Juanicipio 100% Acquisition Closed; Significant Advances on Exploration
MAG Silver Corp. (TSX-V: MAG) announces that it has completed the transaction to acquire the underlying interest in the Juanicipio I claim that encompasses its Juanicipio Project near Fresnillo, Zacatecas, Mexico, currently being drilled by MAG. The transaction was originally announced by MAG on May 30, 2003. Under the terms of the agreement MAG paid the underlying vendor US$250,000 and issued 200,000 shares of its common stock in connection with the purchase.
The acquisition of the Juanicipio I claim eliminates the option obligations of the Company under the Juanicipio Option Agreement, including the obligation to make purchase option payments of an additional US$1,150,000 and work commitments of a cumulative amount of US$2,500,000 over the next three years. The purchase also eliminates the obligation of the Company to pay a sliding scale net smelter return royalty of from 3.5% to 5.0% if the property is put into production. Included in the obligations that are eliminated by the acquisition are two payments of US$100,000 each that were due July 18, 2003 and January 18, 2004 respectively under the Juanicipio Option Agreement. Those payments were already included in MAG's Budgeting and considered when it completed its recent financing.
The Juanicipio property adjoins the largest silver mine in the world, lying just 5km from the principal production headframe of the Fresnillo Mine, and approximately 3km from its westernmost underground workings. Exploration and development of the mine continues to advance west towards Juanicipio, and the Juanicipio structures show substantial geological, geochemical and geophysical similarity to the principal Fresnillo veins and are inferred to be the on-strike continuation of the district.
In the past week, exploration activities conducted by Industrias Penoles, S.A., the owner and operator of the Fresnillo Mine, have expanded to include the use of three drilling rigs that are visible within 2.7 km of the Juanicipio boundary. The rigs are drilling on a trend that lines up with a major structure and geophysical target on Juanicipio. Penoles completed 3 holes on this structure using a single rig over the last few months and have added the two additional rigs to the job over the last 10 days. MAG is referring to the structure as the "Poleo South Trend" because it lies about 500 metres south of, and runs parallel to, Penoles's "Poleo Trend", the extension of which was cut in MAG's first hole.
The Company commenced its drilling at Juanicipio on May 10, 2003, with the first three holes targeting structures on strike with the Poleo Trend. Results from Hole 1 and the top portion of Hole 2 were reported on July 7th, 2003 and included significant gold and silver values. Assays from Hole 2 and a wedge cut on the silver-gold mineralization in Hole 1 are pending. Hole 3 is progressing well and is nearing its target depth. The Company plans to commence drilling on Hole 4 as soon as Hole 3 is completed, to be located on the extension of the Poleo South Trend directly on strike with the three rigs actively drilling for Penoles. This location is based in part on the encouragement from MAG's initial holes and in part on the recent drilling activity on the adjoining Fresnillo Mine property. Like MAG's other targets, the Poleo South Target combines a strong surface mappable structure (parallel to the major district veins), pervasive silicification and argillic alteration, and a strong NSAMT geophysical anomaly.
About MAG Silver Corp.
MAG combines a seasoned management team with two drill-ready targets adjoining high-grade world class producing districts. In addition to the Juanicipio property described in this release, MAG also controls the Guigui project, targeted for the potential source stockwork for the Santa Eulalia District near Chiuahua, Mexico, known to encompass the world's largest carbonate replacement deposit. Although the Santa Eulalia District has produced over 450,000,000 ounces of silver historically from a series of high-grade deposits, its source stockwork and any associated contact skarn have never been identified. Drilling at Guigui is planned in the fall of 2003.
The Batopilas District comprises MAG's third high-grade silver target. Another historic mining district, Batopilas provided 300,000,000 ounces until its abrupt closure during the Mexican revolution. Consolidated by MAG for the first time since the revolution, the Batopilas District has numerous potential high-grade targets that for the first time will be tested with modern exploration techniques. Native silver in calcite, grading up to 70% silver, comprised the principal target mineral historically. Sophisticated exploration will delineate additional high-grade targets for drill testing on or adjacent to former producing structures.
Mag Silver is focussed on exploration targets that are of interest at any conceivable silver price, in districts with known large scale production.
On behalf of the Board of
MAG SILVER CORP.
"George S. Young"
The TSX Venture Exchange has not reviewed and does not accept responsibility for the accuracy or adequacy of this news release, which has been prepared by management.