SOURCE: Marifil Mines Ltd.

August 13, 2008 17:44 ET

Marifil Spins Out K-2 Potash Project

SPOKANE, WA--(Marketwire - August 13, 2008) - Marifil Mines Ltd. (TSX-V: MFM) (PINKSHEETS: MFMLF) ("Marifil" or "the Company") announces that it has signed a Letter of Intent ("LOI") to vend the Company's K-2 potash property to Oxbow Holdings Corp. ("Oxbow"), a new, private Canadian corporation.

The K-2 Potash property comprises 99,964 hectares. Analyses of gamma ray and electric logs from four abandoned oil wells confirm the presence of potash in the property over an area of more than 200 square kilometres (see Marifil News Release dated July 22). The property is highly accessible and can be worked year round.

Under the terms of the agreement Marifil will receive 13,500,000 shares of Oxbow, representing 67.5 percent of the total issued shares of the company. The Company will also receive anti-dilution rights enabling Marifil to retain a minimum fifty percent equity interest in Oxbow by participating in any private equity offerings for 12 months following the Closing or for up to 24 months for any public offerings.

Marifil will also receive $750,000 in cash, payable as to $50,000 within five days of signing the LOI, $200,000 within 30 days after signing a definitive sales agreement on 18 August (the Closing Date), $250,000 within 6 months of the Closing, and $250,000 within 12 months of the Closing. In addition to the $750,000 payments described above, Marifil will also receive further payments of $150,000 annually, beginning on the second anniversary of the Closing and continuing until the first Milestone payment (see below) is made after which the annual payments will cease.

Marifil will receive a further $10,000,000 in Milestone payments as follows: the first Milestone payment will be $5,000,000 on completion of a NI 43-101 report showing an inferred, indicated, and measured potash resource; the second payment of $5,000,000 is due following completion of a bankable feasibility report, or if a decision is made to proceed to production without producing a feasibility study.

Marifil will retain a four percent royalty on sales of potash from the property.

Oxbow agrees to spend a minimum of $1,000,000 on the property during the first 12 months of this Agreement and $2,000,000 during the second 12 months of this Agreement.

Mr. John Hite comments, "This is a very good deal for Marifil, and, I believe, speaks volumes as to the potential size and profitability of this large deposit. We have analyzed four wells and, since these wells were sited to test deeper oil targets they are essentially random with respect to testing the shallower potash deposit. This probably means that we have not seen the axis of the potash basin where the thicker and richer parts of the deposit occur."

The transaction with Oxbow is subject to approval by Marifil's Board of Directors and by the TSX-V.

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.

For further information on the Company and its projects, please refer to Marifil's website: www.marifilmines.com.

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Contact Information

  • For Further Information Contact:

    Head Office:
    John Hite
    President
    Phone: (509) 466-1505
    Email: Email Contact
    Website: www.marifilmines.com


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