Geologix Explorations Inc.
FRANKFURT : GF6
BERLIN : GF6
TSX : GIX

Geologix Explorations Inc.

November 05, 2009 09:00 ET

Geologix Acquires Right to Purchase 100% Interest in the Tepal Gold-Copper Project, Mexico

VANCOUVER, BRITISH COLUMBIA--(Marketwire – Nov. 5, 2009) - Geologix Explorations Inc. (the "Company" or "Geologix") (TSX:GIX)(FRANKFURT:GF6)(BERLIN:GF6)(STUTTGART:GF6)(MUNICH:GF6) is pleased to announce it has entered into an agreement with Arian Silver Corp. ("Arian") whereby Geologix has been granted the exclusive rights to purchase Arian's 100% interest in the Tepal Gold-Copper Project in the state of Michoacan, Mexico.

The Tepal project hosts a resource estimated at 1.15 million ounces ("ozs") gold and 413 million pounds ("lbs") copper (see details below). Under the terms of the agreement, Geologix can elect to complete the purchase of 100% of the property, subject to a 2.5% net smelter return royalty, by delivering to Arian US$3.0 million in staged payments before February 23, 2011 (at Geologix's election, up to 50% payable in Geologix shares), and assuming the balance of Arian's obligations under the terms of the underlying property option agreement.

Dunham Craig, President & CEO stated, "We are excited to have the opportunity to acquire the Tepal Project as it represents an advanced stage Mexican project, with extensive prior drilling, a significant current resource estimation, and multiple exploration targets for possible expansion. The Tepal Project meets the Company's preferred project criteria on multiple levels and fits well with management's exploration and development expertise. In a collaborative effort with Arian, the Company is currently conducting a property scale geophysical (IP) survey and metallurgical test program."

The Tepal Project:

The Tepal Project is located in the northwest portion of Michoacan State, Mexico. Local and regional infrastructure is excellent, with paved roads, deep sea port access, and low topographical relief. The project is comprised of 6 concessions covering approximately 138 square kilometres.

A report on Tepal prepared by ACA Howe International Ltd. has estimated the property resources as of September 24, 2008 as tabulated below:

CategoryTonnesGold g/t Gold Oz.Copper %Copper lbs.
Indicated24,995,0000.544437,0000.267147,130,000
Inferred54,964,0000.405716,0000.219265,370,000

Tonnage figures, ounces of gold and pounds of copper have been rounded up or down to the nearest 1,000 tonnes, 1,000 ounces and 10,000 pounds respectively. Tonnes are metric tonnes, g/t are metric grams/tonne. Ounces and pounds are imperial measure using 2205 lbs = 1 metric tonne.

The estimate is based upon 92 drill holes and utilizes a 0.18 g/t Au envelope that honours geology to constrain the mineralization. An inverse distance method was used to the power of (ID3) to interpolate into 25 x 25 x 20 metre blocks using Micromine software. It is reported using a 0 g/t Au cut off. To the Company's knowledge, such resources will not be materially affected by any known environmental, permitting, legal, title, taxation, socio-political, marketing or other relevant issues. The known resource remains open for possible expansion in multiple directions and numerous highly prospective targets remain untested throughout the project area.

The project has a total of 129 drill holes (62 diamond drill and 67 reverse circulation) totalling 20,121 metres which led to the identification of two main mineralized zones, the North Zone and the South Zone, which host the current resource estimate. In addition, surface geochemical surveys throughout much of the project area indicate numerous highly prospective untested gold and copper anomalies; most notably to the east of the current deposits (see geochemical maps on the Company's website).

Upon successful completion of the Company's due diligence, management intends to initiate a program of trenching, sampling and drill target delineation in advance of a next phase drill program expected to test new target areas and upgrade the current resource.

Terms of the Purchase Transaction:

Under the agreement Geologix has advanced to Arian US$517,500 which has been used by Arian to complete an outstanding underlying option payment due to the property vendor (US$450,000 plus the applicable IVA (value added tax) of US$67,500). The advance was made by Geologix to Arian as an interest free loan repayable on April 23, 2010 unless Geologix elects to option the property, in which case the loan will be applied against the purchase price.

In consideration for the loan, Arian has granted Geologix a five month exclusivity period during which Geologix shall undertake a due diligence review of the property. Following completion of its due diligence review and before the end of the five months, Geologix may elect to acquire the property from Arian on an option basis for US$3-million, payable to Arian in two instalments:

1. An initial payment of US$1.0 million, plus forgiveness of the loan of US$450,000, for a total of US$1.45 million on or before February 23, 2010; and

2. A further payment of US$1.55 million on or before February 23, 2011.

At Geologix's election, up to 50% of each such payment may be made in Geologix shares valued at the 10-day average closing price of the Company's shares immediately prior to the time of each payment.

Geologix will also assume the balance of Arian's obligations under the terms of an underlying property option agreement whereby Geologix will be responsible for completing staged payments to the underlying property vendor (as previously disclosed by Arian Silver Corp.). The Tepal claims are subject to a 2.5% net smelter return ("NSR") to the underlying vendor.

If Geologix elects not to acquire the property, Arian must repay the initial advance (including the IVA, if not already repaid) to Geologix no later than April 23, 2010, and Geologix's interest in the property will terminate. If Arian fails to repay the advance Geologix may elect to either:

1. joint venture the property with Arian and act as operator and hold a 51%, with Arian holding a 49% interest. The operator shall have the right to propose a feasibility study to the joint venture and if the other party does not fund its share, completion of the feasibility study will earn the operator an additional 10-per-cent interest. The operator will also have the right to propose production project financing and if the other party does not participate, arrangement of the financing will earn an additional 10-per-cent interest; or

2. require Arian to repay Geologix the advance (including, if not already repaid, the IVA refund of US$67,500) by way of an issue of units of Arian. Each unit shall be priced at the 10-day average closing price of Arian's shares immediately prior to April 23, 2010, and consist of one common share and one-half of one common share purchase warrant, with each whole share purchase warrant entitling Geologix to purchase one common share for a period of two years at the same price as the issue price of the units.

Galen White, B.Sc., FGS, MAusIMM, Principal Resource Geologist, CSA Global (UK) Ltd, formally of ACA Howe, a 'qualified person' for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Properties of the Canadian Securities Administrators, prepared the information that forms the basis of, and verified the data (including sampling, analytical and test data) contained in, this new release.

Geologix Explorations Inc. is a mineral exploration company focused on acquiring, exploring and developing mineral properties in North and South America.

The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • Geologix Explorations Inc.
    Jeffrey Wilson
    V.P. Corporate Communications
    (604) 694-1742 or Toll Free in Canada/USA: 1(888) 694-1742
    jwilson@geologix.ca
    or
    Geologix Explorations Inc.
    Dunham Craig
    President & CEO
    (604) 694-1742
    dcraig@geologix.ca
    www.geologix.ca