MAG drills high-grade silver at Juanicipio

Vancouver – The Valdecanas vein on the Juanicipio property in the state of Zacatecas, Mexico, continues to return high-grade silver intercepts for joint-venture partners MAG Silver (MAG-V) and Industrias Penoles.

Typical of the high-grade bonanza zone, a couple holes returned silver grades topping 1,000 grams silver per tonne. Hole NE drilled in the central area of the Valdecanas vein cut 3 metres grading 1,338 grams silver per tonne, 3.56 grams gold per tonne, 1.63% lead and 7.37% zinc starting 712 metres downhole.

Likewise hole QH at the eastern extent of the vein hit 5 metres grading 1,134 grams silver, 0.48 gram gold, 2.51% lead and 6.75% zinc starting 776 metres downhole.

The results are part of MAG and Penoles’ ongoing definition drilling program of the Valdecanas vein. As much as possible the two companies want to upgrade the vein’s resource estimate from the inferred to the indicated category, something MAG and Penoles hope to accomplish in early 2009.

So far the companies have pegged the Valdecanas vein at 7.3 million inferred tonnes grading 1,011 grams silver, 2.06 grams gold, 2.31% lead and 3.94% zinc.

The Juanicipio property is adjacent to Penoles’ Fresnillo mine, the largest primary silver mine in the world. So close, in fact, that only 1.5 kilometres east of the Juanicipio property Penoles is sinking a 2,200-metre decline and building a 600-metre shaft to access its Saucito vein.

Not surprisingly, after MAG discovered grades over 500 grams silver in the Juanicipio vein, about a 1 km. south of the Valdecanas vein, Penoles quickly signed a joint venture agreement for a 56% stake in the property in 2005.

The agreement between the two companies stipulated Penoles must spend US$5 million on exploration over four years, though it didn’t take that long to discover the Valdecanas vein. Within months of initiating the joint-drill program in 2005, MAG and Penoles hit grades over 1,000 grams silver.

With three drill rigs still breaking ground MAG says an updated resource estimate may be available in early 2009.

On news of the drill results MAG’s share price lost 3¢ to close at $4.59. It has about 49 million shares issued.