Glamis grabs Western Silver for Peasquito

Vancouver – Glamis Gold (GLG-T, GLG-N) has inked an agreement to acquire Western Silver (WTC-T, WTZ-X) in a share deal valued at about $1.2 billion.

Glamis will issue 0.688 of a common share plus one share in a new exploration company for each Western Silver share. In turn, Western Silver will transfer $38 million in cash, its Carmacks copper project interest, in the Yukon, and an early-stage Mexican exploration project into the new company.

Glamis’ eye is on Western Silver’s flagship asset, the large Peasquito silver deposit in northeastern Zacatecas State, Mexico. A positive feasibility study completed in late-2005 reviewed proven and probable sulphide reserves of 258 million tonnes grading 30.2 grams silver per tonne, 0.5 gram gold per tonne, 0.3% lead and 0.7% zinc. Additional proven and probable reserves of oxide and mixed ore were calculated at 77.3 million tonnes of 23.3 grams silver and 0.28 gram gold.

A measured and indicated resource of 671 million tonnes was also reviewed, encompassing mostly sulphide mineralized material averaging 29 grams silver, 0.4 gram gold, 0.3% lead and 0.7% zinc.

The study models a twin open-pit mine scenario over a 17-year life, with initial heap leaching of near-surface oxides commencing as soon as 2007. Mining of the Peasco deposit is expected first (years 1 through 13), commencing in mid-2008, followed by the Chile Colorado deposit (from year 11 onwards). Over its projected mine life, the 50,000-tonne-per-day operation is expected to produce 220 million oz. of silver, 3.3 million oz. of gold, 3 billion pounds (1.36 million tonnes) of zinc and 1.4 billion pounds (631,000 tonnes) of lead.

A US$334 million initial capital expenditure is estimated for the operation with an additional requirement of US$126 million in sustaining capital.

The grab by Glamis adds a major precious metal asset to its portfolio with near-term production, significantly boosting silver and gold output, along with the upside of additional satellite deposits and exploration targets at Peasquito.

Following the announcement on February 24th, shares of Western Silver surged 27%, or $5.28, to close at $24.80 apiece on volume of over 10.5 million. Glamis dropped 3.2%, or $1.11, to close at $33.62 per share on TSX trading.