Mag Silver releases NI 43-101 Juanicipio resource

2014-05-27 09:18 ET - News Release

Mr. George Paspalas reports

MAG SILVER ANNOUNCES UPDATED JUANICIPIO RESOURCE ESTIMATE

Mag Silver Corp. has released an updated independent mineral resource estimate for the Juanicipio property completed by Roscoe Postle Associates Inc. (RPA) on behalf of Mag. The updated estimate reflects the results of 40 infill holes drilled in 2012 and 2013, and is based on drill results available as of Dec. 31, 2013. The new estimate demonstrates a conversion of previously classified inferred resources into the indicated category and reports a deep lower-grade resource separately. The Juanicipio property, located in the Fresnillo district, Zacatecas state, Mexico, is owned and operated by Minera Juanicipio SA de CV, a Mexican-incorporated joint venture company held 56 per cent by Fresnillo PLC and 44 per cent by the company.

A National Instrument 43-101 technical report documenting the updated mineral resource estimate will be filed on SEDAR within 45 days. RPA has reviewed the 2012 preliminary economic assessment carried out by AMC Mining Consultants (Canada) Ltd. (see press release dated June 14, 2012) and believes that it remains a reasonable representation of the property's economic potential.

Highlights of the May, 2014, RPA resource estimate

The mineral resources on the Juanicipio property are contained within the Valdecanas vein system and the Juanicipio vein. The updated RPA estimate uses a cut-off of $70 (U.S.)/tonne net smelter return, which includes contained values for silver, gold and base metals. The Valdecanas and Juanicipio veins display the vertical grade transition from upper silver-rich zones to deep gold and base-metal-dominant areas that are typical of Fresnillo district veins and epithermal silver veins in general. The resource estimate has been manually divided into the Bonanza Grade silver zone (BGS zone) and the Deep zone to reflect this vertical compositional zonation and highlight the definition of the Deep zone.

The BGS zone resource veins have a similar footprint as previous resource estimates (see press releases dated Nov. 10, 2011, and Dec. 19, 2011), with the higher drill density converting a significant proportion of the previous inferred resource into the indicated category. The increased drill density also provides a better understanding of the vein geometry and indicates that that the Valdecanas vein actually comprises two overlapping en echelon veins rather than a single vein offset by a fault. This reveals an area of overlap, with incrementally increased tonnage. A number of new holes, targeted below the limits of the previous resource estimate, intersected significant widths (10.5 to 25.8 metres true thickness) of lower-grade mineralization, which combined with previous deep intercepts led to the definition of the new Deep zone resource.

George Paspalas, president and chief executive officer of Mag, stated, "The updated RPA estimate boosts the confidence levels for the Bonanza zone and again validates the high-grade silver asset on hand at Juanicipio, whilst the Deep zone adds the potential to extend the mine life beyond that envisioned in the 2012 preliminary economic assessment."

Mineral resources by metal dominance zone are identified in the table.

                       MINERAL RESOURCES BY METAL ZONE

Zone/              Tonnage    Ag    Au   Pb   Zn     Ag     Au     Pb     Zn
classification         (Mt) (g/t) (g/t)  (%)  (%)  (Moz)  (koz)  (Mlb)  (Mlb)

Bonanza Grade
silver zone
Indicated              8.3   601   1.7  2.0  3.7    160    448    365    676
Mag's 44% share        3.7                           71    197    160    297
Inferred               2.4   626   1.9  1.4  2.2     48    146     74    114
Mag's 44% share        1.1                           21     64     33     50
Deep zone
Indicated              1.8    93   1.7  1.4  2.6      5     97     54    102
Mag's 44% share        0.8                            2     43     24     45
Inferred               2.7   146   2.0  2.1  3.4     13    173    128    203
Mag's 44% share        1.2                            6     76     56     89

1. Resources are reported on a 100-per-cent basis unless otherwise noted.
2. CIM definitions were followed for the classification of mineral
resources.
3. Mineral resources are estimated at an incremental NSR cut-off value of
$70 (U.S.) per tonne.
4. NSR values are calculated in U.S. dollars using factors of 57 cents per
gram per tonne silver, $30.11 per g/t gold, $9.07 per per cent lead and
$12.21 per per cent zinc. These factors are based on metal prices of $21.50
(U.S.)/ounce Ag, $1,250 (U.S.)/ounce Au, 91 cents/pound lead and 99 cents/
pound zinc, and estimated recoveries and smelter terms.
5. The mineral resource estimate uses drill hole data available as of Dec.
31, 2013.
6. Totals may not add correctly due to rounding.

Indicated mineral resources in the upper BGS zone are estimated to total 8.3 million tonnes at 601 grams per tonne (17.5 ounces per ton silver, 1.7 grams per tonne gold, 2.0 per cent lead and 3.7 per cent zinc). Total contained metals in the indicated resource for the BGS zone are 160 million ounces of silver, 448,000 ounces of gold, 365 million pounds of lead and 676 million pounds of zinc.

Approximately 77 per cent of the total silver ounces in the BGS zone are now classified as indicated and lie primarily within the Valdecanas vein.

At the same cut-off of $70 (U.S.)/tonne NSR, inferred mineral resources in the Bonanza Grade silver zone are estimated to total 2.4 million tonnes at 626 g/t (18.3 ounces per ton) silver, 1.9 g/t gold, 1.4 per cent lead and 2.2 per cent zinc. The inferred resources in the BGS zone contain an additional 48 million ounces of silver, 146,000 ounces of gold, 74 million pounds of lead and 114 million pounds of zinc, and are contained within the Valdecanas vein system and the Juanicipio vein.

In the Deep zone, indicated mineral resources are estimated to total 1.8 million tonnes at 93 g/t (2.7 ounces per ton) silver, 1.7 g/t gold, 1.4 per cent lead and 2.6 per cent zinc. Inferred mineral resources in the Deep zone are estimated to total 2.7 million tonnes at 146 g/t (4.3 ounces per ton) silver, two g/t gold, 2.1 per cent lead and 3.4 per cent zinc. Within the Deep zone, the total contained metals in the indicated resource are five million ounces of silver, 97,000 ounces of gold, 54 million pounds of lead and 102 million pounds of zinc. The inferred resource contains 13 million ounces of silver, 173,000 ounces of gold, 128 million pounds of lead and 203 million pounds of zinc.

Total mineral resources -- BSG zone and Deep zone combined

Combining the BSG zone and the Deep zone into a total resource by category results in an overall increase in tonnage and a lower overall silver grade. Total indicated mineral resources are estimated to be 10.1 million tonnes grading 511 g/t (14.9 ounces per ton) silver, 1.7 g/t gold, 1.9 per cent lead and 3.5 per cent zinc. The total contained metals in the indicated resource are 166 million ounces of silver, 544,000 ounces of gold, 419 million pounds of lead and 778 million pounds of zinc. At the same cut-off of $70 (U.S.)/tonne NSR, total inferred mineral resources are estimated to total 5.1 million tonnes grading 372 g/t (10.9 ounces per ton) silver, two g/t gold, 1.8 per cent lead and 2.8 per cent zinc. The total inferred resource contains 61 million ounces of silver, 319,000 ounces of gold, 202 million pounds of lead and 317 million pounds of zinc (see table).

                              TOTAL MINERAL RESOURCES

Classification     Tonnage    Ag    Au   Pb   Zn     Ag     Au     Pb     Zn
                       (Mt) (g/t) (g/t)  (%)  (%)  (Moz)  (koz)  (Mlb)  (Mlb)

Total indicated       10.1   511   1.7  1.9  3.5    166    544    419    778
Mag's 44% share        4.4                           73    240    184    343
Total inferred         5.1   372   2.0  1.8  2.8     61    319    202    317
Mag's 44% share        2.2                           27    141     89    139

Qualified person -- resource

The mineral resources for the Juanicipio property disclosed in this press release have been estimated by David Ross, PGeo, an employee of RPA and independent of Mag. By virtue of his education and relevant experience, Mr. Ross is a qualified person for the purpose of National Instrument 43-101. The mineral resources have been classified in accordance with Canadian Institute of Mining, Metallurgy and Petroleum definition standards for mineral resources and mineral reserves (November, 2010). Mr. Ross has read and approved the contents of this press release as it pertains to the disclosed mineral resource estimate.

Quality assurance/quality control

The samples are shipped directly in security-sealed bags to ALS-Chemex Laboratories preparation facility in Guadalajara, Jalisco, Mexico (certification ISO 9001). Samples shipped also include intermittent standards and blanks. Pulp samples are subsequently shipped to ALS-Chemex Laboratories in North Vancouver, Canada, for analysis. Two extra pulp samples are also prepared and are analyzed (in progress) by SGS Laboratories (certification ISO 9001) and Inspectorate Laboratories (certification ISO 9001) (or other recognized lab). The bulk reject is subsequently sent to CIDT (Centre for Investigation and Technical Development) of Penoles in Torreon, Mexico, for metallurgical testing, where a fourth assay for each sample is analyzed and a calculated head grade is received on the basis of a concentrate balance. The CIDT also does a full microscopic, XRF and XRD mineralogical analysis.