JOHANNESBURG (minigweekly.com) – Vancouver-based MAG Silver as executed an option agreement to buy the San Ramone property, in Mexico, from Castle Resources, the company said on Wednesday.

The San Ramone property combined with MAG's existing adjoining holdings at Lagartos SE, would give the Canadian company control of a significant portion of the eastern part of the historic Mala Noche silver vein system.

The Lagartos SE area, which has been a major focus of MAG's exploration efforts in the region, is located 93 km south of the Fresnillo District and the site of the Valdecanas vein discovery.

"The Zacatecas district is the next major producing silver district along the Fresnillo Silver Trend in Mexico. We see a similar discovery potential using the same disciplined exploration approach, adjacent to producing veins, that has led to our success in the historic Fresnillo area," said MAG CEO and president Dan MacInnis.

MAG reported that the Zacatecas District was the only major past producing silver province in Mexico that has not seen the same level of modern exploration as have many of the other significant silver districts.

The basic terms of the option agreement commit MAG $500 000 during the first year and a payment of $75 000 on signing of the agreement.

MAG is also required to make work expenditures of $500 000 during the second year of the option, $1-million during the third year of the option, and $1,25-million during the fourth year of the option for total work related expenditures of $3,25-million.

In addition, MAG has also agreed to an optional cash payment of $750 000 on or before the fifth anniversary of the agreement. Castle would retain a 1,5% Net Smelter Royalty in the project.

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