Aurcana grabbing Mexican mine (February 06, 2006)

Vancouver – Aurcana (AUN-V, AUNFF-O) is boosting its Mexican minerals portfolio with an agreement to acquire the La Negra silver-zinc-copper-lead mine in Queretaro State.

The company will acquire an 80% interest in the project, under a letter of intent (LOI) with Reyna Mining & Engineering, and form a joint venture with the private Mexican mining group.

The past producing La Negra mine and mill facility has an 800-tonne-per-day capacity, having processed ore from a polymetallic, skarn-hosted deposit. The operation reports historic grades of 160 grams silver per tonne, 2.83% zinc, 0.94% copper and 0.91% lead in about 1.2 million tonnes of material, non-compliant to National Instrument 43-101 and as reviewed by Peoles in 2000.

The mine and equipment are reported in good condition with underground development on five levels, accessed through adits and ramps. The plant consists of a three-stage crushing circuit, ball mill and flotation circuit that produced zinc, copper and lead concentrates.

Aurcana will examine the exploration potential of the project, around known ore zones and also to depth. Data from Peoles’ programs reviews a number of delineated drill targets. Mineralization in the area typically exhibits metal zonations; with lead-zinc rich “manto-type” bodies overlying silver enriched lead-zinc mineralized “chimney-structures”. Additionally, portions of the deposit have shown a copper enrichment with depth, as in the Cristo Rey 2 level where grades of up to 353 grams silver, 5.7% copper, and 1.3% zinc were reported.

The LOI has Aurcana covering the US$3 million acquisition costs of the project, under an agreement that Reyna Mining has from the mine vendor, and up to an additional US$3 million in anticipated costs to bring the facility back into operation. Further, Aurcana will issue a total of 3 million shares to Reyna over 24 months.

The company has also recently drilled its La Virgen gold-silver project near Zacatecas, intersecting high-grade silver with strong gold values. La Virgen is under option to Mauricio Hochschild, which is earning up to a 70% by spending US$2.5 million over 4 years.

Shares of Aurcana rallied 84% on the February 6th news of planned mine acquisition, to close up 13 at 28.5 apiece on volume of over 3.5 million. With 31.6 million shares outstanding, the company posts an almost $9-million market capitalization.