also the founder and CEO of HDG. HDG has reported excellent grades (up to 6g/t - see HDG Press Release PR 12-14, August 16, 2012) and good cyanidation recoveries (92% average - see HDG Press Release PR 13-02, January 28, 2013) for the Gold Springs property. The Gold Springs property is almost 60 square kilometres. There are 18 separate targets on the property and at this stage only one has been drilled sufficiently to estimate a resource (Jumbo in Utah, with 233,000 ounces AuEq(1)* of Inferred resources - see HDG Press Release PR 11-18, December 22, 2011). Exploration is still at a relatively early stage and the focus has shifted to the Grey Eagle area in the north-west of the property in Nevada. At this stage there are some drill results available for Grey Eagle but no resource estimate.
Early indications are that Gold Springs has the potential to be a near-surface deposit amenable to heap leaching and the Company believes that Gold Springs has excellent potential to host a significant gold resource. On December 28, 2012, the Company acquired 15,580,000 common shares of HDG at a price of $0.18 per share in a private placement. The Company subsequently purchased another 497,000 shares to maintain its ownership of 19.9% of the outstanding common shares of the HDG. The Company acquired the equity stake for investment purposes and will closely watch exploration progress at Gold Springs and review its investment on a continuous basis.
In addition, the Company is continuing to look for additional new opportunities.
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 large scale Escalones copper-gold project in Chile, the pursuit of new opportunities, and the realization of value from the Malku Khota project in Bolivia. 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 a focus on community relations and sustainable development. Management has extensive experience in the global exploration and mining industry. The Company's shares are listed on the Toronto Stock Exchange under the symbol "SAC" and on the OTCQX as "SOHAF". Information related to South American Silver Corp. is available at www.soamsilver.com and on SEDAR at www.sedar.com.
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 "will", "may", "completing", "expanding", "setting up", "new", "potential", "develop", "planning", "future", "indicate", "further", "could", "promising", "likely", "scheduled", "expected", "believes", "creating", "realization" and "pursuing" and similar expressions. This News Release 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, preliminary economic assessments, and the interpretation of exploration programs and 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 and economically mineable if and when a project is actually developed.
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, the political and economic climate in Bolivia including the attitudes and actions of the Bolivian government related to foreign investment in Bolivia; the international arbitration process; and risks of the mineral exploration industry which may affect the advancement of the Escalones project, including possible variations in mineral resources or grade, metal prices, availability of sufficient financing to fund further required work in a timely manner and on acceptable terms, timely receipt of required permits, availability of equipment and qualified personnel, failure of equipment or processes to operate as anticipated, road access to the property, changes in project parameters as plans continue to be refined; and other risks more fully described in the Company's Annual Information Form filed and publicly available on SEDAR at www.sedar.com. The assumptions made in developing the forward-looking statements include: the ability of the Company to realize value from its investments in Bolivia the accuracy of current resource estimates and the interpretation of drill, metallurgical testing and other exploration results; the timely receipt of required permits for Escalones; the availability of equipment and qualified personnel to advance the Escalones project; execution of the Company's existing plans and further exploration and development programs for Escalones, 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; and the availability of new attractive exploration targets at a cost acceptable to the Company.
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 News Release describe the Company's expectations as of March 28, 2013.
(1) Gold equivalent was calculated using the following prices: $1020/oz gold (Au), and $15.80/oz silver (Ag).