Vancouver, Aug 19, 2010 - Canasil Resources Inc. (Canasil, TSX-V: CLZ) and MAG Silver Corp. (MAG; TSX: MAG) announce the signing of a binding letter agreement providing for MAG to earn a 60% interest in Canasil’s 18,954 hectare La Esperanza Silver project in Zacatecas and Durango States, Mexico. MAG is a leading silver exploration and emerging development company in Mexico, with considerable experience and a very successful track record of high-grade silver discoveries in epithermal vein systems of the Fresnillo Silver Trend. Canasil’s La Esperanza project is located on the northern extension of the Fresnillo Silver Trend and has the potential for hosting a district scale epithermal high-grade silver mineralized system.
To complete the earn-in of 60% interest in the La Esperanza project, MAG must complete CAD$5,000,000 exploration expenditures and CAD$500,000 cash payments to Canasil over a period of four years. The initial payment of CAD$50,000 upon signature and first year expenditure of CAD$750,000 are firm commitments, and will include a minimum of 1,500 metres of drilling.
Canasil President Bahman Yamini commented “MAG is an ideal partner for advancing the large La Esperanza project with considerable exploration experience and a very successful record of discovery in Mexico and particularly in the Fresnillo Silver Trend. MAG is very well funded and has committed to an aggressive exploration program for advancing exploration work at La Esperanza. We are extremely pleased with this opportunity to cooperate with MAG and look forward to the start of the exploration program.”
MAG has also agreed to a private placement of 1,500,000 units of Canasil at $0.10 per unit for gross proceeds of $150,000. Each unit will consist of one common share and one-half of one share purchase warrant (a “Warrant”); each full Warrant will entitle MAG to purchase one common share at a price of $0.15 within one year of closing. If, beginning six months following the closing, the price of Canasil’s shares equals or exceeds $0.30 per share for a period of ten consecutive trading days, Canasil will have the right to accelerate the expiry date of the Warrants with at least 30 days’ written notice. The terms of the placement are subject to acceptance by the TSX Venture Exchange. The proceeds of the private placement will be used for continuing exploration programs on Canasil’s mineral exploration projects and for working capital.
MAG can subscribe to a further CAD$200,000 private placement within 12 months, and is required to do so should the option extend into year two.
The La Esperanza project is located within the Mexican Silver Belt in northern Zacatecas and southern Durango States. This recognized silver district hosts a number of active mines such as Pan American Silver’s La Colorada. The project claims cover multiple vein occurrences and alteration zones over a 5 kilometre strike length on a prospective SE-NW trend. The main La Esperanza vein outcrops over a strike length of 300 metres and has been drill tested with 9 diamond drill holes to a shallow depth (200m). One of the better intersections by Canasil was 396 g/t silver (11.5 ounces per ton), 1.96% lead and 0.71% zinc over a true width of 10.30 metres. The extensive alteration zones observed around the La Esperanza vein and surrounding structures together with the vein systems to the northwest indicate the possibility of a district scale epithermal silver vein system.
Canasil is a Canadian mineral exploration company with interests in precious and base metal projects in Durango, Sinaloa and Zacatecas States, Mexico, and in British Columbia, Canada. Canasil’s directors and management include industry professionals with a track record of identifying and advancing successful mineral exploration projects. Canasil is actively engaged in the exploration of its mineral properties.
For further information please contact:
President and C.E.O.
Canasil Resources Inc.
Tel: (604) 709-0109
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