Reno, Nevada – Magellan Gold Corporation (OTCQB: MAGE) (“Magellan” or “the Company”) today announced that its Peruvian exploration venture with Rio Silver Inc. (TSX.V: RYO) has agreed to acquire three concessions from a Peruvian company owned jointly 60:40 by Newmont Mining Corporation and Southern Peru Copper Corporation. The concessions total 2,200 hectares and lie immediately west of and adjacent to Magellan’s Niñobamba Silver-Gold Project, which is located 330 kilometers southeast of Lima in the Department of Ayacucho, Peru. Consideration for transfer of the concessions includes a small cash payment and a 2% NSR. The transaction includes an extensive database comprising geological, geochemical, geophysical and drilling data.
“This acquisition adds substantially to the potential for a large, bulk tonnage, disseminated silver-gold deposit”, said Dr. Pierce Carson, CEO. “The area under our control will be expanded to 31 square kilometers (7,660 acres), and the new concessions contain untested silver anomalies that appear to reflect direct extensions of the main mineralized zones at Niñobamba. In Peru and elsewhere, the “high sulfidation” style of gold-silver mineralization as represented at Niñobamba has produced world class precious metals deposits.”
Previous exploration in the new concessions identified a number of gold-copper, gold-silver and silver exploration targets, of which only four of the gold-copper targets received limited drilling. Several of the untested silver anomalies appear to be westward extensions of the main mineralized zones at Niñobamba, namely the North, Dilation, Escondida and South Zones. The South Zone, for example, on which trench samples show potential silver ore grades (42 meters grading 4.2 opt silver in Rio Silver’s westernmost trench), appears to continue into the new concessions for 1,800 meters as a strong silver anomaly evident in the newly acquired data.
On July 5, 2016, the Company announced it had signed a Letter of Intent (“LOI”) with Rio Silver Inc. pursuant to which Magellan is granted the option to earn an undivided 50% interest in the Niñobamba Silver-Gold Project by exploration expenditure of $2.0 million over three years. The newly acquired concessions form part of the Project. Due diligence has been satisfactorily concluded and the parties are proceeding to replace the LOI with a definitive agreement.
In connection with the Rio Silver transaction, Magellan is required to complete two private placement unit financings in Rio Silver, each for aggregate proceeds of Cdn$75,000. The Company has completed the first unit private placement financing.