South American Silver Corp.
TSX : SAC

South American Silver Corp.

February 25, 2010 12:48 ET

South American Silver Corp. Discovers New High-Grade Silver-Gold-Indium Vein System at Malku Khota in Bolivia

New High-Grade Vein System Shows Potential to Increase Earlier PEA Silver Resource Of 145-Mil. Oz. Indicated and 178-Mil. Oz. Inferred

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 25, 2010) - South American Silver Corp. (TSX:SAC)("SASC" or the "Company") is pleased to announce the discovery of a potentially significant new high grade silver-gold-indium vein system at Malku Khota that may join the highly mineralized Wara Wara and Sucre Zones. The importance of this new discovery is that the area between these two zones was previously classified as unmineralized material due to a lack of drilling in the area and is now shown to include a well mineralized silver-gold-indium vein system. The vein system consists of many sub-parallel veins, the largest of which that has been drilled to date, is the "Sucre Vein". The most recent drill hole, WWD040, includes a significant 26 metre wide interval of high grade silver mineralization in the Sucre Vein which averaged 125.2 g/t silver and 14.8 g/t indium. The vein intercept starts at 218 metres down-hole and is approximately true width. This vein extends to the surface where it can be seen in outcrop.

Company drill programs in 2007 and 2008 focused on the four kilometre long zone of strata-bound disseminated silver-indium mineralization within the host sandstone that trends NNW-SSE in the northern portion of the property position. This prior drilling was included in the NI 43-101-qualified independent resource estimate issued in October 2008 that defined 145 million ounces of silver in the indicated category and 178 million ounces in the inferred category, plus 845 tonnes of indium in the indicated category and 968 tonnes of indium in the inferred category. This estimate does not include the results from 16 holes drilled subsequent to the preparation of the resource estimate. Malku Khota is recognized as one of the world's largest, undeveloped silver resources.

Ralph Fitch, President and CEO, stated, "This new high-grade vein system discovery has the potential to substantially increase the mineable ounces as previously estimated in the positive Preliminary Economic Assessment ("PEA") last year. It may also indicate the potential for one large, combined Wara Wara-Sucre open pit. WWD040 is the seventh hole to validate this new zone that extends for approximately one kilometre east-west, as seen at surface, connecting the two previously delineated resource areas. These initial results for this new zone are very encouraging and more drilling is planned between the Wara Wara and Sucre Zones to add this high-grade vein system mineralization into a resource category."
The seven holes drilled within the vein system demonstrate the continuity of the vein system between the Wara Wara and the Sucre Zones. The location of the Sucre Vein relative to the Wara Wara and Sucre strata-bound mineralization can be seen on the map (visit http://www.soamsilver.com/MK Map Showing Sucre Vein.pdf) on the Company Website (www.soamsilver.com). 

The most recent drill hole, WWD040, is an excellent example of the newly discovered mineralization. The following table shows the high grade silver, gold, indium and gallium in the Sucre Vein system:

Drill Intercepts:     Average Grade:
  From To length Silver Gold Indium Gallium
  m m m gpt gpt gpt gpt
Sucre vein              
WWD040 218 244 26 125.2 0.02 14.8 5.7
Other parallel veins            
WWD040 7.8 8.25 0.45 43.3 7.75 34.8 15.6
WWD040 7.8 13.4 5.6 18.8 0.64 7.4 8.2
               
WWD040 145 149 4 93.6 0.02 15.1 4.2
The veins are hosted within a broad zone of typical Malku Khota grade mineralization:
  139 338 199 34.6 0.02 7.5 5.1
               
Drill Hole WWD040 was drilled to the SSE at 40 degrees approximately at right angles to the veins, so that the widths reported are approximately true widths.

New geological mapping has shown that the vein drill-intercepts, some of which have been reported previously, are all related to the cross-cutting vein system that includes the major Sucre Vein. These vein intercepts are shown below:

Drill Intercepts:     Average Grade:
  From To length Silver Gold Indium Gallium
  m m m gpt gpt gpt gpt
West Side of Vein System            
Subsidiary Vein (Sucre vein not intersected in this hole)      
MKD003 210.28 223.5 13.22 35.4 0.25 14.3 24
Parallel Silver-Gold veins            
MKD003 113 166.64 53.64 33.7 0.04 0.7 1.9
MKD003 352 360 8 70.9 0.03 4.1 4.3
               
Approximately 200 metres East          
Sucre vein              
WWD09 328 347 19 76.9 0.21 11.5 6.2
Parallel Silver-Gold Veins            
WWD09 104.5 106.5 2 66.5 4.68 10.9 7.2
WWD09 86.2 124 37.8 26.4 0.42 2.1 4.2
WWD09 86.2 156 69.8 18.1 0.29 1.9 5.1
WWD09 289 347 58 37.9 0.13 7 6.7
WWD09 330 331 1 255 0.31 29 7.3
               
Same Drill Collar but 50-150 m deeper          
Sucre vein              
WWD010 329.45 346 16.55 121.2 0.39 11.9 5.4
Subsidiary Silver-Gold Veins            
WWD010 413.75 429 15.25 115.8 0.07 8 3.7
Parallel Silver-Gold Veins            
WWD010 338.05 342 3.95 420.1 1.28 39 5.6
WWD010 338.05 346 7.95 217.6 0.76 22.3 5
               
Approximately 200 metres East          
Sucre vein              
WWD024 355 378.25 23.25 194.3 0.06 9.5 5
Parallel Silver-Gold Veins            
WWD024 365.6 371.25 5.65 535.6 0.17 21.6 7.3
WWD024 413.5 417.6 4.1 77.8 0.04 4.2 3.5
WWD024 436.85 440 3.15 112.7 0.03 7.6 4.9
WWD024 449 452.05 3.05 147.8 0.03 6.1 4.1
               
Approximately 100 metres East          
Sucre vein              
WWD040 218 244 26 125.2 0.02 14.8 5.7
Parallel Silver-Gold Veins            
WWD040 7.8 8.25 0.45 43.3 7.75 34.8 15.6
WWD040 7.8 13.4 5.6 18.8 0.64 7.4 8.2
WWD040 145 149 4 93.6 0.02 15.1 4.2
               
100 metres East              
Sucre vein (this intercept includes the vein and the strata-bound Sucre mineralization)
WWD019 1 165 164 71.5 0.01 15.5 5
Other Intervals              
WWD019 24.2 85.3 61.1 98.7 0.01 16.8 5.3
WWD019 107 165 58 67.8 0.01 19.3 4.8
               
Same Drill Collar but 50-150 metres deeper        
Sucre vein (this intercept includes the vein and the strata-bound Sucre mineralization)
WWD020 34.15 133.85 99.7 142.2 0.03 59.2 5.7
Other Intervals              
WWD020 34.15 169.6 135.45 120.4 0.02 48.5 5.4
WWD020 119.52 120.32 0.8 300 0.07 1,550 9.1
WWD020 105.5 106.55 1.05 1,495 0.05 520 14.4
               
WWD020 1 169.6 168.6 101.1 0.02 39.6 5.3
               
The true width is estimated to be between 50% and 100% of the intersections shown, based on the current number of intercepts and interpreted orientation. Some of the intercepts for drill holes WWD09, 10, 19 and 20, have been reported previously.

There are a number of other cross-cutting veins to the north and south of the veins discussed above which the Company will evaluate in the future.

Down-Trend Drilling:
The Company has also completed 6 widely spaced step out drill holes, in 2009, mostly more than one kilometre apart, in the zone one to six kilometres to the south of the Limosna Zone. This drilling was carried out to determine if any large bodies of higher-grade near surface mineralization were present within trucking range of the Limosna –Wara Wara – Sucre mine plan area presented in the PEA. These very widely spaced drill holes indicate that the mineral system continues but is not higher grade than the currently defined resource. The Company believes that further exploration in this area may find similar grades to that at Limosna, however, this will require a significant drill program in this very large area which is approximately four times larger than the Limosna Zone. The down-trend drill results include broad intercepts of 15-23 gpt silver with a few higher grade samples, often associated with elevated base metal mineralization.

Metallurgical update:
Metallurgical work is in progress to refine the acid chloride leach process and to assess the physical properties of the "mineralized rock". Part of this process is to quantify the physical characteristics of the material when it is placed in a large scale heap-leach. This requires laboratory testing to first ensure that the rock to be placed on the heap does not disintegrate when the leach solution is applied. With this objective, the Company is testing the hardest and softest rock from the property using bottle roll and column leaching tests. These tests are ongoing but initial results indicate that the test rock material is standing up well to the leach solution. Once this test work and additional tests on typical run-of-mine material are completed and evaluated, the Company plans to release a project update later in 2010.
Geochemical analysis of the Malku Khota drill core was carried out by ALS Chemex. The samples were prepared in their Oruro, Bolivia laboratory and analyzed in their ISO 9001 2000 laboratory in Lima, Peru. Silver and lead were analyzed by the ICP MS61 method using a four acid digestion. Silver values greater than 100 gpt were reanalyzed by AA62 method using a four acid digestion. Silver assays greater than 1,500 gpt were analyzed by the 30g FA-GRAV method. Gallium and indium were assayed by ICP MS61.

NI 43-101 Resource Estimate (see PR08-12 dated 10/01/2008):

Indicated Resource Estimate
Cut Off Tonnes Silver Grade Indium Grade Silver Indium
(g/t Silver)   (g/t) (g/t) Troy Ounces Kg
10 151,355,000 29.71 5.58 144,597,000 845,000
20 80,698,000 43.15 6.75 111,966,000 544,000
30 45,116,000 57.9 7.75 83,989,000 350,000
40 28,505,000 71.54 8.5 65,567,000 242,000
50 18,904,000 85.33 9.15 51,861,000 173,000
60 13,534,000 97.52 9.8 42,432,000 133,000
           
Inferred Resource Estimate
Cut Off Tonnes Silver Grade Indium Grade Silver Indium
(g/t Silver)   (g/t) (g/t) Troy Ounces Kg
10 230,069,000 24.03 4.21 177,783,000 968,000
20 95,330,000 37.81 5.87 115,882,000 560,000
30 50,726,000 49.74 7.06 81,120,000 358,000
40 31,471,000 59.13 7.69 59,832,000 242,000
50 18,236,000 69.78 8.15 40,910,000 149,000
60 10,691,000 80.63 8.82 27,714,000 94,000

Felipe Malbran, Executive Vice President of Exploration for the Company, is the Qualified Person for the project. He has reviewed the content of this press release.

Certain statements contained herein constitute "forward-looking statements". These forward-looking statements include, but are not limited to, statements regarding estimated mineral resources, the potential for delineation of additional resources through further exploration at the Malku Khota property and the refinement of the acid chloride leach process. Forward-looking statements express, as at the date of this press release, the Company's plans, estimates, forecasts, projections, expectations, or beliefs as to future events or results. Forward-looking statements are based on certain assumptions, including the key assumptions and parameters on which such estimates are based, involve risks and uncertainties and there can be no assurance that such statements will prove to be accurate. Therefore, actual results and future events could differ materially from those anticipated in such statements. 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, possible variations in mineral resources, grade or recovery rates; availability of sufficient financing to fund planned or further required work in a timely manner and on acceptable terms; changes in project parameters as plans continue to be refined; failure of equipment or processes to operate as anticipated; political, regulatory, environmental and other risks of the mining industry and other risks more fully described in the Company's Annual Information Form filed and publicly available on SEDAR at www.sedar.com. There can be no assurance that the Malku Khota property will be commercialized or that commercial heap leaching will produce positive results. Readers are cautioned not to place undue reliance on the forward-looking statements contained in this press release. 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.

This press release uses the terms 'indicated resources' and 'inferred resources' which are terms recognized and required by Canadian regulations (under National Instrument 43-101 Standards of Disclosure for Mineral Projects ("NI 43-101")). Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will be converted into reserves. In addition, 'inferred resources' have a great amount of uncertainty as to their existence, and economic and legal feasibility. It cannot be assumed that an inferred resource will be upgraded to a higher category. Under Canadian rules, estimates of inferred resources may not form the basis of feasibility or pre-feasibility studies, or economic studies except for preliminary economic assessment as defined under NI 43-101. Investors are cautioned not to assume that part or all of an inferred resource exists, or is economically or legally mineable.

The PEA includes inferred mineral resources which are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Furthermore, there is no certainty that the results projected in the PEA or this press release will be realized and actual results may vary substantially.

South American Silver Corporation is a mineral exploration company that acquires, explores and develops mineral properties, primarily silver, gold and copper in South America. The Company presently holds interests in two properties: the flagship Malku Khota silver-indium-gold project in Bolivia and the Escalones copper-gold-molybdenum property in Chile. 

Contact Information

  • South American Silver Corp.
    Richard Doran
    Executive Vice President, Investor Relations
    (303) 584-0606
    (303) 758-2063 (FAX)
    E-mail: rdoran@soamsilver.com