Geologix has 60 days to pay San Agustin option
2008-12-15 14:21 ET - News Release
Mr. Dunham Craig reports:
GEOLOGIX EXERCISES SAN AGUSTIN OPTION AND ENGAGES CIBC WORLD MARKETS AS FINANCIAL ADVISOR
Geologix Explorations Inc. (the "Company") (TSX:GIX)(FRANKFURT:GF6)(BERLIN:GF6)... announces that in accordance with the terms of its San Agustin Option Agreement (the "Option Agreement") with Silver Standard Resources Inc. ("Silver Standard"), the Company has submitted the necessary documentation to Silver Standard in order to calculate the payment required for Geologix to fulfil the Option Agreement. Effective December 12, 2008, Silver Standard delivered notice of its acceptance of the data submitted, and if the Company elects to complete the purchase, it has a period of up to 60 days within which to deliver the payment to Silver Standard.
The option payment is calculated on a per ounce basis of a portion of the gold and silver resource estimate at San Agustin announced by the Company on November 6, 2008 and posted on Sedar. No amounts are payable by Geologix in respect of lead or zinc contained in the resource estimate. Upon delivery of the option payment, Geologix would own a 100% interest in San Agustin, subject to a 2.50% net smelter return royalty ("NSR") on a portion of San Agustin payable to Silver Standard. Please refer to the Company's website (www.geologix.ca) for further details of the Option Agreement.
San Agustin Contained Metal (i):
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Category Gold ounces Silver ounces Lead pounds Zinc pounds
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Indicated 1,610,000 48,300,000 161,000,000 1,320,000,000
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Inferred 1,080,000 37,000,000 143,000,000 983,000,000
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(i) Press release November 6, 2008
San Agustin Contained Metal Subject to Payment Under the Option Agreement:
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Category Gold ounces Silver ounces
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Indicated 478,017 12,747,127
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Inferred 196,634 11,395,831
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The amount payable to Silver Standard to complete the Option Agreement is US$34.3 million. Based on the Company's current total mineral resource at San Agustin, the option payment equates to approximately US$8.04 per ounce of gold equivalent using a 54:1(ii) silver/gold ratio. Adding the lead and zinc value in the current resource reduces the option payment to just over US$4.00 per ounce of gold equivalent.
Dunham Craig, President and CEO of Geologix, stated, "Paying for a part of San Agustin's current gold and silver resource estimate, while having no payment obligations on the contained base metals in the current resource estimate is a unique growth opportunity for Geologix shareholders to obtain ownership in a project with a multi-million ounce gold resource. Furthermore, the project remains open for possible expansion at depth and in three directions, and should the Company provide payment under the Option Agreement, any additional mineralization subsequently delineated at San Agustin will be to the credit of Geologix. The Company is evaluating a range of transactions to fund the option payment and considering alternatives carefully in light of the current conditions in the capital markets."
The Company is also pleased to announce that CIBC World Markets Inc. has been engaged to act as financial advisor to the Company and to evaluate strategic alternatives to finance the option payment to Silver Standard.
Geologix Explorations Inc. is a mineral exploration company focused on acquiring, exploring and developing gold properties in North and South America. The Company has a wealth of experience in the mining industry taking early stage exploration prospects to final feasibility and ultimately to production.
(ii) Note - The silver/gold ratio and percent contained metal values were calculated using the 4 year rolling average metal prices in the November 6, 2008 NI43-101 compliant resource estimate press release posted on Sedar.
This press release has not been reviewed by Silver Standard Resources Inc.
The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.
CONTACT INFORMATION:
Geologix Explorations Inc.
Jeffrey R. Wilson
V.P. Corporate Communications
(604) 694-1742 or Toll Free in Canada & USA: 1-888-694-1742
Email: jwilson@geologix.ca
or
Geologix Explorations Inc.
Dunham Craig
President & CEO
(604) 694-1742
Email: dcraig@geologix.ca
Website: www.geologix.ca
