South American Silver sizes up Escalones

South American Silver (SAC-T) has released a first resource estimate on its wholly owned Escalones copper-gold-silver project in Central Chile.

Escalones is estimated to contain 420.6 million tonnes grading 0.41% copper, 61.39 parts per million molybdenum, 0.05 gram gold per tonne and 1.24 grams silver per tonne for 0.49% copper equivalent, all based on a 0.2% copper-equivalent cut-off. The values translate to contained metal totals of 3.8 billion lbs. copper, 56.9 million lbs. molybdenum, 610,000 oz. gold and 16.8 million oz. silver.

The resource was based on 30 diamond drill holes totalling 12,700 metres, as well as 43 channel and road cuts. South American is now preparing for follow-up work that will include 7,000 metres of infill and step-out drilling, with two drills mobilized.

The project is 35 km east of the world’s largest underground copper mine, El Teniente.

Work in 2011 included reopening the camp’s road access, re-logging and sampling historic drill holes, reinterpretating an induced polarization survey. An airborne geophysical survey is still being interpreted.

Escalones hosts a 4-sq.-km area of hydrothermal alteration with coincident geophysical anomalies. Copper, gold and silver is found replacement-style skarn mineralization hosted in limestone and porphyry-style mineralization. Mineralization is open laterally and at depth.

The company is advancing its Malku Khota silver-indium-gallium project in Bolivia, with ongoing work on metallurgy, camp construction and other prefeasibility work. In early 2011 the company released a preliminary economic assessment that outlined a pre-tax net present value of US$704 million with a 5% discount rate and a 37.7% internal rate of return. The company assured investors in April that its Malku Khota project should be unaffected by proposed changes in mining legislation, though the country has yet to pass fully revised mining laws.

As of a March 2011 resource update, Malku Khota hosts 255 million tonnes at 28.1 grams silver per tonne, 5.8 grams indium per tonne, 4.3 grams gallium per tonne, 0.02% copper, 0.07% lead and 0.04% zinc for 43.2 grams silver equivalent per tonne.

South American’s share price was up 16¢, or 11.6%, to $1.54. The 52-week high-low range is between $1.20 and $3.35, and 100.8 million shares are outstanding.