VANCOUVER, BRITISH COLUMBIA -- (Marketwire) -- 01/31/13 -- Southern Silver Exploration Corp. (TSX VENTURE: SSV)(FRANKFURT: SEG) ("Southern Silver") has closed the first tranche of its previously reported (NR-01-13; January 16, 2013) non-brokered private placement by issuing 8,002,000 units at a price of $0.05 per unit for gross proceeds of $400,100. Each unit consists of one common share and one share purchase warrant exercisable to purchase one additional common share for a period of three years at an exercise price of $0.10 per share.
Securities issued pursuant to this tranche of the private placement, including common shares, share purchase warrants and finder's warrants issued as finder's fees, carry a legend restricting trading of the securities until June 1, 2013. The private placement and finder's fees are subject to regulatory approval. Net proceeds from the Offering will be utilized for exploration and property maintenance expenses incurred at the Dragoon and Oro projects in the southwestern USA and will be added to general working capital.
The company also announces that it has entered into an option agreement dated Jan. 14, 2013, with Desert Star Resources Ltd. ("Desert Star") which can earn up to a 70-per-cent interest in Southern Silver's copper and gold project (the Oro project), located in southwestern New Mexico, United States.
In accordance with the terms of the option agreement, Desert Star paid to Southern Silver $75,000 upon execution of the agreement. The option agreement provides that Desert Star can earn an initial undivided 51-per-cent interest in the Oro project by making an additional cash payment of $150,000 by Aug. 1, 2013, and, over a period of 42 months after approval of the option agreement by the TSX Venture Exchange, incurring exploration expenditures totaling $3-million and issuing one million common shares of Desert Star to Southern Silver. Desert Star also has the option to earn an additional 19-per-cent undivided interest in the Oro project by incurring a further $3-million in exploration expenditures and completing a preliminary economic assessment, on or before the date that is 66 months after exchange approval. If exchange approval is not obtained by March 15, 2013, either party may terminate the option agreement, in which case Southern Silver will refund the $75,000 paid by Desert Star on execution of the option agreement.
About the Oro Property
The Oro project comprises a contiguous block of federal, state and private land totaling 17.2 square kilometres in the historic Eureka mining district in Grant County, New Mexico and is located approximately 40 kilometres southwest of the Silver City porphyry copper district. The property consists of 157 unpatented lode claims and a relatively large group of private mineral and surface patents and two parcels of New Mexico State Land which are critical to the further evaluation of the Oro property and which had previously hampered exploration due to fragmented land holdings in the district.
Mining primarily occurred in the Eureka District during the late 19th and early 20th centuries, but a small amount of production was reported into the 1950's. Production has been estimated at 2.9 million lbs Pb, 1.7 million lbs Zn, 500,000 lbs Cu, 450,000 ounces Ag, and 5,000 ounces Au. In addition to widespread precious- and base-metal mineralization, favorable features of the Oro property include: prospective carbonate host rocks, low- and high-angle faults, a possible 'cap rock', and multiple Laramide or Tertiary intrusions with well-zoned, prograde and retrograde alteration haloes.
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