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A Prospective Canadian Mine in-the-Making Promises to Make 2007 a Banner Year for Geodex Minerals

By Marc Davis, Managing Editor
January, 2007

Geodex Minerals Ltd. (TSX.V: GXM) is a shrewdly managed, Vancouver-based mining junior that has arguably made the most important geological discovery in New Brunswick within the last several years. (See the section entitled: Geodex’s Flagship Project is Shaping Up to be a “Company-Maker”).

This is very significant as Geodex has strategically set its sights on the discovery and development of exotic and expensive metals that are in huge demand. Ones that are also found in the company of other more common-place but likewise highly sought after base metals.

These various different metals share one important common denominator: they are crucial feed for the furnace of the thriving global economy. Hence, demand for each of them is beginning to outstrip supply. And at an exponential rate, which has spurred on surging metal prices.

Ironically, this under-capitalized, low-key Company (http://www.geodexminerals.com/) has been largely overlooked by most of the investment industry. This is because the resource investment sector is dominated by gold bugs who are overwhelmingly preoccupied with companies that are trying to beat staggering odds in the hunt for world-class gold deposits.

This myopic outlook clearly makes Geodex a bargain. And early-stage investors stand to benefit immeasurably from the Company’s excellent potential for the near-term development of at least one “home run” commercial deposit.

On this last note, Geodex is developing one of North America’s very few tungsten-molybdenum-copper deposits. And this is happening, along with all of the Company’s other exploration projects, in the mining-friendly Canadian province of New Brunswick.

This is both a strategically and tactically adept move as molybdenum is a key alloy for reinforcing the steel pipes that are the arteries of the booming oil & gas industry. Not surprisingly, molybdenum’s price has more than quadrupled in just a little over three years.

Meanwhile, tungsten (which has seen a five-fold spike in its spot price within the last four years) has numerous industrial applications ranging from low tech to Space Age uses. And of course, there is an insatiable global demand for copper, particularly for the development of China’s booming industrial infrastructure, as well as its fast-growing urban centres.

Similarly, the Company is also exploring what is believed to be the undeveloped geological extension of the past-producing tungsten-molybdenum-bismuth-tin Mount Pleasant Mine. This is proving to be a particularly fruitful search as it is also revealing the presence of prospectively economic quantities of indium – a historically overlooked 21^st century metal that is a key component of flat-screen, high definition television sets and computer screens.

Geodex is also finding other invaluable metals that have for millennia been the building blocks of Western civilization. Metals like copper, zinc and tin (all of which have seen dramatic price increases within the last four years). These malleable metals coexist with the industrial and New Age metals that are the Company’s primary focus.

Geodex even has some exposure to a buoyant “rising tide” gold market by way of a drill-ready gold exploration project and a grass roots prospect, both of which are also in New Brunswick.

New Brunswick: A Geologically Fertile Land of Largely Untapped Opportunities

The Company is confining its activities to the mining-friendly eastern seaboard province of New Brunswick. Notably, this economically marginalized territory has historically seen very little systematic exploration for metals like molybdenum, tungsten or indium.

This is largely due to the fact that most of the province is covered by a five-metre thick blanket of glacial til that explains the absence of mineralized outcroppings (which have historically been used by prospectors as tell-tail indicators to locate buried ore bodies).

New Brunswick also benefits from excellent infrastructure, particularly in the vicinity of the Sisson Brook and Mount Pleasant West projects. Both of which are in very close proximity to key service centres such as small towns, from which there is easy property access by way of networks of logging roads. Similarly, the properties are also within a couple of hours drive from major cities and are also close to the U.S. marketplace.

Both properties are also located on government-owned land. This is a particularly positive situation in that any future mine permitting applications won’t need to involve the all-too-familiar process of engaging in protracted negotiations with third parties such as indigenous First Nations peoples or any other special interests groups.

On this last note, Geodex Vice President of Exploration, Jack Marr, P. Geo. asserts that the absence of any obvious environmental problems in the development of both of these projects should ensure that their future is not in any jeopardy.

“All told, we have such excellent logistics working in our favour, particularly at the Sisson Brook Property, that this is surely the best location in the whole of Canada to find and develop a mine,” he adds.

Furthermore, the government of this geologically fertile, yet under-explored province has in recent years implemented a number of pro-mining business initiatives to spur on the growth of its economy. This also includes providing Geodex ready access to a wealth of provincial government-compiled exploration databases.

Geodex’s Flagship Project is Shaping Up to be a “Company-Maker”

By far the most intrinsically powerful value driver for the Company’s share price at this time is the jointly-owned, drill-delineated Sisson Brook Deposit. This emerging discovery is where the outlining of a 100 million-tonne tungsten-molybdenum-copper mineral resource is very much in the offing (as we will soon discuss).

That being said, there still exists considerable potential to outline even greater tonnage, especially since the deposit exhibits plenty of scope for further expansion in several directions. Meanwhile, a more modest and much easier to realize target would be 50 million tonnes, which still represents an in situ asset (its value before extraction costs) of approximately US $1.5 billion.

Either way, SmallCapMedia is highly encouraged by the fact that Geodex is now taking major strides to ensure the expedited development of what is on-track to become an extremely valuable mineral asset. Much of this work is taking the form of detailed in-fill drilling, as well as expanding the deposit’s known lateral parameters.

Drilling Reveals Potential for a Very Lucrative, Low-Cost Open Pit Mine

The dollar value per tonne of the mineralized rock at the fast-expanding Sisson Brook porphyry-style deposit may in fact surpass many of the world’s more profitable mines. So suggests recently announced drill results from the deposit’s tungsten and molybdenum-rich Zone III.

Highlights to date for this ambitious 7,500-metre drill program that spans 29 holes (for which results are still pending on 13 holes) suggest the presence of very wide zones of tungsten and molybdenum that consistently reveal widely disseminated, impressively economic grades.

For instance, Hole SB-06-12 has encountered a 248.7-metre interval of 0.035% Mo (Molybdenum) and 0.056% WO3 (the oxide form of tungsten in which it is normally reported). Similarly, Hole SB-06-13 has also yielded a 249-metre section of 0.029% Mo and 0.114% WO3. Meanwhile, Hole SB-06-14 has returned an equally impressive 292.2 metres of 0.038% Mo and 0.058% WO3.

This is all very significant as open pittable bulk-tonnage (low-cost) tungsten-molybdenum mines are especially rare in North America or anywhere else in the world. So Geodex is poised to hit the geological jackpot if the Sisson Brook Deposit continues to evolve into a very manageable-sized, yet prospectively very lucrative commercial deposit.

Sisson Brook Property History

Located in central New Brunswick, the Sisson Brook Property has experienced intermittent exploration dating as far back as 1955. But it wasn’t until 1982 that its true potential began to emerge following extensive drilling by a previous operator, Kidd Creek Mines. Three substantially mineralized zones straddling a linear two-kilometre-long strike length were partially outlined by Kidd Creek Mines over several years of exploration and development drilling. All told, 13 drill holes revealed two copper-tungsten discoveries to the north and a much larger tungsten-molybdenum zone to the south.

Furthermore, these discovery zones fell within the footprints of several sizeable, mutually corroborative geophysical and geochemical targets that suggested the presence of significantly more mineralization. However, a cyclical slump in metal prices back in the early 80’s prompted Kidd Creek Mines to walk away from the property before undertaking any further investigation of these compelling targets.

Notably, a 500-metre-long area that lies directly between the southern and northern mineralized zones was never drill-tested. That is until Geodex embarked upon a $1 million exploration program in 2006 that involved ground-based geophysics followed by 7,500 metres of drilling.

Sisson Brook Deposit Exhibits All the Right Dynamics to More than Double in Size

The main purpose of the 2006 drilling was to successfully expand the mineralized footprint of Zone III, which is by far the largest and best developed of the three discovery zones. This was achieved along strike in two directions and also at depth.

Zone III is now known to be at least 1,000 metres long and up to 300 metres wide with impressive grades running to a vertical depth of at least 200 metres. This is particularly the case with the molybdenum, for which grades appear to improve at depth within a network of sheeted quartz veins

In essence, the drilling has revealed much wider and deeper zones of mineralization than were previously known to exist. This reinforces the viewpoint that the property is amenable to open-pit mining, which translates into the prospect of a low-cost, quarry-like mining operation. One that would enjoy a further major cost-cutting benefit in the form of the economies of scale that can be realized from bulk tonnage excavation.

Furthermore, much of the drilling that was conducted in 2006 involved in-fill drilling along 100-metre intervals. With some assays still pending, these results are helping to develop a better understanding of the overall size and grade of Zone III.

This zone is also where Kidd Creek Mines outlined a historic resource estimate of 35 million tonnes within an originally much smaller mineralized footprint. (This resource estimate is for reference purposes only as it is not National Instrument (NI) 43-101 compliant. That is to say that it does not satisfy Canadian federal government guidelines for an accurate mineral resource estimate).

Hence, Geodex is now committed to developing a National Instrument (NI) 43-101 compliant inferred resource estimate for Zone III during the first quarter of 2007. (NI 43-101 is a Canadian federal government guideline for an accurate mineral resource estimate.) This is with a near-term view to outlining at least a 50-million-tonne resource.

Moreover, the advent of an aggressive and ambitious $5 million exploration and development program this year also promises to outline the overall potential for the whole property.

This includes extensive drilling of Zones I and II, as well as the emerging northern extension of Zone III. This new target area is believed to connect all three mineralized horizons over a two-kilometre long mineralized horizon or strike length. All told, a 100-million-tonne resource is expected to be successfully outlined before the year’s end.

The $5 million work program also includes bulk sampling to test grade continuity, as well as an early-stage economic viability assessment known as a scoping study, much of which will take place in the spring of this year.

This will be followed by environmental studies and metallurgical testing (aimed at proving that the deposit’s metal content is amenable to low cost recovery methods), and the design of a mining pit. This extensive developmental work will culminate in a pre-feasibility study (a preliminary blueprint for a mine) by the year’s end.

The Discovery of a Prolific New Mineralized Zone is Within Geodex’s Sights

A number of Geodex’s drill results in the northern portion of Zone III suggest that this emerging mineralized structure is oriented towards the 500-metre-long untested area that occupies the ground in between all three known mineralized zones.

In other words, all three mineralized zones may in fact be contiguous i.e. adjoining. Indeed, the revelation of a strong geophysical anomaly overlying this area considerable credence to this theory.

In essence, this milestone development opens the door to the significant expansion of the deposit’s overall size and scope. The fact that this is a porphyry-style deposit (albeit one that is unusual in its linear configuration) is particularly encouraging in that it suggests that much of the mineralization is disseminated and widespread.

This scenario makes the deposit particularly amenable to an open-pit bulk tonnage mining operation. And the fact that much of mineralization begins within five metres of the surface further boosts the economics in favour of a relatively inexpensive open pit mine.

These positive results have to date validated the Company’s decision in late 2004 to sign a joint venture agreement with Champlain Resources which allows Geodex to earn up to a 70% ownership of the property. This requires the expenditure of $2 million in exploration work by the end of 2008, as well as a modest cash payment of $200,000.

The “Big Picture” at Sisson Brook

With a “big picture” target of 100 million tonnes expected to emerge in the coming months, Geodex is determined to make great strides this year. As mentioned earlier, this is scheduled to culminate in the completion by December of a pre-feasibility study that will upgrade pending resource estimations from an inferred category to a much more definitive measured and indicated category.

The implications of outlining a richly mineralized deposit of up to 100 million tonnes in size within the next 12 months explain the twinkle in the eyes of Geodex Vice President of Corporate Development, Chris Anderson, when he met with SmallCapMedia.

“The dollar value of the rock at Sisson Brook is on par with or even better than many of the world’s best known mines. At this point, we’re averaging nearly 180 metres of US $35 a tonne rock. But we’ve also found 100-metre mineralized intercepts running to US $50 a tonne,” he says.

“And our operating costs at around a projected $10 per tonne promise to be among the lowest not just in Canada but anywhere in the world. Meanwhile, our share price is a fraction of all the companies that own all these other very profitable mines. And we’re fully expecting to outline a very big deposit. So, I truly believe that we’ve got a tiger by the tail.”

Interestingly, the Company has also encountered significant gallium intersections averaging 23 grams per tonne in Hole SB-06-03. This is a metal that is extremely valuable (it trades at around $0.50 per gram) and is used in the high tech sector. Management believes that it is likely present throughout Zone III and it may prove to be an added sweetener to the overall value per tonne of rock at Sisson Brook.

Excellent Infrastructure Already in Place

The property is situated on federal government land within one hour’s drive of Fredericton, the provincial capital (see the section above entitled: New Brunswick: A Geologically Fertile Land of Largely Untapped Opportunities). Notably, it also lies in flat or gently rolling bush country not far from several small towns and has a local power line crossing the property, as well as an ample supply of water. There is also a network of logging roads traversing the property and a railway line immediately to the north.

Likewise, the Mount Pleasant West project (which we are about to discuss) also benefits from robust logistical dynamics such as $115 million worth of mining infrastructure at the nearby decommissioned Mount Pleasant Mine. Located in the southwestern part of New Brunswick, the project is also only a short distance by road from both the port city of Saint John and the border with the State of Maine.

Mount Pleasant West Project Overview

Geodex controls a block of hundreds of claims involving six joint venture agreements with other companies, as well as wholly-owned prospects encompassing a 200-square-kilometre area. Most of which lies immediately to the west of the past-producing Mount Pleasant Mine (1983-1985) in southwest New Brunswick. However,

The mine, which was formerly owned by Billiton Exploration Canada Ltd., boasted $115 million worth of infrastructure, much of which is still in place. However, one of the century’s most dramatic across-the-board collapses in metal prices in the early to mid 80’s forced the premature closing of the mine.

As a side note, the Mount Pleasant Mine was originally developed for its reserves of tungsten and molybdenum. Indium was not of great interest at that time. But now it is in high demand in the consumer electronics industry, which is providing added impetus for Geodex to develop a good understanding of where the greatest concentrations of indium are located within its land package.

Unearthing a World-Class Indium Resource?

A more recent re-evaluation of the Mount Pleasant Mine’s still far-from-depleted mineral inventory suggests that it hosts the largest high-grade indium resource in the world. In fact, it may contain as much as one third of the world’s known indium reserves. Notably, there has been a dramatic improvement in the price of this New Age metal in the past few years.

Extensive government mapping and previous exploration activity demonstrates that there are many other mineral prospects and discoveries, including indium, within a 20 kilometre-long belt to the west of the mine. This is where Geodex’s expansive claim holdings are situated.

Hence, the Company undertook a $750,000 exploration program in 2006 involving extensive ground-based geophysics, soil sampling and prospecting. All of which narrowed down Geodex’s search from 14 original prospects to half a dozen high-priority targets. They include vein structures, mineralized boulders and geochemical anomalies that are now the focus of a 2,000-metre winter drill program that began in December.

The key target areas include an 800-metre long zinc and indium soil anomaly that occurs in the vicinity of zinc and lead-bearing boulders at surface, as well as float samples of up to 20.3% tin. Known as the Pug Hole-Whopper Zone, this prolific anomaly is immediately adjacent to and within a few hundred metres of the Mount Pleasant mine property. It will be the focus of at least 50% of all of the ongoing drilling.

Another key anomaly entails the surface expression of a sheeted quartz vein, the Pomeroy Vein, which can be traced to surface. This is where values from a trench spanning a 250-metre-long strike length run as high as 1240 grams per tonne of indium and 8% zinc, as well as 0.94% tin.

The Pomeroy Vein -- which is situated a few kilometers to the west of the former mine -- will also be drill-tested at depth. This is an important strategy as the tin and tungsten lenses at the Mount Pleasant Mine generally are not present at surface but develop at a depth of about several hundred metres. Geodex believes that a similar scenario is likely the case for the tin and tungsten at its Mount Pleasant West target zones.

Blue Sky Potential Offers Lustre to Geodex’s Gold Projects

Investors are offered plenty of blue sky potential by way of a grass-roots gold prospect known as the Harry Brook Property, where prolifically high gold-in-stream anomalies have recently been encountered.

The Annidale-Harry Brook area is a gold-laced belt of rocks which appears to be structurally controlled by a major fault system in south-central New Brunswick. The Company controls three properties along a 10-kilometre section of this mineral belt.

This “corridor of hope” has only seen sporadic exploration over the years. However, the most notable exploration highlight for this region only came about in the fall of 2005. It attests to the presence of an as-yet undiscovered gold system that is the source of one of the highest gold assays ever found in this district.

Specifically, we’re talking about a provincial government assay result of 1320 grams per tonne (nearly 40 ounces per tonne of gold) from a boulder. This opens the door to the probably existence of at least one particularly high-grade deposit on or in the vicinity of Geodex’s land holdings.

Geodex has staked 41 claims in and around the boulder and along the northeasterly mineral structures that may be related to this key find. The Company plans to use soil sampling and prospecting to identify targets which will be individually tested later in the summer by diamond drilling.

Elsewhere in New Brunswick, Mantra Mining Inc. has commenced drilling on Geodex’s Armstrong Brook gold property, which is located near the city of Saint John’s. Mantra can earn a 65% interest in the property by paying Geodex cash and shares over a period of two years and by expending $1 million on the property before the end of this year.

Mantra can acquire an additional 10% interest by financing 100% of all exploration and development costs to the stage of completing a feasibility study. Geodex’s joint venture partner is currently drill-testing a deep target at the Silica Zone, located 600 metres north of an open-pit gold mine which operated on the property from 1985 to 1988. This large geophysical target was found below the Silica Zone by Geodex in 2004.

Investment Summary

On a corporate note, the Company benefits from a seasoned and accomplished management team and Board of Directors that collectively have well nearly two century’s worth of experience in all areas of the mining business. Their talents are augmented by an illustrious Advisory Board that also collectively benefits from over a century in the mining industry.

From a technical perspective, Geodex has a relatively tight share structure with approximately 35.58 million shares outstanding (about 43 million shares fully diluted). Such a situation, matched with positive news flow, typically acts as a potent catalyst to high share price valuations. On this note, there should be no shortage of meaningful news flow in the coming months that promises to ensure a pronounced upwards trend for the Company’s share price.

All told, the Company’s various projects also offer enough near-term blue sky potential to ensure that 2007 will be an especially upbeat year. One that promises to become a banner year once the Company successfully outlines an extremely valuable and impressively-sized mineral inventory at the Sisson Brook Deposit.

In turn, such a major milestone development should go a long way towards greatly enhancing the odds in favour of the successful commercialization of this mine-in-the-making. Accordingly, SmallCapMedia expects Geodex Minerals’ share price to be a strong performer this year.