Southern Silver Exploration Corp. (“Southern Silver” or the “Company”) reported today that it has entered into a loan facility arrangement with Radius Gold Inc. (“Radius”) to borrow $CDN 800,000 to fund the final payments of $USD 600,000 to fully exercise its option to acquire the Cerro Las Minitas mineral claims in Durango, Mexico. The final payment completes the purchase price of $USD 3.6 million to acquire a 100% unencumbered interest in the claims where exploration has been ongoing since 2010.
In consideration for the grant of the loan facility, the Company has granted Radius an exclusive option for 120 days to enter into negotiations with the Company to settle terms of a business arrangement for Radius to acquire either a direct or indirect interest in the claims inclusive of continued exploration and development of the claims.
Since acquisition of an option to purchase the claims in 2010, the Company has conducted 23,310 metres of diamond drilling in 75 core holes together with surface geochemical and biogeochemical sampling, airborne magnetics, deep penetrating IP geophysics and gravity geophysics. Aggregated acquisition and exploration costs incurred on the property total approximately $USD 9.2 million. Over the course of exploring the project, the Company has discovered two new zones of mineralization on the claims, the Blind zone and the El Sol zone, which it has traced for a cumulative 820 metres strike-length in a northwest-southeast direction and to depths of up to 550 metres in some drill holes.
Details of the loan facility are:
The loan is repayable on demand, provided that Radius shall not demand repayment for one year.
Interest is payable annually at 8% per annum. At Radius’ election, interest may be paid by the issuance of common shares of the Company in accordance with the policies of the TSX Venture Exchange (“TSXV”).
Radius shall have the right at any time during the Term to convert such portion of the loan into common shares of the Company to result in Radius holding no greater than 19.9% of the then issued and outstanding shares of the Company. In the event of such conversion election, the balance of the loan shall remain due and payable for the remainder of the Term, provided that, upon default of payment, Radius shall have the right to convert the balance of the loan into common shares of the Company based upon a market price of $.05 per share. In the event of such election resulting in a “Change of Control” in accordance with TSXV Policy, the Company shall convene a shareholders meeting for the purpose of approving such Change of Control.
Security for the loan shall consist of issuance of a convertible debenture by the Company in favour of Radius supported by hypothecation of all shares in the Company’s British Virgin Island subsidiary, Southern Silver Holdings Limited (“SSHL”) which owns all issued shares of SSHL’s Mexican subsidiary, Minera Plata del Sur, S.A. de C.V., which holds the mineral claims forming the Cerro Las Minitas property.
The loan facility agreement is subject to TSXV acceptance of filings.
Subject to acceptance of the TSXV, Southern Silver proposes to pay a finder’s fee to an arm’s length party in connection with this transaction.
President Lawrence Page Q.C. said “Final payment to acquire an unencumbered 100% interest in the Cerro Las Minitas claims is a major milestone for the Company as an explorationist in Mexico. Together with our initial investment and those of past partners on the project we have been able to fund both the option purchase of the property and to advance the claims to their present state. The loan facility provided by Radius Gold Inc. provides certainty as to our ownership of the claims which will be the subject of negotiations over the next several months to establish terms for the further exploration and beneficiation of the claims.”
About Southern Silver Exploration Corp.
Southern Silver Exploration Corp. is a precious and base metal exploration and development company with a focus on mineral deposits in north-central Mexico and the southern USA. The Company’s growth strategy is the acquisition, exploration and development either directly or through joint venture relationships in high-quality mineral properties in progressive jurisdictions and includes the Cerro Las Minitas silver-lead-zinc project located in Durango, Mexico and the Oro porphyry copper-gold project located in southern New Mexico, USA.
The Cerro Las Minitas property lies within the Faja de Plata (Belt of Silver) and is located about 70 kilometres to the northeast of the city of Durango in Durango State, Mexico, and is accessed easily by road. The property comprises 19 concessions totaling approximately 13,700 hectares in one of the most significant silver producing regions in the world.
The Company’s Oro property is located approximately 80 km southwest of the Silver City porphyry copper district and lies within the prolific Laramide Porphyry Copper Belt of the southwestern USA. The property covers a highly prospective 6 square kilometer area of quartz-sericite-pyrite alteration, interpreted to overlie an unexposed porphyry center. Since acquisition in 2007, Southern Silver has completed surface mapping and sampling, a 455 line-kilometre airborne magnetic survey over the entire property and 3,201 meters of diamond drilling at a cost of $1.25 million. In addition to bulk tonnage porphyry copper-molybdenum-gold potential, the Oro Project claims also include the high-grade sediment-hosted Stock Pond gold target which has yielded values up to 4.8 g/t gold in reconnaissance chip sampling and is a primary target for drill follow-up.
About Radius Gold Inc.
Radius Gold is traded on the TSX Venture Exchange under the symbol RDU, and has been exploring for gold in Latin America for over a decade. The company has a strong treasury as a result of exploration asset sales and is looking for project acquisition opportunities across the globe. Please call toll free 1-888-627-9378 or visit its web site (www.radiusgold.com) for more information.
Robert Macdonald (P.Geo) is a Qualified Person as defined by National Instrument 43-101 and responsible for the supervision and preparation of the technical information in this disclosure.
On behalf of the Board of Directors
Lawrence Page, Q.C.
President & Director, Southern Silver Exploration Corp.
For further information, please visit Southern Silver’s website at southernsilverexploration.com or contact us at 604.684.9384 or by email at firstname.lastname@example.org.
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.
This news release may contain forward-looking statements including but not limited to comments regarding the timing and content of upcoming work programs, geological interpretations, receipt of property titles, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. These statements are based on a number of assumptions, including, but not limited to, assumptions regarding general economic conditions, interest rates, commodity markets, regulatory and governmental approvals for the company’s projects, and the availability of financing for the company’s development projects on reasonable terms. Factors that could cause actual results to differ materially from those in forward looking statements include market prices, exploitation and exploration successes, the timing and receipt of government and regulatory approvals, and continued availability of capital and financing and general economic, market or business conditions. Southern Silver Exploration Corp. does not assume any obligation to update or revise its forward-looking statements, whether as a result of new information, future events or otherwise, except to the extent required by applicable law.