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CFB Silver ReportM a r c h 2 0 1 0

The Silver ReportMarch 2010

Silver is an often under-appreciated metal. Categorized as a precious metal, it is immediately held up to the standard of gold, and - given the difference in price – is usually overlooked as a potential investment. While the majority of gold is held (and traded) as an investment or by governments, this is not the case for silver; the majority of silver sales are for manufacturing purposes and jewellery. This lack of `float’ in the silver market may contribute to volatility in the silver spot market.

Silver is certainly the proletariat of the precious metals world, having numerous practical uses from medicine to photography to electronics. Silver is a main component of salves and wraps for burn victims, as well as surgical tools. In photography, a silver-based compound forms a thin layer on the film which eventually transposes the images from the film to paper during processing. Though personal cameras are swiftly moving to being almost exclusively digital image capture, the movie industry still mainly uses film based cameras to shoot. Silver is one of the best conductors of heat and electricity, and is widely used across all sectors of industry. More than 50% of silver available in any given year is bought and used for industrial purposes.

Gold has become the `it’ commodity since the Great Recession began in early 2008. Spot prices have risen from an average of $700(USD) per ounce is the summer of 2008, to over $1200(USD) in late 2009. Silver recovered from lows of under $9 (USD) per ounce in early 2008 to over $19 (USD) in late 2009. During this time gold production has risen, and mines in pre-production (in the pipeline) are up significantly. Silver production has remained relatively flat though, rising only 2.5% year over year from 2007 to 2008 while the pipeline looks on pace to just maintain current production levels. Current economic conditions have squelched industrial demand slightly, but the emergence of silver ETFs has helped shore up demand. This potential for demand increase by a recovering world economy plus the growth of these holding funds could produce a demand squeeze that could put great upward pressure on silver prices going forward.

Very few companies that produce silver are really necessarily looking for it. Roughly 70% of silver output is as a secondary product of operations. Copper and gold are typically hosted in similar geologies as silver, and the silver can be extracted from the concentrate fairly easily. Silver is also commonly found along-side the base metals zinc and lead. A key component of many feasibility studies are potential secondary streams of income from silver tailings.

Buying the silver rights to these types of poly-metallic plays has been the route Silver Wheaton Corp (SLW.TO) has taken in becoming one of the largest silver producers trading on the TSX. In 2009, through their rights, SLW brought over 16m ounces to market. Canadian gold miner Kinross Gold Corp (K.TO) sold nearly 14m ounces of silver from their gold projects in 2009. Primary silver miner Couer d’Alene Mines Corp (CDM.TO) produced 17.7m ounces last year.

Yearly values are not available yet for 2009, but in 2008 680.9m ounces of silver were mined while 888.4m ounces (or 28,564 tonnes) were available for sale, realizing an average price of $14.99(USD) per ounce.

North America$ 384,971,777.25

Asia$ 51,812,804.30

Europe$ 67,623,486.06

SouthAmerica$ 841,536,060.07

Working Capital$ 20,665,612.01 Exploration/

Development$ 469,144,657.31Debt Refinancing

$ 363,047,819.57

Aquisition(Land & Secondary Rights)$ 493,086,038.79

62 different companiesclosed 161 financings in 2009.

Total proceeds (2009): $1,346m

Largest closing: $312m

Average proceeds (by company): $21.7m

Average proceeds (per closing) $8.4m

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SILVER - London Fix - Jan 01, 2009 to Dec 28, 2009

The Silver ReportMarch 2010

Canadian capital markets raised nearly $1.35b for primary silver production in 2009. Over $363m of that sum was for reworking or repaying debts; $469m was earmarked for exploration and development programs; $493m went towards acquisitions (either of land or secondary production streams); the remaining $21m went towards general working capital. Of the ten major producing countries in the world, six are in the Americas, the two largest being Peru and Mexico. Of the $1.35b of financings, $658m were spent on projects in Peru, and $329m were spent in Mexico. Fully 73% of silver financing activities in Canada were raised for these two countries (these figures are representative of primary silver projects or silver stream acquisition.) Some other major producing countries include China, Australia, Chile, and Poland.

As some of you know, I have finished a new seminar recently that I have only presented one time. This presentation focused on what is expected in the silver market for the next decade. Frankly, when beginning this study I was not really certain what conclusions could be determined about the future of the silver market. The main thinking was that the investment demand for silver would drive the price far higher than present and this is in fact

the case as we go through this report. But it was also determined that silver’s unique properties will be in higher and higher industrial demand over the next decade as well. Before going into detail, it must be stated that anytime a long-term projection of anything is presented there are bound to be errors. Things change, life is dynamic, there may be new uses for silver in five years that no one is even aware of today. Secondly, there may be a substitute for silver discovered that might impact overall demand. However, as you study this month’s issue keep in mind the facts as they are presented, and think through the ideas and projections to make your own conclusions. In an effort to not show my bias toward the bullish case for silver, there are areas that are presented with little mention of increasing demand. For example, the consumer electronic area is one that we assume is static in this report. Certainly, if the economy improves or perhaps if it does not, a good case can be made that more electronic appliances will be in use on a worldwide basis over the next decade. However, this study assumed little to no growth for two reasons. One: it is a more conservative approach, meaning that the forecast for silver demand will probably be better than projected. And two: the amount of recycled silver from electronics is increasing due to the amount of printed circuit boards that are recycled. Something I have presented on many occasions is that silver is “uneconomic” to retrieve in many electronic applications, and this is the truth. However, governments do not have to run at a profit and can

mandate almost anything these days, so in California, for just one example, silver, lead, zinc, etc., are demanded to be captured for environmental reasons and at a far greater cost than breakeven. Please under stand that this is not a judgment call on our part but only a clarification of the fact that some silver is recycled—that is done, but not on an economic basis. Further, gold is used in many of the printed circuit (pc) boards and is economic if enough pc boards are processed. Since silver is almost always on the same pc then obviously the silver is captured as well. So to be conservative, the idea is that although the consumer electronics portion of demand will increase, so will the amount of recycled silver. And for the purposes of this analysis, we will consider the growth to recycle rate to remain in balance over the next ten years. You do not have to agree with this assessment—just be aware of it. If we examine the past decade we will find some interesting facts about the silver market, and for this report to carry the most meaning, it is important to review some of the most important points about the silver market from roughly 2000 to 2010. The first fact is that the industrial demand was roughly 35% of the total market but by 2010 the industrial component was 54% of the total market, according to the Silver Institute. The silver market was in a deficit situation from about 1990 and carried through until 2007 or so, when, according to both the Silver Institute and CPM Group, the total amount of mining had brought silver annual demand and annual supply into balance. Up until that time period, the aboveground silver supply was disappearing rapidly at a rate of roughly 100 million ounces per year. From 1990 to 2007, according to the best recognized studies on the silver market, about 1.5 billion ounces of silver were eaten out of stockpiles. There is much more to the report... but the brief clip above may have given you some insights into the silver market that you had not consider previously. You can get this report for free if you attend one of Davids seminars..

Silver in the Next Decade Special Contribution by David Morgan

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Silver minersSilverminers.com is the first and last word on the precious metals mining industry. Established in 2003, it is edited by award-winning journalist David Bond, who has covered the gold- and silver-fields for nearly four decades. Silverminers.com is the mining investor's portal.

David Bond Phone: 208.556.1621 Email: info@silverminers.com

El Tigre Silver Corp.El Tigre Silver Corporation (TSX.v - ELS) is a publicly traded company, which is committed to becoming a leader in mineral exploration and development. The company has its head office in Vancouver, BC and a mine site office Hermosillo, Mexico.

John Ross Phone: 604.728.7145 Email: jross@eltigresilvercorp.com

SilverCrest Mines Inc.SilverCrest Mines Inc. is a “Precious Metals Focused” exploration and development company with a portfolio of gold and& silver deposits and high grade exploration properties located in Mexico and El Salvador. This property portfolio, which includes reported, probable reserves as well as indicated and inferred gold and silver resources and substantial exploration potential, provides an important base from which SilverCrest can develop its corporate objective of becoming a significant precious metalsasset based company. The Company’s immediate initiative is to complete construction on the Santa Elena Project in Mexico and commence full production of the open pit, heap leach Gold & Silver mine before the end of 2010. Longer term goal is to acquire and develop substantial mineral resources and ultimately to operate multiple low cost, high grade precious metals mines.

Fred Cooper Phone: 866.691.1730 Email: fred@silvercrestmines.com

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