Silvermex Resources (SMR-V) says that plans to buy the mine and mill next door to its San Marcial silver property in Sinaloa state, Mexico will help it reach it to reach production much faster.
For a total of $4.25 million in cash and two million shares, Silvermex has signed an agreement with Aurcana (AUN-V) to buy its 85 sq. k m Rosario property, which is just two km from its 12.5 sq.-km San Marcial property.
The Rosario deal includes surface rights, underground workings, tailings dam, water, power, offices, shops, a camp that sleeps 60 people, warehouses and an assay lab. The mine and mill site has been partially renovated including upgrading the electrical substations and wiring, camp accommodations upgrades, mine dewatering and a detailed engineering of an 800 tonne per day mill. Silvermex will acquire all kinds of equipment for the mill, including a 1,200 tonne-per-day SAG mill, two ball mills, trucks and other equipment.
Upon signing, the company will initially pay Aurcana $125,000, plus one million Silvermex shares, and within 90 days Silvermex will pay another $125,000.
Silvermex will pay another one million shares either when it reaches production or within two years time, plus $3 million to be paid over a 36-month term.
Silvermex shares were down 1¢ today to 19¢ apiece on a trading volume of 132,000 shares.
On top of that, Silvermex will have to takeover payments that Aurcana was scheduled to make to former operator, Grupo Mexico — $350,000 this July and $650,000 in January 2010.
Grupo Mexico operated the mine from 1986-2000, producing 2.5 million tonnes grading 190.5 grams silver per tonne, 0.92 gram gold, 2.02% zinc and 2.38% lead.
There are two main areas of interest at Rosario – the San Juan prospect and the Plomosas mine.
San Juan has historic reserves of 26.2 million tonnes grading 339.9 grams silver per tonne, 2.1% zinc, 1.4% lead and 0.4 gram gold per tonne, amounting to 286,000 oz. silver, 297 oz. gold, 741,000 lbs. lead and 1.16 million lbs. zinc.
The Plomosas mine has historic reserves of 323,000 tonnes grading 92 grams silver per tonne1 gram gold, 2.5% lead and 3.7% zinc for 956,000 oz. silver, 10,000 oz. gold, 16,000 lbs. lead and 23.5 million lbs. zinc.
Silvermex says it plans to do exploration work on both San Juan and Plomosas, to confirm and expand the resources.
Silvermex’s San Marcial property has a near surface, potentially bulk-mineable National Instrument 43-101 resource of 1.4 million tonnes grading 359 grams silver per tonne containing 16.15million oz. silver.