Currently, there are a total of 11 drills operating on the property in various work categories from exploration to water studies with two more coming in for infill drilling at Valdecanas.
Cinco de Mayo
The Company incurred exploration and evaluation costs in 2012 of $8,329,879 (2011: $6,271,072) at Cinco de Mayo and drilled approximately 33,067 metres (2011: 25,716 metres). Overall, the 2012 drilling demonstrated that mineralization is continuous from the Jose Manto through the Bridge Zone to Cinco Ridge, which is now collectively referred to as the "Upper Manto." In mid-June 2012, exploration hole CM12-431 drilled deep beneath the overlap zone between the Bridge Zone and the Jose Manto, cut four significant sulphide intervals within a 300 metre wide skarn and marble zone (see press release dated July 18, 2012). The largest and deepest interval was 61 metres of high-grade massive sulphides that lies behind (to the southwest of) the structures that host the Upper Manto mineralization. This is an entirely new mineralization zone named the "Pegaso Zone" which shows all of the hallmarks of being a near-source part of the Carbonate Replacement Deposit system that MAG has been systematically seeking at Cinco de Mayo.
On October 3, 2012, MAG announced that Roscoe Postle Associates Inc. had completed the first independent mineral resource estimate for the Upper Manto zone. Inferred Mineral Resources are estimated to be 12.45 million tonnes at 132 g/t (3.9 opt) silver, 0.24 g/t gold, 2.86% lead, and 6.47% zinc (9.33% lead plus zinc) (see press release dated October 3, 2012).
In the fourth quarter of 2012, the Company was in the process of renewing ordinary course surface access permissions with the Ejido Benito Juarez (the "Ejido") as the final component in the application for its Soil Use Change Permits. However, on November 17, 2012 at what the Company believes was an illegally constituted meeting, the Ejido voted to expel MAG from its Cinco de Mayo property. Several Ejido members challenged the meeting on the grounds that proper notice was not given, key signatures required to properly call the meeting were fraudulent, and that the vote taken at the meeting was fraught with irregularities. A court hearing was held on February 6, 2013 in Chihuahua where the ejiditarios calling for the meeting to be declared illegal presented their evidence. The opponents who had organized the illegal meeting failed to appear in court on time and their testimony was dismissed by the judge. The judge ordered the Ejido administration to provide original documents for the meeting, which to date they have failed to provide. It is expected to take the judge one to two months to write his decision on the legality of the meeting once he has settled the original documents questions.
MAG remains highly confident that the meeting and the illegal resolutions will be nullified, at which time, the Company will ask government officials to oversee a new assembly meeting of the Ejido to ensure that the necessary procedural and governance rules are respected and the vote is properly conducted. Although there is no certainty that a new vote would produce a favourable outcome for the Company, MAG believes that the opposition group and its supporters do not represent the will of the majority of the 421 voting members of the Ejido. Further exploration and drilling at Cinco de Mayo will resume only upon obtaining a Soil Use Change Permit, drill permits and a surface access agreement with the Ejido. MAG believes that it has the support of a majority of the members of the Ejido and that the requisite authorizations to complete its submission for the Soil use Change Permit will be obtained in due course, and that access will be negotiated and resolved on a permanent basis with the Ejido.
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