April 25, 2007 20:54 ET

Lexam Explorations Inc.: Fourth Quarter Results

Oil & Gas: Current Drill Locations Approved; 3D Seismic Survey Completed - Analysis Underway; Fast Start to 2007: Uranium Acquistion, Nevada Sale!

TORONTO, ONTARIO--(CCNMatthews - April 25, 2007) -

(All amounts expressed in Canadian dollars)

LEXAM EXPLORATIONS INC. (TSX VENTURE:LEX) is pleased to announce financial results for the fourth quarter 2006, an update on the Baca Oil and Gas Project in south-central Colorado and recent corporate developments designed to focus the Company on energy exploration and strengthen its financial position!


- Current Oil & Gas Drill Locations Approved

- 3D Seismic Survey Completed - Analysis Underway

- Uranium: Big Land Acquisition, Largest Owner In Otish Region

- Nevada Property Sale: Securities Received Now Worth $21.5 million (subject to closing)

- Base Metal Property Sold: Estimated Proceeds $750,000


For the fourth quarter Lexam reported a loss of $354,043 or one cent per share, compared with a loss $31,366 or nil per share in 2005. The increase in loss reflects a significant increase in exploration activities relating to the Baca Project and increased corporate development activities.

During the quarter Lexam completed the necessary work and was approved to begin a 25 square mile 3D seismic survey over the two natural gas targets that have been outlined on the project. Lexam began the 3D seismic survey in mid-January 2007 and has completed all the required field work. The geophysical interpretation of the survey data is underway, with results expected to be received by mid-May.

During the fourth quarter Lexam completed and submitted its application to drill two wells down to depths totalling 14,000 ft. (4,265 m). The permits to drill the current targets on the Baca Project were approved by the Colorado Oil and Gas Conservation Commission at the beginning of April 2007. The final interpretation of the 3D seismic survey data may result in adjustments to the exact locations of the proposed wells. Lexam will wait for the results of the 3D seismic survey before making a final decision on potential drilling.

At the end of the fourth quarter Lexam had working capital of $3.6 million, compared with a working capital deficit of $540,000 in 2005. Subsequent to the fourth quarter Lexam entered into an agreement to exchange its large Nevada land holdings, consisting of 225,000 acres (190,000 net acres) to Rubicon Minerals for approximately 8,571,000 common shares of Rubicon.

The sale of the Nevada properties was designed to unlock value, narrow the Company's focus on energy and improve its financial condition. The current market value of the shares Lexam will receive, upon closing, is approximately $21.5 million (April 25, 2007), dramatically increasing the financial strength of the Company!

Lexam also announced that HudBay Minerals had exercised their option on the Jason Base Metal Property. Lexam anticipates that its share of the proceeds will total approximately $750,000.

Lexam's fourth quarter and annual reports, including management's discussion and analysis, financial statements, and notes can be found on the Company's website at www.lexamexplorations.com and on SEDAR at www.sedar.com.


Permits Granted, 3D Survey Complete

During the fourth quarter of 2006, Lexam continued to advance the 100,000+ acre Baca Oil and Gas Project located in south-central Colorado towards potential drilling. The Baca Project is located approximately 45 miles southwest of the Florence Field and 110 miles northeast of the prolific San Juan Basin, which was discovered in 1927 and is the largest producer of natural gas in the USA. During 2006, Lexam was focused on the permitting effort for a 3D seismic survey and two natural gas wells that will reach depths totalling 14,000 ft (4,265 m).

During the fourth quarter Lexam submitted its drill applications to the Colorado Oil and Gas Conservation Commission and completed the required work in advance of a 25 square mile 3D seismic survey over the drill target areas. Lexam received approval and began the 3D seismic survey mid-January 2007 and completed the data acquisition stage by mid-February. The data was sent to Vector Seismic Data Processing headquartered in Denver, Colorado, for processing and initial interpretation of the data has begun. The Company expects the final interpretation to be completed by mid-May.

The 3D seismic survey is designed to help Lexam confirm and define the deep targets that have been identified through the previous use of extensive 2D seismic and also potential targets for natural gas in the lower Tertiary section of the San Luis basin, where the Baca Project is located.

The Dakota Sandstone of Cretaceous age is the primary target of Lexam's oil and gas exploration in the San Luis Basin. Regional well data from adjacent basins suggests that the expected thickness of the Dakota in the targeted area ranges from 50 ft to 120 ft, with porosities of 15 to 21%.

This is the first time that a 3D seismic survey has been performed on the Baca Project and it is anticipated that the results will enhance the Company's geological knowledge and aid potential drilling.

On April 3, 2007 Lexam was notified by the Colorado Oil and Gas Conservation Commission that the Company's permits to drill the current target areas had been approved, subject to certain conditions. The Company is currently awaiting the final analysis of the 3D seismic data that was acquired from the Baca Project in order to make a determination on whether to proceed with the proposed wells. Lexam anticipates the costs associated with the drilling of the two wells and final completion to total approximately $21.0 million.

Lexam holds a 75% undivided interest in the Baca Project with the other 25% held by ConocoPhillips.


HudBay Exercises Option to Purchase

On August 8, 2006 Lexam announced that its 62% owned subsidiary, MacPass Resources, had entered into an agreement with HudBay Minerals for the sale of the Jason property located in the Yukon for total consideration of $1,000,000.

HudBay was required to pay an initial non-refundable deposit of $100,000 to MacPass with the balance of the $900,000 payable on exercise of the option during a six month period.

Subsequent to fourth quarter Lexam announced that MacPass has been notified by HudBay Minerals that they would exercise their option to purchase the Jason property. Lexam anticipates receiving its percentage share of the net proceeds, plus funds owed to the Company MacPass for an approximate total of $750,000.

Lexam will retain a 0.9% net smelter return (NSR) on the Jason property. HudBay has the option to purchase, from Lexam, 50% of the NSR at any time, for approximately $370,000, and the remaining 50% of the NSR for approximately $1,200,000.


Dominate Land Position Acquired!

Subsequent to the end of the fourth quarter Lexam announced that it had entered into an agreement with Golden Valley Mines to earn up to a 50% interest in their prospective Otish Basin Uranium Project in Quebec.

Lexam is required to spend $3.0 million over three years to earn a 50% interest. The projects' areas include historical uranium showings from work conducted over the period from 1976 to 1983. The properties are geologically similar to the Athabasca Basin area in northern Saskatchewan, where approximately 28% of the world's annual uranium production is mined.

On April 5 Lexam announced that it had acquired additional uranium properties in the Otish Basin and would now control 170,000 acres. The acquisition of this additional land is believed make the Lexam and Golden Valley joint venture the largest land holder in the Otish region! The properties were acquired for their potential to host 1) fault controlled uranium mineralization similar to that discovered by Strateco Resources in the Otish Basin and 2) high-grade uranium deposits similar to those currently mined in the Athabasca properties for Rubicon common shares. Basin, Saskatchewan. Lexam and Golden Valley are also awaiting final government confirmation on more than 66,000 acres.

A property-wide geophysical survey is planned in conjunction with comprehensive data compilation for exploration planning. The objective of the survey will be to prioritize target areas for further exploration. The 2007 exploration program has been budgeted at a minimum of $750,000.


Rubicon Share Worth $21.5 million

During the quarter Lexam announced that management had begun to evaluate its large land holdings in north-eastern Nevada in order to generate more value from these assets. On February 26, 2007 Lexam signed a letter of intent with Rubicon Minerals to trade its Nevada properties for Rubicon common shares. Also party to the transaction is Evanachan Limited, a company wholly owned by Mr. McEwen, Lexam's Chairman and CEP, which has agreed to exchange its Alaska properties for Rubicon common shares.

Lexam agreed to transfer approximately 225,000 gross acres (190,000 net acres) of mineral interests for approximately 8,571,000 common shares of Rubicon. The transaction was designed to strengthen Lexam's balance sheet, help fund future exploration at the company's Baca Oil and Gas Project in Colorado and Otish Uranium Project in Quebec.

The common shares Lexam will receive have increased 259% since the deal was announced and now have a market value of approximately $21.5 million!

About Lexam

Lexam Explorations is a North American based energy exploration company. Lexam's shares are publicly traded on the TSX-Venture Exchange under the symbol LEX. The company is advancing the Baca Oil & Gas Project located in south-central Colorado, USA, which is 75% owned by Lexam and 25% by ConocoPhillips and has an option to earn 50% interest in Golden Valley Mines Otish Basin uranium project located in Quebec, Canada.


Some of the statements contained in this release are "forward-looking statements". Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to differ materially from the anticipated results, performance or achievements expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from anticipated results include risks and uncertainties such as: ability to raise financing for further exploration and development activities; risks relating to estimates of reserves, deposits and production costs; extraction and development risks; the risk of commodity price fluctuations; political, regulatory and environmental risks; and other risks and uncertainties in the reports and disclosure documents filed by Lexam from time-to-time with Canadian securities regulatory authorities. The Company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The complete second quarter report including management's discussion and analysis, financial statements and notes can be found on our Company's website at www.lexamexplorations.com and on SEDAR at www.sedar.com.

Contact Information

  • Lexam Explorations Inc.
    Ian J. Ball
    VP, Corporate Development
    (647) 258-0395 or Toll Free: 1-866-441-0690
    (647) 258-0408 (FAX)
    Email: info@lexamexplorations.com
    Website: www.lexamexplorations.com
    Corporate Head Office
    Lexam Explorations Inc.
    99 George Street, 3rd Floor
    Toronto, Ontario M5A 2N4