GFM Resources Limited

GFM Resources Limited

November 18, 2005 13:47 ET

GFM Announces Option Agreement for VMS Project

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - Nov. 18, 2005) - GFM Resources Limited (NEX BOARD:GFM.H) ("the Company") is pleased to announce that it has reached an agreement with its majority shareholder, Grupo Ferrominero, S.A. de C.V. ("Grupo"), to earn an interest in Grupo's Atexcaco volcanogenic massive sulphide (VMS) project in the State of Puebla, in central Mexico ("Atexcaco").

Property description:

The Atexcaco VMS project, located at the intersection of Mexico's Eastern Sierra Madre and the Trans-Volcanic Belt, is comprised of 16 mining concessions totalling 15,964 Hectares, and divided into two distinct project areas: "Aire Libre" and "Guadalupe".

The "Aire Libre" project area was mined from 1887 to 1939 by several operators including The Teziutlan Copper Company, and Asarco, the last operator who shut it down in 1939. Aire Libre's original orebody was a VMS deposit fractioned by faulting, and contained an total approximate volume of 2.5 million tonnes of ore with the following average values: Cu: 3.0% -10.0%, Zn: 10.0% - 14.0%, Pb: 5.0%, Ag: 100 g/t and Au: 2.0 g/t.

The "Guadalupe" project area, located some 15 Km to the northwest of Aire Libre, has an exploration drift also providing evidence of the presence of VMS orebodies.

Some 5 Km to the NW of Guadalupe, and also covered by Grupo's concessions, a system of high-grade Au-veins called "Areton" was recently discovered and sampled in three different outcrops, thus opening the possibility to constitute a second exploration target.

A project location map will be available on the Company's website at

Exploration work performed:

Grupo acquired the concessions in 1993 and has carried out exploration work during the past six years, including geochemistry, geophysics and detailed geology. A stream sediment sampling survey and reconnaissance geological mapping on Atexcaco was carried out in 1996, and in 1997 an airborne magnetic VLF-EM-radiometric survey was commissioned to Aerodat. During 1998 and 1999, Grupo carried out a grid-soil sampling and lithogeochemical rock sampling program.

The Company's exploration program:

Given the findings of prior exploration work, and the fact that VMS orebodies have a tendency to be deposited in clusters, the Company has determined that further exploration is merited, aimed at locating additional VMS orebodies, as there are evidences determined through a well-defined and detailed rock alteration index survey coincident with geochemical anomalies.

In order to determine precise drilling targets the Company has retained the services of a VMS-specialized geophysicist to commence preparatory work for a geophysical survey immediately.

Prior to initiating the geophysical study, the Company plans on securing the required land-access and environmental permits.

The Company anticipates that this geophysical study is to be initiated towards the end of the regional raining season by the end of November 2005, and will result in the definition of targets for a 3,000 m preliminary diamond drilling program. Drilling will commence during the dry season in the first half of 2006, and will encompass both the Aire Libre and Guadalupe Project Areas.

The private placement arranged in June of 2005 secured sufficient funds to conduct the exploration work leading up to the drilling phase.

Terms of the agreement:

Under the terms of the agreement, the Company will earn a 60% interest in Atexcaco by investing Cdn $750,000 in exploration with the following investment schedule:

- Cdn $200,000 by June 30, 2006

- An additional Cdn $550,000 by June 30, 2007

If the Company invests amounts greater than the minimum for each year, the balance will be credited towards the amounts due the following year. The Company will have the right to earn the 60% interest at any time by completing its investment schedule.

Once the 60% interest has been earned, the Company has a second option to earn the remaining 40% interest in Atexcaco by paying Grupo US $1,000,000 in the following manner:

- US $500,000 in cash

- US $500,000 in cash or issue to Grupo such number of common shares of the Company as is equal to US $500,000 divided by the Discounted Market Price

GFM Resources Limited is a Canadian public company engaged in the business of mineral exploration in Mexico; its shares are listed on the NEX Board of the TSX Venture Exchange under the symbol GFM.H. The Company's majority shareholder, Grupo Ferrominero, S.A. de C.V. ("Grupo") is a private Mexican holding company that also controls Compania Minera Autlan S.A. de C.V. ("Autlan"), a company listed on the Mexico City stock exchange and active in manganese and ferroalloy operations in Mexico and South America. Grupo also controls other companies in domains such as electronics and investment banking.

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

Contact Information

  • GFM Resources Limited
    Mr. Lizardo Galvan
    Chief Executive Officer
    (604) 484-8766
    GFM Resources Limited
    Mr. Salvador Miranda
    Chief Financial Officer
    (604) 806-6110
    (604) 806-6112 (FAX)