Diadem Proceeding With The Acquisition Of Mexican Silver And Base Metal Projects To Generate Near-Term Cash Flow
TORONTO, CANADA--DIADEM RESOURCES LTD. (DIR.ME) is pleased to announce that conditional approval has been obtained from The Montreal Exchange to proceed with the acquisition of two private companies which own 98% of three projects in the state of Zacatecas, Mexico, covering 57,000 hectares.
The three diversified projects contain different types of deposits, namely high-grade silver and polymetallic veins, volcanic massive sulphides (VMS) with copper, zinc, and a skarn/replacement zinc deposit.
The first project being acquired (90%) consists of the Zacatecas Claims, a group of claims containing five high-grade silver veins with a total strike length of 4.3 kms. These veins include the San Martin Vein and the SE Los Dije Vein. Geologist E. Rocca reported in 1991 that the San Martin Vein had an inferred resource of 1,243,200 tonnes at 0.95 g/t Au, 100 g/t Ag, 2.33% Pb, and 4.65% Zn down to a 200 metre depth. Mr. Rocca also reported in 1991 that the Se Los Dije Vein System had an inferred resource of 1,100,000 tonnes at 1.46 g/t Au, 359 g/t Ag, 1.27% Pb, and 2.7% Zn. There is a local mill available and a preliminary report has been obtained by Diadem indicating that production can be commenced immediately at 100 t.p.d for a capital cost of US$300,000. It is Diadem's plan to raise the capital to commence this production and generate positive cash flow. Diadem plans to increase production to 800 t.p.d. The current silver resources are located within the oxide zone ! to a depth of 50 m. There is considerable potential for additional resources below this level in the sulphide zone, and by mining other veins such as the Magistral Vein with a potential 3 million tonnes to a depth of 320 m calculated by geologist, E. Rocca.
The Zacatecas region of Mexico has received significant attention over the past three years in direct response to the discovery of the San Nicolas VMS copper/zinc/silver deposit by the Teck/Western Copper Joint Venture and the development of the Francisco I. Madeira deposit by Penoles. Following these discoveries Cyprus Amax agreed, in February 1999, to a joint venture on one of the projects being acquired by Diadem, the El Morro Project, for its VMS potential plus known silver veins. Cyprus Amax has the right to earn a 75% interest by exploration expenditures of US$2.5 million. Once this interest is earned Diadem will be carried for a further US$10 million of expenditures. To-date work on the property has consisted of geophysical surveys, which have outlined a number of targets considered to have VMS potential. Drilling of these targets has been recommended.
The Bilbao mine being acquired by Diadem (90%) is a skarn type zinc deposit on which a pre-feasibility study by Kilborn Inc. in 1997 concluded that the ore would be best exploited as an open pit/vat leaching operation processing 250,000 tonnes of zinc/copper ore per year for 9.8 years. The capital cost of US$20.2 million would be paid back over three years, at a zinc price of $0.55 per pound. Gravity and magnetic surveys confirm drill targets for new skarn type zinc bodies. Diadem is seeking a joint venture partner for this project.
Diadem will acquire these three projects by the purchase of two private companies that own a 98% interest in the claims, have $200,000 cash available to maintain the properties and no debts, for a purchase price of 3,500,000 shares and 1,750,000 warrants exercisable at $0.25 for two years.
Detailed descriptions of these, and Diadem's other properties, are available on Diadem's website - www.diademresources.com.
The Montreal Exchange has also conditionally approved the issuance of an aggregate of 4,519,979 common shares at $0.25 to creditors holding debts totalling $1,129,985.27. The Company will issue 1,506,642 for a total debt settlement of $376,334.28 to arms-length creditors. Non-arms length creditors have settled for a total of 3,013,337 shares valued at $753,334.28. The non-arms length transaction is subject to shareholder approval. The issuance of these shares will substantially reduce Diadem's liabilities. Details of this debt settlement are available in Diadem's 1999 Annual Report and Information Circular.
All shareholders and other interested parties are invited to attend Diadem's annual meeting to be held at The Ontario Club in Toronto at 11:00 a.m. on Friday, November 26, 1999.
Diadem Resources Ltd. is a Toronto-based mineral exploration company with interests in gold properties in Nicaragua; an advanced zinc project in Indonesia; zinc, copper-nickel-cobalt properties in Quebec; interests in zinc/copper/silver projects in Mexico; and a diamond discovery in California.
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