The Company currently has the financial and management capacity to take Escalones forward in the near term but is conscious that if Escalones reaches the potential that management believes it has, it will eventually become too big for the Company to advance alone, even in the exploration stage. South American Silver is currently evaluating the potential that joint venturing offers and has invited interested parties to review the exploration data and to visit Escalones with a view to joint venturing. The Company has not yet committed to joint venturing and will see how things develop with interested parties over the coming months.
Malku Khota, Bolivia
On October 23rd, South American Silver notified the Bolivian Government of an Investment dispute, arising from the expropriation of the Malku Khota mining concessions. This instigated a 6 months negotiation or cooling-off period. The company delivered subsequent letters to the Bolivian Government reiterating a willingness to attend meetings with Bolivian Government representatives to resolve the dispute amicably. The Government of Bolivia finally responded on February 21, 2013 requesting a meeting with company representatives on April 17, 2013 to discuss a potential amicable resolution to the investment dispute. The company responded on March 4, 2013 expressing its willingness to meet but subject to certain conditions. As at March 28, 2013, the Company has not received a response from the Government of Bolivia.
The cooling-off period ends on April 23, 2013. If settlement cannot be reached within the cooling-off period, South American Silver intends to file by May 2013 for international arbitration under the Arbitration Rules of the United Nations Commission on International Trade Law (UNCITRAL), and will seek compensation based on fair market value of the Malku Khota project. Unless there is a negotiated settlement during the process, arbitration cases such as this typically take around 3-4 years to get to the point of award.
Arbitration provides the forum for the Company to pursue fair compensation for the substantial losses suffered as a result of the expropriation. Since the expropriation Supreme Decree, the Company has appointed the international legal firm, King & Spalding, to prepare the claim. King & Spalding will be supported by prominent local counsel in Bolivia. Financial experts have been appointed to assess the value of damages for the purpose of the claim. South American Silver is also evaluating proposals for third-party litigation funders to finance the arbitration costs up to the collection of a potential arbitration award.
High Desert Gold Corporation - Gold Springs, Nevada
After the loss of Malku Khota it became very important to have other exploration targets on which to focus the Company's exploration and development expertise. The Company drew up its "wish-list" and started a search, aimed at finding a precious metals property or properties, preferably gold, located in a mining-friendly jurisdiction in the Americas, right-sized for the Company, preferably at an advanced exploration stage, in a near-surface deposit requiring conventional processing.
Amongst many other interesting prospects, the Company's efforts turned up the Gold Springs property, which straddles the Nevada-Utah border, both mining friendly jurisdictions. Gold Springs is owned 82% by High Desert Gold Corporation (TSXV: HDG) and is another example of a potentially significant discovery by Ralph Fitch and team, who, as well as being the founder and Executive Chairman of the Company is also the founder and CEO of HDG. HDG has reported excellent grades (up to 6g/t - see HDG Press Release PR 12-14, August 16, 2012) and good cyanidation recoveries (92% average - see HDG Press Release PR 13-02, January 28, 2013) for the Gold Springs property. The Gold Springs property is almost 60 square kilometres. There are 18 separate targets on the property and at this stage only one has been drilled sufficiently to estimate a resource (Jumbo in Utah, with 233,000 ounces AuEq(1)(i) of Inferred resources - see HDG Press Release PR 11-18, December 22, 2011). Exploration is still at a relatively early stage and the focus has shifted to the Grey Eagle area in the north-west of the property in Nevada. At this stage there are some drill results available for Grey Eagle but no resource estimate.
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