Mag to release Juanicipio resource estimate in Q2 2014

2014-02-17 13:01 ET - News Release

Mr. George Paspalas reports

MAG SILVER DEVELOPMENT & EXPLORATION UPDATE

Mag Silver Corp. is providing an update on its exploration and development projects in Mexico. At Dec. 31, 2013, the company had cash of $25-million (U.S.), which is sufficient to maintain all of its properties and currently planned programs through 2014 and into 2015.

Juanicipio project

On Oct. 28, 2013, the company announced that the Minera Juanicipio SA de CV joint venture had commenced underground development at the Juanicipio property, based on the recommendations made to it in a 2012 National Instrument 43-101-compliant updated preliminary economic assessment prepared by AMC Mining Consultants (Canada) Ltd., as filed on SEDAR. The proposed 2014 Minera Juanicipio development budget is $11.4-million (U.S.) (Mag's 44-per-cent share is $5-million (U.S.)) and is focused primarily on the ramp advancement. To date, the decline has progressed approximately 147 metres utilizing a continuous miner. It is expected that the 115-metre-per-month advance rate outlined in the AMC study will be attained progressively by the operator, Fresnillo PLC, to achieve the 1,200 metres of advance planned for the year.

On Feb. 5, 2014, the company hosted a visit to the Juanicipio site for 12 mining analysts, who had the opportunity to see firsthand the professionalism with which the ramp is being advanced and developed. The visit included an overall viewing of the property, including the portal, the decline and the core shack.

In addition to the Juanicipio development, significant exploration work is also planned to seek new veins, and trace structures and veins in neighbouring parts of the district onto the Minera Juanicipio joint venture ground. The proposed 2014 exploration budget for Minera Juanicipio is $2.7-million (U.S.) (Mag's 44-per-cent share is $1.2-million (U.S.)).

The majority of drilling in 2013 was focused on infill drilling on the Valdecanas vein designed to convert inferred mineral resources to indicated mineral resources. An updated Minera Juanicipio resource estimate is expected to be available in the second quarter of 2014.

Cinco de Mayo

The Cinco de Mayo project owned 100 per cent by the company is a 25,00-hectare district-scale project located in northern Chihuahua state, Mexico. No drilling was undertaken in 2013 as the company has been in the process of negotiating a renewed surface access agreement with the local landowners, the Ejido Benito Juarez, since it was asked to vacate the property in November, 2012, at what the company maintains was an illegally constituted Ejido assembly (see press releases dated Nov. 19 and Nov. 20, 2012).

Various Ejido members legally challenged the assembly meeting on the grounds that proper notice was not given, key signatures required to properly call the meeting were fraudulent and that the vote taken at the meeting was fraught with irregularities, including a significant number of votes being cast by unverified proxies. Mag had expected that the assembly and the resolutions passed would be nullified by the Fifth Unified Agrarian Tribunal, but the company has just been notified that the tribunal rejected the Ejido challenge. The ruling was made on narrow technical grounds and did not speak to the merits of the actions of the assembly, however the tribunal did note that a vote of a majority of Ejido members can revoke the actions of the challenged assembly at any time. The company has been advised that an appeal of the ruling, based on failure of the tribunal to consider broader requirements of the agrarian law, has already been filed with the Mexican Supreme Court by the same Ejido members and should be considered within the next 60 days.

As permission of the Ejido assembly is required to obtain surface access, Mag continues to pursue negotiations with the Ejido and anticipates that the Tribunal's ruling (and the outcome of the pending appeal) will have minimal impact on the ratification by the Ejido of any settlement agreement that may ultimately be reached. While no assurances can be given, Mag is continuing the negotiation process with the intent of arriving at a settlement agreement that would be fully supported at a properly constituted assembly. The company believes that the access issue is a temporary delay and continues to work diligently with state and local officials to negotiate renewed access to the mining claims, and return the significant economic and social benefits to the community in the second half of 2014.

Salamandra

In May, 2013, the company entered into an option agreement with Canasil Resources Inc. whereby the company can earn up to a 70-per-cent interest in Canasil's 14,719-hectare Salamandra property located in Durango state, Mexico. Drilling began in the fourth quarter of 2013 under a committed initial 3,000-metre drill program as required under the option agreement. The option agreement also requires Mag to incur expenditures of $1-million in the first year. Both of these requirements have been met and the currently active drilling program has been extended by at least another 500 metres. Salamandra appears to be a typical Mexican carbonate replacement/skarn system and lies 80 kilometres northwest of the Sabinas (Penoles) and San Martin (Grupo Mexico) mines that exploit Mexico's largest known silver-lead-zinc skarn deposit. Salamandra is also similar to Mag's Cinco de Mayo project and the same exploration model that drove successful exploration there is being applied at Salamandra. Mag undertook detailed geologic mapping and grid sampling of the property, and systematically revaluated Canasil's geophysical surveys and drilling results to generate over 20 drill targets around the central outcropping intrusive complex, and under alluvial and volcanic cover to the east and west. Most of these targets lie from 500 to 2,500 metres from the mineralized zone Canasil drilled.

The initial 3,000-metre diamond drilling program commenced in late November, 2013, and was completed on Feb. 11, 2014. The first hole of the extended program is in progress. Assay results are pending.