often diagnosed between ages ... Helen Terry .... A total of 206 personal grants were made to help people cope with the ... do not appreciate the true impact of their Crohn's and Colitis ... and, more recently, in Scotland. .... put a lot of your mem
to community-based services and affordable diabetes .... software to Greentree. This provided ..... Too Good Pty Ltd, Uniting Church â. Yallourn Parish.
Cover photograph: Jesse Martin, around the world solo yachtsman and Let's Prevent Diabetes ambassador, spends ... new research projects in the next year. ... on report was launched showing ..... (Ireland), who gave research seminars in.
worker focussing on resettlement, support to overcome the affects of domestic .... setting to explore issues such as low self esteem and confidence, isolation, guilt ...
Children having fun at Junior Camp. 2. Call centre staff ..... A History of Diabetes in Australia, at a special ceremony at the. Immigration .... Lions Club of Karingal.
on the housing waiting list being re-housed in Wealden. Good progress has ..... The support of our partners Wealden District Council and. Denne Construction ...
close with a piglet at the Anglesea YMCA. Recreation ... was discovered and people could start ..... every encounter with our members .... professionals, teachers.
2009 ANNUAL REVIEW
Table of Contents 2 3 6 8 10 15 16 18 19 20 IBC
Message from the Chairman Message from the President Project Map Pirquitas Mine Exploration and Development Projects Mineral Reserves and Resources Summary Safety and Sustainability Silver Market Management Team Board of Directors Investor Information
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND NON-GAAP PERFORMANCE MEASURES The Annual Review contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and Canadian securities laws concerning the anticipated developments in our operations in future periods, our planned exploration activities, the adequacy of our financial resources and other events or conditions that may occur in the future. These statements relate to analyses and other information that are based on forecasts of future results, estimates of amounts not yet determinable and assumptions of management. Statements concerning mineral reserve and resource estimates may also be deemed to constitute forward looking statements to the extent that they involve estimates of the mineralization that will be encountered if the property is developed. Any statements that express or involve discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance (often, but not always, using words or phrases such as “expects”, “anticipates”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential” or variations thereof, or stating that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms and similar expressions) are not statements of historical fact and may be forward-looking statements. Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: uncertainty of production and cost estimates for the Pirquitas Mine; uncertainty of production at our mineral exploration properties risks and uncertainties associated with new mining operations, including start-up delays and operational issues; risks related to our ability to obtain adequate financing for our planned development activities and the ability to complete further exploration programs; commodity price fluctuations; our history of losses and expectation of future losses; recent market events and conditions; risks related to general economic conditions; risks related to our covenants given with respect to our 4.5% convertible senior notes due 2028; differences in U.S. and Canadian practices for reporting mineral resources and reserves; risks and uncertainties relating to the interpretation of drill results and the geology, grade and continuity of our mineral deposits; unpredictable risks and hazards related to the development and operation of a mine or mine property that are beyond our control; risks related to governmental regulations, including environmental regulations; risks related to the delay in obtaining or failure to obtain required permits, or non-compliance with permits we have obtained; increased costs and restrictions on operations due to compliance with environmental laws and regulations; risks related to reclamation activities on our properties; uncertainties related to title to our mineral properties and surface rights; risks related to political instability and unexpected regulatory change; our ability to successfully acquire additional commercially mineable mineral rights; currency fluctuations; increased costs affecting the mining industry; increased competition in the mining industry for properties, qualified personnel and management risks related to estimates of future income tax assets and liabilities; risks related to claims and legal proceedings; our ability to maintain adequate internal control over financial reporting. This list is not exhaustive of the factors that may affect any of our forward-looking statements. Forward looking statements are statements about the future and are inherently uncertain, and our actual achievements or other future events or conditions may differ materially from those reflected in the forward looking statements due to a variety of risks, uncertainties and other factors. Our forward-looking statements are based on the beliefs, expectations and opinions of management on the date the statements are made, and we do not assume any obligation to update forwardlooking statements if circumstances or management’s beliefs, expectations or opinions should change. For the reasons set forth above, you should not place undue reliance on forward-looking statements.
Focused on Opportunity Silver Standard is a silver producer with fifteen projects ranging from exploration to production. Our strategy: to leverage the growth opportunities offered by our developing pipeline of quality assets. Our goal: to be the premier silver company.
SILVER STANDARD RESOURCES INC. Message from the Chairman
Message from the Chairman Silver Standard has arrived at the milestone of commercial production, the most transformative achievement to date in our strategy for growth. We reached the status of silver producer with a mine that will rank among the largest of silver producers worldwide, and one which establishes a firm foundation for our success going forward as a mining company.
2009 started in an environment of great uncertainty, as the global financial crisis unfolded around us. We were very pleased, although not surprised, to see the continuing strength of the precious metals markets through this period, which reinforces our view that the silver and gold business is one where we can continue to grow value for our shareholders for many years to come. With our robust pipeline of projects ranging from exploration to production, we are wellpositioned to do so. We faced the usual start-up challenges in getting our Pirquitas Mine up and running in 2009, but the efforts of our management team prevailed, and we are poised for a successful year there as we continue to optimize the operation. It was particularly pleasing to see the excellent safety performance through the construction and early operating phase, as this is a core value for the company, and receives a lot of attention from the Board and management. We continued to conduct successful exploration programs in 2009, and look forward to another active year of discovery on our key prospects. With our extensive in-ground mineral resource, we now face the enviable task of extracting full value from our diverse assets. We will be looking to accelerate progress on our development projects, and rationalize our large project portfolio in a way that will maximize returns to our shareholders, while respecting the position of all of our stakeholders.
Under his watch, Silver Standard has grown from a $1.5 million junior explorer to a $1.6 billion exploration, development and mining company with the largest in-ground silver resource of any publiclytraded silver company. Michael Anglin, a member of the Board of Directors since 2008, has agreed to assume the role of President and CEO on an interim basis. We are fortunate to have someone of Mike’s caliber as a senior mining executive with many years of South American experience to run the company while the Board conducts an extensive international search for a permanent CEO. We are evaluating both internal and external candidates, and hope to finalize this process soon. I would also like to thank Gordon Davis, who has decided to retire from the Board, for his 14 years of diligent service.
In March of this year, we monetized the non-core Silvertip Project in British Columbia for a total consideration of approximately $15 million, reflecting a gain of approximately $13.1 million. We will continue to seize the opportunities presented by the market to realize attractive returns for our non-core assets, which will enable us to focus on our growth.
We are excited about the quality of our people, our projects and our strategy. We have hundreds of dedicated and hard working employees, and on behalf of the Board, I thank them for their contribution in 2009. Your Board of Directors is committed to working closely with our talented management group, and I am sure that through the efforts of all of our employees, both in Canada and throughout the Americas, 2010 will be a safe and memorable year.
In recent months there have been significant changes within the company. On January 19th of this year, Robert Quartermain stepped down as President and CEO of Silver Standard. On behalf of the Board, I thank Bob for his 25 years of leadership of the company.
Peter W. Tomsett Chairman
In Focus – 2009 Annual Review Message from the President
Message from the President 2009 was a year of significant progress for Silver Standard, from the success of our exploration programs at Snowfield and Brucejack in Canada to the December announcement of commercial production at our flagship Pirquitas Mine in Argentina. We have substantially increased our gold and silver resources and advanced our development projects, demonstrating our commitment to grow the company through our pipeline of quality assets.
Strengthening Our Team Thanks to the leadership of past President and CEO Bob Quartermain, the value of our project pipeline has already begun to be unlocked by a growing team of talented professionals. In 2009 we strengthened our management team in areas including engineering, human resources, sustainability, and corporate development which has prepared us to meet the challenges and opportunities of a growing mining company. During my time I have found this group to be energetic, competent and focused on delivering value to our shareholders. Pirquitas Mine Delivering on our targets at Pirquitas remains our number one priority. The early stages of the ramp-up of the mine posed some challenges, and the progress of the project did not meet our own ambitious 2009 production timetable. The mine and plant are now operating at capacity, and we believe that we are now in a position to meet our plant operational targets and begin achieving nameplate production levels of eight to ten million ounces of silver per year beginning in late 2010. Developing Our Quality Assets Our development projects are an important driver of our growth, and we have been focused on advancing the San Luis joint venture project in Peru and our wholly-owned Pitarrilla Project in Mexico. San Luis, a high-grade gold-silver project, has been the subject of a feasibility study which we plan to release in the second half of 2010. At Pitarrilla, engineering work is now underway as a result of the pre-feasibility study released in 2009 on the Breccia Ridge underground component. We are accelerating work on this project, one of the largest silver discoveries in the world this past decade, and plan to have a feasibility study prepared by the fourth quarter of 2010.
Building on Our Exploration Success Exploration success is a hallmark of Silver Standard, and remains a strategic imperative for the company going forward. In 2009, we increased our silver resources globally and on a per share basis compared to 2008, and, importantly, we added 92 million ounces of silver reserves. We increased our measured and indicated gold resources by over 580%. Our gold exposure has been growing in large part due to the outstanding results from drilling at our Snowfield and Brucejack projects in British Columbia. Snowfield and Brucejack remain priorities, and this summer we are planning a drill campaign similar in scope to our 2009 program. Other exploration activities this year include programs at San Agustin in Mexico, Berenguela in Peru and Challacollo in Chile. We continue to pursue generative, early-stage exploration as part of our strategy to maintain a pipeline of quality projects. Looking Forward Our goal is to build on our achievements and realize Silver Standard’s full potential as a premier silver mining company with a sustainable growth profile. We are committed to our plan, and are actively pursuing our objectives. To our stakeholders we thank you for your confidence and we look forward to updating you on our progress.
A.E. Michael Anglin President and Chief Executive Officer 3
SILVER STANDARD RESOURCES INC. Growth in Reserves and Resources
Focused on Growth in Reserves and Resources Silver Standard has a track record of creating shareholder value through discovery. Our strategy is to realize the full potential of our portfolio through a continued focus on exploration to expand our project pipeline.
SILVER RESERVES AND RESOURCES (IN MILLIONS OF OZ.)
SILVER RESERVES AND RESOURCES PER SHARE (OZ./SHARE)
1500 20 1000
Proven & Probable 10 500
Measured & Indicated
5 0 2005
GOLD RESOURCES PER SHARE (OZ./SHARE)
GOLD RESOURCES (IN MILLIONS OF OZ.)
Measured & Indicated
In Focus – 2009 Annual Review Section Title
(in millions of oz.)
Proven & Probable Reserves
TOTAL RESERVES & RESOURCES (at Dec. 31, 2009)
Measured & Indicated Resources
(in millions of oz.)
Measured & Indicated Resources
SILVER STANDARD RESOURCES INC. Map of Operations
Map of Operations
Pirquitas Mine: Jujuy Province, Argentina
Pitarrilla: State of Durango, Mexico
San Luis (55%): Ancash, Peru
Snowfield: British Columbia, Canada
Brucejack: British Columbia, Canada
Diablillos: Salta Province, Argentina
San Agustin: State of Durango, Mexico
Veta Colorada: State of Chihuahua, Mexico
Berenguela: Puno, Peru
10 Maverick Springs: Nevada, USA 11 Challacollo: Region 1, Chile 12 Candelaria: Nevada, USA
13 Bowdens: New South Wales, Australia 14 Sunrise Lake: Northwest Territories, Canada
15 San Marcial: State of Sinaloa, Mexico
11 6 13
In Focus – 2009 Annual Review Section Title
• Pirquitas, Argentina
• San Luis, Peru • Pitarrilla, Mexico • Diablillos, Argentina
• • • • •
Americas generative exploration programs
Snowﬁeld, Canada Brucejack, Canada San Agustin, Mexico Berenguela, Peru Challacollo, Chile
PROJECT PIPELINE 7
Pirquitas Mine Silver Standard has made a successful transition to production with the ramp-up of the Pirquitas Mine in Argentina. The efficient operation of our flagship silver mine is fundamental to our growth strategy, and we are focused on achieving our operational objectives. Ramp-Up The Pirquitas Mine achieved commercial production in December 2009, producing 1.1 million ounces of silver and shipping 800,000 ounces for the year. We expect to achieve 2010 production of seven million ounces of silver at an average operating cost of $9.00 per ounce silver (net of by-product credits). Full annual production averaging eight to 10 million ounces of silver and 2,000 tonnes of tin will begin in 2011. Open pit operations have performed well and to expectations during ramp-up. In 2009, the open pit operated at the design rate of 43,000 tonnes per day at a cost of $2.15/tonne material mined. To date, over 18 million tonnes of material have been moved since the mine commenced operations in July 2008. During 2009, pit ore was stockpiled while historic jig tailings were used as initial mill feed during the ramp-up process. Although this material served the purpose of enabling us to commission the facility without wasting ore, it affected our earlier 2009 projected production results due to challenges presented by greater than expected grade variation and oxidation affecting metallurgical performance. In Q4, the performance of the process plant improved significantly with a switch to oxidized and transitional open pit ore. We achieved over 60% silver recovery from this material, more than double attained in metallurgical testwork. The sulphide ore for which the plant is designed is now exposed in the pit. It is anticipated that we will process this ore at full capacity in Q2, and achieve ultimate silver recoveries of 76%. The tin circuit is commissioned and will be operated when the sulphide ore is processed. Grade and
SSRI % INTEREST:
Argentina - Jujuy Province
open pit silver-tin mine
Two all-weather roads
natural gas for mill and facilities, diesel for rolling stock
195.1 million ounces of silver
6,000 tonnes per day
recovery optimization for the silver and tin circuits is ongoing, and we have installed and configured the zinc circuit.
TOP MINES RANKED BY 2009 SILVER PRODUCTION (millions of ounces)
With average annual silver production of eight to 10 million ounces of silver, Pirquitas will rank among the world’s largest silver producers.
40.0 35.0 30.0 25.0 20.0 15.0 10.0 5.0
IS T N U
O M N SA
Exploration Earlier drilling at Pirquitas showed evidence of excellent exploration potential elsewhere on the property. Drilling is planned for 2010 to test several new mineralized zones discovered in 2009, and to test depth extensions below the pit. Safety and Sustainability Our “Safe for Life” safety and risk management program has been successfully established at Pirquitas. Positive incentive initiatives have had a measurable impact, and we continue to focus on safety training. Employment and economic development is the focus of our community relations initiatives at Pirquitas. An early emphasis on local recruitment and training has resulted in a stable, skilled local workforce at the mine. Thirty-three percent of Pirquitas employees come from communities adjacent to the mine (with 35% from the province and 32% national).
In addition to offering opportunities for employment, we have been engaged in collaborative projects which improve the quality of life in the region through economic development, and health and education. We have worked with government ministries to promote the development of small business enterprises in the area, and have used the expertise and resources of minesite professionals and contractors to support infrastructure projects such as gas and heating installation in area schools and water and sanitation facilities at a local medical post. Nutrition and illness prevention have been addressed with workshops and other initiatives. We value the support for the mine from the area communities, and continue to look for opportunities to partner with them on projects which contribute to the long-term development of the region.
SILVER STANDARD RESOURCES INC. Section Title
San Luis The high-grade San Luis gold project is a promising development opportunity in a recentlyidentified gold-silver epithermal district in central Peru.
San Luis was first discovered in 2005. The property is located approximately 25 kilometers from Barrick Gold Corporation’s Pierina gold mine. The San Luis vein system is a typical volcanic-hosted low sulphidation epithermal quartz/precious metal deposit. Five separate subparallel veins have been identified so far, and the western-most Ayelén vein has been the focus of ongoing work as it demonstrates the best opportunity for near-term production. A feasibility study for the project is anticipated to be finalized in the second quarter of 2010 upon completion of geotechnical drilling and related engineering design work. It is expected that conventional underground mining methods will be used. San Luis is held in joint venture with Esperanza Silver Corporation. We hold a 55% interest and have elected to increase our interest to 70% by funding the cost of the completed feasibility study. We can earn up to 80% interest by funding costs to place the project into production. Baseline environmental data collection has been ongoing, and the environmental permit application will be submitted when the feasibility study is completed. The joint venture has been in negotiations to secure long-term land access agreements. We have been engaged with the communities surrounding the project in a variety of ways, with employment and local economic improvement the two areas of emphasis. We have collaborated with community and municipal governments on infrastructure projects, as well as initiatives that improve the commercialization of livestock and farming.
SSRI % INTEREST:
55% up to 80%
Peru - Ancash, Yungay Province
Two all-weather roads
Measured & Indicated: gold, 348,100 oz. and silver, 9.0 mil oz. Inferred: gold, 3,600 oz. and silver, 174,900 oz.
In Focus – 2009 Annual Review Section Title
Pitarrilla Pitarrilla is a major grass-roots silver discovery and has been a significant driver of our silver resource growth. Our goal is to unlock the value of this large resource with accelerated development. The Breccia Ridge Zone, one of five identified zones on the property, hosts 63% of Pitarrilla’s resources and has been the focus of development activities to date. A feasibility study on the underground component of Breccia Ridge is underway, and all the engineering contracts have been awarded. The feasibility study is expected to be completed in the fourth quarter. In August of 2009 we released the results of a pre-feasibility study on the underground component of the Breccia Ridge Zone. The pre-feasibility study presents a project with a 12-year mine life, mining 4,000 tonnes per day and producing approximately seven million ounces of silver per year. Based on the pre-feasibility study and the June 16, 2009 two-year average silver price of US$14.06/ounce, the underground project has a net present value of C$521 million at a 5% discount rate. The pre-feasibility study also identifies bulk mining opportunities for the underground component and a scoping study is underway to explore this possibility. Concurrent with the advancement of the Breccia Ridge underground is a scoping study on the open-pit opportunities at Breccia Ridge, as well as engineering studies and testwork on the four other surface zones: Pena Dike, Cordon Colorado, Javelina Creek and South Ridge.
SSRI % INTEREST:
Mexico - State of Durango
underground/open pit silver-lead-zinc
Paved highways to within 12 miles of property center
91.7 million oz silver (Breccia Ridge Zone)
Measured & Indicated: 551.6 mil oz. silver Inferred: 82.2 mil oz. silver
Feasibility study on Breccia Ridge underground component
Diablillos In June 2009 we announced an updated resource for our silver-gold Diablillos project in Salta Province, Argentina. With 15,000 meters of drilling, we converted 70% of the silver and gold inferred resources to the indicated category. Metallurgical testwork has demonstrated, using conventional milling, recoveries of 87% for gold and silver and heap leach tests gave recoveries of 65% for gold and 40% for silver. In 2010 we are planning a pre-feasibility study for the project. 11
SILVER STANDARD RESOURCES INC. Section Title
Snowfield Our drilling success at Snowfield has greatly increased our exposure to gold, and demonstrates that a focus on exploration to expand our project pipeline creates value for our shareholders.
The Snowfield Project hosts a substantial gold resource with significant copper and molybdenum resources. Part of an expansive gold camp, Snowfield and the adjacent Mitchell Zone of Seabridge Gold Inc. are evolving into a world-class gold district. This area has been the subject of numerous exploration programs since the mid-1980’s when it was being actively explored for porphyry copper-molybdenum and copper-gold, exhalative volcanogenic and lode gold-silver vein deposits. Drilling in 2006 resulted in the definition of the Snowfield Zone which then measured 350 meters by 450 meters on surface. In 2007, we expanded the zone and in a single hole located one kilometer to the north intersected a significant interval of gold-copper mineralization. In 2008, we followed up with a 16,945-meter drill program which outlined a significant gold-copper inferred resource that was part of the same system. In 2009, we drilled in excess of 22,000 meters and doubled the total resource, upgrading a substantial portion of the inferred gold resource to measured and indicated. A drill program of 18,000 meters and engineering studies are planned for 2010, primarily to expand and upgrade the resource. Geotechnical and large diameter drilling for advanced metallurgical studies will also be included. Preliminary environmental and geotechnical investigations will be completed at the proposed mill tailings locations. These areas are being defined in a national instrument 43-101 compliant Preliminary Assessment, which is expected to be completed in the second quarter. A strategic review of Snowfield is underway.
SSRI % INTEREST:
Canada - British Columbia, 65 km north of the town of Stewart
Measured & Indicated: gold, 19.8 mil oz and silver, 50.9 mil oz. Inferred: gold, 10.1 mil oz and silver, 43.7 mil oz.
Drilling and preliminary economic analysis
In Focus – 2009 Annual Review Section Title
Brucejack In an area of little known bulk tonnage gold mineralization, our 2009 drill program outlined four million ounces of measured and indicated gold and five million ounces of inferred gold in five zones.
The 2009 Brucejack drill program exceeded expectations in identifying and defining previously unrecognized gold targets, and in intersecting bulk tonnage gold mineralization over significant intervals, with several exceeding 500 meters. The program included 17,846 meters of diamond drilling in 37 holes, all of which intersected gold-silver mineralization. A highlight is hole SU-19, in the newly-discovered Bridge Zone, which encountered 552 meters of 0.87 grams of gold per tonne, including 260 meters of 1.19 grams of gold per tonne. Hole SU-10, drilled 100 meters northeast of SU-19, intersected 483 meters of 0.70 grams of gold per tonne including two higher grade intervals of 50 meters of 1.26 grams of gold per tonne and 33 meters of 1.25 grams of gold per tonne. Both holes ended in mineralization. Interpretation suggests that the Bridge Zone may have the potential to be a gold-copper-molybdenum porphyry similar to the Snowfield Zone six kilometers to the north. Drilling also intersected bonanza-grade gold-silver mineralization over narrow widths. A highlight is hole SU-12 at Galena Hill, which intersected 1.5 meters of 16.9 kilograms of gold and 8.7 kilograms of silver per tonne. There is excellent exploration potential at Brucejack for locating additional high-grade mineralization as well as porphyry-style bulk tonnage deposits, and a 24,000 meter drill program is planned for 2010. One goal is the expansion of the Bridge Zone, and other drill targets include the continued testing for expansion of the high grade Galena Hill and West Zones, and new areas which have been defined by surface sampling and mapping.
SSRI % INTEREST:
Canada - British Columbia, six km to the south of Snowfield
Measured & Indicated: gold, 4.0 mil oz and silver, 65.4 mil oz. Inferred: gold, 4.9 mil oz and silver, 71.5 mil oz.
Hole SU-12 from the Galena Hill Zone encountered 1.5 meters with 16.96 kilograms of gold and 8.7 kilograms of silver per tonne. 13
SILVER STANDARD RESOURCES INC. Targeted Exploration
Focused on Targeted Exploration Silver Standard’s resource growth is fuelled by successful early-stage exploration. Our portfolio of quality projects offer us unparalleled opportunities for long-term, organic resource growth – a key component of our strategy. We are focused on continuing to unlock value from our resource assets.
We congratulate long-time Silver Standard contract senior geologists Perry Durning (r) and Frank (Bud) HIllemeyer (l) for winning the 2010 Prospectors and Developers Association of Canada Thayer Lindsley Award for International Mineral Discoveries. Their outstanding record of grass-roots discoveries in Mexico include Silver Standard’s San Agustin and Pitarrilla projects in Durango.
San Agustin – State of Durango, Mexico
The San Agustin gold-silver project in Durango, Mexico was returned to Silver Standard in early 2009 in the midst of the global financial crisis when the company that held the option elected not to exercise its option to acquire it. Interim exploration work had significantly increased the mineral resource for the project and demonstrated excellent exploration potential for additional resources. We are planning an in-depth geophysical program to be followed by 6,000 meters of drilling. Engineering studies on possible heap leach potential and metallurgical studies on the sulphide mineralization are also planned.
Berenguela – Puno, Peru
Our Berenguela project in southern Peru hosts an indicated silver and copper resource. In 2010 we plan to complete additional geophysics and a 5,000 metre drill program to expand the existing near-surface mineralization and test for silver sulphide feeder mineralization.
Challacollo – Region 1, Chile
A geophysical program is planned for the Challacollo silver project in northern Chile, which hosts an indicated and inferred silver resource. Challacollo is located along a strong north-south lineament that includes a number of copper deposits to the north, with a possible east-west lineament postulated between major copper deposits to the east and Challacollo. The project is considered highly prospective for the discovery of additional mineralization.
In Focus – 2009 Annual Review Mineral Reserves and Resources, December 31, 2009
SSRI Silver oz. in Millions
SSRI Gold oz. in Millions
MINERAL RESERVES: PIRQUITAS
TOTAL PROVEN AND PROBABLE RESERVES: MEASURED AND INDICATED RESOURCES: PIRQUITAS
SAN LUIS (55%)
MAVERICK SPRINGS (100% of Ag)
TOTAL MEASURED & INDICATED RESOURCES: MEASURED
INFERRED RESOURCES PIRQUITAS
SAN LUIS (55%)
MAVERICK SPRINGS (100% of Ag)
TOTAL INFERRED RESOURCES:
HISTORICAL RESOURCES: VETA COLORADA
TOTAL HISTORICAL RESOURCES: 1
On February 26, 2010 we sold our interest in the Silvertip property. This table complies with National Instrument 43-101 and Companion Policy 43-101CP. See notes to Mineral Reserves and Resources Table and Cautionary Note to U.S. investors concerning disclosure of contained ounces and estimates of measured, indicated and inferred mineral resources on the inside back cover of this report.
SILVER STANDARD RESOURCES INC. Safety and Sustainability
Focused on Safety and Sustainability Silver Standard adheres to the safety and sustainability standards outlined by our company policies and monitored by the Safety and Sustainability Committee of our Board of Directors. It is our commitment to uphold the value of responsible mining to ensure the long-term well-being of our stakeholders and the protection of the environment where we conduct our operations. We strive to develop and implement the best safety and sustainability management systems and initiatives which correspond to the various stages of our projects and the growth of the company.
Safety Mining activities at all stages carry risks, and Silver Standard strives to foster a safe working environment and maintain a corporate-wide emphasis on individual responsibility for risk management in all the different regions where we operate. An important way we work to anticipate and manage risk is by instilling in our employees a sense of risk awareness and mutual accountability. Our safety and risk management program, “Safe for Life”, applies a proactive approach and incentive-based tools to help shape a culture of safety throughout the organization. We successfully completed a safe transition from construction to production at Pirquitas, and we will seek to continuously refine our approaches there to maintain a high standard of safe operations. We are working to build the risk management systems particular to remote exploration at our early-stage projects, and to establish a sound risk management platform for the development projects we are advancing. All of our projects, from exploration to operations, have risk registers in place which measure hazards and assess risk. Training at all staff levels is a priority and is ongoing, with a focus on risk management, travel safety and emergency response. Stakeholder Engagement Two key principles which support our sustainability model are early stakeholder engagement and open communication. At the Pirquitas Mine, the monthly community roundtable established early in the project’s development stage is now ongoing with the mine management team, and mine site visits have been extended to include community leaders and others outside the immediate project area. From this foundation of dialogue we have been able to grow our stakeholder relationships and build partnerships in the region with our local communities and other groups which share our sustainability goals. Employment and Economic Development The Local Hiring Policy underpins our commitment to ensure that our communities share in the success of the company. At Pirquitas, we 16
Safety training is an integral part of Silver Standard’s “Safe for Life” safety and risk management program. Above: Vertical rescue training at the Pitarrilla Project in Mexico.
In Focus – 2009 Annual Review Section Title
have maintained a high rate of employment of those people available to work in the five communities surrounding the mine, even now that the labor-intensive construction is complete. Employment is also outgrowth of our efforts to support other economic development opportunities in the communities where we operate. We have provided technical assistance to small development projects as part of a municipal program to promote the entrepreneurial role of women in the local economy. At San Luis, we have extended development assistance to projects concerning the improvement of traditional herding and farming activities. We have also supported medical and educational infrastructure projects in the communities. The process of reaching out to our community stakeholders has provided us with opportunities to better understand who is affected by our business activities, their concerns and their desired level of engagement with the company. We will continue to measure the progress of our activities to ensure that Silver Standard builds and sustains mutually beneficial relationships and makes a positive impact as a corporate neighbor.
Students from the town of Nuevo Pirquitas tour the Pirquitas mine site. Our Puertas Abiertas (“Open Door”) community relations policy promotes continuous education about our activities to residents of area communities.
Environmental Protection The protection of the environment is a fundamental corporate priority, and a consideration in all activities relating to Silver Standard’s exploration and development operations, risk management systems and stakeholder engagement. We are working to ensure that our operations have minimal ecological impact, and that Silver Standard takes part in broader international initiatives to monitor our sustainability metrics in economical, environmental and social performance. Baseline environmental work that addresses air, water and soil quality is ongoing at all our projects, and forms the basis for long-term planning for construction, development, mining and closure activities. Remediation programs are also in place to ensure that impact from even early stage activities such as exploration drilling are addressed and managed on a continuous basis. At Pirquitas and San Luis, members of the local communities participate in ongoing environmental assessment.
Silver Standard provides technical assistance to local small development projects in the Pirquitas area such as a laundry service in Coyahuaima which employs nine women. The project, “The Miracle” was organized under a municipal government program to promote the entrepreneurial role of women in the local economy. Top photo: Raymundo Alberto Gonzales, a resident of Cochabamba, measures the alkalinity of the water near the San Luis Project.
SILVER STANDARD RESOURCES INC. Silver Market
Focused on the Silver Market Strong investment demand helped propel silver’s price performance by 48% over the year, substantially outperforming gold with a 24% year-over-year gain. Metals consultancy GFMS Ltd. estimates that investment demand including coins grew to 207 million ounces or 24% of total demand in 2009, compared to 13% in 2008. At the same time, global silver demand is estimated by GFMS to have shrunk from 888 million ounces in 2008 to approximately 800 million ounces in 2009, led by fabrication demand that declined from 50% of total demand in 2008 to 39% in 2009. As the global economy resumes growth in 2010, fabrication demand for silver is expected to recover in tandem and new applications for silver continue growing, especially in medicine, water purification, consumer electronics and solar energy.
WORLD SILVER DEMAND 2008 ACTUAL
Among the more interesting applications as reported by The Silver Institute: • In the U.S., medical studies have shown that one in 10 patients who have spinal surgery develop infections. To fight these infections, a silver-imbedded spinal implant has been developed and proven 99.999% effective in killing bacteria for four weeks following surgery.
De-hedging Photography 24%
• Silver nanotechnology sales are expected to reach $25.2 billion by 2011. The United States has the heaviest investment, followed by Japan.
51% Jewelry & Silverware Coins 12%
• The market for silver conductive inks is expected to reach $2.5 billion by 2015. Applications include solar panels, switches, printed circuits and RFID tags. Computers with silver-zinc batteries are being marketed in the U.S. These batteries offer users up to 40% more run time and are more environmentally friendly than lithium ion batteries. • The production of high thermal reflectivity, silver-coated glass has increased dramatically for residential use in the last several years. Extremely thin silver coatings are being applied to windows, reflecting over 90% of outside light and keeping heat inside.
WORLD SILVER DEMAND 2009 FORECAST Industrial
Photography 39% Jewelry & Silverware
The increased use of silver in healthcare takes advantage of silver’s anti-bacterial qualities and coincides with the global need for new ways to combat pathogens. For electronics, silver is the best conductor of electricity and it does not spark. And in many of the growing variety of silver uses, the quantities are so minute that recycling is not likely to occur.
Source: GFMS Ltd.
In Focus – 2009 Annual Review Management Team
Management Team Silver Standard’s management team is focused on project delivery in every area of our business. To achieve our objectives, we will explore, advance, and operate our projects in a professional, sustainable and safe manner.
A.E. Michael Anglin President and Chief Executive Officer
W.J. (Jim) Mallory Vice President, Sustainability
Joseph J. Ovsenek Senior Vice President, Corporate Development
Kenneth C. McNaughton Vice President, Exploration
George N. Paspalas Senior Vice President, Operations
Kristen G. Riddell Vice President, Corporate Secretary and General Counsel
W. John DeCooman Jr. Vice President, Business Development
David Smith Vice President, Human Resources
Tony Horton Vice President, Safety and Risk Management
Tom S.Q. Yip Vice President, Finance and Chief Financial Officer 19
SILVER STANDARD RESOURCES INC. Board of Directors
Board of Directors Silver Standard’s Board of Directors is committed to ensuring that our strategic objectives are aligned with the interests of all of our stakeholders, and that our business practices are governed by integrity, transparency and accountability.
2009 Board of Directors (left to right) A.E. Michael Anglin* Former Vice President, Operations Base Metals Group BHP Billiton (Audit Committee, Safety and Sustainability Committee) Peter W. Tomsett Former President and CEO, Placer Dome Inc. (Chairman of the Board) John R. Brodie, FCA President, John R. Brodie Capital Inc. (Audit Committee, Compensation Committee) Richard C. Campbell, MBE Former President, BP Alaska (Corporate Governance and Nominating Committee, Safety and Sustainability Committee) 20
R.E. Gordon Davis* Founder and former director, Cyprus Anvil (Compensation Committee, Corporate Governance and Nominating Committee) Robert A. Quartermain* President and CEO David L. Johnston Former President and GM, Highland Valley Copper Corp. (Corporate Governance and Nominating Committee, Safety and Sustainability Committee) Richard D. Paterson Managing Director, Genstar Capital (Audit Committee, Compensation Committee)
*Michael Anglin assumed the role of interim President and CEO following the resignation of Robert Quartermain on January 19, 2010. Mr. Anglin was replaced on the Audit Committee by Peter Tomsett. Effective May 11, 2010 Robert Quartermain and Gordon Davis no longer serve on the Board.
Notes to Mineral Reserves and Resources Table
Silver Standard, Silver Price and S&P Index January 1, 2009 - December 31, 2009
Pirquitas reserves based on: US$11/oz silver, US$5.00/lb tin, and US$1.05/lb zinc. Pitarrilla reserves based on: US$11/oz silver, US$0.50/lb lead and US$0.70/lb zinc.
S&P INDEX 12,000
9 ,2 .1 ov N
Head Office Suite 1400 999 West Hastings Street Vancouver, British Columbia Canada V6C 2W2 Tel: 604-689-3846 Fax: 604-689-3847 Investor Inquiries North America toll-free: 1-888-338-0046 [email protected] Common Share Listings NASDAQ Global Market: SSRI Toronto Stock Exchange: SSO CUSIP: 82823L-10-6 Capitalization Common shares issued (as at December 31, 2009) 71,964,708 Fully Diluted (as at December 31, 2009) 77,235,826 Transfer Agent and Registrar For questions concerning share holdings, share certificates, and address changes: Computershare Investor Services Inc. Tel: 514-982-7888 North America toll-free 800-564-6253 www.computershare.com Auditors PricewaterhouseCoopers LLP Vancouver, British Columbia
Pirquitas: US$22 NSR. Pitarrilla: US$50 NSR. * Pitarrilla’s measured lead, zinc and copper resources (14.6 million tonnes) indicated lead, zinc and copper resources (141.3 million tonnes) and inferred lead, zinc and copper resources (24.8 million tonnes) are contained in the Breccia Ridge Zone. Cut-offs: Pirquitas: 50 g/t silver. Resources are outside designed pit. Pitarrilla: 40 g/t silver. Breccia Ridge Zone 20g/t silver equivalent for open pit potential and 65 g/t silver equivalent for underground potential (using US$11.00 silver, US$1.05/ lb zinc and US$0.75/lb lead). San Luis: 6 g/t gold equivalent. Snowfield and Brucejack: 0.35 g/t gold equivalent. Recoveries: gold 75%, silver 73%, copper 85% and molybdenum 60%. (gold equivalent =US$800/oz gold, US$12/oz silver, US$2.50/lb copper and US$10/lb molybdenum). The pit optimization utilized the following cost parameters: Mining US$ 1.75/tonne, Processing US$5/tonne and G&A US$1.00/tonne along with pit slopes of 50 degrees. Diablillos: US$10.00 recovered metal values (RMV) and the following metals prices and recoveries: gold (US$700/oz., 65%); silver (US$11.00/oz., 40%). San Agustin: US$3.40 RMV in oxide material and US$6.25 RMV in sulphide material and the following metal prices and recoveries: gold (US$631.97/oz,72%); silver (US$11.63, 74%); zinc (US$1.11/lb., 50%); and lead US$0.78/lb.; 62%). Berenguela: 50 g/t silver. Candelaria: lode resources 0.5 oz/ton soluble silver. Maverick Springs: 1.0 oz./ ton silver equivalent. Silver Standard controls 100% of contained silver resources and Allied Nevada Gold Corporation controls 100% of contained gold resources. Challacollo: 50g/t silver. Bowdens: 40 g/t silver equivalent (silver equivalent = 88% silver + 92% lead/321+65% zinc/169). San Marcial: 30g/t silver. Sunrise Lake: 30g/t silver. Mineral Reserves and Resources tabulated here were prepared by Qualified Persons: Pirquitas: Reserves, Paul MacRae, P. Eng. Resources, James A. McCrea, P. Geo. Pitarrilla: Reserves, Wardrop - Jacqueline McAra, P. Eng., Marinus A. de Ruijter, P. Eng., Iouri Iakovlev, P. Eng., Hasan Ozturk, P. Eng., Miloje Vicentijevic, P. Eng., Peter Wells, P.SAIMM and Scott Cowie, MAusIMM.; P & E - Wayne D. Ewert, P. Geo., Tracy J. Armstron, P. Geo and Eugene Puritch, P. Eng.; Knight Piesold - Daniel Friedman, P. Eng. and Robert A. Mercer, P. Eng. Resources, Eugene Puritch, P. Eng. and Antoine Yassa, P. Geo. Breccia Ridge; James A. McCrea, P. Geo. other zones. San Luis: Michael Lechner, P.G, CPG and Donald Earnest, P.G. Snowfield: Eugene Puritch, P. Eng., F.H. Brown, CPG PrSciNat and Tracy Armstrong, P. Geo. Brucejack: Eugene Puritch, P.Eng, Fred H. Brown, CPG PrSciNat and Tracy Armstrong, P. Geo. And Dr. Wayne D. Ewert, P.Geo. Diablillos: J. Douglas Blanchflower, P. Geo. And Dr. Gilles Arseneau, P. Geo. San Agustin: Dr. Gilles Arseneau, P. Geo. Berenguela: James A. McCrea, P. Geo. Challacollo: C. Stewart Wallis, P. G., P. Geo.Candelaria: Mark G. Stevens, P.G. Maverick Springs: Neil R. Burns, P. Geo. Bowdens: James A. McCrea, P. Geo. San Marcial: C. Stewart Wallis, P. G., P. Geo. and N. Eric Fier, C.P.G. Sunrise Lake: Dr. William E. Roscoe, P. Eng. and C. Stewart Wallis, P. G., P. Geo.
Cautionary note to U.S. investors concerning disclosure of contained ounces and estimates of measured, indicated and inferred mineral resources: The terms “measured mineral resource”, “indicated mineral resource”, and “inferred mineral resource” are Canadian geological and mining terms as defined in accordance with National Instrument 43-101, Standards of Disclosure for Mineral Projects (“NI 43-101”) under the guidelines set out in the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council on December 11, 2005 as may be amended from time to time by the CIM. We advise U.S. investors that while such terms are recognized and required under Canadian regulations, the U.S. Securities and Exchange Commission (the “SEC”) does not recognize them. “Inferred mineral resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules estimates of inferred mineral resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that any part of all of an inferred mineral resource exists, or is economically or legally mineable. Disclosure of contained silver expressed in ounces is in compliance with NI 43-101, but does not meet the requirements of Industry Guide 7 of the SEC, which will only accept the disclosure of tonnage and grade estimates for non-reserve mineralization.
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