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Press release from Marketwire

Geologix Explorations Inc.: Tepal Preliminary Economic Assessment Mine Plan Estimates $348 Million Net Positive Pre-Tax Cashflow

Tuesday, October 12, 2010

Geologix Explorations Inc.: Tepal Preliminary Economic Assessment Mine Plan Estimates $348 Million Net Positive Pre-Tax Cashflow16:30 EDT Tuesday, October 12, 2010 VANCOUVER, BRITISH COLUMBIA--(Marketwire - Oct. 12, 2010) - Geologix Explorations Inc. (the "Company" or "Geologix") (TSX:GIX)(FRANKFURT:GF6)(BERLIN:GF6)(STUTTGART:GF6)(MUNICH:GF6) 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 (http://media3.marketwire.com/docs/geologix_oct_12.pdf). 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(i) in mine plan -- 157,000 ounces gold equivalent(i) 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 (i)Gold equivalent is estimated using $900/oz. Au and $2.75 Cu metal prices: (Cu lbs(i) $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(ii) PEA Base Gold Case: (NI-43-101) Average Average Equivalent(i) Tepal Mine Gold Gold Copper Copper Plan Tonnes g/t Oz. % 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 (ii)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 $900 Au, $1000 Au, $1200 Au, Tepal PEA ($ Millions) $2.75 Cu $3.00 Cu $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(i) 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 $1.09 Table 5 - Total Project Capital Cost(iii) Tepal PEA Year 0 Year 1 Year 2 Year 3 Year 9 Total ---------------------------------------------------------------------------- Total Capital Cost M$ $ 105.1 $ 181.5 $ 3.3 $ 1.7 $ 1.5 $ 293.0 (iii)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 approx.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: $900 Au, $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 Mr. Gordon Doerksen, P. Eng., PE, Principal Consultant and Project Manager, SRK Consulting Limited, Vancouver, BC, Canada and Mr. Dunham L. Craig, P.Geo, President and CEO of Geologix Explorations Inc., Vancouver, BC, are 'qualified persons' for the purposes of National Instrument 43-101 Standards of Disclosure for Mineral Properties of the Canadian Securities Administrators, have reviewed and verified the data contained in this news release.Geologix Explorations Inc. is a mineral exploration company focused on acquiring, exploring and developing mineral resource opportunities with the potential to host world class mineral deposits. The Company's primary focus is the Tepal Gold-Copper Porphyry Project in Michoacan State, Mexico, where the Company is aggressively exploring for potential resource expansion, of the project in its ongoing effort to upgrade and increase the scale of this emerging project.FOR FURTHER INFORMATION PLEASE CONTACT: Geologix Explorations Inc. Jeffrey Wilson V.P. Corporate Communications (604) 694-1742 or Toll Free in Canada & USA: 1(888) 694-1742 jwilson@geologix.ca or Geologix Explorations Inc. Dunham Craig President & CEO (604) 694-1742 dcraig@geologix.ca www.geologix.ca The Toronto Stock Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.