The board of directors of Minera Juanicipio S.A. de C.V., owned 56% by Fresnillo plc and 44% by Canadian junior MAG Silver Corp., has approved a $25-million mine permitting and underground development budget for its Juanicipio project in the Fresnillo district of Zacatecas state, Mexico. The 18-month (2012-2013) budget includes the first 2,500 m of underground development. The joint venture has begun the permitting process and anticipates receipt of all necessary permits by the end of 2012.

                The Juanicipio development program will be managed by Fresnillo, as operators of the joint venture. The proposed work plan is based on recommendations provided by AMC Mining Consultants (Canada) in a recently filed NI 43-101 compliant updated preliminary economic assessment, which outlined a development program for the Valdecañas, Desprendido, and Juanicipio veins identified to date on the Juanicipio property.

                Pre-development spending is estimated at $10 million in 2012 and $15 million in 2013. The project’s 2012 exploration budget of $8.5 million remains in effect. The 2013 underground development plan is projected to cost $11.9 million, with another $2.3 million dedicated to further drilling, plus $1.2 million for reporting, general, and other administrative expenses.

                The updated Juanicipio preliminary feasibility study defines the project as an economically robust, high-grade underground silver project exhibiting minimal financial or development risks that will produce an average of 15.1 million oz/y of payable silver over the first six full years of commercial production and 10.3 million oz/y over a 14.8-year mine life. Total mine-life plant throughput is estimated at 13.3 million mt, averaging 416 g/mt silver, 1.3 g/mt gold, 1.4% lead and 2.7% zinc. Life-of-mine production is estimated at 153 million oz of silver, 430,000 oz of gold, 361 million lb of lead and 584 million lb of zinc.

                Initial capital cost to develop the Juanicipio project is estimated at $302 million over a 3.5-year pre-development period.

                Primary access to the Juanicipio mine will be via a 14% decline to the top of the mining area, from which three internal footwall ramps will provide access to the stopes along the nominal 1,500-m-long strike length. All ore and most of the waste will be hauled to surface via the decline. The mining method recommended for the project is long-hole retreat stoping. Cemented paste fill from mill tailings will be used to fill most of the voids and, where possible, development waste will be used as backfill.

                The Juanicipio processing plant has been designed to treat a nominal 850,000 mt/y of ore. The proposed flowsheet is based on metallurgical test work by Centro de Investigacion y Desarrollo Technologio and will consist of a comminution circuit followed by sequential flotation of a silver-rich lead concentrate, a zinc concentrate, and a gold-rich pyrite concentrate.