Silver-indium project looks promising for South American Silver

Vancouver – In a scoping study South American Silver (SAC-T) outlines a US$105 million silver-indium project at its Malku Khota property in central Bolivia, about 300 km southeast of La Paz.

In a base case scenario using a silver price of US$13.3 per oz. and an indium price of US$530 per kg. South American Silver proposes a 20,000-tonne-per-day heap-leach mine that would run for 36 years.

It would mine 247 million tonnes grading 25.3 grams silver per tonne and 5.92 grams indium per tonne.

Given higher grades near surface, however, during the first ten years of the project grades would average 38.6 grams silver and 8.1 grams indium.

The higher grades help give the proposed mine a quick payback of 2.2 years. Overall the undiscounted internal rate of return (IRR) is 50.7% and the net present value (NPV) is US$1.2 billion.

South American Silver would run the operation as a typical open-pit mine with crushing to under 19 mm and placement of ore on heap leach pads. The strip ratio is one to one and there is little overburden.

Recovery would be less conventional as to capture indium South American Silver would use a leach mixture of sulphuric acid and chloride.

The scoping study considers an alternative cyanidation scenario without indium recovery but it returns a smaller IRR and NPV.

The silver and indium are in a steeply dipping sandstone unit and so far extend over a 3.5 km long area that is 100-228 metres wide, the company says.

With the scoping study complete, South American Silver plans on producing a prefeasibility study of the project.

The company says it will conduct more detailed metallurgical tests, hone the commercial design of the acid chloride process and further explore the Malku Khota property for additional mineralized targets.

As of Sept. 30, 2008, South American Silver reported cash and cash equivalents of US$8.7 million.

On news of the scoping study its share price dropped 2¢ to close at 41¢.