Aurcana signs Option to acquire the silver-zinc-lead Rosario Property, Mexico / Past Producer with large land package and significant exploration potential
February 8, 2007
Aurcana Corporation ("Aurcana" or the "Company") is pleased to announce that it continues with its strategy of acquiring advanced stage properties in Mexico. The Company has entered into an Option Agreement with a subsidiary of Grupo Mexico S.A de C.V., Industrial Mineral Mexico, S.A. de C.V. ("collectively Grupo Mexico") to acquire a 100% interest in the silver -- zinc -- lead -- gold Rosario Property ("Rosario Property") located in south eastern Sinaloa State, Mexico. The Rosario Property, consisting of 18 concessions totalling approximately 8,515 hectares is located approximately 94 kilometres southeast of Mazatlan and is accessed by an all weather road.
There are two main areas on the Rosario Property, San Juan and Rosario where Grupo Mexico has calculated historic reserves. At the San Juan area, east of the Rosario mine site, Grupo Mexico reports historic reserves of 256,756 tonnes at a grade of 329.3 g/t silver, 3.73% zinc, 1.69% lead, and 0.19 g/t gold. A decline has been driven into the San Juan zone and has tested the zone over a vertical distance of 40 metres, with the zone still open to depth. Aurcana will make San Juan a focus of its early exploration on the property due to the high grade nature of the ore and the significant potential of the area. Originally reported as reserves by Grupo Mexico in 2000 using a cut-off grade based on metal prices at that time, the reader should be cautioned the historic reserves do not conform to National Instrument 43-101 requirements for reporting purposes; as such the Company is not treating these historic estimates as current reserves or resources. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person".
At Rosario, in 2000, Grupo Mexico calculated 638,756 tonnes at a grade of 136 g/t silver, 3.21 % zinc, 2.23 % lead, and 1.05 g/t gold consisting of 37,944 tonnes of proven reserves grading 122 g/t silver, 3.82% zinc, 2.57% lead and 0.98 g/t gold; 277,074 tonnes of probable reserves grading 89 g/t silver, 3.45% zinc, 2.36% lead and 1.0 g/t gold; and 323,738 tonnes of inferred resources grading 178 g/t silver, 2.92% zinc, 2.07% lead and 1.1 g/t gold. Aurcana will also focus on the exploration potential that remains on this zone and intends to expand the reserves from areas remaining between old mine levels, and from below the lowest level exploited. As with the San Juan area, the reader should be cautioned the historic reserves do not conform to National Instrument 43-101 requirements for reporting purposes; as such the Company is not treating these historic estimates as current reserves or resources. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person".
In addition to San Juan and Rosario there are a number of exploration targets outlined by geology, geochemistry and geophysics which are drill ready. The Company is encouraged by the exploration potential that has been identified by Grupo Mexico on the Rosario Property.
The Rosario Property has historically reported, by Grupo Mexico, past production from 1986 to 2000 at an average rate of 600 tonnes per day of a total of 2.5 million tonnes of ore averaging 190.5 grams per tonne (g/t) silver, 2.02% zinc, 2.38% lead, and 0.92 g/t gold. These estimates should not be relied upon until they have been verified by further due diligence and by the Company's "Qualified Person". All other facilities including surface rights, underground workings, water, power, offices, shops, warehouses, met lab, mill infrastructure, and a town site will be part of the acquisition from Grupo Mexico. The Option Agreement grants Aurcana the exclusive option, but not the obligation, to purchase the assets of the Rosario Property (the "Option to Purchase"). Aurcana may, subsequent to its technical and legal review of the Rosario Property agree to execute, within a term of six (6) months following the date of signing the Option Agreement, exercise the Option to Purchase and execute a Sale and Purchase Agreement to acquire the 100% undivided interest in the Rosario Property.
In the event Aurcana Mexico executes the Sale and Purchase Agreement, consideration for the purchase of the Rosario Property is US$3,000,000.00 ("Purchase Price"), US$250,000 is due upon signing of the Option Agreement and is subject to the receipt of TSX-Venture Exchange ("TSX-V") approval. Should the Company proceed with the Purchase Agreement the US$250,000 payment will form part of the Purchase Price. The remaining Purchase Price of US$2,750,000 will be payable over two years.
A cash finders fee may be payable on this acquisition in accordance with the policies of the TSX-V. Aurcana would also like to thank Sedna bdp, a Mexico City based investment banking and international businesses firm, which represented Grupo Mexico in the marketing, negotiation and sale of the Rosario Property.
Ron Nichols, P.Eng., a Director and Vice President of Exploration for Aurcana, and a Qualified Person as defined by National Instrument 43-101, supervised the preparation of the technical information in this release.
ON BEHALF OF THE BOARD OF DIRECTORS OF
"Ken Booth", President
For further information, please contact: Ken Booth, President or
Colin Farr, Investor Relations
Phone: (604) 331-9333
Web site: www.aurcana.com
The statements made in this News Release may contain certain forward-looking statements. Actual events or results may differ from the Company's expectations. Certain risk factors may also affect the actual results achieved by the Company. The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy and accuracy of this Release.