Vancouver, B.C. .....MAG Silver Corp. (TSXV:MAG) and Industrias Peñoles S.A. de C.V.
, announced today the signing of a binding letter agreement for the establishment of an exploration Joint Venture covering MAG's wholly-owned 8,302 hectare Juanicipio Property in Zacatecas, Mexico. Industrias Peñoles is the largest silver producer in the world and owns and operates the Fresnillo Silver Mine. The Juanicipio Joint Venture property is located adjacent to the Fresnillo Mine, the world's richest silver producing operation.
MAG Silver President Dan MacInnis said "Peñoles has the entire infrastructure, mining expertise and smelter facilities to bring to fruition any successful exploration discoveries within the Joint Venture area. We look forward to the next phase of exploration drilling at Juanicipio, building on both companies' knowledge base in the district". Octavio Alvidrez, Vice President of Exploration, Engineering and Construction at Peñoles said "We are pleased to have this opportunity to combine our exploration and production experience with MAG Silver's committed approach to district scale exploration. Our successful exploration work is leading us towards Juanicipio and a Joint Venture is the logical combination of mineral rights and exploration programs".
The Peñoles-MAG Joint Venture on the Juanicipio Property lies 5 kilometres from the principal production head-frame of the Fresnillo Mine, and 2.3 kilometres from its westernmost underground workings. Exploration over the past 6 years by Peñoles has focused on tracing the discovery of a series of new silver-rich veins to the west of the mine area. Peñoles has also been expanding production at the Fresnillo mine with the recent development of the high-grade silver San Carlos vein system. Peñoles' current exploration campaign resulted in the recently announced "Saucito" silver-gold vein discovery lying near the eastern boundary of the Juanicipio property. MAG's 2003-2004 exploration drilling intersected several vein structures with significant silver and gold values lying along the projection of the Saucito vein group. The initial Joint Venture exploration effort will focus on linking MAG's discoveries to the Saucito veins.
The principal features of the agreement are:
- Peņoles can earn a 56% interest in Juanicipio upon completion of a US$5,000,000 exploration program on or before the end of year 4 of the agreement.
- During the first year, Peņoles shall incur an obligatory work commitment expenditure of US$750,000. Year 1 expenditures must include a minimum of 3,000 metres of diamond drilling.
- A flexible and staged exploration program is included in the contract. Exploration work will be supervised by a technical committee comprised of 3 representatives from Peņoles and 2 from MAG Silver. Peņoles and MAG Silver are obliged to share their information in the district. Part of the geological and exploration work will be conducted by MAG consultants and in-house personnel.
- Exploration results from Juanicipio will be published as appropriate on an ongoing basis, with both companies to agree on the content.
- Peņoles will subscribe for US$500,000 in MAG shares, at a market based price on signing and an additional US$500,000 in MAG shares, at a market based price, if the contract continues into the second year.
Industrias Peñoles, S.A. de C.V. and its subsidiaries make up one of Mexico's largest industrial conglomerates. Since its founding in 1887, this group has been engaged in the sustainable exploitation of non-renewable natural resources. Peñoles is an integral part of Grupo BAL, a private, diversified group made up of independent Mexican companies ranging from mining to insurance to retail. Peñoles' productive operations are currently located in Mexico, where it operates the world's richest silver mine (Fresnillo), the world's fourth largest metallurgical complex in terms of the value of its production, and the largest sodium sulphate plant in the world. These operations make Peñoles the world's largest producer of refined silver, metallic bismuth and sodium sulphate, and a leader in Latin America in refined gold, lead and zinc.
About MAG Silver Corp.
MAG is a Silver exploration company focused on projects located within the Mexican Silver Belt. Our large land inventory is well positioned in mining districts with historical and ongoing large-scale, high-grade silver production. MAG's exploration efforts are engaged in the search for multi-million ounce silver deposits on a district scale. We are committed to discover silver deposits of size and grade that are able to withstand and overcome fluctuations in commodity prices. Our mission is to become one of the premier silver explorers in the Silver Mining Industry. MAG is based in Vancouver, British Columbia, Canada and trades on the TSX-V as MAG.
On behalf of the Board of
MAG SILVER CORP.
President and CEO
For further information on behalf of MAG Silver Corp. contact Gordon Neal
, VP Corp. Development
Phone: (604) 630-1399
Toll free: (866) 630-1399
Fax: (604) 484-4710
For further information on behalf of Industrias Peñoles S.A. de C.V. Contact Emilio Fandiño
, Investor Relations
Phone: 52 (55) 5279 3250
Fax: 52 (55) 5279 3217
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.