Marifil Mines Ltd.
TSX VENTURE : MFM

Marifil Mines Ltd.

June 17, 2011 09:00 ET

Marifil Signs Definitive Letter of Intent for the K-2, K-3, and K-4 Potash Properties

VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 17, 2011) - Marifil Mines Ltd. (TSX VENTURE:MFM) ("Marifil" or "the Company") announces that it has signed a definitive Letter of Intent ("LOI") with Saccharum Energy Corp. of Calgary, AB, for the K-2 Potash property in Neuquen Province and the K-3 and K-4 Potash properties in Mendoza Province, Argentina. This LOI revises the original Agreement to include the terms of a proposed joint venture between the Company and Saccharum whereby Saccharum can earn up to a 70% interest in Marifil's K-2, K-3, and K-4 properties.

In summary Saccharum agrees to pay Marifil US$1,500,000 in cash; pay Marifil up to 9,000,000 shares of Saccharum common stock, and perform a minimum of US$12,000,000 in work to earn a 70% interest in all three properties.

Under the revised LOI (see news release dated March 31, 2011) Saccharum agrees to purchase all of the shares of Oxbow for a total price of US$366,481. Saccharum further agrees that Oxbow shareholders can accept either cash or Saccharum shares at a deemed price of C$0.50 per Saccharum share. Marifil then agrees to restructure its underlying agreement with Oxbow whereby Saccharum can earn up to a 70% interest in the K-2 property. Marifil shall retain a 1.5% Net Smelter Royalty. Saccharum shall have the right to purchase Marifil's royalty for US$15,000,000.

Marifil further agrees that Saccharum can acquire up to a 70% interest in the K-3, and K-4 properties. If Marifil elects not to participate, its 30% working interest shall be reduced to a 25% carried interest through to a bankable feasibility study.

Saccharum will pay Marifil US$500,000 in cash plus 2,000,000 Saccharum common shares over three years for the K-2 property. Saccharum will pay an additional US$500,000 in cash for each of the K-3 and K-4 properties. Marifil shall retain a 3% Net Smelter Royalty for the K-3 and K-4 properties but following completion of a NI 43-101 report Saccharum shall have a 30 day right to purchase the royalty for each property for 2,000,000 Saccharum common shares per property. Marifil shall also have a 30 day put option right to sell such royalty for 2,000,000 shares.

The US$150,000 cash payment for the K-4 property will be placed in escrow and released to Marifil after Saccharum receives satisfactory evidence that the cateos (claims) are issued in Marifil's name and on a basis satisfactory to Saccharum.

Saccharum further agrees to spend US$4,000,000 in work over the next three years on each of the properties as follows: US$500,000 during Year 1, US$1,500,000 during Year 2, and US$2,000,000 during Year 3. Saccharum may make such expenditures on any one of the properties and following expenditure of US$4,000,000 shall have earned its 70% interest on the first property; following total expenditures of US$8,000,000 shall be deemed to earn a 70% interest in a second property; and following total expenditures of US$12,000,000 shall be deemed to have earned a 70% interest in the third property.

Saccharum will also pay Marifil performance bonuses of 1,500,000 shares upon completion of a positive NI 43-101 compliant ore resource and a further 1,500,000 shares following completion of a commercially positive Feasibility Study. These bonus shares shall be a one-time payment applicable to the first property only. If Saccharum's share structure exceeds 75,000,000 shares during this agreement the shares payable to Marifil shall be adjusted upward proportionately.

Marifil and Saccharum have agreed to incorporate all of these terms into a binding Joint Venture agreement before July 15, 2011.

Mr. John Hite remarks, "The three properties have a combined total of 200,648 hectares (2,006 square kilometers) making this one of the largest potash holdings in Argentina. Our work has identified an abandoned oil well hole on the K-3 property which hit 4.5 meters grading 32% to 34% KCl at a depth of 221.5 meters. This high grade zone, located at shallow depth will be an ideal target for the early drilling. This shallow zone may be amenable to low cost underground mining."

"Our geologists have designed a drill program to test this zone first. Saccharum agrees with this strategy and we will begin as quickly as possible to test this important target."

This agreement is subject to approval by the Boards of Directors of Saccharum, Marifil, Oxbow and the TSX. A small finder's fee is payable to a third party.

For further information regarding Marifil Mines Ltd., please refer to the Company's filings available on SEDAR (www.sedar.com) or at Marifil's Website (www.marifilmines.com).

This press release has been reviewed and approved by John Hite, President of Marifil Mines Ltd. and by Richard Walters, Vice President under whose directions the exploration program is being carried out. Mr. Hite and Mr. Walters are Qualified Persons as defined by National Instrument 43-101.

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