March 22, 2011 -- Vancouver, B.C. -- Arco Resources Corp. (TSX-V: ARR) ("Arco" or the "Company") announces that the Company has now signed a definitive option agreement (the "Option") for the Tres Hermanas claims (the "Property") with Zodiac Capital Ltd., an Australian company ("Zodiac"), subject to TSX Venture Exchange approval. This announcement follows Arco's news release of January 18, 2011 concerning its access agreement with the community at Rio Dulce, and its existing letter of intent with Zodiac.
Pursuant to the terms of the Option, Zodiac will incorporate and fund a Mexican subsidiary ("Zodiac Mexico") that will earn a 90% interest in the Property over a three-year period in consideration for total cash payments of US$500,000. Zodiac Mexico will be required to perform a minimum of US$1.5 million in exploration expenditures on the Property over the three-year term of the Option. The remaining 10% interest in the Property will remain with Arco as a carried interest. Zodiac may elect at any time during the term of the option to purchase Arco's 10% carried interest in the Property for US$1,000,000. In addition, Arco will receive shares of Zodiac Mexico, having a value of US$250,000, concurrent with Zodiac Mexico's listing on the Australian Stock Exchange or such other stock exchange as Zodiac may determine. Finally, Arco will receive a 1% net smelter royalty on any production from the Property.
Tres Hermanas Property
The Property consists of the Tres Hermanas 1 and Tres Hermanas 2 claim blocks, which have areas of 500 and 900 hectares respectively, and the Khulan claim block of 2310 hectares.
The Tres Hermanas property covers a silver-lead-zinc-bearing vein system that has historic underground workings on five levels along a 400 metre strike. Previous underground sampling showed local values >500g/t of silver. In addition, chip samples taken included values as high as 764.5 g/t of silver and 10.4% lead across 1.5 metres. Regional soil sampling has indicated the vein system continues along strike in both directions. The vein system shows widths of one to two metres with a lower grade shell upwards of 15 metres wide.
Paul Cowley, P.Geo. and Chief Geologist for Arco Resources Corp., is the Qualified Person, as defined in National Instrument 43-101, who has reviewed and approved the technical content of this news release.