Silver-Indium Project Shines For South American Silver

VANCOUVER — In a scoping study, South American Silver (SAC-T, SOHAF-O) 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$13.30 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 and 5.92 grams indium per tonne.

Given higher grades near surface, however, during the first 10 years of the project, grades would average 38.6 grams silver and 8.1 grams indium.

On paper, the higher grades help give the proposed mine a quick payback of 2.2 years. Overall, at a 0% discount rate, the internal rate of return (IRR) is 50.7% and the pretax net present value (NPV) is US$1.2 billion. At a 10% discount rate, the NPV drops to US$325 million.

South American Silver would run the operation as a typical, open-pit heap-leach mine with crushing to under 19 mm. The strip ratio is 1:1 and there is little overburden.

Recovery would be less conventional for the indium, with South American Silver proposing to use a leach mixture of sulphuric acid and chloride.

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

The silver and indium are in a steeply dipping sandstone unit and, so far, mineralization extends 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 explore the Malku Khota property for more good targets.

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

At presstime, the company’s shares traded at 37¢ apiece. The stock has traded in a 12-month range of 10-65¢.