🕐11.06.11 - 21:27 Uhr

CORRECTION: AURCANA SOLIDLY ON TRACK TO BECOMING THE NEXT MID-TIER SILVER PRODUC
ER: GOAL 5 MILLION OZ/YR





Originally distributed April 06 2011
SOURCE CORRECTION:
Original copyright of The Bull and Bear Financial Report


Aurcana Solidly on Track to Becoming the Next Mid-Tier Silver Producer:
Goal 5 Million Oz/Yr

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$85 Million in Financing Allows Development of Second Producing Silver Mine

With $85 million in equity and debt financing newly in hand, Aurcana Corporation (TSX.V: AUN) is poised to quadruple its annual silver production to more than 5 million ounces and, in the process, join the ranks of mid-tier silver producers - a feat that few junior mining companies ever achieve.

This huge infusion of cash to Aurcanas bottom line, split between a C$60 million equity financing and a C$25 million debt financing due to close in early 2011, will be used primarily to fund production development of the companys Shafter Silver Mine in Texas and to buy back a US$25 million silver purchase agreement at its La Negra Silver Mine in Mexico.

"This buyback is very significant step for Aurcana and will greatly enhance cash flow at the La Negra Mine. Our financing efforts also have opened a clear path to production at our Shafter Silver Mine," says Aurcana President and CEO Lenic Rodriguez. "The company is now solidly on its way to becoming a mid-tier silver producer with annual silver production growing to 5 million ounces."

Aurcana to Retain Value of All Silver Produced
from Expanded La Negra Mine

Aurcana recently expanded mill production to 1,500 tonnes per day at its silver-copper-lead-zinc La Negra Mine in Queretaro State, Mexico. Annualized production starting in 2010 is forecast at 1,200,000 ounces silver, 4 million pounds copper and 7 million lbs of zinc. Previously, Aurcana sold 50% of its silver production at $3.90 under an agreement with a Silver Wheaton subsidiary. No longer.

As a result of the buyback, Aurcanas share of silver production at the La Negra mine will more fully reflect its 92% ownership.

Over the past year, mining operations and some 10,000 meters of exploration drilling delineated additional mineralized zones, adding to the mines economically productive life. In the third quarter alone, an additional 157,000 tonnes of silver and copper mineralization was defined in two zones.

Aurcana Corporations operating La Negra Silver Mine in Mexico includes 28 deposits along two main mineralized trends that are all accessible through over 50 km of underground development.

The company installed additional mill equipment, expanding mill operations to 1,500 tpd, a 50% increase in throughput. Studies for a new tailings disposal area are now underway as part of fulfillment of permitting requirements to facilitate long term operations at the mine.

The La Negra mine was discovered and developed by Industrias Pe�oles S.A. de C. V. and was in production from 1970 until 2000. Historically, the mine produced 36 million oz. of silver, 323 million lbs. of zinc, 70 million lbs. of copper and 161 million lbs. of lead. Pe�oles estimated at the time the mine was put on care and maintenance that it contained reserves of 1.22 million tonnes grading at 116 g/t silver, 2.8% zinc, 0.94% copper and 0.88% lead (not NI 43-101 compliant).

The mine site includes a three-stage crushing plant and a mill producing copper-silver and zinc concentrates. A lead circuit will be operational in the spring, 2011.

Aurcana acquired La Negra in 2006, expanded the mill from 1,000 to 1,500 tpd last summer, and continues to explore the property. To date, 28 distinct orebodies have been discovered, five of which were discovered by Aurcana over the past three years. Most recently, Aurcana expanded the projects resource potential following a drilling program that extended the boundaries of existing orebodies and intersected significant mineralization in the La Cruz and Sofia deposits.

"We feel that a good number of these ore bodies have potential at depth," says Senior Vice President Ron Nichols.

Shafter Mine to be Major Pure Silver Producer

Aurcana is already moving ahead with plans to develop its 100%-owned Shafter Silver Mine over the next 18 months. When completed, the mine is expected to produce 3.8 million ounces of silver in its first year of operations at an initial cash cost of $7.60 an ounce.

Headframe at Shafter Silver Mine in Texas

At that point, Aurcanas Shafter Mine will become the 12th largest primary silver mine in the world and will increase total U.S. silver production by an impressive 10%.

A robustly positive feasibility study completed last fall projected a 32% IRR with a Capex of $45 million over a five-year mine life, based on a $15.53 per ounce silver price. The mine, which is expected to pay back the companys capital investment in just under two years, is actually projected to have at least a 10-year economic life as infill drilling expands the projects resources.

The mine, located in southwest Texas, currently has an NI 43-101 compliant silver resource of 24.6 million ounces measured and indicated (2,900,000 tons @ 8.48 opt), 22.8 million ounces inferred (2,167,000 tons @ 10.52 opt) (assumes a 4.0 opt silver cut-off). The Shafter deposit is the northeastern strike extension of the historic Presidio mine.

Basic engineering of the mill and surface infrastructure was completed last spring. The fully permitted project historically produced 35 million ounces of high-grade silver between 1883 and 1942. The mine also produced lead and zinc. An extensive surface and underground drilling program conducted by Gold Fields in the 70s and 80s delineated an ore body extending for a mile east of the old mine. The district is known for its potential to produce silver, copper, lead, zinc and gold. The mine was acquired by Rio Grande Mining in 1994, which was itself acquired by Silver Standard in 2001. A 900 tpd mill was relocated to the site in 2003.

Aurcana bought the mine in 2008 from Silver Standard, which holds 15 million shares in Aurcana. The company has been successful in securing sufficient financing to bring the mine back to production. and construction is underway.

The mine sites infrastructure is excellent with a major power line and paved highway crossing the property, an electrical substation on site, a 1,050 foot shaft serviced by an 80-ton per hour hoist, and 5,100 feet of underground development.

Aurcana executives are already on site setting up management offices and preparing for construction of a portal collar scheduled to begin in February. A planned new ramp is expected to intersect extensive historic underground workings 1,500 feet from the portal that have blocks of ore remaining. Older mined-out areas will be used for waste rock storage while existing shafts will provide ventilation for new workings.

First scoop being delivered to Shafter Mine

Once production is a reality at Shafter, Aurcana plans to continue exploratory drilling to continue to expand the projects reserves. There appears to be substantial exploration potential both to the east and west of the main orebody.

Proven Management Team

Aurcana is led by a particularly experienced management team. President and CEO Lenic Rodriguez, a top Mexican business executive with a strong background in international finance, was integral in the companys acquisition and financing of the La Negra Mine. His extensive contacts in, and knowledge of, Mexico bode well for Aurcanas future in that silver-rich country.

Senior Vice President Ron Nichols has been involved for over 30 years in international mining exploration with particular expertise in project management and property generation. Previously, he served for 20 years with Cominco and was involved with the Valley Copper and Snip mines in British Columbia and in extending the Black Angel deposit in Greenland.

Andy Nichols, the companys Vice President of Operations, has over 35 years of underground mining experience in Canada, Africa, Asia and Latin America. Nils von Fersen, Vice President of Exploration, also has over 30 years experience in conducting and managing mineral exploration for base and precious metals in Canada, Chile, Mexico and Guatemala for both major and junior mining companies. Dr. Peter Megaw, Technical Advisor, will assist in planning exploration at both La Negra and Shafter.

Investment Considerations

The participation of major financial institutions, such as Sprott Asset Management LP, in Aurcanas recent financings is a strong endorsement of the companys management and the quality of its La Negra and Shafter Silver Mines. In fact, institutional funds took $50 million of the $60 million equity financing, which totaled a whopping 150% of Aurcanas market cap. Aurcanas solid performance at the end of its third quarter (September 2010) speaks volumes for the quality of its present operations and prospects for the future. Consider that when comparing the quarter with the same period in the previous year, Aurcana increased its silver production 72%, increased its net revenues 43%, and increased earnings from mining by 72%. Actual ounces of silver sold jumped 47%, while copper and zinc concentrates increased 68% and 123%, respectively. And in addition to major spending planned at La Negra and Shafter, Aurcana will still have up to $6 million left for ongoing working capital, possibly for the acquisition of new projects in either North or South America.

"We believe there are very strong reasons for investors to take a close look at Aurcana," says Rodriguez. "We offer pure silver leverage backed by a growing annual silver production, robust mining economics and a compelling market valuation."

Click here for contact information

Sources:
Aurcanas Web Site
Sedar filings

BOX:

AURCANA CORPORATION
TSX.V: AUN
Contact: Janna MacLeod, Corporate Relations
1188 West Georgia St., Suite 1750
Vancouver, BC V6E 4A2
Toll Free: (866) 532-9333
Phone: (604) 331-9333
Fax: (604) 633-9179
E-Mail:
Web Site:

Shares Outstanding: 322.8 million (As of Dec. 29, 2010)
Active Float: 75 million
52 Week Trading Range: Hi: C$0.86 || Low: C$0.22

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