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 October 12, 2010
Tepal Preliminary Economic Assessment Mine Plan Estimates $348 Million Net Positive Pre-Tax Cash Flow

 
Vancouver, B.C., October 12, 2010 - Geologix Explorations Inc. (the "Company" or "Geologix") is pleased to announce the positive results from the Tepal project's NI-43-101 Preliminary Economic Assessment Study ("PEA") completed by SRK Consulting Inc.("SRK") of Vancouver B.C. The study is based on the existing NI-43-101 resource estimation previously announced and filed on SEDAR, and does not take into consideration pending results from the current 5,000 metre drill program underway at the project. See the PDF version of this release or the Company's website for accompanying section and site plan. Significant highlights of the PEA and mine plan include:
  • 989,000 ounces of gold mined in the life of mine ("LOM") plan
  • 351M lb of copper in LOM plan
  • 2.06M ounces gold equivalent* in mine plan
  • 157,000 ounces gold equivalent* per year production rate
  • Cash costs on a co-product basis: gold = $358/ounce, copper = $1.09/pound
  • $348M net positive earnings before interest, taxes, depreciation and amortization ("EBITDA")
  • $258M net present value ("NPV") at a 5% discount
  • 28% internal rate of return ("IRR")
  • 87% of current resource converts to PEA mine plan

    *Gold equivalent is estimated using $900/oz. Au and $2.75 Cu metal prices: (Cu lbs* $2.75)/$900 = gold oz. Please refer to Tables 1 and 3 below for separated copper and gold production.
Dunham Craig, President and CEO stated "We are very pleased with the results of this PEA as they exceed our initial expectations of the potential economics of the existing resource and fit perfectly with our target criteria of developing a mid-sized or greater gold-copper production project. Using $900 gold and $2.75 copper as a base case, the current mine plan delivers a robust pre-tax economic model and NPV, and when you contemplate the significant upside to metal prices, along with the exploration expansion potential currently being explored through our ongoing drill programs, we see significant growth potential for this project. We plan on proceeding full tilt with developing Tepal as a core asset for the Company and its shareholders."

The Tepal PEA mine plan consists of conventional flotation concentration of 58.7 million tonnes of sulphide ore followed by smelting, and heap leaching 10 million tonnes of the oxide cap. All processes and equipment use standard technology that has been common mining practice for years. The PEA considers purchasing all new mining and plant equipment.

The Tepal Project PEA base case uses metal prices fixed at $900/oz. gold and $2.75 copper. Financial estimates are earnings before income tax and depreciation allowance ("EBITDA") and all dollars are $US. Highlights of the PEA are:

Table 1 - Tepal PEA Mine Plan**

PEA Base Case: (NI-43-101) Average   Average   Gold
Equivalent*
Tepal Mine Plan Tonnes Gold g/t Gold Oz. Copper
%
Copper lbs. oz.
Sulphide Ore Mined
Open Pit
58,700,000 0.45 849,000 0.23 265,370,000 1,660,000
Oxide Ore Mined
Open Pit
10,000,000 0.45 150,000 0.24 147,130,000 594,000
Total Ore Mined 68,700,000   989,000   351,000,000 2,061,000


**The PEA mine plan considers Indicated and Inferred resources and cannot be classified as "Reserves". Further infill drilling will be conducted for the purpose of improving Inferred Resources to Measured or Indicated categories.

The Current Tepal NI-43-101 Resource to PEA Mine Plan Conversion rate is 87%. Approximately 2/3 of the mine plan resources are in the Inferred Category. The average strip ratio is 0.75 tonnes waste to 1 tonne ore (0.75:1).

Table 2 - Tepal NPV and IRR at Base Case and Variable Metal Prices

Tepal PEA ($ Millions) $900 Au
$2.75 Cu
$1000 Au,
$3.00Cu
$1200 Au,
$3.50 Cu
Project NPV (5% Discount) $258 $357 $555
Project IRR 28% 35% 49%


The PEA mine plan is designed, and capital is estimated on a 25,000 tonnes per day ("tpd") processing plant facility and a 10,000 tpd heap leach facility. The current mine will provide an average of 23,000 tpd throughput leaving additional capacity for expansion in the facility for additional throughput potentially added through exploration. Average annual production for the life of the mine is displayed in Table 3 below:

Table 3 - Production: Base Case

    Average Payable Total
    Production Payable
Average Mine Production Unit per year Production
       
Gold oz. 68,500 616,000
Copper lbs. 29,000,000 259,900,000
Gold Equivalent* oz. 157,111 1,434,355


Table 4 -Base Case Average Operating Cost on a Co-Product Basis

Base Case Operating Cost ("OPEX") per Equivalent Payable Metal
OPEX per Au equivalent $/oz Eq. Au payable $358
OPEX per Cu equivalent $/lb Eq. Cu payable $1.09


Table 5 - Total Project Capital Cost***

Tepal PEA   Year 0 Year 1 Year 2 Year 3 Year 9 Total
Total Capital
Cost
M$ $105.1 $181.5 $3.3 $1.7 $1.5 $293.0


***Total capital is inclusive of initial, sustaining, EPCM and closure costs. A 10% contingency has been applied.

Table 6 - Base Case Mine Plan Details

Tepal PEA Mine Plan Details - Life of Mine Averages
Mine Type   Open Pits (2)
Strip Ratio (Waste t/Ore t) (Waste t/Ore t) 0.75:1
Oxide    
Oxide tonnes processed   10,000,000
Daily Heap Leach Rate   6700 tpd
Oxide Gold Recovery   78.4%
Oxide Copper Recovery   14.3%
Oxide Processing   Crush 1/2", Heap Leach
Sulphide    
Sulphide tonnes processed   58,700,000
Sulphide Plant Design Capacity   25,000 tpd
Sulphide Mine Plan Throughput   22,000 tpd
Sulphide Gold Recovery   60.7%
Sulphide Copper Recovery   87.4%
Sulphide Processing   Grind/Standard Flotation/Concentrate
Primary Grind Size   ~140 micron
Flotation Concentration Ratio   110 t ore=1 t concentrate
Concentrate Grade   25.1% Cu, 33.8 g/t Au
Smelter Penalties   None
Operating Costs    
Mining (Owner fleet) $/t mined $1.35
Mining (Owner fleet) $/t processed $2.37
Sulphide ore $/t milled $4.30
Oxide Ore $/t leached $4.31
G&A and sustaining capital $/t milled $0.63
Average operating cost $/t ore $7.35
Royalties    
NSR Royalty   2.5%
Payback at Variable Metal Prices    
Base Case: $900Au, $2.75 Cu   4.4 years
$1000 Au, $3.00 Cu   3.9 years
$1200 Au,$3.50 Cu   3.3 years
Mine Life   9 years




 
 

You can view the Next News item: Mon Oct 25, 2010, Tepal Resource Expansion Drilling Intersects 95 Metres of 1.18 g/t Gold and 0.39 % Copper Outside Current Resource

You can view the Previous News item: Thu Sep 30, 2010, Tepal Oxide Cap Metallurgical Test Work Delivers 78.4% Gold Recovery

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