south american silver corporate presentation

Value. Growth. Vision

Growing and advancing one of the world’s largest

undeveloped silver and indium resources.

TSX: SAC, US OTC: SOHAFCorporate Presentation

A Growth Focused Exploration & Development Company

December 2010

www.soamsilver.com


Forward Looking Statements

Certain statements contained herein constitute “forward-looking statements.” 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 “plans,” “intends,” anticipates,” “should,” “estimates,” “expects,” “believes,” “indicates,” “targeting,” “suggests,” “potential,” and similar expressions. These forward-looking statements are based on current expectations and entail various risks and uncertainties. Actual results may materially differ from expectations, if known and unknown risks or uncertainties affect our business, or if our estimates or assumptions prove inaccurate. 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.

TSX:SACUS OTC:SOHAF


Investment HighlightsSouth American Silver Corp.

•Experienced management team with track record of successful project development and value creation

•Two large-scale deposits in South America•Well defined business plan to drive shareholder value•Leveraged to silver with over $40 of silver value per $1 invested•Exposure to the high-tech indium market•Potential value from new copper-gold resource•Attractive investment value relative to peers at low value per oz•Strong focus on community relations to mitigate execution risk•Well financed into feasibility

TSX:SACUS OTC:SOHAF


Escalones

Malku Khota

World-Class DepositsTwo large-scale assets in South America

•Malku Khota, Bolivia, silver-indium project•One of the world’s largest

silver and indium resources•Potential to be one of the top producing

silver and indium mines•Funded into Feasibility

•Escalones, Chile, copper-gold project•Located in premier copper mining district•Near term resource definition drill program•Potential for several billion pounds of copper

and significant gold and silver credits

TSX:SACUS OTC:SOHAF


Share Capitalization2

TSX:SAC, US OTC:SOHAF

Issued & Outstanding

Fully Diluted1WarrantsOptions

97.8M 114.8M8.6M8.4M

• +$200 million Market Capitalization

•Average trading volume 550,000 shares/day

•Well financed with $30 million estimated in cash at year end1

•Potential NYSE-AMEX listing to increase visibility and liquidity

(1) As of November 8, 2010 with proposed $28 million financing

(1) On a fully diluted basis

(2) As of December 16, 2010

Major Shareholders

•Zamin—19.7%

•Private Swiss investors--19%

•SAC Management1 --15%

Institutional Ownership

•Sprott Asset Management

•Front Street

•K2 funds

•Kudu Partners


Zamin Group - Strategic InvestmentA Key Regional Player

•Well funded regional player in South American resources industry with major projects in Brazil, Uruguay, Bolivia, and Chile

•Strategic 19.7% investment positions SAC in strong financial and operational position to advance projects to feasibility

•Track record of successfully facilitating South American project development through relationships with national and state governments in the region

•Portfolio of South American projects with strong government support in permitting, rail and port infrastructure

•Bamin Project-Brazil•Valintine Project-Uruguay•Acquiring assets in Bolivia over past year

TSX:SACUS OTC:SOHAF


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Alexco Silvermex Sulliden Golden Minerals

Silvercrest MAG Silver Orko ECU Sabina Tahoe Resources

So.American Silver

Bear Creek

Comparative Resources in the AmericasSecond largest development stage silver resource

Millions of Silver Ounces

Source: Canaccord Report as of October 2010Note: All companies have projects in South and/or North America

MexicoMexicoEl. Salvador

MexicoMexico

PeruMexico

PeruMexicoYukonNunavut

GuatemalaBoliviaChile

Peru


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So.American Silver

Silvercrest Bear Creek Silvermex Orko ECU Sabina Tahoe Resources

Golden Minerals

MAG Silver Sulliden Alexco

Enterprise Value in the AmericasUndervalued relative to peers

Source: Canaccord Report October, 2010Share prices as of December1, 2010Note: All companies have projects in South and/or North America*EV/oz truncated to $10 . Alexco excluded from early stage average EV/oz AgEq $18/oz

Average EV/oz for development stage silver companies: >$1.85/oz

*

Average EV/oz of companies with >200Moz silver resource: $2.80/oz


Development Stage Value CurveTremendous value growth with project advancement

Increased value through resource

expansion

Increased value with project advancement

Early StageExploration & Development

AdvancedDevelopment Stage

(Reserves)

Production

Increased Enterprise Value per Oz by Stage

ResourceDefinition

PEA

PFS

FS

Permits

Construct

Discovery

$

$

/oz$

Project Advancement

=resource confidence

+risk reduction

+ value multiplier with

transition toFeasibility (reserves)

And transition to production

Source: Recent average enterprise value per ounce of silver at various development stages for North and South American based projects. Canaccord, Wellington West and Company reports.


& ETFs

Silver Supply/DemandSurging investment demand plus improving industrial consumption suggests continued demand growth with flat total supply

Source: GFMS World Silver Survey 2010

& ETF

Total Global Silver Supply Total Global Silver Demand


Silver Fundamentals PositiveFor continued higher prices

•One of the only precious metals not yet to hit all-time nominal highs from the 1980’s ($35s/oz and $50/oz 1980)

•Bullish supply/demand outlook

•Continued increase in investment and industrial demand for silver

•Annual mine production vs total demand remains in short-fall

•Few new major deposit discoveries

•Projected new production by analysts have failed to have

been realized

TSX:SACUS OTC:SOHAF


Indium—a key strategic metalRapidly growing market for high-tech uses

Uses• Indium-tin oxide (ITO) a key component of flat panel displays (FPDs) and touch

screens• High-efficiency thin film solar panels (CIGS Photo-Voltaics), and LED lighting • Fiber optics, specialized and transparent semiconductorsSupply• Global indium use growing rapidly and could surpass available supply from by-

product zinc refining at current price range• One of the most scarce strategic metals due to low recycling and few primary

producers

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LCD

LED Lighting

Indium DemandGrowing demand in high-tech markets

• 70% of indium market in FPDs• One of the most scarce strategic metals • As few as 5 years of indium remain with

anticipated demand increase• Low supply and high demand could force

prices much higher to bring new supply to market

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LED LCD TV

LCD TV

LCT TV Market Forecast (Millions of units) LED Lighting Market Forecast (billions $US)

Indium Consumption by the PV Industry (Tonnes)

Charts Source: Displaybank in LCD TV Association “LCD TV Matters”-Volume 3, Issue 2, February 2010 , Strategies Unlimited, August 2009 , Solarbuzz, Photon International, GFMS , Nanomarkets


Indium Fundamentals

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Opportunity in BoliviaAn emerging resource based economy

• Bolivia experiencing its best economy in 30 years

• Member of Mercosur Regional trade organization with Brazil as largest trading partner

• One of the world’s premier silver districts with billions of ounces of historical production

• Planned $32 billion 5-7 year infrastructure build-out by Bolivian government for new rail and road corridors and hydropower generation

• Three Major silver mines built within last four years

• Substantial resource industry investments in Bolivia

Jindal Steel of India investing US$2.3 billion for 50% interest in El Mutun iron ore deposit

Petrobras of Brazil—Latin America’s largest publicly traded oil company – investing US$1 billion of new capital into the Bolivian gas fields

Repsol of Spain investing $1.6 billion to increase gas production in Bolivia

TSX:SACUS OTC:SOHAF


Silver Mines in BoliviaOne of the world’s premier silver mining districts

• Historical district production of billions of ounces of silver

• Highly prospective under-explored

• Increase from 9th largest global silver producer to 5th largest with completion of three major silver mines in past four years:

Pan American Silver – San Vincente Coeur D’Alene - San Bartolome Sumitomo - San Cristobal

TSX:SACUS OTC:SOHAF


Malku Khota Project, BoliviaOne of the world’s largest silver-indium resources

• 100% owned, road accessible project, long life open pit mine

• low capital and operating costs and high internal rate of return

• Ongoing drill campaign with recent higher grade discoveries

• Potential to be one of the top primary silver and indium producing mines

TSX:SACUS OTC:SOHAF

Indicated: 145 M oz of silver & 845 tonnes of indiumInferred: 178 M oz of silver & 968 tonnes of indium

Q4 2010 Q1 2011 Q2 2011 Q3 2011 Q42012

Malku Khota Completion of resource update drill program

Updated resource estimate

Pre-Feasibility Feasibility

Ongoing drilling to expand/define resource

Updated PEA with increase throughput

Commence Permitting Process

Escalones Initiation of drill program

Resource Estimate


Established InfrastructureLow capital and operating costs

• Open pit, bulk mineable

• Accessible by road

• Commercial power within 15km

• Access to water

TSX:SACUS OTC:SOHAF


Enrichment starts at surface Host rock sandstone with disseminated silver, indium, gallium, lead, zinc and copper

MineralizationOpen pit, bulk mineable deposit

Average grade first ten years:• Silver: 38.6 g/t (60 g/t Ag Eq) • Indium: 8.1 g/t•Economic cut-off grade <10 g/t (at $15/oz Ag)

TSX:SACUS OTC:SOHAF


MineralizationGeological formations looking south from Limosna

High Grade Sandstone

1160 g/t Silver

Wara WaraSandstone

Malku KhotaSandstone

Aroifilla Fm

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Malku Khota DrillingGrade thickness map

• 75 drill holes in current resource with approximately 120 in updated resource for Q4-2010

• 2010 program focused on in-fill & confirmatory drilling

• 2011 program to target conversion from resources to reserves & expansion drilling

• Mineralization begins at surface

• Deposit open along trend and down dip with higher grade zones current focus

• New discovery of higher grade zones and down dip expansion of surface mineralization

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New Exploration ResultsDiscovery of broad continuous mineralization horizonLMD048: 286 meters grading 76 g/t Ag Eq Grade thickness values of over 21,500 g-m AgEq

TSX:SACUS OTC:SOHAF


Malku Khota DepositOnly 30% of 15km property drill tested

• 2010 program focused on in-fill and confirmation drilling

• 2011 program to target conversion from resources to reserves and expansion drilling

TSX:SACUS OTC:SOHAF


Metallurgy Flow SheetAcid-Chloride Leach

Crushing

Heap Leach or Milling with Acid

Solution

Silver, Gold and Copper Recovery

Indium and Gallium Recovery

Lead Recovery

Zinc Recovery

Open Pit Mining

Further refining with solvent extraction (SX-EW ) process to metal dore or high purity concentration

• Same process used for solvent extraction and electo-winning in copper-oxide heap leach deposits and for indium

• Similar recoveries to cyanide leach

• Production of high purity silver bars and indium ingots on site

• Additional production of by-product metals including lead, zinc, copper and gallium

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Summary of PEA 2009Updated PEA with expanded throughput for Q1 2011Pincock, Allan and Holt

Heap Leach Operation – 20,000 Tonnes per Day

Recovery: Silver 80%, Indium 70%

Annual Production: 6.4 M oz Silver2

37,200 kgs Indium2

Cash Cost: $3.75 / oz Ag

Mine Life: 36 Years

2009 2010 Recent

Base Avg’s High

Silver Price/oz $13.30 $15.00 $20.00

Indium Price/kg $530 $550 $1,000

Net Annual Cash Flow2: $74M/yr $86M/yr $135M/yr

Net Total Cash Flow: $1.2B $1.5B $2.7B

Pre-Tax NPV: >$300M >$500M >$1,000M

Years to Payback: 1.4 years 1.2 years <1 year

Base Case Silver Price: US$13.30/ozBase Case Indium Price: US$530/kg

70%

18%

12%

Revenue Distribution

Silver

Indium

Lead/Copper/Zinc

(1) In US dollars, March 2009, PEA by Pincock Allan and Holt. Updated study utilizing higher production levels and new cost estimates anticipated Q1-2011

(2) First ten years of production


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Near Term Mine Development ProjectsSAC one of largest near-term producers at 20K tpd

• Annual estimated potential production of new development projects with production anticipated in the next 2-4 years

Source: CPM Silver Yearbook 2010

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Global Silver Industry Cash Cost CurveAnticipated low-cost silver production

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Cumulative Percentile of Silver Mine Production Cost

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Industry AverageCash Cost$5.25/oz

Malku Khota6.4 Mozs/yr~ $3.75/oz

Source: GFMS World Silver Survey 2010


Escalones-Copper-Gold project, ChileHigh potential, large-scale target

• 100% controlled, road accessible, large scale system

• Located in world-class copper mining district near El Teniente

• Historic drilling shows >1% copper grades at surface and untested porphyry system grading 0.6% copper

• Additional significant gold, silver and molybdenum credits

• Resource definition program targeted for Q1 2011

• Resource estimate targeted for 2nd half of 2011

TSX:SACUS OTC:SOHAF


Drill Results Grad Thickness MapLarge-scale porphyry system

• Open in all directions

• Strong historic results

TSX:SACUS OTC:SOHAF


EscalonesGeological cross-section

• Enriched zones with high grades at surface at over >1% copper with significant gold and molybdenum

• Large scale porphyry target intercept of 176 m @ 0.6% copper with additional gold, silver and molybdenum

TSX:SACUS OTC:SOHAF


Community RelationsA key to successful project development

• Signed agreements of cooperation with surrounding communities• Assistance of BSR* to develop proactive community relations strategy• Two full-time indigenous community relations officers working in region• Objectives to facilitate economic development in communities

*Business for Social Responsibility, San Francisco, CA


Project MilestonesValue drivers over the next 6-12 months

• Malku Khota Silver and Indium Project, Bolivia Drill campaign underway with additional drills being mobilized Updated resource estimate targeted Q1 2011 Updated Preliminary Economic Assessment at higher throughput Q1-2011 Pre-feasibility targeted for 2011 and feasibility for 2012

• Escalones Copper and Gold porphyry project, Chile Planning work underway for initial drill campaign Q1 2011 Target for initial resource estimate in 2nd half of 2011 Potential for several billion pounds of copper with additional

gold and silver credits

TSX:SACUS OTC:SOHAF


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Leveraged to SilverValue of silver per dollar invested

SAC has some of the best leverage to silver of any development stage company with over $40 of silver value per $1 invested

Source: Canaccord as of October, 2010, Share prices updated December 1, 2010Note: all companies have projects in South and/or North AmericaCalculated using $25/oz Ag. Dollar value of silver per $1 invested = (silver resource/shares outstanding) x $25/oz silver) divided by share priceValue only shown for silver with no contribution from other metals

Silver value per $1 invested

Average value of silver <$8 of silver per $1 invested*


Why South American Silver?Investment highlights

• World-class scale projects with excellent expansion potential

• Track record of discovery and successful project development

• Growing shareholder value through resource expansion and advancing

projects up the development value curve toward feasibility

• Leveraged to silver with over $40 of silver value per $1 invested

• Exposure to rapidly growing Indium high-technology market

• Potential new value from copper resource definition and expansion

• Attractive investment value relative to peers at low value per oz

• Continued investor outreach to broaden market awareness of Company

• Potential near-term NYSE-AMEX listing in the U.S.

TSX:SACUS OTC:SOHAF


TSX: SACOTC: SOHAF

Phone: 604.681.69261.855.681.6926

www.soamsilver.com

Greg JohnsonPresident & CEO

TSX:SACUS OTC:SOHAF


Investment Highlight DetailsA tremendous value growth opportunity

• Management team with track record of market value creation, discovery and advancement of large projects, and key operational/process expertise

• 100% owned, diversified portfolio of projects within well defined mining districts with existing road and nearby power infrastructure

• Bulk mineable, sediment hosted silver and indium deposit with exceptional regional expansion potential and positive low cost, leach characteristics

• Large scale, copper-gold project in resource definition/expansion phase

• Well defined, near term business plan to drive value from early development stage to feasibility stage with multiple pathways to achieve additional increased shareholder value from production multiples and valuations

• Leveraged to silver with over $40 of silver value per $1 invested

• Exposure to the niche strategic metal sector with new and growing industrial applications for indium and compelling supply/demand dynamics with few primary suppliers

• Attractive investment value relative to peers at low value per oz

• Strong focus on approaches to mitigate execution risks while maximizing value creation such as an early, effective community relations programs and staged stakeholder engagement strategy

TSX:SACUS OTC:SOHAF


Relative Stock PerformanceSAC out-performing key silver & gold indices

•Trading liquidity increasing with average volume of 550,000 shares/day

•SAC undervalued relative to peers at $0.50/oz vs average of more than $1.85/oz for early stage resources and $2.80/oz for >200Moz resources

TSX:SACUS OTC:SOHAF


Bullish Silver FundamentsUndervalued relative to historic ratios with gold

• The secular bull market for silver remains in place

• Silver has had a 95% correlation to movement in gold since 2005

• Silver generally mirrors and amplifies the price moves in gold due to the smaller size of market, and lower relative above-ground supply

• Silver equities generally show a 3-5x leverage to silver price moves due to profit margins

TSX:SACUS OTC:SOHAF


Indium FundamentalsCompelling supply/demand dynamicsMajor Indium uses due to its unique electrical and optical properties

• Indium-tin oxide (ITO) a key component of LCD, flat panel TV’s and touch screens• High-efficiency thin film solar panels (CIGS Photo-Voltaics), and LED lighting • Fiber optics, specialized and transparent semiconductors

Indium Supply/Demand dynamics• Indium highlighted in UN study as a key specialty metal at risk of shortages due to

rapidly increasing growth, low recycling rates and low primary production • China is largest producer and consumer of indium and has imposed export quotas

and tariffs like other key high-technology specialty metals• Global indium use growing rapidly and could surpass available supply from by-

product zinc refining at current price range• Zinc market growing at 1-3% annually with indium market estimated at 15-20%

growth• World consumption estimated at 1,200 to 1,400 tonnes in 2010 up 2x from 2008

and up more than 10x from 1990• Current price ~$600/kg with five-year prices from $400/kg to over $1000/kg

Malku Khota Annual Indium Production (at 20,000 tonnes/day)• Range: 30-60 tonnes/year• Malku Khota projected to be one of the worlds largest indium producers• Potential to represent 10% or more of global mine supply• Teck Resources is currently world’s largest producer of indium at ~50 tonnes/year

TSX:SACUS OTC:SOHAF


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Management TeamA track record of success

Ralph Fitch, Executive Chairman Co-founder of South American Silver, High Desert Gold, and General Minerals Key role in discovery of Collahuasi copper porphyry , Malku Khota, Vizcachitas, and Escalones deposits

Greg Johnson, President and CEO Co-founder of NovaGold, key role in growing company from $50 million to $2 billion market capitalization Recognized for discovery and advancement of the 40 M oz Donlin Creek gold deposit for NovaGold and Barrick

William Filtness, Chief Financial Officer Chartered Accountant with twenty plus years of financial experience, including Manager, Corporate Development at Aurizon Mines

Felipe Malbran, Vice President of Exploration Extensive experience in exploration management in Bolivia, Chile, Peru and Argentina Key role in discovery of Malku Khota, Vizcachitas, and Escalones deposits

Phillip Brodie-Hall, Vice President of Project Development Global industry experience in engineering construction and project development experience covering nearly every aspect of

evaluation, feasibility studies and project development in the mining and mineral processing industriesDavid Dreisinger, Vice President of Metallurgy

Professor and Industrial Research Chair in Hydrometallurgy at the University of British Columbia (UBC) Actively involved in developing and commercializing hydrometallurgical process at a number of operating mines in Australia and Southeast

Asia.Richard Doran, Vice President and corporate secretary

Former VP Investor Relations for General Minerals and Marketing Manager for Chevron ResourcesAndrew Clark, Manager of Project Implementation

Global industry experience in the design and management of industrial, mining, materials handling, chemical and petrochical projects from feasibility studies through to commissioning and handover of completed facilities.

Xavier Gonzales Yutronic, General Manager Compañía Minera Malku Khota S.A. Mining Industry experience in finance, accounting, logistics, human resources and community relations at Comsur S.A., Sinchi Wayra

(Glencore) from 2005-2007, and Compañía Minera Malku Khota S.A. from October 2008 to date

TSX:SACUS OTC:SOHAF


Board of DirectorsStrong industry and financial experience

Ralph Fitch, Executive Chairman Greg Johnson, President and CEO

Antonio Canton, Director - Mr. Canton is an independent consultant for international companies in marketing, finance and real estate. He is a director of a number of Swiss companies and brings to the board extensive experience in accounting and finance.

Peter Harris, Director - Mr. Harris is an engineer with over 40 years of mining industry experience including as Senior VP and Chief Operating Officer at Nova Gold Resources Inc., and Senior VP of Project Development at Placer Dome Inc. He has been involved in the construction and operation of over 20 different mines in North and South America, Africa, Australia and PapuaNew Guinea.

William Murray, Director - Mr. Murray is an engineer in the mining industry with over 33 years of experience in construction management and project evaluation in North America and Africa. He currently serves as the executive chairman and director of Polymet Mining Corp. Mr. Murray has been involved in numerous successful projects while working at Fluor Daniel, Denison Mines, Optimum Project Services and Anglo American Corp. in South Africa.

Paul Haber, Director - Mr. Haber is a Chartered Accountant and a Certified Public Accountant with a strong background in US/Canadian accounting and finance. Presently manages Haber & Co. Ltd. Has previously been Chief Financial Officer and Corporate Secretary of a TSX Venture listed company.

John Watson, Director - Mr. Watson has been the President of a TSX Venture Exchange listed company since 2002. He is also the manager/member of a limited liability corporation that owns and manages commercial real-estate.

Tina Woodside, Director - Ms. Woodside is currently the head of the corporate finance department in Gowlings’ Toronto office and a member of the firm’s National Executive Committee. Ms. Woodside practices corporate and securities law with particular emphasis on corporate finance, mergers and acquisitions and corporate governance matters.

TSX:SACUS OTC:SOHAF