Canasil Signs Agreement with Pan American Silver to ExplorePan American's Escobar and Canasil's Sandra Silver-Gold Projects in Durango, Mexico
Vancouver, August 18, 2008 – Canasil Resources Inc. (“Canasil” TSX-V: CLZ) is pleased to announce the signature of a letter agreement with Pan American Silver Corp. (Pan American TSX: PAA) providing an option for Canasil to earn a 51% interest in Pan American’s Escobar claims for US$1 million in exploration expenditures over 3 years. As described below, Pan American will then have the option either to back-in to a 51% interest in the combined claims of Pan American’s Escobar project and Canasil’s Sandra project to form a joint venture with the objective of advancing the projects through to feasibility and to production if warranted, or to sell its 49% interest in the Escobar claims to Canasil.
Bahman Yamini, President and CEO of Canasil, commented: “We are very pleased with the opportunity for cooperation with Pan American Silver on the Escobar and Sandra projects. The combined claims cover over 6,000 hectares with the potential for hosting a significant silver-gold deposit in a region known for its silver and gold producing mines and deposits. We regard this as a very important development for Canasil with the opportunity to cooperate with a leading company with significant silver production and reserves, and an extensive history of working on silver projects in Mexico and Latin America. We plan to work actively to evaluate and advance these projects and look forward to future developments as the planned exploration program advances.”
Following Canasil’s initial earn-in of a 51% interest in Pan American’s Escobar claims, Pan American may back-in to the combined Canasil and Pan American claims by paying Canasil 3-times exploration expenditures on the combined claims, forming a 51% Pan American and 49% Canasil joint venture. If Canasil elects not to contribute its share of further joint venture expenditures, Pan American may earn an additional 14% interest by completing a feasibility study, thereby taking its interest to 65%. Following this, and upon Canasil’s request, Pan American may earn a further 15% interest for a total 80% interest by financing Canasil’s share of capital costs required to take the project through to production. If Pan American decides not to exercise its back-in right, it may sell its 49% interest in the Escobar claims to Canasil for US$5 million in a combination of cash and shares paid over 3 years, and would retain a 2.5% NSR on future production from the Escobar claims. A formal agreement, which may be subject to acceptance by the TSX Venture Exchange, will follow.
Pan American Silver’s Escobar claims cover 635 hectares and Canasil’s Sandra claims cover 5,513 hectares; the claims are contiguous and are located 180 kilometres northwest of the city of Durango, in Durango State, Mexico. The project area is located on an important mineral trend with many past and presently producing silver-gold mines and deposits, such as Silver Standard’s La Pitarrilla deposit, Endeavour Silver’s Guanacevi mine, and Great Panther’s Topia mine. Numerous veins and mineralized structures have been identified within the project claim area by Pan American Silver and Canasil on their respective claims, with surface and trench samples returning high silver, gold, copper, lead and zinc grades. This agreement will create the opportunity for systematic exploration and potential development of this large combined claim area.
About Pan American Silver:
Pan American Silver Corp. was founded in 1994. Pan American's mission is to be the world's largest and lowest cost primary silver mining company and to achieve this by increasing the company's low cost silver production and silver reserves. Pan American has seven operating mines in Mexico, Peru and Bolivia. An eighth mine in Argentina is scheduled to commence operations in 2008. Pan American Silver reported first half 2008 silver production of 9.2 million ounces, with forecasted silver production for 2008 of 18.8 million ounces, and reported 227 million ounces of silver reserves as at December 31, 2007.
Canasil is a Canadian mineral exploration company with interests in precious and base metal properties in Durango, Sinaloa and Zacatecas States, Mexico, and in British Columbia, Canada. The Company’s directors and management include industry professionals with a consistent track record of identifying and advancing successful mineral exploration projects. The Company is actively engaged in the exploration of mineral properties and evaluating additional acquisition opportunities.
For further information please contact:
Calgary: Garth McTavish
The TSX Venture Exchange has not reviewed and does not accept responsibility
for the adequacy or accuracy of the content of this news release.
This news release contains certain statements that may be deemed “forward-looking statements”. All statements in this release, other than statements of historical fact, that address future production, reserve potential, exploration drilling, exploitation activities and events or developments that the Company expects to occur, are forward looking statements. Although the Company believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results may differ materially from those in the forward-looking statements. Investors are cautioned that any such statements are not guarantees of future performance. Forward-looking statements are based on the beliefs, estimates and opinions of the Company’s management on the date the statements are made.