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Aug 09, 2002
Company Annoumcement


MEGA CAPITAL INVESTMENTS INC. (the "Company") has disclosed that on August 8, 2002 it entered into an agreement to acquire 98% of the issued and outstanding common shares of Minera Los Lagartos, S.A. de C.V. ("Lagartos") for the sum of US$5,000 plus US$50,000 to be used for repayment of funds advanced in respect of the option by Minera Cascabel S.A. de C.V., the owner of Lagartos, plus applicable purchase and transfer costs. Lagartos holds an option to acquire a 100% interest in the Juanicipio Property located in the Fresnillo District, Zacatecas, Mexico. The proposed acquisition by the Company of Lagartos (the "Transaction") will serve as the Company's qualifying transaction pursuant to Policy 2.4 of the TSX Venture Exchange (the "Exchange").

The Juanicipio Property adjoins the producing Fresnillo mine property owned by Industrias Peñoles, Mexico's largest and most profitable mining Company. The Property lies 6 kilometres west of the centre of the Fresnillo District, which annually produces over 10% of the world's silver from a series of highgrade epithermal veins that "top-out" about 200m below the surface. The Property was advanced to the drill ready stage through over US$500,000 in work when a previous mining company did not advance the project during the low gold silver market and the property reverted to the vendor. The Juanicipio Property represents an excellent advanced drill-ready exploration opportunity in an important high grade silver gold mining camp. The Company intends to consider the acquisition of other advanced gold silver properties in Mexico.

Recent vein discoveries, traced for over 5 km west from this historic mining centre by Industrias Peñoles, operators of the Fresnillo Mine, have resulted in a significant change in the perception of the magnitude of the Fresnillo system. The "San Carlos", biggest of the new veins, has been put into production and traced by drilling past the northeastern corner of Juanicipio. Less explored parallel structures trend towards Juanicipio and in some cases can be traced in outcrop across Juanicipio. Exposures of the structures in Juanicipio are good and the geology, geochemistry, mineralization and alteration match those of the main district closely. Juanicipio exploration thus consists of seeking the continuation of these high-grade Fresnillo-style veins within the claim. The basic field geologic mapping, geochemical sampling, geophysical surveys and drill permitting have already been performed. The highly experienced exploration team that performed the earlier work on the Property, and are assisting with the proposed acquisition via Lagartos, will remain involved in the project.

Lagartos
Lagartos, a private company incorporated under the laws of the Mexican Republic, holds an option to acquire a 100% interest in the Juanicipio Property which is located in the Fresnillo District, Zacatecas, Mexico. To exercise the option, Lagartos must pay approximately 200,000 pesos (approximately CDN$32,629) in mining taxes owed for the first half of 2002, make certain payments and incur certain expenditures. The required payments are as follows:

1. US$75,000 plus Value Added Tax IVA on the date (the "Effective Date") which is the later of six months following execution of the option agreement and the registration of the option agreement;
2. US$100,000 plus Value Added Tax VAT on or before the date that is 12 months following the Effective Date;
3. US$100,000 plus Value Added Tax VAT on or before the date that is 18 months following the Effective Date;
4. US$150,000 plus Value Added Tax VAT on or before the date that is 24 months following the Effective Date;
5. US$150,000 plus Value Added Tax VAT on or before the date that is 30 months following the Effective Date;
6. US$200,000 plus Value Added Tax VAT on or before the date that is 36 months following the Effective Date;
7. US$200,000 plus Value Added Tax VAT on or before the date that is 42 months following the Effective Date; and
8. US$250,000 plus Value Added Tax VAT on or before the date that is 48 months following the Effective Date.

All cash payments are considered advance NSR royalty payments. Once production has begun, these cash payments will be recovered from NSR payments due to the optionor, but not more than 50% of any NSR payment will be applied towards repayment of these advances.

In addition, to earn its option, Lagartos must incur the following exploration expenditures:

1. drill a minimum of 3,500m of diamond core, reverse circulation or a combination of the two methods within 12 months following the Effective Date;

2. the cumulative amount of US$750,000 within 24 months following the Effective Date;

3. the cumulative amount of US$1,500,000 within 36 months following the Effective Date; and

4. the cumulative amount of US$2,500,000 within 48 months following the Effective Date.

Lagartos will pay the optionor a net smelter return royalty according to the following schedule:

1. 3.5% for silver priced up to US$5.50/troy ounce;

2. 3.75% for silver priced greater than US$5.50/troy ounce and up to US$6.50/troy ounce;

3. 4.0% for silver priced greater than US$6.50/troy ounce and up to US$7.50/troy ounce;

4. 4.25% for silver priced greater than US$7.50/troy ounce and up to US$10/troy ounce; and

5. 5% for silver priced greater than US$10/troy ounce.

Royalties on other precious metals will be paid at the same percentage rate then in effect for silver. Royalties on base metals recovered will be paid at half the then prevailing percentage rate for silver. Alternatively, the option may be exercised at any time by paying such amount as is required to make the total payments to the optionor aggregate US$1,300,000.

Lagartos may terminate the option at any time by providing the optionor with 60 days notice and failing to make any payment or incur any expenditures when due, but must pay the applicable taxes for the following semester.

Lagartos has a right of first refusal in the event that the optionor wishes to dispose of its interest in the option agreement or NSR.

Upon completion of the Transaction, the Company intends to continue with the business of Lagartos as described above.

Property of Lagartos
Lagartos has an option to acquire a 100% interest in the "Juanicipio 1" Exploration mining concession, title number 209790. Records in the Mexican Public Registry of Mining show:

(a) Location: Municipality of Fresnillo, State of Zacatecas, Mexico;
(b) Effective Period: From August 9, 1999 thru August 8, 2005*;
(c) Surface Area: 28,103.9790 Ha.;
(d) Status: In force, and free of any liens or encumbrances.

*Note: This claim can be pro-forma raised to exploitation status on expiration of its current
exploration status. The resulting Exploitation claim will be valid for 50 years.

Principals of Lagartos

The directors, officers and shareholders in Lagartos at present are

- Peter Kenneth McNeill Megaw of Tucson, Arizona. Dr. Megaw is a US citizen with over 25 years of exploration experience in Mexico, U.S.A. and Canada, and is President of IMDEX Inc., Vice President of Minera Cascabel S.A. de C.V., and Treasurer of Lagartos. Dr. Megaw supervised all prior work on the Juanicipio Property.

- Ing. Porfirio C.A. Padilla Lara of Hermosillo, Sonora, Mexico. Ing. Padilla is a Mexican citizen with over 30 years exploration experience in Mexico. He has been President of Minera Cascabel S.A. de C.V., a well-known exploration services company in Mexico, since 1988, and is the President of Lagartos.

- Carl A. Kuehn of Tucson, Arizona. Dr. Kuehn is a US citizen with 25 years gold exploration experience in the western U.S. and Mexico. Dr. Kuehn is Vice President of IMDEX Inc., Exploration Director of Minera Cascabel S.A. de C.V., and a major shareholder in Lagartos.

Upon the closing of the Transaction, it is expected that the following individuals will be Officers or Directors of the Company:

Dave Pearce
British Columbia
Director
Mr. Pearce has been the President and Director of the Company from 1999 to present. From June 1995 to present, he has been the President of Function Gate Hardware Ltd. and Function Gate Holdings Ltd. Mr. Pearce has also been the President of Palmer Beach Properties Inc. from January 1990 to present and President of Mega Capital Corp. from 1982 to present.

James Speakman
British Columbia
Director
Mr. Speakman is a lawyer and has been a partner of Clark, Wilson, Barristers & Solicitors since February 2001. From October 1997 to February 2001 he was the Vice President, Corporate Affairs and the Secretary of Anthem Properties Corp. From November 1994 to October 1997, Mr. Speakman was the Vice President, Corporate Affairs and the Secretary of Anthem Properties (1993) Ltd.

Eric Carlson
British Columbia
Director
Mr. Carlson is the President, CEO and co-founder of Anthem Properties Corp. He has also been CEO of Vecwest Properties Ltd. and Vice President of Finance of Schroeder Properties Ltd. In addition to Anthem Properties Corp. and Mega Capital VCP Inc., he sits on the boards of various companies including Vaughn Custom Sports Canada Ltd., Continental Home Health Care Ltd. and Motivus Software Ltd. Mr. Carlson is a Chartered Accountant and holds a bachelor of commerce degree from the University of British Columbia.

R. Michael Jones
British Columbia
Director
Mr Jones is the President of Platinum Group Metals Ltd.- PTM-TSXV. Mr. Jones has 16 years of experience as a professional geological engineer and has been involved with raising over $200 million in capital for exploration, mining development and production. He was a founder of Glimmer Resources. During a six year tenure as President of Cathedral Gold, Mr. Jones ran a producing mining company and as Vice President with Aber Resources for two years was involved in the review of a feasibility study and financing for a $1 billion mining project. The British Columbia Minister of Finance has appointed Mr. Jones to the Securities Policy Advisory Committee. Mr. Jones holds a B.Sc. in geological engineering from the University of Toronto.

The Transaction
Subject to the receipt of approval of a majority of the Company's minority shareholders and the approval of the applicable regulatory authorities, the Company will purchase 98% of the issued and outstanding common shares of Lagartos for the sum of US$5,000 plus US$50,000 to be used for repayment of funds advanced in respect of the option by Minera Cascabel S.A. de C.V., the owner of Lagartos, plus applicable purchase and transfer costs.

Subject to the satisfaction of certain conditions precedent, the Company will pay to Lagartos a nonrefundable deposit in the amount of $25,000 (the "Deposit"). Additionally, subject to the receipt of approval from the Exchange, the Company will make a loan to Lagartos in the amount of $100,000 (the "Loan"). The Loan will not bear interest for the initial six months from the date of advance and thereafter interest will accrue at the rate of 12% per annum, due and payable monthly in arrears. The Loan will be secured by way of a promissory note and will be repaid by Lagartos on the earlier of the completion of the Transaction or nine months from the date of advance of the Loan.

The Company plans to issue up to 1,500,000 special warrants at the price of $0.10 per Special Warrant to raise up to $150,000 on a private placement basis. A portion of these funds will be advanced to Lagartos to be used to make payments required to keep the option in good standing pending completion of the Transaction. Each Special Warrant will be exercisable into one common share of the Company (a "Share") and one non-transferable share purchase warrant (a "Share Purchase Warrant"). Each Share Purchase Warrant entitles the holder to purchase one additional common share of the Company at the price of $0.20 for two years from the date the Special Warrants are issued. The Special Warrants will be deemed to be exercised on the date that is the earlier of 12 months following the date the Special Warrants are issued and the date a receipt is issued for a prospectus of the Company qualifying the distribution of the Shares and Share Purchase Warrants.

As a condition precedent to the closing of the Transaction, the Company will raise at least $1,500,000 (the "Offering") through the issuance of securities of the Company.

Raymond James Ltd. ("Raymond James"), subject to completion of satisfactory due diligence, has agreed to act as sponsor in connection with the Transaction. The Company has agreed to pay Raymond James a corporate finance fee of $22,500, plus GST, and to pay Raymond James' legal fees and other reasonable disbursements in connection with the Transaction. As well, if Raymond James completes the Offering, the Company has agreed to grant Raymond James a right of first refusal to participate in any future finance offerings by the Company for a period of 12 months. An agreement to sponsor should not be construed as any assurance with respect to the merits of the Transaction or the likelihood of completion.

Completion of the Transaction is subject to a number of conditions, including but not limited to Exchange acceptance and the approval by a majority of the Company's minority shareholders. The Transaction cannot close until the required shareholder approval is obtained. There can be no assurance that the Transaction will be completed as proposed or at all. Investors are cautioned that, except as disclosed in the management information circular to be prepared in connection with the Transaction, any information released or received with respect to the Transaction may not be accurate or complete and should not be relied upon. Trading in the securities of a capital pool company should be considered highly speculative.

The Exchange has in no way passed upon the merits of the proposed Transaction and has neither approved nor disapproved the contents of this press release.

On behalf of the Board of
MEGA CAPITAL INVESTMENTS INC.
"Dave Pearce"
President and Director
Company Contact:
Mega Capital Investments Inc. Attn. Dave Pearce
Phone: (604) 922-0010
Fax: (604) 922-6674
E-mail: davepearce@telus.net


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