FORWARD LOOKING STATEMENTS

Transcription

1 KTN TSX.V CREATING A LEADING MEXICAN SILVER CONSOLIDATOR PROMONTORIO LA NEGRA LA CIGARRA July 7, 2016

2 FORWARD LOOKING STATEMENTS The information in this presentation has been prepared as at June 21, This presentation contains forward-looking statements with the meaning of Canadian securities legislation. Such forward-looking statements concern the completion of the proposed combination (the Transaction ) of Kootenay Silver Inc. ( Kootenay ) and Northair Silver Corp. ( Northair, collectively with Kootenay, the Companies ), potential benefits resulting from the Transaction, projected cash and cash equivalents post-transaction, plans related to the business of the Companies post-transaction and other matters that may occur in the future. Forward-looking statements are statements that are not historical facts and are generally, but not always, identified by words such as expected, projected, anticipated, potential, approaches, may, will or similar terms. Forward-looking statements are based upon a number of factors and assumptions that, while considered reasonable by the Companies as of the date of this presentation, are inherently subject to significant business, economic and competitive uncertainties and contingencies. Many factors, known and unknown, could cause actual results to be materially different from those expressed or implied by such forward-looking statements, including, without limitation: risks related to the Transaction not completing in the manner currently contemplated or at all; risks related to precious and base metal price fluctuations; risks related to fluctuations in the currency markets (particularly the Mexican peso, Canadian dollar and United States dollar); risks related to the inherently dangerous activity of mining, including conditions or events beyond the control of the Companies, operating or technical difficulties in mineral exploration, development and mining activities; uncertainty as to actual capital costs, operating costs, production and economic returns; risks related to governmental regulations and obtaining necessary licences and permits; risks related to the business of the Companies being subject to environmental laws and regulations which may increase costs of doing business and restrict operations; risks related to mineral properties being subject to prior unregistered agreements, transfers, or claims and other defects in title; risks related to the global economy; risks related to properties being located in Mexico including political, economic, social and regulatory instability and all country risks related to Mexico. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this presentation. Except as otherwise required by law, the Companies expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any such statements to reflect any change in the Companies expectations or any change in events, conditions or circumstances on which any such statement is based. Although information used in this presentation was considered reasonable by management at the time of preparation, the results may prove to be incorrect and actual results may differ materially from those anticipated in the statements made. Certain information in this presentation relating to Kootenay s Promontorio property is derived from NI Technical Report on Resources, Promontorio, Mexico, effective date March 31, 2013 and report dated May 24, 2013 prepared by SRK Consulting (U.S.), Inc. and available on the SEDAR website under Kootenay s profile at The scientific and technical information relating to Kootenay s Promontorio property contained in this presentation has been reviewed and verified by Kootenay s CEO, James McDonald P. Geo (a qualified person for the purposes of NI Standards of Disclosure for Minerals Projects). Certain information in this presentation relating to Northair s La Cigarra property is derived from Technical Report on the Updated Mineral Resource Estimate on the San Gregorio/Las Carolinas Zones, La Cigarra Silver Project, Chihuahua, Mexico, effective date January 14, 2015 and report dated February 27, 2015 prepared by GeoVector Management Inc. and available on the SEDAR website under Northair s profile at The scientific and technical disclosure relating to Northair s La Cigarra s property contained in this presentation has been reviewed and verified by Northair s VP Exploration, David Ernst, a professional geologist (a qualified person for the purposes of NI Standards of Disclosure for Minerals Projects). Cautionary Note to US Investors National Instrument Standards of Disclosure for Mineral Projects ( NI ) is a rule developed by the Canadian Securities Administrators that establishes standards for all public disclosure an issuer makes of scientific and technical information concerning mineral projects. Unless otherwise indicated, all reserve and resource estimates contained or incorporated by reference in this presentation have been prepared in accordance with NI and the Canadian Institute of Mining Metallurgy and Petroleum Classification System. These standards differ significantly from the requirements of the SEC, and reserve and resource information contained herein and incorporated by reference into this presentation may not be comparable to similar information disclosed by U.S. companies. In this presentation, we use the terms measured, indicated and inferred resources. U.S. investors are cautioned that, while such terms are recognized and required by Canadian securities laws, the SEC does not recognize them. Under U.S. standards, mineralization may not be classified as a reserve unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. U.S. investors are cautioned not to assume that all or any part of measured or indicated resources will ever be converted into reserves or is economically or legally mineable. U.S.investorsshouldalsounderstandthat inferredresources haveagreatamountofuncertaintyasto theirexistenceandas to whether theycanbe minedlegallyoreconomically.itcannotbeassumedthatall oranypartof the inferred resources will ever be upgraded to a higher category. Therefore, U.S. investors are also cautioned not to assume that all or any part of the inferred resources exist, or that they can be mined legally or economically. Disclosure of contained ounces is permitted disclosure under Canadian regulations; however, the SEC only permits issuers to report resources as in place tonnage and grade without reference to unit measures. Accordingly, information concerning descriptions of mineralization and resources contained in this presentation, including the documents incorporated by reference therein, may not be comparable to information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC. NI43-101also permits an historical estimate made prior to the adoptionof NI43-101thatdoes notcomply with NI to be disclosedusing the historical terminology if the disclosure: (a) identifies the source anddate of the historical estimate; (b) comments on the relevance and reliability of the historical estimate; (c) states whether the historical estimate uses categories other than those prescribed by NI , and if so, includes an explanation of the differences; and(d) includes any more recent estimates or data available. We have not independently verified the accuracy of the information regarding the mining industry and other market data set forth herein. This information is not intended to provide and should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your own advisors as to the accounting, legal, tax, regulatory, business, financial and related aspects of making an investment in the Company. 2

3 CREATING A LEADING MEXICAN SILVER CONSOLIDATOR Large diversified resource base with strong exploration upside Path to production carried interest in Promontorio& La Negra (Pan American Silver) Platform for aggressive growth with continued pursuit of other acquisition/ consolidation opportunities Organic growth potential 3,400m drill program underway at La Negra with 3,000m drilling to commence at La Cigarra Prospect generator portfolio with multiple joint ventures Strategic investments made by 3 separate major mining companies -vetting the exploration/development assets Significantly undervalued in comparison to earlier stage peers within the Mexican silver space with recent exploration results, but no resources 3

4 CAPITAL STRUCTURE Pan American, 10% Retail & Other,24% Exchange(Tier 1) TSX.V ( KTN ) Issued& Outstanding (1) 158.9m Fully Diluted (1) 226.3m Current Market Cap (2) CAD ~$63.6m KTN Institutions, 35% Coeur, 11% Condire, 6% KTN (shares 52-week High/Low) C $0.495/ $0.165 Average Daily Volume (3) ~402,000 Cash Position ~$4.0m Mgmt/ Directors & FF, 11% Agnico, 4% KTN.WT (Warrants 52 week High/Low) C $0.15/ $0.325 AverageDaily Volume (3) ~$32,500 (1) Shares issued and outstanding as at June 21,, 2016 (2) Slide assumes closing price of C$0.40 per share, June 21, 2016 (3) Average daily volume last 30 days 4

5 WELL ROUNDED BOARD AND MANAGEMENT TEAM FROM DISCOVEREY TO OPERATIONS MINE BUILDING James McDonald - Alamos Dick Whittington Farallon Andrea Zaradic - Diamet FINANCE & LEGAL Jon Morda -Alamos Joe Giuffre -Nevsun Raj Kang -Salares FINANCE & MARKETING Ken Berry -Northern Vertex Tony Reda -Kaminak Gold EXPLORATION Tom Richards -Teck, Mansfield, Newmont 5

6 CONSOLIDATION THESIS COMBINED ASSETS Purchasing silver resources at less than finding costs provides an efficient way to build a large resource base and leverage to silver price LOCATION LA NEGRA LA CIGARRA Opportunity to consolidate silver exploration &development assets among a highly fragmented peer group PROMONTORIO Northair Project Kootenay Project MEXICO KTN s Projects provide a large resource base and upside in Mexico Combined Represent 143 Million Ounces Ag Equivalent of M+I with Good Upside Excluding La Negra (1) (1) Refer to slides 11 and 16 for the required NI Technical disclosure related to breakdown of resources in the M, I and I categories, including tonnes, grades and metals. Which assumes 100% recovery of all metals. 6

7 VALUE PROPOSITION FOR CONSOLIDATION PRECEDENT CONSOLIDATION OF ASSETS AT LOW SILVER PRICES Market Cap (US$ Millions) $5,000 $4,500 $4,000 $3,500 $3,000 $2,500 $2,000 $1,500 Pan American First Majestic Silver Standard Silver Price HISTORIC SECTOR PERFORMANCE Acquisitons pre $60 $50 $40 $30 $20 Silver Price (US$/oz) Pan American: $2.50/sh to $41/sh First Majestic: $0.05/sh to $23/sh $1,000 $500 $0 $10 $0 Silver Standard: $1.25/sh to $37/sh Kootenay is pursuing strategic acquisitions and partnerships in the current low silver price environment Note: Market caps and share prices in US dollars 7

8 FULLY INTEGRATED CONSOLIDATION/DEVELOPMENT PLATFORM Kootenay s assets across multiple development stages provide a three track platform for continued growth: 1. Acquisition/consolidation of silver resources to build leverage 2. Exploration and development of assets to provide organic growth 3. Continue prospect-generator model to capitalize on joint venture opportunities La Negra: - Exploration drill program - Focus on resource expansion Promontorio: - Evaluating regional prospectivity Prospect Generation Portfolio La Cigarra: - Drill program focused on resource expansion La Negra Development: - Carried to Production Interest with Industry Leading Partner, Pan American Silver Grassroots Exploration Resource Definition Project Development 8

9 SHARE PRICE PERFORMANCE Since acquisition -KTN s share price increased from $0.175 to a recent high of $0.495 Trading volume (30 /day) increased from 62K to 402K 60% 40% RELATIVE PERFORMANCE - SINCE JAN Silver Px KTN Northair Silver Acquisition Total Return (%) 20% 0% -20% -40% -60% Jan. 13, % 9

10 LA CIGARRA OVERVIEW Located in Chihuahua State, Mexico, within the Historic Parral Silver District - over 18,000 hectares in size - 26 km from the city of Parral close to power, rail and highway 100% owned with surface rights obtained for mining operations Excellent relations with local community and Ejido 10

11 LA CIGARRA RESOURCE Resource Category* Tonnage In-Situ Grade Contained Metal Ag (g/t) Au (g/t) Pb(%) Zn (%) Ag (oz) Au (oz) Pb (lbs) Zn (lbs) Measured 3,620, ,340,000 9,000 10,920,000 15,510,000 Indicated 14,930, ,130,000 33,000 42,950,000 59,260,000 Meas + Ind 18,540, ,470,000 41,000 53,870,000 74,770,000 Inferred 4,450, ,460,000 8,000 12,680,000 15,610,000 Note:* NI Technical Report on the Updated Mineral Resource Estimate on the San Gregorio/Las Carolinas Zones, La Cigarra Silver Project, Chihuahua, Mexico, effective date January 14, 2015 prepared by GeoVector Management Inc. Mineral resources are reported in relationtoaconceptualpitshellata35g/tsilvercut-offgradeanda$22/ozsilverprice.mineralresourcesthatarenotmineralreservesdonot have demonstrated economic viability. All figures are rounded to reflect the relative accuracy of the estimate and numbers may not add up due to rounding. Pit constrained resource with significant expansion potential PEA level metallurgy study shows up to 88% silver recoveries and excellent concentrate grades 11

12 LA CIGARRA EXPLORATION POTENTIAL Numerous targets provide potential to increase resource and grade Mineralized structure over 6 km of strike Deposit remains open along strike to the NW and SE, and at depth Undrilled targets include: RAM Zone La Soledad Zone La Navidad Zone La Colorada Zone Nogalera Zone 3,000m Drill Program planned for mid July/16 12

13 LA CIGARRA E-W CROSS-SECTION 13

14 LA CIGARRA PROIRTY DRILL TARGETS Widespread anomalous silver in soil define target areas within large hydrothermal system Largely untested - only three holes drilled outside of Las Carolinas, San Gregorio, and La Borracha target areas Mineralized zone outcrops with higher grades in surface samples correspond to higher grades within deposit Higher grade shoots may also be defined in the La Borracha target area Mineralization at RAM is exposed in an erosional window within a 3.8 km linear magnetic low 14

15 HIGH GRADE POTENTIAL Geological modeling to evaluate potential for higher grade zones to improve grade. (Resource blocks shown below are modeled above a 75 gptsilver cutoff) La Cigarra Project 2015 Mineral Resource at 50 g/t silver cut-off* Resource Category* Cut-off grade Tonnes Ag (g/t) Ag (oz) Au (g/t) Pb (%) Zn (%) Measured > 50 Ag g/t 2,670, ,060, Indicated > 50 Ag g/t 10,700, ,410, Inferred > 50 Ag g/t 3,080, ,600, Note: *Valuesinthistablearereportedinrelationtoaconceptualpitshellata$22/ozsilverpriceandforcut-offgradesabove35g/tsilvershould not be misconstrued with a Mineral Resource Statement. The figures are only presented to show the sensitivity of the block model estimates to the selection of cut-off grade. All figures are rounded to reflect the relative accuracy of the estimate and numbers may not add due to rounding. 15

16 RAM ZONE DRILL TARGETS 3D Inversion Model at 200 Meters Depth 14 samples taken along a 35m length at the RAM Fault returned an average grade of 258 g/t Ag over an average width of 1.5m. Surface trenching above the area returned 67 g/t Ag over a width of 35m of disseminated in wallrock trench samples below quartzite caprock Large target area over a 3.8 km linear trend as defined by geochemistry, geophysics and alteration Additional targets along other northsouth faults parallel to RAM NW-trending mag low to southeast of known silver deposit indicates La Cigarra Fault continues below volcanic cover 16

17 PROMONTORIO MINERAL BELT Optioned to Pan American Host to two major silver discoveries: Promontorio & La Negra New high-grade La Negra silver discovery Numerous additional targets within a 6.5km x 15km area, including the Cameron-Vania trend Promontorio(2013) * Tonnage Grade Contained Pan American to spend 32% or US$3.7M of its 2016 exploration budget on greenfield and Joint Venture projects such as La Negra In-Pit Resources M&I Inferred Underground Potential M&I Inferred 44.5 Mt 14.6 Mt 0.2 Mt 1.3 Mt 64.3 g/t AgEq 52.0 g/t AgEq 57.0 g/t AgEq 61.1 g/t AgEq 92.0 Moz AgEq 24.3 Moz AgEq 0.4Moz AgEq 2.5 Moz AgEq (1) NI Technical Report on Resources, Promontorio, Mexico, Report by SRK Consultants Inc. Effective date March 31, Calculated at a pit-constrained cut-off of 20 g/t AgEq, and an underground cut-off of 45 g/t AgEq using a $31/oz silver price. AgEq calculated using $31/oz Ag, $1,650/oz Au, $0.96/lb Pb, $0.89/lb Zn, assuming 100% recovery of all metals. 17

18 LA NEGRA DISCOVERY High-grade silver intercepts to 300m vertically from surface Open Pit Low Cost Potential Surface footprint of ~500m x 200m 41 Holes to Date Metallurgy Indicates Potential for Leach Extraction in 80 to 90% Range 3,400m diamond drill program underway by Pan American 7 km La Negra 3,040 g/t Ag over 1m 1,338 g/t Ag over 6m 468 g/t Ag over 18m 420 g/t Ag over 50m 213 g/t Ag over 28m 156 g/t Ag over 200m Promontorio High-grade drill results to date 18

19 KOOTENAY - PAN AMERICAN (PAS) CARRIED TO PRODUCTION DEAL Provides pathway to production and future cash flow Augments and strengthens consolidation platform KTN carried interest Mitigates Project and Finance Risk To Earn 75% PAS Invests: US$16 million in work and cash payments; pay up front C$350k PAS invests C$2 million in Equity at $0.22 per share Provides All Capital to Production KTN chooses 2 properties from PAS portfolio 19

20 PROSPECT GENERATOR PORTFOLIO Canada Exploration Properties Copley Spike s Big Adventure Walter the Water Buffalo Connors Creek Optioned Properties Silver Fox Antofagasta 2X Fred, Fox Theia Resources Mexico Exploration Properties Santa Lucia Guadalupe Male San Diego Optioned Properties Cervantes Aztec Metals Continued strategy of pursuing JV opportunities feeding the development pipeline and reducing capital and project risk 20

21 FORWARD PLAN & CATALYSTS Near Term Mid Term La Cigarra Conduct 3,000 m drill program Prioritize 14 additional exploration targets for larger follow-up drill program Update Resource Calculation PEA Promontorio / La Negra Under Option to Pan American Silver 3,400m of drilling underway at La Negra with surface exploration program Pan American Silver to evaluate project development options Prospect Generator Portfolio JV Partners to determine 2016 work program amongst the four active ventures Evaluate on-going joint venture opportunities Corporate Continue to evaluate other consolidation targets Strong continuum of assets to provide steady news flow 21

22 SILVER EXPLORERS PEER GROUP OREX Minerals Kootenay Silver Golden Arrow Silvercrest Canasil Resources Tinka Resources Silver bull Resources 22

23 KOOTENAY SILVER Leading Mexican silver consolidator & development company Platform for aggressive growth through: Resource Development at La Cigarra Path to Production with carried interest at Promontorio& La Negra Discovery in prospect generator portfolio Continuation of Acquisition / Consolidation Strategy Silver ounces are cheaper to buy than they are to find Larger capital markets presence and greater liquidity Opportunity to become the go-to name in the silver exploration/ development space with potential re-rating 23

24 CONTACT US KOOTENAY SILVER INC West Hastings Street, Suite #1820 Vancouver, BC, V6E 2E9, Canada Tel: (604) Fax: (604) Toll free: (888) Website: Twitter: