Last week Geologix Explorations announced they are now evaluating a new engineering concept and an alternative processing procedure for their flagship Tepal gold-copper project in Michoacan state, Mexico.

Analysts expected the Tepal project to reach production in 2014. But with the news from last week, further delays and some additional costs are now expected with the long-awaited prefeasibility study (PFS). The company has engaged JDS Energy & Mining, a new lead engineering firm, to complete the study which is now slated for the first quarter of 2013.

Dunham Craig, president and chief executive officer of Geologix (Stock Profile – TSE:GIX & OTC:GIXEF) stated,”In the process of the study, our consulting engineers have recommended review of several areas that offer potential benefit to the project. Although we recognize that delays have caused uncertainty for some investors, the primary purpose of this PFS is to accurately evaluate and understand the potential mine plan and economics in a manner that will permit the company to subsequently advance from PFS to a bankable feasibility stage as efficiently as possible.”

In response to the news, Raymond James analyst Gary Baschuk writes in an updated report today, “We are reducing our target on Geologix to $0.40 (from $1.10) and our rating to Market Perform (from Outperform) based on the lack of successful exploration drill results and expected capital increase associated with potential construction of the Tepal gold/copper project. While the company is advancing on the development front with a [PFS] on Tepal, we believe GIX needs to restart the exploration process with a new acquisition.”

The company maintains other projects in Mexico, Peru and Nevada but for the past few years the focus has been on developing Tepal. Since the announcement, shares of Geologix have been drifting lower and are currently trading at $0.175, a half a penny above its 52 week low.