Oro Silver Resources Ltd.
TSX VENTURE : OSR

Oro Silver Resources Ltd.

June 05, 2007 16:16 ET

Oro Silver Signs Option to Acquire Producing El Compas Mine in Zacatecas, Mexico

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 5, 2007) - Oro Silver Resources Ltd. ("Oro Silver") (TSX VENTURE:OSR) has signed an option-to-purchase agreement for the El Compas Mine in Zacatecas, Mexico. The mine belongs to a private Mexican individual and has been producing silver and gold for the last four years. This acquisition is the cornerstone for Oro Silver's strategy for growth in the Zacatecas District.

Highlights:

- Recently discovered, high-grade silver and gold veins being mined underground at a rate of 50-60 tonnes per day

- Synergy achieved with recently acquired option-to-purchase of the mining rights on the same property (see Oro Silver's press release dated March 19, 2007)

- Acquisition consists of staged cash payments over a 2 year period totaling US$2.7 million

- Consolidates exploration activity with Oro Silver's adjacent exploration properties (El Orito, La Virgen and Ampliacion El Compas)

Under the agreement, which is subject to approval by the TSX Venture Exchange, Oro Silver has the option to purchase 100% ownership in the producing El Compas mining concession. Oro Silver paid US$100,000 upon signing of the formal agreement. Additional payments, totaling US$2.6 million, are staged over the next 2 years in order to complete the purchase. Oro Silver will earn 51% equity interest in the property and begin realizing proceeds of production after US$1.6 million in payments are made.

As part of the agreement Oro Silver was also provided access core drill-hole data (21 drill holes for 5,788m). This work was performed by a third party in 2005 for expenditures totaling over US$810,000; assessment of the data has commenced by Oro Silver.

Oro Silver successfully completed its due diligence in April and May 2007. Work during this period included:

- Underground characterization sampling:

12 selective samples of low-sulfidation epithermal veins; values ranging from trace for calcite veins to 353.36 g/t Au and 694 g/t Ag for banded veins; 4 of the 12 samples are in the 100 to 350 g/t Au and 100 to 800 g/t Ag range

- Underground channel sampling:

398, 1-meter channel samples collected in 46 channels; assay results pending; observed vein widths vary from 0.5m to 6m

- Surface mapping and sampling:

El Compas and the surrounding mining properties, El Orito, La Virgen and Ampliacion

El Compas covering 1.26 km2; 91 vein samples collected, assay results pending

- Review of mill recovery data for 55,200 tons of El Compas ore:

51 head-grade assays collected between 2003 and 2007 at the Contracuna mill in Vetagrande average 7.99 g/t Au and 96.63 g/t Ag (note: high assay results were cut to 34.3 g/t Au by the qualified person since the original data could not be verified; highest reported head-grade assay was 175.0 g/t Au and 749 g/t Ag)

In addition to completing a thorough evaluation of the past drilling, future plans are to (1) complete the underground mapping to further characterize the silver and gold occurrence, (2) re-log and resample available core, (3) construct a 3-dimensional geological model, and (4) initiate preliminary engineering evaluations and financial analyses. Exploration and verification drilling to confirm and complement the 2005 drill campaign will follow submission of an NI 43-101 report.

"We are very excited with this acquisition. The potential to develop a resource and reserve base through exploration is exceptional," stated Greg Cox, President and CEO of Oro Silver. "This transaction sets Oro Silver down the path to becoming an active silver producer, and is aligned with the company's strategy of growth through acquisition and exploration in the Zacatecas District."

Zacatecas, founded by the Spaniards in 1546, is one of the largest historic silver districts in the world with past production estimated at 1.2 billion ounces. Oro Silver's acquisitions represent a strong foothold in the heart of the Zacatecas silver mining district from which the company plans to leverage itself through additional acquisitions to become the dominant player in the district. Oro Silver's strategy is to become a mid-tier silver producer through an aggressive acquisition and development plan focused on advanced-stage projects with known silver resources that exhibit potential for expansion. Oro Silver will explore and develop primary silver deposits located in Mexico and North America.

The due-diligence and sampling program were supervised by Mr. Herve Thiboutot, P. Eng. and Vice-President of Exploration and Development for Oro Silver, who is the qualified person as defined by National Instrument 43-101 and has reviewed the content of this press release.

On behalf of the board of directors,

Gregory M. Cox, President and CEO

This news release may contain forward-looking statements based on assumptions and judgments of management regarding future events or results. Such statements are subject to a variety of risks and uncertainties which could cause actual events or results to differ materially from those reflected in the forward-looking statements. Oro Silver disclaims any intention or obligation to revise or update such statements.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Oro Silver Resources Ltd.
    Gregory M. Cox
    President and CEO
    (604) 646-1585
    604 642-2411 (FAX)