Canasil Resources (TSX-V:CLZ, StockForum), a Vancouver-based mining and mineral exploration company engaged in precious metal and base metal exploration projects in Durango, Zacatecas and Sinaloa States, Mexico and British Columbia, announced today that MAG Silver (TSX:MAG, StockForum) had commenced the Phase 1 drill program at Canasil’s Salamandra Project in Durango.
The drill program will consist of 3,000 metres of diamond drilling and $1.0 million in expenditures incurred by MAG by May 2014 if the company intends to earn up to 70% interest in the Salamandra project.
According to the news release, Under the agreement, MAG will have a first option to earn 55% interest in Salamandra by incurring C$5,500,000 exploration expenditures and making C$750,000 cash payments to Canasil over four years.
It went on, The first year expenditures of $1,000,000, which must include at least 3,000 meters of diamond drilling, will be a firm commitment. Upon completion of the first option, MAG will have a second option to earn an additional 15% interest, for a cumulative 70% interest, by either preparing and delivering a NI43-101 compliant feasibility study within four years, or by incurring an additional C$20,000,000 in exploration expenditures over four years, with a minimum annual expenditure of C$2,500,000.
Canasil Resources was in the news recently when the company closed the first tranche of its non-brokered private placement.
Shares gained 7.69% on the news to $0.07 per share.
Currently there are 76,797,873 shares outstanding with a market cap of $5.38 million.
