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This acquisition is part of IMPACT's strategy of building a mid-tier Silver producer based on an aggressive development and acquisition plan focusing on Mexico. Through its network of local contacts, IMPACT continues to seek out undervalued assets that can represent consolidation opportunities in historically significant silver districts.
THE AGREEMENT
IMPACT has acquired a four-year option from a private Mexican vendor to purchase four mining concessions, a 200-tpd processing plant and associated surface rights. Under the agreement, IMPACT may purchase the assets for US$1,120,000 and 500,000 shares in stages, as follows, plus commit to US$700,000 in work expenditures (US$350,000 in each of the first two years):
IMPACT paid US$10,000 on signing of the Letter Option Agreement. On signing of a comprehensive agreement and receipt of regulatory approvals, IMPACT will pay US$370,000 and 100,000 shares to the vendor, for which IMPACT will acquire a 25% interest in any Net Revenues from material processed through the plant. Of this amount, US$330,000 will be used to pay off existing debt on the processing plant. After 18 months, additional payments of US$200,000 and 100,000 shares will earn IMPACT a total 40% interest in any Net Revenues from material processed through the plant. After 36 months, further payments of US$240,000 and 200,000 shares will earn IMPACT a total 60% interest in any Net Revenues from material processed through the plant. After 48 months, additional payments of US$300,000 and 100,000 shares will earn IMPACT a 100% interest in the project with no underlying royalties. IMPACT may accelerate the payments and work commitments at any time after the first 18 months and upon completion of the cash and share payments will earn a 100% interest in the project.
Under the agreement, the Mexican vendor may mine and process material from the properties until IMPACT exercises its purchase option. The agreement is subject to TSX Venture Exchange approval.
THE PROJECT
The Veta Grande Project consists of mining concessions, surface rights and a 200-tpd processing plant. The last production through the plant was in 2003.
Four mining concessions and one concession application comprise the mineral rights. Two of the initial targets on the concessions are the Cristian and San Pascual Mines. The Cristian Mine was last in production on a small scale in 2003. Hoisting equipment for the shaft is still in place in anticipation of restarting the operation. The shaft was flooded and IMPACT could not access the workings, but samples from surface dumps returned 310g/t silver, 24.2% lead and 8.0% zinc from a high grade stockpile and 93g/t silver, 0.43% lead and 1.4% zinc from a low grade waste dump. The San Pascual Mine last saw production about 20 years ago. The shaft was flooded, but a representative sample of the dump around the shaft assayed 875g/t silver. A representative sample from the dump beside the nearby Pirul shaft assayed 525g/t silver. Planned work at these and other sites controlled by IMPACT will consist of exploration and evaluation, followed by drilling.
The 200-tpd processing plant was built in 2000 and last operated in 2003. IMPACT engineers will make a full assessment of the plant and associated facilities as part of IMPACT's due diligence work. The surface rights to the area around the plant are also included in the agreement.
FUTURE PLANS
The Zacatecas Silver District is one of the largest historic silver districts in the world with past production of 1.2 billion ounces. The Veta Grande Silver Project represents an initial foothold in the core of the district from which IMPACT plans to leverage itself to become the district's dominant player. IMPACT plans to immediately begin due diligence, exploration and engineering work to evaluate the production potential of the properties and the processing plant. IMPACT has also begun evaluating other concessions in the district as potential acquisitions.
Management is pleased to have acquired a foothold position in one of the great historic silver mining districts of Mexico. It anticipates that with first mover status, the Zacatecas Silver District will grow to become an important part of IMPACT's silver profile that in time may add significantly to the Company's ongoing silver production from the Royal Mines of Zacualpan Silver Project in central Mexico.
George Gorzynski, P.Eng., a Qualified Person under the meaning of Canadian National Instrument 43-101, is responsible for the technical content of this news release. Rock samples were collected from dumps beside old mine workings. All samples were shipped to the ALS Chemex preparation laboratory in Guadalajara (Mexico) where they were fine crushed (70% passing a 2mm screen), pulverized (85% passing a 75-micron screen) and pulp split separated for assay by a riffle splitter. These pulps were shipped to the ALS Chemex laboratory in North Vancouver, Canada, where a 30-gram split of each was assayed for gold and silver by standard fire assay and a 10-gram split was analysed for an additional 30 elements by ICP spectrometry.
IMPACT Silver Corp. is a silver focused mining and exploration company with a producing silver mine at Zacualpan, Mexico, a new project at Zacatecas, Mexico and other projects in the Dominican Republic. Energold Drilling Corp. (EGD:TSX.V) owns 6.6 million shares of IMPACT.
On behalf of the Directors of IMPACT Silver Corp.
"Frederick W. Davidson"
President, CEO
Telephone: 604-681-9501
For further information please contact:
Darrell Rader, Corporate Development
The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this news release.
900-543 Granville St.
Vancouver, BC, Canada V6C 1X8
Telephone 604 681-9501
Facsimile 604 681-6813
www.IMPACTSilver.com
inquiries@IMPACTSilver.com
