Silver Mines Limited · ASX:SVL
Silver Mines — Investor Presentation (May 2016)
29 slides from Silver Mines's investor presentation, May 2016
Slide 1: Building the largest pure silver company in Asia-Pacific
“Building the largest pure silver company in Asia‐Pacific”
Slide 2: Disclaimer
Disclaimer The material in this presentation contains certain forecasts and forward-looking information, including regarding possible or assumed future performance or potential growth of Silver Mines Limited (“SVL”). Such information is not a guarantee of future performance and involve unknown risks
Slide 3: Silver Mines Limited Strategy
Silver Mines Limited Strategy • Development of the only primary silver focussed company of substance in Asia‐Pacific • Acquisition of complimentary silver assets at cyclical lows • Buying silver ounces for cents/ounce ‘in the ground’ • Targeted consolidation of silver deposits in New South Wales • B
Slide 4: Silver Mines Limited Structure
Silver Mines Limited Structure Shares on Issue (post 100:1 consolidation) 108.8m Placement A$40.5m @ $0.15 270.0m Total on Issue 378.8.0m Undiluted Market Capitalisation (based on 15c issue) A$56.8m Cash after completion A$20.0m Enterprise Value A$36.8m Options May 2017 @ $4.30 0.06m Oct 2017 @ $0.3
Slide 5: Gold/Silver Ratio
Gold/Silver Ratio 90 60 80 50 70 60 40 Gold/Silver Ratio Silver US$/oz 50 30 40 30 20 Gold/Silver Ratio 20 10 Silver US$/oz Trading off 7 10 year lows 0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Slide 6: New South Wales Silver Consolidation
New South Wales Silver Consolidation
Slide 7: SVL Resource Inventory
SVL Resource Inventory (Refer to Appendices 1,2 & 3 for further details) Deposit name Mt Ag Eq (g/t) Ag Eq (Moz) Status Bowdens 88.0 64 182 Agreement to purchase Webbs 1.5 353 17.5 100% owned Conrads 2.6 206 16.5 100% owned Total 92.1 73 216 191 Moz Ag Eq attributable • NSW silver assets ripe for co
Slide 8: Title Package
Title Package BOWDE SILVER O PROJECT ¢ BOWDENS SILVER PROJECT | KINGSGATE BOWDENS P/L OTHER HOLDERS Yy SILVER _~ MINES LIMITED BB svver mines ummeD py SILVER _~ MINES LIMITED
Slide 9: Bowdens Silver Project
Bowdens Silver Project • The largest undeveloped silver deposit in Australia and one of the largest globally • Kingsgate purchased from Silver Standard for A$75 million • Over A$35 million spent by Kingsgate • Freehold land mostly purchased (~A$12 million) • Transaction consolidates 80kms of strike
Slide 10: Bowdens Silver Project
Bowdens Silver Project • Resource of ~180 Moz of silver equivalent • New drilling including resource, metallurgical and sterilisation drilling • Feasibility Study +80% complete • Environmental Impact Statement +80% complete • Flat lying deposit at surface – easy to mine and very low strip ratio • Cl
Slide 11: Bowdens Resource
Bowdens Resource (Refer to Appendix 1 for further details) • Kingsgate resource based on 63,000 metres drilling (65% by Silver Standard, 20% by Kingsgate) • Eastern flank of resource presents high grade ore from surface and first three years could be pushed to ~80‐90g/t Ag vastly improving economics
Slide 12: Long Section
Long Section Deep Zone high grade zone in basement Ordovician shales. Peak assays of: 197g/t Ag 5.5% Pb 6.52g/t Au 0.3% Cu 9.0% Zn
Slide 13: Cross Section
Cross Section 112m @ 76g/t AgEq i SE I 96m @ 34g/t AgEq 500 226m @ 38¢/t AgEq N BGD42 67m @ 81g9/t AgEq 116m @ 61g/t AgEq CROSS SECTIO 1) 2010.50 gt AgEa [B30 10 60 gf AgEq >" | 50 to 100 g/t AgEg > 60 g/t AgE _~ MINES LIMITED | | >= 100 g/t AgEq Ordivician Carbonaceous Shale »~ — MINES LIMITED
Slide 14: Cross Section
Cross Section 7008 a 5 z a 3 8 room 98m @ 76g/t AgEq S$ 8 89m O 6Ig/t Age — ‘ = 8 2 AA a Se 8 8 r\ ‘ ae a peg door ee ® /| 7 / G00RL 400R 12g/t AgEq 185m @ 68g/t AgEq Yy SILVER _ MINES LIMITED | | 30 to 60 g/t AgEq > = 60 g/t AgEq Ordivician Carbonaceous Shale py SILVER _~ MINES LIMITED
Slide 15: Cross Section
‘768600E 7OORL. 768700E TS8E00E T6ES09E 768009 769100 788200 798300 768400E 600RL., >it Shell Design BRC12071 1289/t AgEq S00RL. 836m @ 37g/t AgEq 96m © 809/t AgEq 46m @ 61g/t AgEq @ 85g AgEq Eg — @ 46g/t AgEq 245m @ 8ig/t AgEq Yy SILVER — MINES LIMITED [20 10 60 of AgEq > = 60 g/t AgEq Ordivician C
Slide 16: Feasibility
Feasibility • Managed by Ausenco • MPR Geological (Resources), AMC (Mining), Coffey (Tailings), RW Corkery (Environment), SKM (water) and others • Halted in mid 2013 with silver price downturn • Circa A$25 million expenditure (including drilling) • “Rolls Royce” approach to 4.0 million tonnes per an
Slide 17: Feasibility
Feasibility Ausenco/Kingsgate Lycopodium Scoping Draft Feasibility Study Case 8 mid 2013 mid 2006 Mining/Process Mtpa ore 4.5 2.5 Strip 1.7 : 1 1.6 : 1 Head Grade g/t Ag 68 77 Head Grade % Zn / %Pb 0.38 / 0.30 0.38 / 0.32 Silver Recovery % 82.4 80.9 Production Silver Moz pa 8.0 5.0 Zn tpa 12,000 8,0
Slide 18: Exploration Upside
Exploration Upside • Outstanding regional exploration package ignored by previous operators (concentrating on Bowdens development) • ~ 80 kms of strike length of mineralised structures under‐explored • Potential for: • Large disseminated deposits hosted in Rylstone Volcanics like Bowdens and Coomber
Slide 19: Exploration Upside
Exploration Upside • More than 30 metal mineral Bara Targets occurrences within 8kms of Bowdens • Large scale target areas untested in Bowdens NW Target Rylstone Volcanics including: Bowdens North Target • Bowdens North • Bowdens Northwest, Duagh Target • Bowdens South and • Duagh Target. Bowdens 18
Slide 20: Exploration Upside
Exploration Upside Coomber Prospect Drill Results From (metres) To (metres) Intercept (metres) Silver g/t Ag Eq 0 58 58 88.8 0 50 50 42.8 18 100 82 31.2 34 48 14 85.1 16 26 10 73.7 • 40 drill holes for 2645 metres • Drilling by CRA in early 1990’s, yet to be followed up • Circa 10kms from Bowdens •
Slide 21: Comparatives
Comparatives Company Attrib. Resource Enterprise Value Enterprise Value Moz Ag Eq US$m US$/oz Ag Eq MAG Silver 143 778 5.45 Impact Silver 8 37 4.37 Fortuna Silver Mines 160 661 4.14 Pan American Silver 489 1,928 3.94 Aurcana 18 60 3.39 First Majestic Silver 483 1,409 2.92 Coeur Mining 457 1,329 2.91
Slide 22: Silver Company Share Price Performance
Silver Company Share Price Performance Company Market Cap. Jan 2016 April 2016 % US$m US$/share US$/share Increase Pan American Silver 2,095.2 6.50 13.83 113 First Majestic Silver 1,396.6 3.56 8.97 152 Coeur Mining 1,039.4 2.48 6.87 177 Silver Standard 984.1 5.66 8.27 46 MAG Silver 924.5 7.09 11.60
Slide 23: Major Primary Silver Mines
Major Primary Silver Mines Mine Country Company Silver Moz pa BOWDENS Cannington Australia BHP Billiton 24.7 TOP 10 Escobal Guatemala Tahoe Resources 20.3 Fresnillo Mexico Fresnillo 20.1 Dukat Russia Peolymetal International 19.5 Saucito Mexico Fresnillo 15.4 Uchucchacua Peru Buenaventura 12.1 Pirqu
Slide 24: Silver Pricing Pressures
Silver Pricing Pressures • Comex silver inventories have fallen from 70 Moz to about 25 Moz in last 12 months • India demand (investment and solar) increasing by about 100 Moz last year • Scrap supply has dropped by 100 Moz since 2012 • Average silver grade of the top seven primary producers is redu
Slide 25: Conclusion
Conclusion • Management proven strategy of significant shareholder wealth creation • Targeted regional consolidation with ‘bottom of cycle’ silver acquisitions • Adding quality silver inventory a priority • Well advanced on execution of strategy • Timing ‘sweet spot’ with macroeconomic trends
Slide 26: Appendix 1 – Bowdens Resource
Appendix 1 – Bowdens Resource Kingsgate mineral resource estimation, October 2012 Table A1 Bowdens Mineral Resource Estimate completed by MPR Geological Consultants. First reported under JORC Code 2004 in November 2012, and re-reported in October 2013 to be compliant with JORC2012 guidelines. Refer
Slide 27: Appendix 2 – Conrad Resource Estimate
Appendix 2 – Conrad Resource Estimate Malachite Resources NL – Conrad resource estimate released 16 December 2008 Table A2. Conrad Mineral Resource estimate as released by Malachite Resources NL (ASX:MAR) on 16/12/2008. Based on work compiled by Hellman & Schofield Pty Ltd, Geological Consultants, S
Slide 28: Appendix 3 – Webbs Resource Estimate
Appendix 3 – Webbs Resource Estimate Silver Mines Limited – Webbs resource estimate released 27 February 2012 Table A3 Webbs Mineral Resource estimate as released by Silver Mines Ltd (ASX:SVL) on 27/02/2012. Based on work compiled by GeoRes Pty Ltd. Totals may vary due to rounding. Table 3. Combined
Slide 29: Competent Persons Statements
Competent Persons Statements Bowdens Resource Estimation The information in this report that relates to the Bowdens Mineral Resources estimation is based on information compiled by Jonathon Abbott who is a full time employee of MPR Geological Consultants Pty Ltd and a Member of the Australian Instit