Geologix Exploration Inc. (OTC:GXEXF) provided results from an airborne geophysical survey taken over the entire 172 square kilometer Tepal project in Michoacan State, Mexico. Results revealed more than a half dozen new exploration targets, one directly north of its resource at Tepal that required immediate follow-up. While a number of these new targets are within the same structural corridor as the North, South and Tizate zones, it is the area referred to as "Target area #1" that we believe has the most potential to expand and potentially reshape Geologix's Tepal project.
While Geologix has been recognized by investors and analysts for successfully advancing a low-cost gold-copper project in Mexico, this included exploration on only 10% of the property under its control. The project has a mine life of about 18 years, and economics are significantly enhanced by heap-leaching gold oxides in the early years. We believed that with oxides typically located near the surface, the remaining 90% of the property provided the potential opportunity for additional ore to extend the length of heap-leach operations. While the airborne geophysical survey has provided a number of targets which we believe may lead to fully capturing the potential of the Tepal project, successful location of other resources may boost economics without significant reshaping of the current development plan. While still early in its understanding, the geophysical anomaly outlined to the north of Geologix's resource, referred to as "Target area #1," has the potential of leading to a significant increase and revision of Geologix's plan to develop a mine at Tepal.
The anomaly referred to as "Target area #1" is roughly three by thee kilometers in size and could possibly contain the area including Geologix's resources in the North, South and Tizate zones. Management believes the anomaly has "a textbook geophysical signature for porphyry deposits." Porphyry deposits are significant as they may contain gold and silver in very large amounts, disseminated over large areas, which lead to large long-lived mining operations. The anomaly has a geophysical signature of elevated magnetic, cored by a magnetic low where a potassic signature has replaced the magnetic low. As outcropping is scarce the potential for mineralization at "Target area #1" was likely the reason for this area to have gone unnoticed. Geologix explorationists have already completed a soil sampling program at "Target area #1" taking 220 samples on a grid with 100 by 200 meter spacing. Initial geochemical results indicate gold, copper, silver and molybdenum which are also characteristic of porphyry deposits.
It is important to remember that while interesting; until "Target area #1" is drilled the potential for mineralization is speculative. Even if mineralized there remains a significant amount of work and cost required to advance this area as a new or additional project with current activities at Tepal. On the other hand, as porphyry deposits containing mineralization may be widely disseminated, early exploratory drill holes may provide an early indication of the area's potential. Given the size and characteristics of the anomaly, if drilling is successful in encountering significant mineralization, "Target area #1" may have the potential to lead to a company making resource on its own, which exceeds our earlier optimism about additional gold oxide ore for repayment of capital boosting economics early in the Tepal project's mine life.
Geologix has recently encountered additional positive drill results around the North, South and Tizate zones and is expected to update a resource estimate in the coming weeks, and a Pre-feasibility Study by the end of the second quarter. These scheduled initiatives with any additional upside from exploration following the completion of the airborne geophysical survey should be positively received by investors.
Disclosure: I am long OTC:GXEXF.