Kootenay Silver Announces Option with Pan American Silver

Kootenay Silver Inc. (TSXV:KTN) and Pan American Silver Corp. (TSX:PAA, NASDAQ:PAAS) are pleased to announce that Pan American, Pan American’s wholly owned subsidiary Compania Minera Dolores S.A. de C.V., Kootenay, and Kootenay’s wholly owned subsidiary Minera JM, S.A. de C.V.have entered into the following agreements.
As quoted in the press release:

• an option agreement pursuant to which Minera will grant Dolores an option (the “Option“) to earn a seventy-five (75%) interest in Minera’s Promontorio Mineral Belt silver properties (including the Promontorio and La Negra deposits) in consideration for:
  1. cash payments totalling US$8,050,000 from Dolores to Minera (the “Cash Payment“) to be made by Dolores over a four (4) year earn-in period following the execution of the Option Agreement (the “Option Period“); and
  2. Dolores committing US$8,000,000 of exploration and development expenditures on Minera’s properties in the Promontorio Mineral Belt during the Option Period (the “Exploration Payment“); and
• a subscription agreement pursuant to which Pan American will invest CDN$2,000,000 in Kootenay by subscribing for 9,090,909 Kootenay shares at CDN$0.22 per Kootenay share (the “Investment“).

Furthermore, concurrently with the closing of the Investment, the parties anticipate entering into a property purchase option agreement pursuant to which Dolores will provide Minera with the option to acquire up to two of its exploration properties in Mexico in return for a 2.5% net smelter return royalty on each of the acquired properties.

Kootenay Silver President and CEO James McDonald stated:

We are very excited to join forces to aggressively develop our Promontorio Mineral Belt assets with Pan American, one of the world’s esteemed mining companies and operators of seven silver mines in Mexico, Argentina, Peru and Bolivia. Bringing approximately US$16 million in cash payments and exploration investments and a carried interest to commercial production, along with a CDN$2 million direct investment in Kootenay, the PAS Transactions underscore Pan American’s confidence in the potential viability of La Negra and the Promontorio Mineral Belt.  The PAS Transactions serve as catalyst and a strong complement to our new consolidation plan with Northair Silver, providing the amalgamation with greater financial strength and flexibility to focus on the advancement of the La Cigarra silver asset and to pursue further potential consolidation and growth opportunities in the sector.