South American Silver Corp.
TSX : SAC
PINK SHEETS : SOHAF

South American Silver Corp.

October 07, 2010 13:32 ET

South American Silver Announces New Drill Results Extending Higher Grade Mineralization at the Malku Khota Silver Indium Project

Highlights Include 286 Meters Grading 76 g/t and 243 Meters Grading 57 g/t Silver Equivalent(1)

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 7, 2010) - South American Silver Corp. (TSX:SAC)(PINK SHEETS:SOHAF) is pleased to announce new exploration drilling results for the 100%-owned Malku Khota silver-indium project in Bolivia. In early August, the Company announced that it was accelerating exploration and engineering activities on the project including mobilization of three drills to the site to increase drill production prior to updating the resource estimate, which is planned for release later this fall.

Thirteen holes totaling 6,000 meters have been completed to date out of an approximate 11,500 meter drilling campaign this year. The objective of the current drill program has been to confirm the geologic model and demonstrate the potential to extend mineralization down dip and laterally along the trend of the mineralized sandstone units. The drill campaign has focused on a combination in-fill drilling within the pit model to confirm the prior resource estimate for mine planning purposes and expansion drilling especially in areas of higher grade mineralization. Additional results will be released as assays become available over coming months.

For the remainder of 2010, ongoing drilling will continue to explore both mineralized zones laterally and to depth and will test several additional high-priority, near surface targets based on surface sampling and geophysics. Only about 30% of the known mineralized trend at Malku Khota has been tested to date.

Highlights of the recent drilling include a significant expansion of high grade silver-indium mineralization in the central portion of the Limosna deposit at Malku Khota. This new mineralization extends beneath the known resource from the previously developed pit models for the 2009 Preliminary Economic Assessment (PEA) completed by Pincock, Allan and Holt in 2009 and includes a previously unrecognized stratigraphically controlled high grade zone in the footwall.

The results from LMD048 and LMD050 demonstrate two of the best intercepts to date on the project in terms of width and grade with respective down-hole grade-thickness values of over 21,500 gram-meters (g-m) silver equivalent and >13,500 g-m silver.

These results show that within the central part of the Limosna deposit a continuous zone of high-grade mineralization starts at surface and extends to a depth of greater than 500 vertical meters where it remains open. Drill intercepts from the upper part of this zone include DDH LMD016 and LMD017, and LMD035 at intermediate depth, with LMD048 and LMD050 extending the zone to greater depth. A representative cross section of the main mineralized Limosna horizon the new highlighted results in Tables 1 & 3 will be available on the Company's website at www.soamsilver.com.

Table 1. Highlights of new drill hole intercepts from the central Limosna deposit.
DDH   From
m
  To
m
  Length
m
  Ag
g/t
  In
g/t
  Ga
g/t
  Pb
ppm
  Zn
ppm
  Cu
ppm
  AgEq
(1)
g/t
LMD048   190.6   477.0   286.4   62.4   2.7   3.2   1,170   413   78   75.8
                                         
Including   436.5   467.5   31.0   260.1   0.4   3.5   233   108   184   267.9
Including   439.5   453.0   13.5   496.6   0.4   3.4   252   131   338   506.2
                                         
LMD050   326.0   569.0   243.0   43.1   1.4   3.6   734   1,102   120   56.9
                                         
Including   440.5   528.0   87.5   92.9   1.1   3.5   375   938   230   105.6
Including   484.0   503.0   19.0   258.5   1.8   2.9   164   1,515   708   278.1
Including   491.3   499.0   7.7   425.4   3.1   2.7   289   2,735   921   453.6
 1) Silver Equivalent (Ag Eq g/t) calculations reflect gross metal content using long-term average metals prices of $15.00/oz silver (Ag), $550/kg indium (In) and gallium (Ga), 0.80/lb Lead (Pb) and Zinc (Zn), and $2.50/lb Copper (Cu) and have not been adjusted for metallurgical recoveries. True widths have not been determined for the above intercepts but are believed to be approximately 70% of the drill thickness.
 
Table 2. Highlights of the drill hole intercepts starting from near surface at the central Limosna deposit.
DDH   From
m
  To
m
  Length
m
  Ag
g/t
  In
g/t
  Ga
g/t
  Pb
ppm
  Zn
ppm
  Cu
ppm
  AgEq
(1)
g/t
LMD016   0.0   202.0   202.0   98.5   3.2   1.6   1,907   265   141   113.5
Including   60.5   111.2   50.7   220.1   3.9   1.3   1,370   239   224   234.5
                                         
LMD017   0.0   149.0   149.0   60.5   7.1   2.8   1,406   223   224   80.3
Including   43.8   65.5   21.7   142.4   3.6   2.2   1,129   204   513   159.8
                                         
LMD035   0   318   318   135.8   2.9   2   1,334   253   288   150.5
Including   17.5   74   56.5   289   4   1.4   2,769   230   959   317.1
And   196.9   254   57.1   279.7   3.7   1.7   2,007   308   242   297.1
1)  See table 1 above for Silver Equivalent calculations. These three drill hole results were reported earlier: See PR08-01, January 16, 2008 and PR08-09, July 2, 2008. True widths have not been determined for the above intercepts but the holes are believed to be representative of mineralization down through the upper and middle Limosna horizon.

This zone of higher grade mineralization should ensure the availability of higher grade ore over several years of pit development and will be integrated into the new mine plan for the updated economic assessment study which is scheduled for release for Q1, 2011. Further drilling will focus on expanding this deeper, high-grade zone laterally beneath previous drilling to the north and south, plus testing for additional areas of higher grade resources in several areas inclduing the south end of the currently defined Limosna deposit.

To the north within the Wara Wara deposit another important area of higher grade mineralization is developing in Malku Khota sandstone and in the immediate hanging wall rocks. This mineralization is also stratagraphically controlled but includes high grade, cross cutting veins associated with silver and gold mineralization. This zone remains open to depth and along trend and further drilling is planned to determine the extents of the zone.

Table 3. Highlights of recent drill hole intercepts starting from near surface at the Wara Wara deposit.
DDH   From
m
  To
m
  Length
m
  Ag
g/t
  In
g/t
  Ga
g/t
  Pb
ppm
  Zn
ppm
  Cu
ppm
  AgEq
(1)
g/t
WW32   2.0   296.0   294.0   45.1   3.7   8.0   430   37   202   62.4
Including   6.0   15.6   9.6   205.4   12.9   7.1   1,307   26   75   233.9
And   6.0   67.0   61.0   73.3   5.4   7.2   676   17   88   91.2
And   166.0   232.0   66.0   60.7   2.5   7.2   438   17   101   74.6
                                         
WW033   2.0   500.0   498.0   26.6   1.9   5.6   290   14   114   37.6
Including   39.8   108.1   68.2   78.3   5.5   6.6   927   10   109   96.8
Including   86.0   92.0   6.0   190.0   12.5   4.8   1,744   24   160   218.0
 1) See table 1 above for Silver Equivalent calculations. True widths have not been determined for the above intercepts but the holes are believed to be representative of mineralization down through the upper and middle Malku Khota horizon.
 
Table 4. Highlights of additional drill hole intercepts at the Wara Wara deposit.
DDH   From
m
  To
m
  Length
m
  Ag
g/t
  In
g/t
  Ga
g/t
  Pb
ppm
  Zn ppm   Cu
ppm
  AgEq
(1)
g/t
WW007   14.0   106.5   92.6   42.3   5.0   5.8   550   51   584   62.3
Including   90.2   106.5   16.3   109.9   6.4   7.3   675   43   531   134.2
                                         
WW012   0.0   324.0   324.0   32.4   2.4   6.6   351   20   139   45.6
Including   0.0   87.8   87.8   66.1   4.4   8.9   628   40   121   85.2
And   6.0   15.0   9.0   125.4   7.8   10.5   996   13   84   150.9
And   52.4   80.0   27.7   96.8   5.5   9.1   895   38   168   118.8
1)  See table 1 above for Silver Equivalent calculations. True widths have not been determined for the above intercepts but the holes are believed to be representative of mineralization down through the upper and middle Malku Khota horizon.

Engineering Activities

Since completion of the PEA in March 2009, South American Silver's focus has been on confirmatory in-fill and expansion drilling at Malku Khota, and ongoing metallurgical and process-related test work to refine the leach recovery characteristics of the silver, indium and associated lead, zinc and copper mineralization in both heap leach and milling approaches. Test work completed to date supports the amenability of heap leaching and/or milling of the mineralized material at Malku Khota by applying the same type of process as used in copper oxide SX-EW heap leach mining or by the indium refineries that process by-product indium from zinc smelting.

More detailed engineering studies are underway for the balance of 2010 that will further refine metallurgical recoveries anticipated by representative mineralized zones throughout the deposit, define the potential location of mine facilities and infrastructure required to support the operation and develop a plan for implementation utilizing local resources as much as possible. This information will be the basis for a number of optimization studies that will be applied to a range of operating scenarios combining different throughput, production rates and leaching processes to be incorporated in the updated Preliminary Economic Assessment targeted for release in Q1 2011.

President & CEO Greg Johnson said, "We are very pleased with progress on the project since completion of the financing in August. These results show that the current drill program is expanding the known mineralization and has identified a number of new targets for testing. The Company's ongoing metallurgical test work demonstrates excellent recovery characteristics for silver, indium and the accompanying base metals. In addition, our environmental baseline study work, which is important for the permitting process, is progressing well and we are receiving positive feedback from local and federal authorities. All of this positions South American Silver to move rapidly to feasibility and toward a production decision for the project."

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 the 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. 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. 

About the Malku Khota Project

The Malku Khota Project is a recent discovery of a sediment host, bulk mineable, silver, indium, lead, zinc and copper deposit located in the world-class silver mining district of central Bolivia, approximately 200 kilometers north of Potosi. The project is road accessible and has commercial scale power within 15 kilometers of the site. The project contains an Indicated Mineral Resource of approximately 145M oz silver and 845 tonnes of indium and an additional Inferred Mineral Resource of approximately 178M oz silver and 968 tonnes of indium. South American Silver continues an ongoing exploration drill program at the project and is conducting metallurgical and engineering studies to evaluate optimal development scenarios. Current studies indicate that the Malku Khota project has the potential to be one of the largest new silver and indium producing mines in development.

As part of the Company's ongoing community relations approach to Malku Khota, 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 facilitate local-area economic development through the various stages of development of the project.

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 100% owned Malku Khota Silver-Indium project in Bolivia, one of the world's largest undeveloped silver and indium deposits, and the 100% owned large-scale Escalones Copper-Gold project in Chile. 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 effective community relations to increase shareholder value. Management has over 100 years of combined experience in the global exploration and mining industry with much of that focused in Bolivia, Chile, Peru and Argentina. The Company's shares are listed on the Toronto Stock Exchange under the symbol "SAC" and on the US OTC market as "SOHAF." Additional information related to South American Silver Corp. is available at www.soamsilver.com and on SEDAR at www.sedar.com

Certain statements contained herein constitute "forward-looking statements". These forward-looking statements include, but are not limited to, statements regarding estimated mineral resources, milestones for 2010 and Q1 2011 and the Company's and its properties' growth potential . 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; sustained favourable commodities prices; continued project development 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 Company's properties will be commercialized. 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.

Contact Information

  • South American Silver Corp.
    Greg Johnson
    President & CEO
    604-681-6926
    or
    South American Silver Corp.
    Richard Doran
    Executive Vice President
    303-584-0606
    www.soamsilver.com