Greg Johnson was appointed President & CEO of South American Silver in April, 2010.

Evo Morales, of indigenous Aymara descent, was born in Isallawi village in the province of Oruro, Bolivia.  He was one of seven children born into a poor family; only Morales and two of his siblings survived past childhood. He grew up in an adobe house with a straw roof that was three by four meters.

As a child, he traveled with his father to Argentina to work in the sugar cane harvest. As a youth, he accompanied his father in herding llamas from Oruro to the province of Independencia. At the age of 46 he became the President of Bolivia in 2005 receiving 53.7% of the popular vote.

Morales is a nationalist. During his first term in office, he improved the living standards of poor Bolivians through increased state intervention of the economy by nationalizing oil, mines, gas, and communications. Welfare provisions and old-age pensions were expanded and payments were made to mothers provided their babies are taken for health checks and that their children attend school. Evo Morales is a charismatic leader and although he continues to align himself with other Latin American socialist leaders, he has gained a reputation for being responsible towards foreign business investment. Morales’ decree, “We want partners, not bosses.” And has previously stated that, “The investor has the right to recuperate their investment and to a reasonable profit.”

Earlier this month, Evo Morales overturned certain mining, banking and investment laws in another bid to increase state control over the Bolivean economy. A new mining bill, which has yet to be sent to Congress, isn’t expected to “substantially” change contract conditions for miners.

South American Silver’s flagship project is the Malku Khota silver-indium-gallium project in Bolivia, one of the world’s largest undeveloped silver, indium and gallium deposits. On May 16th, the company updated its economic assessment and resource estimate to expand Measured and Indicated resources 60% to 230 million ounces of silver with an additional Inferred resource of 140 million ounces of silver. In addition to Malku Khota, South American Silver is also developing the Escalones copper-gold project in Chile and we joined up with the company’s President & CEO Greg Johnson to learn more about their projects and the rare element indium.

South American Silver’s flagship project is the Malku Khota Silver-Indium deposit in Bolivia. Can you give our our readers an overview of the project? And, what impact do the other metals have on the economics of the project?

Malku Khota is our most advanced project. With an NI-43-101 qualified Measured and Indicated resource of 230.3 M ounces of silver, plus an additional Inferred resource of 140 M ounces, Malku Khota is already one of the largest silver resources in the world. In addition to an abundance of silver, Malku Khota also contains one of the largest known resources of indium at 1,481 tonnes Indicated and 1,001 tonnes Inferred. Only about 30% of the 50 square kilometre property at Malku Khota has been drill tested and the deposit shows excellent potential for expansion. At this point in time, we are focusing on expansion drilling to move forward into the pre-feasibility process during the remainder of 2011 and into feasibility in 2012.

Our recently filed updated Economic Assessment showed robust economics for an open-pit heap leach operation. The study predicts that Malku Khota could be one of the world’s largest primary silver producers with annual production of some 13.2 million ounces of silver, 80 tonnes of indium, and 15 tonnes of gallium for the first five years of operation’s 15 year mine life. The additional production of several million pounds of by-product lead, copper and zinc contributes to the project’s low operating costs, which are projected to be in the lower quartile of primary silver producers.

I’m sure many of our readers are not familiar with indium – what is indium used for and, once produced, what does the market look like for the product?

Indium is a rare strategic, high-technology metal with unique electrical and optical properties. Demand for indium is being driven by applications such as touch screens, solar panels, LCD displays, and LED lights. While demand for indium is rapidly increasing, primary production and recycling levels remain low. Because indium is most commonly produced as a by-product of zinc smelting, slow growth in overall zinc production limits overall growth in indium production. Demand for indium, on the other hand, has more than doubled in the past several years and has increased more than ten-fold over the past decade. Projections indicate substantial growth in overall indium consumption that will likely need to see new primary sources of indium production developed to meet increased demand levels.

Recently, Bolivia was in the news when it was reported that officials might make changes to mining legislation, particularly regarding certain previously state owned and operated mines. South American Silver reported in May that you received assurances that these changes would not impact the company. Please expand?

Recently, the media had reported that the Bolivian Government might increase state control over certain mines. This caused quite a stir in the market, as it was initially unclear whether this was a broad change in government policy for mining. We have since received clarification that the government is considering changes to legislation from 1985 that had allowed for the privatization of the operation of some specific mines owned and operated by the Bolivian State Mining Corporation, or COMIBOL. Bolivian government officials have confirmed that these changes will only be focused on 4 specific COMIBOL-owned mines and that private investments in mining will continue to be respected.

As South American Silver’s Malku Khota project does not have government involvement and has always been a privately owned project, we have been assured that our project will not be impacted by the proposed changes for government-owned mines. In addition, government officials have made statements of support specifically on the Malku Khota project. The government has also clearly stated that it wishes to attract foreign investment in mining. Mining is a key area for economic development in Bolivia, currently representing over 40% of the country’s GDP.

What is it like working in a developing country like Bolivia?

Working in emerging countries like Bolivia has both its challenges and opportunities. The South American Silver management team has over 16 years of experience working in Bolivia and other parts of Latin America, with significant combined experience in the global mining industry.

Bolivia offers significant opportunity for resource development because of its rich endowment in silver and other metals. In fact, it is one of the largest historic producing regions for silver. We have been able to identify exceptional mineral opportunities that have the scale potential to become world-class mines, and our team has the experience and expertise in the exploration and development process to advance our projects toward feasibility and production. In addition, the management team looks for ways to further mitigate development risks. In particular, we are working closely with local communities and indigenous people to develop respectful, mutually beneficial relationships that we believe can greatly facilitate the development of our projects.

Under the Morales administration, Bolivia has experienced much positive growth. A key area of reform has also been a focus on bringing benefits from resource development to local indigenous and rural communities. As we advance the Malku Khota project through to production, we will continue to look for infrastructure development and job creation opportunities to further stimulate the local economy.

You also have a development project in Chile, what about the project captured your interest and what’s been happening there recently?

The Escalones copper-silver-gold project located in Chile shows excellent potential to become a large-scale asset. Our exploration has revealed grades and widths of mineralization that indicate the presence of a strong mineralizing copper-silver-gold porphyry system. We have completed initial geological modelling and target definition and are developing an exploration plan to include additional surface sampling, mapping, deep sensing geophysics, and diamond drilling to test the strength and scale of the mineralized system. With the exploration program underway, we are aiming for an initial copper-silver-gold NI-43-101-qualified resource estimate to be completed later this year.

You completed a $32 million financing at the end of 2010, where do you plan on spending the money?

The $32 million financing put us in a very strong financial and operational position to move forward with the rapid development of our Malku Khota silver-indium project to feasibility and to advance our Escalones copper-silver-gold project to the resource definition stage. With our current plans and budgets we have working capital for the next 18-24 months. As the company advances each of our projects through the various stages of development, we will also look to continue to build on our skilled and experienced management team and our work with our local communities to support the company’s rapid growth.

This interview appeared in 10 Most Interesting Silver Stocks – Part 3 – CLICK HERE – for the article.

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