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Canadians plan to open Shafter silver mines
From news reports
Aurcana Corp., based in Vancouver, British Columbia, says it has arranged financing to close the acquisition of 100 percent of the Shafter Silver Mine.
Aurcana has signed an agreement with Silver Wheaton Corp. that will result in Aurcana receiving a $25 million payment from a silver stream financing agreement on life-of-mine silver production from La Negra mine.
Silver Wheaton will also pay Aurcana a fixed price payment per ounce of silver produced equal to the lesser of $3.90 and the spot price at the time of sale.
Silver Wheaton and Aurcana have also agreed to enter into negotiations on a silver off-take agreement on Shafter in return for Silver Wheaton providing the capital required to reopen the mine.
Ken Booth, Aurcana president, said, "This is an extremely attractive opportunity for Aurcana and its shareholders. The company has secured all funding necessary to take the high-grade Shafter silver mine from acquisition through to production with no further dilution."
In 1880, silver was discovered in the Shafter region, and in 1883, the Presidio Mining Co. began production from the Mina Grande deposit. The mining of silver continued with few interruptions until 1942 when the mine was closed, not from lack of ore, but by the War Act. Total production during that period was 2.3 million tons of ore containing 35 million ounces of silver at an average grade of 15.24 ounces of silver per ton.
In 1977 Gold Fields Mining Co. acquired the project and held it until 1994, during which time over $20 million was spent on project development. In 1994, the project was acquired by Rio Grande Mining Co. (RGMC) and additional exploration, mine planning, mill design and metallurgical studies were carried out.
During this period beginning in 1977, a total of 260,000 feet of drilling in 891 drill holes was completed.
This systematic surface-drilling program resulted in the discovery of the eastern extension of the Presidio deposit, extending more than 5,000 feet horizontally from the lowest development work in the Presidio Mine. A 1,050-foot vertical shaft was sunk and 5,100 feet of underground development work was completed.
Silver Standard Resources subsequently acquired RGMC. In 2003, a 900 ton-per-day mill was acquired and is on site. No significant work has been done on the property since that date.
All necessary infrastructure is in place with a major power line and paved highway crossing the property, an electrical substation on site and a 1,050-foot shaft with a lift capacity of 80 tons per hour.
Aurcana said it will use the expertise and experience of its operations team, which refurbished and restarted La Negra Mine in 13 months, to assemble the mill and restart the mine at Shafter. The company estimates Shafter Mine could be in production in 15 months.
Aurcana Corp. is a Canadian mining company listed on the TSX Venture Exchange, symbol AUN.
Company officers say acquisition of the Shafter Silver Mine has transformed Aurcana into an emerging primary silver producer. Shafter is planned for start-up in 2009 with projected annual silver production averaging 2.6 million ounces.
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