San Agustin step-outs show bulk tonnage potential

Vancouver – Finally finished with drilling limited by an option agreement, Geologix Explorations (GIX-V) started expansion drilling at the San Agustin polymetallic project in Durango, Mexico, and was immediately rewarded with long mineralized intercepts.

A series of drill holes expanded the width of Zone II to 425 metres from a previously-defined width of only 200 metres. In that series hole 182 returned 312.9 metres grading 0.49 gram gold per tonne, 23.12 grams silver per tonne, 0.15% lead, and 0.81% zinc from 44 metres depth. Roughly 150 metres northwest hole 184 intersected 206.5 metres grading 0.57 gram gold, 13.96 grams silver, 0.06% lead, and 0.93% zinc.

Other strong results from the new round of drilling include hole 179, which returned 0.24 gram gold, 19,75 grams silver, 0.14% lead, and 0.48% zinc over 366 metres from surface in Zone II, and hole 177, which cut 23 metres grading 0.49 gram gold, 27.37 grams silver, 0.16% lead, and 0.76% zinc from 8 metres depth in a hole in the southwest corner of the current prospective area.

Four step-out holes to the northwest designed to test narrow vein structures as a potential underground target failed to return prospective results.

At San Agustin low grade gold, silver, and zinc mineralization is widespread through a dacite dome complex. Disseminated gold and silver mineralization is hosted in a serite-pyrite altered, locally brecciated, massive to flow-banded dome with some quartz veining. Higher grade mineralization dominated by gold appears to be structurally controlled, centred on veins oriented to the northeast. Elsewhere within the dome complex mineralization is dominated by zinc and silver.

The property hosts an historical resource of 11.2 million tonnes averaging 0.96 gram gold and 12.86 grams silver in the Main Zone.

Until recently, Geologix only drilled the Main Zone and Zone II because the company’s option agreement with Silver Standard Resources (SSO-T) means Geologix will have to pay Silver Standard for each ounce of gold and silver in a resource estimate based on 15,000 metres of drilling.

By confining its drilling to a smaller area, Geologix limited its payout. But now, with the option agreement drilling complete and a resource estimate for the Main Zone and Zone II due out shortly, Geologix is free to expand the deposit.

Recent results are from the first holes of Geologix’s planned 20,000-metre Phase III drill program, which will almost double the company’s drilling on the project to date. The planned drilling is a combination of delineation drilling to expand identified mineralization in the Main Zone and Zone II as well as exploration drilling testing targets on strike 800 metres northeast and 200 metres southwest.

Geologix signed the San Agustin option agreement with Silver Standard in 2006. Geologix handed over 1 million shares and spent $2 million on exploration drilling within two years, and agreed to prepare a resource estimate from the drilling results. Based on current metal prices, when the estimate comes out sometime before mid-June Geologix will have to pay Silver Standard US$15 per oz. gold and US$1 per oz. silver in the measured, indicated, and inferred categories.

Provided all obligations are met Geologix will hold San Agustin outright, less a 2.5% net smelter royalty capped at 2 million oz. gold equivalent.

The 576-hectare property lies 85 km north of Durango City via paved road and national power lines run 6 km east of the property.

On news of the latest drill results Geologix gained 5 to close at $1.40. The company has a 52-week trading range of $1.01 to $2.90 and has 50.9 million shares issued.