MAG Silver Corp. Acquires Juanicipio Project Property Outright
MAG Silver Corp. (TSX-V: MAG) announces that it has entered into an agreement to acquire the underlying interest in the Juanicipio I claim that encompasses its Juanicipio Project near Fresnillo, Zacatecas, Mexico, currently being drilled by MAG. Under the terms of the agreement, subject to regulatory approval, MAG will pay US$250,000 and issue 200,000 shares of its common stock in connection with the purchase.
The acquisition of the Juanicipio I claim will eliminate 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.
The two near-term payments of US$100,000 each due July 18, 2003 and January 18, 2004 respectively under the Juanicipio Option Agreement were already included in MAG's Budgeting and considered when it completed its recent financing. This opportunity to buyout the underlying option agreement on such attractive terms, acquire the royalty, and potentially save the Company a total of US$3,400,000 in cash and work commitments was seen as an excellent opportunity for MAG and its shareholders. MAG CEO George Young said, "The strategic nature of the large Juanicipio property adjoining the largest silver mine in the world, combined with the excellent indications from our geologic work to date, give us the confidence to make the purchase."
Drilling at Juanicipio commenced on May 10, 2003, and is in progress. The first hole, which is being supervised by the Company's technical consultants, Dr. Peter Megaw and Imdex Inc., is designed to test a 150 metre wide structural zone on trend with a string of over 10 Peñoles drill holes. The zone consists of at least 12 parallel fault strands carrying strong pyrite and hematite mineralization. Geochemical signatures are similar to those of the high-grade vein outcrops of the district. The drill road has exposed advanced argillic alteration of volcanic rocks beneath the silicification that is stronger than the alteration previously mapped on the property. The 3,500 metre drill program is designed to test a series of target structures that are aligned with the major veins currently in production, or under advanced exploration, at the Fresnillo Mine. The Fresnillo Mine is operated by Industrias Peñoles and currently produces 12% of the world's silver from high-grade (23 oz/T Ag plus up to 0.1 oz/T Au) veins. Overall production plus reserves for Fresnillo since 1560 is around 1 billion ounces of silver with roughly 400 million ounces of production coming since 1976 when the veins currently being mined were found.
Juanicipio lies 5km from the principal production headframe of the Fresnillo Mine, and approximately 3km from the westernmost underground workings. Exploration and development of the mine continues to advance west towards Juanicipio. Structures in Juanicipio show substantial geological, geochemical and geophysical similarity to the principal Fresnillo veins and are inferred to be the on-strike continuation of the district.
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.