On July 8, 2010 the Company signed a definitive agreement with Rae Wallace Mining Co. ("RWMC") granting RWMC the option to purchase all of the Company's Peru properties and equipment (except for the La Joya property). The optioned projects are Liscay, San Filipe, Sura, Cayhua, Toro Blanco, Tarajita, Lachoc, and Miko.
Rae Wallace Mining Company ("RWMC"), .a private company incorporated in Idaho, USA in 1916 and under new management since 2007. RWMC is currently lead by President and CEO, George Cole, a 35 year veteran of the mining industry and former Vice President of Exploration at Cominco American Inc., and Vice President, Steven Friberg, a former consultant with over 35 years in the mining industry.
The transfer of the properties was completed on the following terms and payment schedule:
US$30,000 on signing of the LOI (paid).
US$67,500 on or before May 31, 2010 (paid). The Company agreed to use this payment to renew the Property's concessions (paid).
That number of Shares of RWMC valued at US$250,000, distributed, as follows:
RWMC completed the issuance of 1,000,000 shares valued at US$250,000 ($CDN 261,150) and 500,000 share purchase warrants exercisable at $ 0.375 per share. The fair value of the warrants of $78,316 was calculated using the Black-Scholes valuation method. The weighted average assumptions used for the Black-Scholes valuation of warrants were annualized volatility of 104.31%, risk-free interest rate of 1.5%, expected life of 2.23 years, dividend rate of Nil. The value of the shares and warrants were allocated to Long Term Investments and Mineral Property Recovery. At December 31, 2010 the value of the warrants was adjusted to $33,358 and the adjustment was allocated to Long Term Investments and Unrealized Loss on Investments.
If RWMC should sell, lease, transfer, convey or otherwise dispose of the property in any agreement or option terms with a third party within one year from March 8, 2010, RWMC shall pay the Company 20% of the proceeds when received by RWMC. On August 18, 2010 the Company received US$30,000 from RWMC in reference to an option agreement RWMC signed with a third party included in the recovery on the Liscay property.
RWMC purchased the equipment of Geologix Peru and US$35,000 of the total proceeds received by the Company were assigned to the sale of the equipment.
RWMC acknowledges the NSR agreement owing to Newmont Peru S.R.L. ("Newmont") on the Liscay and Newmont Alliance properties and agrees to accept title to the properties subject to the terms of that royalty
Liscay Property
Introduction
The Liscay Property covers a large area of precious-metal-bearing low-sulphidation epithermal veins and vein swarms. Altered wall rocks and isolated altered outcrops with no clear relationship to the veins have also been found to carry precious metals indicating potential for bulk-tonnage, disseminated-style mineralization as well.
Details of the Liscay Property
High grade gold and silver mineralization has been identified at the Liscay project in Central Peru. Detailed sampling of the numerous veins has returned values up to 76.6 g/t gold and 1,205 g/t silver across 1.3 metres from an area where previous reconnaissance sampling had yielded 7.2 g/t gold, 304 g/t silver and 1.2 g/t gold, 748 g/t silver across similar widths. A new zone of epithermal veining with high precious-metal values has also been discovered located approximately 6 kilometres to the southwest. Values up to 27.5 g/t gold, 1,110 g/t silver over 0.4 metres and 0.8 g/t gold, 736 g/t silver across 1.5 metres have been detected in limited sampling within the new zone.
To date a total of approximately 780 rock samples have been collected by Geologix on the project, 435 samples in the NE epithermal zone, 321 samples in the Central mesothermal zone and 24 samples in the SW epithermal zone. Statistics show gold and silver dominated mineralization in the epithermal zones with 14% of the samples in the NW Zone grading higher than 0.5 g/t Au and 21% grading higher than 10 g/t Ag. In the SW Zone 38% of samples grade higher than 0.5 g/t Au and 54% of samples grade higher than 10 g/t Ag.
Geological mapping shows intense and extensive vein development in several areas on the Liscay property. Currently defined vein swarms lie within an area of 12 x 6 kilometres and the ultimate extent of mineralization is yet to be determined. Individual zones of veining and stockwork development have been found with dimensions up to 300m by 3 kilometres.
An initial program of diamond drilling commenced in November 2008 and Review of the results to evaluate further requirements of additional exploration was completed in the first two quarters of 2009. The review indicated that targets remaining for additional testing are not of the size requirements of Geologix. The concessions pertaining to the Liscay project remain in good standing for potential farm-out to interested third parties.
San Felipe
Introduction
Geologix identified San Felipe through regional reconnaissance early in 2004. Little evidence of significant past prospecting was evident in the field at the time of identification and acquisition. Geologix has since completed surface rock and soil sampling, reconnaissance and detailed geologic mapping, and Pima alteration studies.
Details of the San Felipe Property
Both high and low sulphidation precious-metal-bearing systems are present; the latter superimposed on the high sulphidation system. A large Oligocene-age andesitic dome underlies the western side of the concession with gold mineralization occurring in silicified ribs (high sulphidation), and pebble dikes and quartz veins (low sulphidation). NNW structures cross the property and along trend to the north lies Castrovirreyna, a producing polymetallic vein district, and to the south, Geologix's Sura property, another high-sulphidation precious-metal prospect.
Rock chip sampling has detected gold anomalies up to 0.74g/t from the high sulphidation system and 0.24 g/t in low-sulphidation veins. Arsenic, antimony, and mercury are associated with the higher gold values. Targets include high-sulphidation style bulk-mineable replacements within receptive stratigraphy proximal (or masked under) the margin of a dome, and high-grade low-sulphidation veins cutting domal rocks. Geophysical surveys are proposed to identify drill targets.
Sura
Introduction
The Sura concessions cover a portion of a very large zone (or more likely coalescing zones) of high sulphidation style hydrothermal alteration hosted in volcanic rocks.
Details of the Sura Property
Reconnaissance geological mapping and rock sampling have returned low-level gold anomalies (to 0.12 g/t Au). Follow-up grid soil sampling completed over the area of the best rock anomalies has defined a large coherent northwest-trending gold-in-soil anomaly 300 metres wide and 550 metres long. Sample values within the anomaly average 0.07 g/t Au with individual samples containing 0.02 to 0.17 g/t gold. The anomalous trend appears to continue, although less well defined, over the total length of the grid area, or in excess of 1.5 kilometres in length and 200 - 300 metres in width. Additional sampling is required to better define the overall extent and magnitude of the anomaly. Follow-up geological and geophysical investigations are planned.
Cayhua
Introduction
Geologix's Cayhua concession lies adjacent to the Corihuarmi high-sulphidation, volcanic-hosted deposit currently under development by Minera IRL of Australia. Corihuarmi hosts an estimated mineable resource of 300,000 ounces of gold.
Geologix located the Cayhua concession in 2004 after investigation revealed open land in close proximity to known gold mineralization at Corihuarmi. Geologix has completed reconnaissance scale geologic mapping and rock chip sampling.
Details of the Cayhua Property
Geologix's property at Cayhua lies immediately adjacent to a stratabound ore zone at Corihuarmi. This zone may extend onto Geologix property via down faulting. Mineralized talus, a target for production by IRL and shed from the outcropping mineralized zone, is also present on Geologix's ground. Sampling of glacially denuded subcrop and talus on Geologix's property has returned low-level gold anomalies (0.05 - 2.3 g/t) consistent with know results over the main ore zones at Corihuarmi.
While a natural for joint development with IRL, to date no agreement has been negotiated. Should this situation continue, a plan including geophysics and drilling will be proposed to identify significant mineralization within Geologix's portion of the system.
Toro Blanco
Introduction
Toro Blanco is a high sulphidation precious-metal prospect with low-sulphidation overprinting hosted in Tertiary-age volcanic rocks. Disseminated precious-metal targets include high-sulphidation style replacements within silicified and vuggy silica altered sequences as well as cross-cutting, potentially porphyry-related, low-sulphidation quartz stockworks.
Details of the Toro Blanco Property
Precious-metal bearing alteration exposed at the higher elevations at Toro Blanco consists of vuggy silica and alunite typical of high sulphidation deposits. Anomalous gold concentrations are also found in low-sulphidation quartz stockworks common in lower elevation exposures suggesting a transition to a porphyry environment. Pima alteration studies indicate lower temperature clay assemblages predominate within the high-sulphidation target suggesting the best precious-metal concentrations could lie at shallow depth where higher temperatures would be expected. Over-printing of low sulphidation stockwork-hosted mineralization indicates multiple precious-metal mineralizing events and the possibility of remobilization and upgrading.
Geochemical sampling from Toro Blanco has identified a zone of anomalous gold values within an area 1 by 1.5 kilometres. Values range from 0.02 to 1.0 g/t gold. Detailed geologic mapping followed by geophysical targeting are recommended.
