Santacruz Silver Announces a Long Term Agreement to Explore and Mine the Veta Grande and Minillas mineral properties

TSX.V: SCZ
FSE: 1SZ
OTCQX: SZSMF  

VANCOUVER, Nov. 2, 2015 /CNW/ - Santacruz Silver Mining Ltd. (TSX.V:SCZ) (the "Company" or "Santacruz") is pleased to announce that it has entered into a definitive agreement with Minera Contracuña I, S.A. de C.V. and Vetalinda Compania Minera, S.A. de C.V. (together "Contracuña"), pursuant to which Contracuña has granted Santacruz the right for thirty years to explore, mine and operate Contracuna's Veta Grande and Minillas silver-gold-zinc-lead mineral properties which cover approximately 1,100 hectares within the State of Zacatecas, in central Mexico.

Operational Highlights of the Agreement

• Access to additional mineralization feed for the Rosario Mine milling facility to take advantage of unused capacity and realize immediate increased cash flow to the Company.
• Synergistic distance of 180 kms between Rosario Mine and Contracuña properties which will allow for future streamlining of operating and management functions.
• Access to a 500 tpd fully permitted operational mill, which requires minor adjustments including two additional flotation cells and additional pipe systems to produce both lead and zinc concentrates (currently producing a single bulk concentrate).
• Operations located in one of Mexico´s most prolific silver, lead, zinc and copper regions in Mexico, which includes the Fresnillo Silver Mine, the Madero Mine (operated by Peñoles) and the Cozamin Mine operated by Capstone Mining Corp.. The Contracuña historical records indicate that the properties consist of extensive vein systems that average 4 to 4.5 metres in width with average head grades of 170 g/t silver, 1.5% lead, 2% zinc and 0.4 g/t gold including some mineralized stockwork zones associated to the structures.
• Located near the Capital city of Zacatecas with excellent highways system, power, water, and specialized mining workforce.
• Preliminary reconnaissance sampling has been carried out by the Company over different areas of the Contracuña properties with silver assay results averaging 180 g/t as well as significant lead, zinc and gold credits. Santacruz has a quality assurance program for field sampling procedures which covers collection, labelling, and the shipping of samples. The assays were carried out at Santacruz's Rosario Mine laboratory with proper QA/QC protocols. The Company has previously processed at its Rosario Mine milling facility over 20,000 tonnes of mill feed from the Contracuña deposits.

Agreement Terms

• An initial term of 15 years, with an additional 15 year term extension at the Company's option at the end of the original term.
• Santacruz must make cash payments of US$200,000 on execution of the agreement (paid) and an additional payment of US$300,000 upon registration of the agreement with the Deputy of Mines, which is expected to occur in 2016.
• Santacruz to operate the properties on a 60%/40% net profits interest basis ("NPI") with Santacruz holding 60% and Contracuña holding 40%.
• In the event the price of silver is greater than USD$22.00/ounce, the NPI changes to 55%/45%.

Mr. Arturo Prestamo, President and CEO of Santacruz stated: "First and foremost this agreement allows us to immediately leverage on the extra milling capacity available at our Rosario Mine which will help us realize certain economies of scale. In this regard we note that mineralization previously processed from the Contracuña properties reacted favourably on a metallurgical basis." Mr. Prestamo continued, "In addition, the agreement will allow us to operate the Contracuña mill at 500 tpd capacity after a nominal capital expenditure upgrade.   Further, the Company will be in position to evaluate the possibility of upgrading the Contracuña mill throughput capacity and if the economics are favourable we can explore the opportunity to increase the mining operations."

The Veta Grande Silver-Gold Mining District (VGMD) contains silver, gold and base metals including lead and zinc. The Contracuña mine is an active silver producer. The property includes 34 mining concessions covering a total of 1,108.65 hectares (2,739.6 acres). The concessions cover areas in groups of claims within the VGMD, including seven mining claims covering parts of the Veta Grande vein area. (see attached map below)

Other Corporate Matters

The Company advises that it is continuing to negotiate the amendment of the terms of the Pre-paid Silver Forward Purchase Agreement with JMET, LLC, pursuant to which silver deliveries are now scheduled to begin in the month of January 2016.

In addition in order to streamline corporate functions the Company wishes to announce that our CFO Mr. Rob McMorran has now assumed the additional role of Corporate Secretary. Previously this role was held by Mr. James Harris.

Qualified Person

All technical information which is included in this statement has been reviewed and approved by Leonel López, PG of Cardno Inc. Mr. López is independent of the Company and a qualified person, pursuant to the meaning of such terms in National Instrument 43-101 Standards of Disclosure for Mineral Projects.

About Santacruz Silver Mining Ltd.

Santacruz is a Mexican focused silver company with a producing mine (Rosario); two advanced-stage projects (San Felipe and Gavilanes) and an early-stage exploration project (El Gachi). The Company is managed by a technical team of professionals with proven track records in developing, operating and discovering silver mines in Mexico. Our corporate objective is to become a mid-tier silver producer.

'signed'

Arturo Préstamo Elizondo,
President, Chief Executive Officer and Director

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Forward looking information

Certain statements contained in this news release, such as planned production and milling levels, costs, sales prices and efficiencies and the amendment of the Pre-paid Silver Forward Purchase Agreement constitute "forward-looking information" as such term is used in applicable Canadian securities laws. Forward-looking information is based on plans, expectations and estimates of management at the date the information is provided and is subject to certain factors and assumptions, including, that the Company's financial condition and development plans do not change as a result of unforeseen events, that third party ore to be milled by the Company has properties consistent with management's expectations, that the Company obtains all required regulatory approvals, and that future metal prices and the demand and market outlook for metals remains stable or improves.  Forward-looking information is subject to a variety of risks and uncertainties and other factors that could cause plans, estimates and actual results to vary materially from those projected in such forward-looking information.  Factors that could cause the forward-looking information in this news release to change or to be inaccurate include, but are not limited to, the risk that any of the assumptions referred to prove not to be valid or reliable, that the Pre-paid Silver Forward Purchase Agreement is not amended on satisfactory terms, that occurrences such as those referred to above are realized and result in , lower production levels, delays, and/or cessation in planned work, that the Company's financial condition and development plans change, delays in regulatory approval, risks associated with the interpretation of data (including in respect of the third party ore), the geology, grade and continuity of mineral deposits, the possibility that results will not be consistent with the Company's expectations, as well as the other risks and uncertainties applicable to mineral exploration and development activities and to the Company as set forth in the Company's Annual Information Form and other continuous disclosure filings filed under the Company's profile at www.sedar.com. There can be no assurance that any forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. There can be no assurance that the Company will be successful in negotiating a satisfactory amendment of the Pre-paid Silver Forward Purchase Agreement.  Accordingly, the reader should not place any undue reliance on forward-looking information or statements. The Company undertakes no obligation to update forward-looking information or statements, other than as required by applicable law.

SOURCE Santacruz Silver Mining Ltd.