Canadian miners Pan American Silver (TSX: PAAS) and Canasil Resources (TSX:CLZ) signed a non-binding Letter of Intent providing for Pan American to acquire Canasil's interest in the Sandra-Escobar project in Durango, Mexico.
The LOI provides for the parties to enter into a Definitive Agreement covering the acquisition of Canasil's interest by Pan American for a payment of CDN $2 million and grant of a 2 per cent net smelter return royalty on Pan American's interest in the project. Pan American will have the right to reduce the NSR Royalty to 1% at any time by paying the Canasil CDN $4 million.
"We look forward to finalizing the Definitive Agreement with Pan American for the sale of Canasil's interest in Sandra-Escobar," Canasil's CEO, Bahman Yamini, said in a media statement.
The Sandra-Escobar project consists of two properties that extend for 6,970 hectares and are located 200 kilometres northwest of the city of Durango, which is itself located in the northwestern state of the same name.
The operation sits on the so-called Mexican Silver Trend, which hosts some of the world's largest silver camps and deposits. The mineral concessions host multiple mineralized structures that control zones of disseminated silver mineralization in volcanic tuffs as well as quartz veins and breccia structures. The veins and structures form a high-level silver-gold-base metal system, hosted in andesitic and rhyolitic rocks, and are centered on a large rhyolite dome complex in the north and silver-dominant systems around smaller rhyolite dome complexes to the southeast.
According to Canasil, excellent infrastructure exists in the Sandra Escobar area, including paved road access, electrical power, water and manpower from nearby communities.