Jul 29 2015
Cyprium Mining Corporation is pleased to announce that it has entered into a letter of intent with Minerales Nacionales de Mexico SA de CV, Minera Potosi Silver S de RL de CV and Daniel Valenzuela, pursuant to which Cyprium and the Potosi Partners have agreed to form a twenty year joint venture for the exploitation and exploration of the Potosi silver mine located in the historic silver rich mining district of Santa Eulalia in Mexico.
The Joint Venture will also have the exclusive rights of possession, usage and operations to the San Guillermo processing facility which is located seven kilometers from the Potosi silver mine, as well as all of the exploration and exploitation rights to a property adjacent to the Potosi silver mine known as La Chinche. The Potosi silver mine, the San Guillermo processing plant and the La Chinche property are 100% owned by the Potosi Partners. Cyprium will initially acquire a 53% interest in the Joint Venture in return for a US$2.5 million financial commitment to the Joint Venture to be completed by December 31, 2016. The Joint Venture is expected to be finalized before the end of August 2015 and is subject to several conditions including, without limitation, receipt of all necessary regulatory and TSX Venture Exchange approval, and other usual conditions for transactions of this nature.
Mr. Alain Lambert, Chairman and C.E.O. of Cyprium stated: "We are proud to form this partnership with Daniel Valenzuela, a third generation miner of the Potosi silver mine and operator of the San Guillermo plant. The mine operated continuously for over thirty-four years before it closed in 1991 when commodity prices were low and a labour dispute lead to a strike. The Potosi Partners have successfully, but inconsistently, carried out small scale production between 1991 and 2012. Together, we will restart mining operations at Potosi and San Guillermo."
Mr. Lambert concluded: "When I was appointed CEO of Cyprium in May 2015, I was very clear about the number one strategic imperative for our company: to secure medium to long-term supply of mineralized material with acceptable head grades from nearby mines to fill up the capacity of the Cyprium operated processing plant in Aldama, Mexico. The Joint Venture also meets another strategic imperative we had set at the time: the acquisition or co-participation of existing mines and/or plants where we can deploy our financial resources and technical expertise for the benefit of our shareholders. Needless to say, the transaction announced today goes a long way towards meeting those priorities. The combination of owning the rights to an existing operating plant and a historic silver mine, especially of the scale of Potosi, is quite a unique proposition for a junior mining company."
Santa Eulalia is a world class polymetallic mining district located in the central part of the State of Chihuahua, Mexico, approximately twenty-two kilometers east of the City of Chihuahua. Mineralization in the area was originally discovered during the Spanish colonial period in the 1500's, and recorded production has occurred over more than 300 years. Santa Eulalia ranks as one of Mexico's primary silver and base metal producing districts with nearly 450 million ounces of silver and substantial amounts of lead and zinc mined. The nature of the deposit in the Santa Eulalia district is a carbonate replacement deposit and is the historically largest of its type in Mexico. Mineralization occurs in an area about 10 km in length and 5 km in width. Production and reserves for the district have been estimated to be about 50 million metric tons(1) with grades of 125-350 g/t Ag, 2-8% Pb and 3-12% Zn(1)(2), along with appreciable quantities of tin and vanadium.
The Santa Eulalia district covers approximately forty-eight square kilometers and is divided into three areas, the West Camp, the Central Camp and the East Camp. The Potosi silver mine is located in the West Camp. The West Camp has produced most of the minerals from the district from an area 4 km long in a north-south direction and 2 km wide in an east-west direction, with the Potosi silver mine being one of the primary producers.
Groupo Mexico, through its subsidiary Southern Copper Corp. owns the Buena Tierra mine in the West Camp and the San Antonio mine in the East Camp. Mag Silver Corp controls all of the ground to the immediate south, except for La Chinche, and between the West Camp and East Camp.
Mr. Cesar Duarte, Governor for the State of Chihuahua noted: "The Potosi silver mine is a significant asset which is central to the long and vibrant history of success of the Chihuahua mining sector. Cyprium's US$2.5 million investment in restarting the mine is in addition to Cyprium's recent US$400,000 investment in the Aldama plant. These investments will lead to the creation of several hundred direct and indirect jobs, as well as goods and services being purchased locally for the benefit of all residents of Santa Eulalia, Aldama and Chihuahua. Cyprium now joins larger Canadian mining companies such as Agnico Eagle Mines Ltd and Goldcorp Inc. that have operating mines in Chihuahua. We look forward to providing them all the support they need to make their operations successful."
Strategic advantages and deal highlights
- All historic technical reports were preserved by the Potosi Partners and will be available to the Joint Venture.
- The Potosi silver mine, which is twenty-one level deep, stopped operating because of low commodity prices and a labour dispute, not because of lack of mineralized material.
- Much of the infrastructure at the mine such as buildings, while in need of renovations in some cases, is still available.
- The Santa Eulalia mining district is one of the most researched mining districts in Mexico.
- The Potosi silver mine is located approximately 22 kilometers from downtown Chihuahua and is 100% accessible by paved roads.
- The Potosi silver mine is located only 42 kilometers from Cyprium's Aldama plant.
- The team currently working at the Aldama processed at that plant mineralized material from the Potosi silver mine in the last few years and all the technical information is available to the Joint Venture.
- The Potosi Partners invested over US$600,000 between 2010 and 2012 on the rehabilitation of the San Guillermo plant as part of a plan to deliver a processing plant with capacity between 400 and 500 tons per day. The Joint Venture intends to make investments in the San Guillermo plant in 2016 as and when additional production capacity is required over and above the Aldama plant existing capacity.
- The Aldama plant has enough capacity to process the planned initial production from the Potosi silver mine meaning that the Joint Venture does not need to immediately invest in a processing plant in order to resume production.
Source: http://www.cypriummining.com/