QGX Ltd.

QGX Ltd.

May 15, 2008 07:30 ET

QGX Discovers Rare Earth Elements at Khotgor, Southern Mongolia

WATERDOWN, ONTARIO--(Marketwire - May 15, 2008) - QGX Ltd. (TSX:QGX) is pleased to announce that the three drill holes collared at its 100%-owned Khotgor project at the end of last year (see press release of August 15, 2007) returned highly significant concentrations of rare earth elements ("REEs"). Drill-hole KH-01 cut the best intercept, containing 0.68% total rare earth oxides and yttrium ("TREO+Y") over a width of 219 m (114.5-333.5 m) based on a 0.5% TREO+Y cutoff.

The relative abundance of the REEs contained in the 219-m intercept of KH-01 is dominated by the light REEs (92.1%), with cerium (Ce), lanthanum (La), neodymium (Nd), and praseodymium (Pr), comprising 46.7%, 22.6%, 17.7%, and 5.1%, respectively.

The mineralized intercept from KH-01 consists of "diorite" (field term) overprinted by albite-biotite-carbonate-magnetite-fluorite hydrothermal alteration. The overall zone of hydrothermal alteration is larger, encompassing 9 sq km. There is a strong correlation between high REE values and high iron values. In fact, the single best 3-m interval, assaying 6.2% TREO+Y, is associated with the single highest iron value (21% Fe). This is particularly noteworthy because (1) located approximately 250 m to the north of KH-01 and 600 m to the south of KH-01 are two large magnetic geophysical anomalies measuring approximately 600 m and 1500 m in length, respectively, and (2) the world's largest REE deposit, Bayan Obo in northern China, is hosted in magnetite-replaced rock averaging 35% Fe.

Paul Zweng, President/Chief Executive Officer of QGX Ltd., commented as follows:

"QGX drilled Khotgor in late 2007 exploring for a porphyry molybdenum deposit. Instead, we found considerable quantities of rare earth elements. What is particularly tantalizing is the strong association of high REE values with high Fe values. Drill-hole KH-01 is collared interior to an annular-shaped magnetic geophysical anomaly with two portions of this ring recording particularly high readings only 250 and 600 m away from the hole. Should the geophysical anomalies contain an abundance of iron oxide, then they would represent highly prospective targets for REEs.

Global demand for rare earths is expected to grow in a number of high-tech applications, especially in permanent magnets, consumer electronics, and automotive catalytic converters. In particular, demand growth will be seen in the automotive industry as more electric components replace hydraulic systems and NiMH rechargeable batteries are used in hybrid vehicles. Strong demand is expected for cerium (Ce) in automotive catalysts, lanthanum (La) in NiMH batteries, and those elements used in Neo magnets (neodymium (Nd), praseodymium (Pr), dysprosium (Dy), and terbium (Tb)). The fundamentals for REEs have never been stronger."

For a brief overview regarding REEs, go to: http://pubs.usgs.gov/fs/2002/fs087-02/

Upcoming Work

QGX is currently preparing thin sections of the most mineralized portions of drill core to submit for petrographic, XRD, and electron-microprobe studies. These studies will allow for the identification of the REE-hosting minerals (e.g., allanite, apatite, bastnaesite, monazite, etc.) thereby providing key insights into potential metallurgical processes and recoveries. QGX is organizing a gravity geophysical survey to understand better the nature of the annular-shaped magnetic geophysical anomaly surrounding the three drill holes. As part of this, QGX is also undertaking to measure the magnetic susceptibility of the existing drill core as a means to understand better the nature of the annular-shaped magnetic geophysical anomaly surrounding the three drill holes. Finally, QGX is contacting drill service companies to conduct a two-hole program to drill test the magnetic anomalies for REEs. The goal is to complete these studies prior to the completion of the strategic review process now being undertaken by Merrill Lynch on behalf of QGX (see press release of March 17, 2008).

SGS Mongolia LLC in Ulaanbaatar, Mongolia, prepared the samples. SGS Minerals Services in Toronto, Ontario, performed all rare earth element and yttrium analyses cited in this press release. The Company maintains a QA-QC program designed by AMEC in the preparation, shipping and checking of all samples from the property.

Qualified Person

Mr. John Thompson, Vice President Operations of QGX and a qualified person as defined by NI 43-101, has reviewed and approved the information contained in this press release.

About QGX

QGX is a Canadian-based company that has been exploring for mineral deposits in Mongolia since 1994. QGX's two most advanced properties are the Baruun Naran and the Golden Hills projects. In January 2008 QGX announced that an independent 43-101 pre-feasibility study for Baruun Naran showed a net present value (discounted at 10%) of US$499 million on an after-tax basis. QGX announced in August 2007 an independent NI 43-101 resource for coking and thermal coal at Baruun Naran comprised of 93.3 Mt of measured and 159.6 Mt of indicated (252.9 Mt contained in measured and indicated) and 11.1 Mt of inferred resources. In April 2007, QGX filed an independent NI 43-101 report outlining a positive preliminary economic assessment for its copper-gold-silver project at Golden Hills. Barrick Gold Corp. holds an approximate 9% equity interest in QGX as part of a strategic relationship between the two companies. On March 17, 2008, QGX announced the engagement of Merrill Lynch as exclusive financial advisor to assist the Company with a review of potential strategic alternatives.

This press release includes certain "forward-looking statements". All statements, other than statements of historical fact, included herein, including without limitation, statements regarding potential mineralization, results and future plans and objectives of the Company are forward-looking statements that involve numerous risks and uncertainties. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statement.

The Toronto Stock Exchange has neither approved nor disapproved the information contained herein.

Contact Information

  • QGX Ltd.
    David Anderson
    Executive Chairman
    (905) 689-9442
    QGX Ltd.
    Paul Zweng
    (925) 855-0505
    Website: www.qgxgold.com