Pan American Silver Corp. ("Pan American") (TSX: PAA)(NASDAQ: PAAS)
and Orko Silver Corp. ("Orko") (TSX VENTURE: OK) are pleased to
announce that they have reached an agreement for the joint
development of Orko Silver's La Preciosa silver project in the
state of Durango, Mexico.
The Project
The La Preciosa silver project and adjacent mineral concessions
of Santa Monica and San Juan, covers 32,422 hectares of contiguous
mining claims on which Orko has already defined an indicated and
inferred mineral resource. The indicated resource is estimated to
comprise 10,637,000 tonnes, grading 185 grams of silver per tonne
and 0.27 grams of gold per tonne, for a total of approximately
63,000,000 ounces of silver and 94,000 ounces of gold, while the
inferred resource is estimated to comprise 12,087,000 tonnes,
grading 185 grams of silver per tonne and 0.25 grams of gold per
tonne, for a total of approximately 71,700,000 ounces of silver and
97,000 ounces of gold. The primary discovery is the Martha vein,
which ranges from 2 to 40 meters in thickness and has been traced
over 3.5 kilometers on strike. Martha remains open at depth and
along strike, as do several other promising veins and earlier stage
exploration targets within the remainder of the La Preciosa claims.
For more details on the resource estimates, refer to the technical
report by Mine Development Associates ("MDA") dated March 31, 2009.
George Cavey, P.Geo., Orko's Vice-President, Exploration, is the
Qualified Person who takes responsibility for the technical
disclosure in this news release.
The Joint Venture Agreement
Pan American and Orko have agreed to form a joint venture to
develop the La Preciosa project. Pan American will contribute its
demonstrated mine development expertise, as well as 100% of the
funds necessary to develop and construct an operating mine, in
consideration for a 55% interest in the joint venture, while Orko
will contribute its exploration expertise and the La Preciosa
project and related concessions to retain a 45% interest.
Over the next 36 months, Pan American has agreed to spend an
estimated US$16 million at La Preciosa to conduct resource
definition drilling, acquire necessary surface rights, obtain
permits, and ultimately prepare and deliver a feasibility study to
maintain its interest in the Joint Venture. Furthermore, Pan
American has agreed to spend a minimum of US$5.0 million in the
first 12 months of the development program to maintain its interest
in the Joint Venture, of which a minimum of US$2.5 million will be
spent to continue to explore the highly prospective land package
that Orko is contributing to the Joint Venture.
Key terms of the joint venture and the development strategy for
La Preciosa include:
- Pan American will be the operator for the joint venture and
has agreed to share with Orko all technical information relating to
the development of La Preciosa,
- A joint venture Management Committee will be formed, with
representation from both Orko and Pan American, which will be
responsible for monitoring the project's development,
- Any mine construction decision and subsequent operating
budgets will require the unanimous approval of the Management
Committee,
- Pan American has agreed to a "standstill" with Orko for as
long as the joint venture is in operation.
Commenting on the agreement, Mr. Geoff Burns, President and CEO
of Pan American stated: "I am extremely pleased to be partnering
with Orko Silver in the joint development of La Preciosa. Orko has
done a first class job in defining a very significant silver
resource and the project is at an ideal stage to take the next step
towards future production. Having just completed the development
and construction of two mines, we had been actively seeking
opportunities to re-deploy our talented team of mine builders. The
timing is right, the location is right and the resource seems right
to allow for some real value creation and growth for both Pan
American's and Orko's shareholders."
Mr. Gary Cope, President and CEO of Orko commented: "We have
long believed in the value of La Preciosa and it is rewarding to
know that Pan American has recognized that same potential by
committing both its capital and human resources to the project. We
believe that with further exploration we should be able to define a
significantly larger silver resource. Most importantly, we have
structured a Joint Venture which is truly an open partnership.
Orko's shareholders will benefit from the financial capacity and
extensive mine development expertise that Pan American brings to
the joint venture. As such, this transaction significantly reduces
the financing and dilution risk for our shareholders. We believe
this will be a strategic advantage for Orko and we look forward to
working closely with Pan American's team as La Preciosa moves
toward production."
GMP Securities L.P. and BMO Capital Markets acted as financial
advisers to Orko and have both provided fairness opinions that the
transaction is fair from a financial point of view.
Private Placement
Coincident with the formation of the La Preciosa joint venture,
Pan American has also agreed to purchase, on a private placement
basis, 4,000,000 common shares of Orko at a purchase price of CDN
$1.25 per share. Pan American's investment in Orko's common shares
is subject to certain anti-dilution and pre-emptive rights to
participate in future financings of Orko. The price represents a
premium to the current market price and further reflects Pan
American's confidence in the value of the project. The private
placement is subject to acceptance by the TSX Venture Exchange.
About Pan American Silver
Pan American Silver's mission is to be the world's largest and
lowest cost primary silver mining company, and to achieve this by
increasing its low cost silver production and its silver reserves.
The Company has eight operating silver mines in Mexico, Peru,
Bolivia and Argentina.
About Orko Silver
Orko Silver Corp. is developing one of the world's largest
primary silver deposits, La Preciosa, located near the city of
Durango, in Durango State, Mexico.
THIS NEWS RELEASE CONTAINS "FORWARD-LOOKING STATEMENTS" WITHIN
THE MEANING OF THE UNITED STATES PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995 AND "FORWARD-LOOKING INFORMATION" WITHIN THE
MEANING OF APPLICABLE CANADIAN SECURITIES LEGISLATION. SUCH
FORWARD-LOOKING STATEMENTS AND INFORMATION INCLUDE, BUT ARE NOT
LIMITED TO, STATEMENTS AS TO: THE TERMS AND CONDITIONS OF THE JOINT
VENTURE, WHICH MAY BE AMENDED BY FUTURE NEGOTIATIONS BETWEEN PAN
AMERICAN AND ORKO; STATEMENTS AS TO PAN AMERICAN'S FUTURE
EXPENDITURES AND ACTIVITIES FOR THE BENEFIT OF THE JOINT VENTURE,
WHICH ARE CONDITIONAL TO PAN AMERICAN MAINTAINING ITS INTEREST IN
THE JOINT VENTURE; LA PRECIOSA ACHIEVING FUTURE PRODUCTION; VALUE
CREATION AND GROWTH FOR PAN AMERICAN'S AND ORKO'S SHAREHOLDERS;
DEFINITION OF A LARGER MINERAL RESOURCE AT LA PRECIOSA; AND TSX
VENTURE EXCHANGE ACCEPTANCE OF THE PRIVATE PLACEMENT. PAN AMERICAN
AND ORKO DO NOT INTEND, AND DO NOT ASSUME ANY OBLIGATION TO, UPDATE
SUCH FORWARD-LOOKING STATEMENTS OR INFORMATION, OTHER THAN AS
REQUIRED BY APPLICABLE LAW.
FORWARD-LOOKING STATEMENTS OR INFORMATION INVOLVE KNOWN AND
UNKNOWN RISKS, UNCERTAINTIES AND OTHER FACTORS THAT MAY CAUSE THE
ACTUAL RESULTS, LEVEL OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS OF
PAN AMERICAN, ORKO OR THEIR RESPECTIVE OPERATIONS TO BE MATERIALLY
DIFFERENT FROM THOSE EXPRESSED OR IMPLIED BY SUCH STATEMENTS. SUCH
FACTORS IN RELATION TO PAN AMERICAN INCLUDE, AMONG OTHERS:
FLUCTUATIONS IN THE SPOT AND FORWARD PRICE OF SILVER, GOLD, BASE
METALS OR CERTAIN OTHER COMMODITIES (SUCH AS NATURAL GAS, FUEL OIL
AND ELECTRICITY); FLUCTUATIONS IN THE CURRENCY MARKETS (SUCH AS THE
PERUVIAN SOL AND MEXICAN PESO VERSUS THE U.S. DOLLAR); CHANGES IN
NATIONAL AND LOCAL GOVERNMENT, LEGISLATION, TAXATION, CONTROLS,
REGULATIONS AND POLITICAL OR ECONOMIC DEVELOPMENTS IN CANADA, PERU,
MEXICO, ARGENTINA, BOLIVIA, THE UNITED STATES OR OTHER COUNTRIES IN
WHICH PAN AMERICAN MAY CARRY ON BUSINESS IN THE FUTURE; OPERATING
OR TECHNICAL DIFFICULTIES IN CONNECTION WITH MINING OR DEVELOPMENT
ACTIVITIES; RISKS AND HAZARDS ASSOCIATED WITH THE BUSINESS OF
MINERAL EXPLORATION, DEVELOPMENT AND MINING (INCLUDING
ENVIRONMENTAL HAZARDS, INDUSTRIAL ACCIDENTS, UNUSUAL OR UNEXPECTED
FORMATIONS, PRESSURES, CAVE-INS AND FLOODING); INADEQUATE
INSURANCE, OR INABILITY TO OBTAIN INSURANCE, TO COVER THESE RISKS
AND HAZARDS; EMPLOYEE RELATIONS; AVAILABILITY AND INCREASING COSTS
ASSOCIATED WITH MINING INPUTS AND LABOUR; THE SPECULATIVE NATURE OF
MINERAL EXPLORATION AND DEVELOPMENT, INCLUDING THE RISKS OF
OBTAINING NECESSARY LICENSES AND PERMITS; DIMINISHING QUANTITIES OR
GRADES OF MINERAL RESERVES AS PROPERTIES ARE MINED; BUSINESS
OPPORTUNITIES THAT MAY BE PRESENTED TO, OR PURSUED BY PAN AMERICAN;
PAN AMERICAN'S ABILITY TO SUCCESSFULLY INTEGRATE ACQUISITIONS; AND
CHALLENGES TO PAN AMERICAN'S TITLE TO PROPERTIES; AS WELL AS THOSE
FACTORS DESCRIBED IN THE SECTION "RISK RELATED TO PAN AMERICAN'S
BUSINESS" CONTAINED IN PAN AMERICAN'S MOST RECENT FORM 40F/ANNUAL
INFORMATION FORM FILED WITH THE SEC AND CANADIAN PROVINCIAL
SECURITIES REGULATORY AUTHORITIES. ALTHOUGH PAN AMERICAN AND ORKO
HAVE ATTEMPTED TO IDENTIFY IMPORTANT FACTORS THAT COULD CAUSE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN
FORWARD-LOOKING STATEMENTS OR INFORMATION, THERE MAY BE OTHER
FACTORS THAT CAUSE RESULTS TO BE MATERIALLY DIFFERENT FROM THOSE
ANTICIPATED, DESCRIBED, ESTIMATED, ASSESSED OR INTENDED. THERE CAN
BE NO ASSURANCE THAT ANY FORWARD-LOOKING STATEMENTS OR INFORMATION
WILL PROVE TO BE ACCURATE AS ACTUAL RESULTS AND FUTURE EVENTS COULD
DIFFER MATERIALLY FROM THOSE ANTICIPATED IN SUCH STATEMENTS OR
INFORMATION. ACCORDINGLY, READERS SHOULD NOT PLACE UNDUE RELIANCE
ON FORWARD-LOOKING STATEMENTS OR INFORMATION.
NEITHER TSX VENTURE EXCHANGE NOR ITS REGULATION SERVICES
PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES OF THE TSX
VENTURE EXCHANGE) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR
ACCURACY OF THIS RELEASE.
Contacts: Pan American Silver Corp. Kettina Cordero Coordinator,
Investor Relations (604) 684-1175 info@panamericansilver.com
www.panamericansilver.com Orko Silver Corp. Gary Cope President
(604) 684-4691 info@orkosilver.com www.orkosilver.com
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