Pan American drops option on Kootenay Silver projects

Drill cor from the La Negra silver discovery in Sonora, Mexico.

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Pan American Silver Corp. [PAAS-TSX, NASDAQ] has relinquished its right to earn a 75% in the Promontorio mineral belt in Sonora, Mexico, including the Promontorio resource and La Negra high-grade silver discovery, Kootenay Silver Inc. [KTN-TSXV; KOOYF-OTC] said Friday. As a result, Kootenay Silver has regained a 100% interest in those assets.

Kootenay Silver shares were unchanged at 12 cents on Friday and trade in a 52-week range of 10.5 cents and 17 cents.

Kootenay Silver is a Canadian and Mexico-based silver company. It is focused on developing two major silver projects in Mexico, including the La Cigarra Silver Project in Chihuahua and the Promontorio and La Negra silver discoveries in Sonora.

The La Negra discovery was made in the fall of 2014 and is one of several new prospects recently identified within a 25 by 15-km mineralized corridor referred to as the Promontorio mineral belt.

La Negra has previously been compared to Pan American’s Alamo Dorado Mine, which is located 190 km to the south. Like Alamo Dorado, La Negra is thought to be amenable to a low strip, open pit mining situation.

“We thank Pan American for the considerable work they have done on the project, in particular the extensive drilling completed at the La Negra high-grade silver discovery,” said Kootenay President and CEO James McDonald.

“Combined with the existing large resource base of Promontorio and over US$3.6 million in exploration expenditures funded by Pan American in advancing the Project, we are regaining control of 100% of what we consider to be very valuable assets,” he said.

McDonald went on to say that Kootenay Silver is conducting an internal review of the comprehensive work performed on both La Negra and Promontorio and will plan the next steps for advancing these assets.

Pan American’s and Kootenay’s drilling results at La Negra established the presence of good silver grades and continuity of silver within a large hydrothermal breccia pipe measuring about 100 to 200 metres wide and 500 metres long at surface.

Meanwhile, the company is in the process of receiving and collating data of work performed by Pan American so that they it may update its digital data room in response to recent requests from other interested parties to review the project’s technical information.

Kootenay Silver recently announced that its wholly-owned subsidiary has entered into an option agreement with Capstone Mining Corp. [CS-TSX] on Kootenay’s La Mina Project in Mexico.

La Mina contains a large leached argillized pyritic zone exposed at surface where surface grab and chip samples averaged 300 ppm copper. This is consistent with leached zones above enriched copper deposits to the north, such as La Caridad, where the leached zone was in the 200 ppm range and overlaid an enriched deposit of 0.7% copper.

The agreement allows Capstone Mining to earn an initial 60% interest in La Mina by making staged cash payments totalling US$600,000 and spending US$4 million over four years.

Following the initial earn-in, Capstone may earn up to a 100% interest in La Mina by completing certain milestones, including preparation of a preliminary economic assessment, a pre-feasibility study and paying an additional US$8.4 million to Kootenay in stages at each of the various milestones.

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