MAG Silver Acquires Sierra de Ramirez District in Durango, Mexico
MAG Silver Corp. (TSX-V: MAG) announces the acquisition of an option to purchase a 100% interest in the historic Sierra de Ramirez District covering 4,443 hectares in Durango, Mexico. The Sierra de Ramirez District is a Silver-Lead-Zinc-Copper Carbonate Replacement Deposit ("CRD") located in south-eastern Durango State. An estimated one million tons of greater than 1000 g/T (>32 oz/T) Silver ore containing high Lead, Zinc and Copper values were produced from the District dating from Spanish Colonial times until the mid-1960s. District mineralization occurs over a wide area, but due to the fractionated ownership pattern of the claims in the past, the mineralization has never been explored systematically. MAG's option of Minera Rio Tinto's newly consolidated land package creates the first opportunity in over 75 years to explore the majority of the district as a coherent system. Infrastructure is very good as the district lies right along the main line of the Mexican Northern Railroad, approximately 90 km from Industrias Peñoles' Torreon smelting complex.
The terms of the option will include issuing 20,000 shares of MAG common stock and paying US$30,000 to the property owners within five days after acceptance of the option agreement by the TSX Venture Exchange. In order to keep the option in force, the option agreement calls for payments of US$50,000 at 12 months, US$25,000 at 18 months, US$100,000 at 24 months, US$25,000 at 30 months, US$150,000 at 36 months, US$25,000 at 42 months, US$225,000 at 48 months, and US$25,000 at 54 months, from the acceptance date. In order to exercise the option, an option payment of US$850,000 is due 60 months from the acceptance date, up to US$500,000 of which MAG, at its option, may pay in shares of its stock valued at the time of the option payment. In addition, in order to maintain the option, MAG must incur exploration expenditures on the property of US$50,000 within 12 months, US$100,000 within 24 months, US$150,000 within 36 months, US$200,000 within 48 months, and US$250,000 within 60 months, from the acceptance date. At any time prior to 48 months from the acceptance date, MAG, at its option, may pay US$1,000,000 to Rio Tinto to exercise the option, in which case no further payments shall be due, and no further work commitments required, after the time of such payment. Upon exercise of the option, Minera Rio Tinto retains a sliding scale net smelter return royalty from 2.0% to 3.0% based on the silver price. MAG will issue 25,000 shares of its stock as a finder's fee to Peter K.M. Megaw in connection with the transaction, upon exchange approval.
Sierra de Ramirez lies along the western edge of the Mexican CRD Belt, in a comparable geological position to such major mining districts as Santa Eulalia (site of MAG's Guigui Project), Naica, San Martin, Ojuela, Velardeña, and Concepcion del Oro. Recent exploration activity in the region has yielded significant discoveries 110 km to the east at Concepcion del Oro (Western Silver's Peñasquito Project and Minera Frisco's Tayahua Mine) and 150 km to the west near Ojuela (Excellon Resources' Platosa Project). Notably, the CRDs in this WNW-trending portion of the CRD belt extending from Concepcion del Oro, through Sierra Ramirez to MAG's Adargas Project (See MAG Silver Press Release of December 19, 2003) are distinctly richer in Gold than deposits in the remainder of the belt.
Geologically, Sierra de Ramirez occupies a 7 by 15 km E-W oriented anticlinal fold developed in massive limestone. Known district mineralization consists of very high-grade replacement veins and mantos developed high in the limestone section in areas surrounding several poorly exposed rhyolite intrusions. The limestone should persist to depths of several hundred meters and Mexican Government air-magnetic maps indicate the presence of a large buried stock flanking the district. Exploration of the district will include detailed geological, geochemical, and geophysical studies to determine overall district zoning and ore controls to define the most favourable areas for drilling of large-scale mineralization by late 2004. MAG will commence systematic exploration of the Sierra de Ramirez property immediately, along with its other projects. MAG expects to have drill-ready targets delineated by late second quarter, 2004.
About MAG Silver Corp.
MAG combines a seasoned management team with exploration targets in the Mexican Silver Belt that are of interest at any conceivable silver price, in districts with known large-scale production. MAG controls the Juanicipio and Lagartos properties described in the release dated January 6, 2004, covering 120,000 hectares in the famous Zacatecas/Fresnillo District. The Juanicipio project lies 5 km from the principal production headframe of the Fresnillo Mine, the largest producing silver mine in the world, and less than 3 km from its westernmost underground workings. Industrias Peñoles currently produce over 31 million ounces of silver annually from high-grade (23 oz/T Ag plus up to 0.1 oz/T Au) veins. Production since 1560 is around 700 million ounces of silver, with half of this coming since 1976 when the high-grade Santo Niño style veins currently being mined were found. Current silver reserves exceed 500 million ounces. Recent exploration by Peñoles has focused on tracing veins discovered in the last 6 years westward from the historic mining centre towards Juanicipio. Peñoles has recently begun ramping up production to over 50 million ounces per year through exploitation of the San Carlos Vein, the biggest of their new western vein discoveries. MAG has completed its first round of drilling and has successfully demonstrated the extension of Fresnillo-style mineralization and grades onto the Juanicipio property (See press releases of August 14, October 14, November 13, December 8 and December 19 2003). The Juanicipio and Lagartos properties are actively being explored for their potential to expand the Fresnillo District mineralization.
In addition, MAG also controls the Guigui project in the historic Santa Eulalia District of Chihuahua, Mexico. Santa Eulalia is the world's largest known Carbonate Replacement Deposit and has produced nearly 500 million ounces of silver from ores averaging 350 g/T Ag, 8.2% Pb and 7.8% Zn. The known mineralization appears to zone towards a buried intrusive centre that has never been drilled. Drilling at Guigui commenced on October 20, 2003 and will continue into 2004.
MAG also a 100% option interest in the Don Fippi Project, covering the historic Batopilas Mining District. Batopilas produced some 300,000,000 ounces of silver from native-silver rich ores prior to its abrupt closure during the Mexican Revolution. Consolidated by MAG for the first time since the revolution, the Batopilas District contains numerous targets that will be tested with modern exploration techniques to delineate high-potential targets for drill testing on or adjacent to former producing structures. Underground work is currently underway at Batopilas.
MAG recently acquired two additional Carbonate Replacement Deposit properties that were the outgrowth of a very well funded regional generative program by a major during the 1990s exploration cycle. Adargas in southern Chihuahua will be drilled in 2004 as soon as drill permits are obtained. Geological and geophysical study of the second property, Cinco de Mayo in northern Chihuahua, will also begin in early 2004, with drilling slated for late 2004.
On behalf of the Board of
MAG SILVER CORP.
"George S. Young"
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For further information on behalf of MAG Silver Corp.
contact George S. Young
The TSX-VE has not reviewed and does not accept responsibility for the accuracy or adequacy of this news release, which has been prepared by management.