PK: Geologix Explorations Inc. (GIX:TSX; GIXEF:OTCQX) has a great gold-copper resource base in Mexico. In addition to its huge 187 million ton resource containing 4.5 Moz of gold equivalent, the company recently identified additional targets about 1.5 kilometers north of its resource boundary. Several of these anomalies are looking quite interesting from their geophysical signatures and preliminary sample results. The exploration team is currently taking additional prospecting and chip samples on the targets and will continue sampling and delineating them through an upcoming 5,000-meter (m) program.
"Buying at opportune times such as now positions one ahead of the herd."
TGR: When should we know how much this new mineralized zone could add to its Tepal project's resource?
PK: The company is aiming to start its shallow drill hole program later in August. I expect to see assay results in late September or October and that will give us a good indication of grades and potential. A secondary program would follow up on successful results.
TGR: Geologix has a prefeasibility study due in the third quarter. What does that study need to show in order to move the needle at the company?
PK: The study should confirm that the economics of Tepal are robust. The project has a strong net present value, a long mine life and good production numbers at low operating costs. Unfortunately, Geologix has a lower market cap of about $30M at this time and capital expenditure (capex) requirements pushing $400M. It could be a severe challenge to get project financing. However, it should be able to use the prefeasibility study to its advantage in negotiating its financing options.
TGR: Do you believe that it will have to fully delineate that new mineralized zone before this project gets green-lighted?
PK: I don't think so, but it definitely adds upside. What's been indicated in the chip samples thus far is that grades are 2–3 times higher than what is in the current resource. It only gets better from here if there are additional grades and economic tonnage to be added