Terms of the Purchase Transaction:
The principal terms of the transaction are as follows:
Effective April 4, 2011 Geologix delivered the final payment and fulfilled all obligations under the property purchase agreement and earned a 100% interest (subject to a 2.5% NSR) in the 138 square kilometre Tepal property.
Under the Agreement Geologix advanced to Arian Silver Corp. the sum of US$517,500 which was used by Arian to complete an outstanding underlying option payment due to the property vendor (US$450,000 plus the applicable IVA of US$67,500). The advance was made by the Company to Arian as an interest free loan and applied against the eventual purchase price as described in the following paragraphs.
In consideration for the loan, Arian granted Geologix a five month exclusivity period during which Geologix completed its due diligence of the property. Following completion of its due diligence review of the property, Geologix elected to acquire the property from Arian on an option basis for a total consideration of US$3-million, payable to Arian in two installments. The first installment consisted of US$725,000 cash and 3,434,193 common shares of the Company to Arian has been completed, and Arian has advanced to Geologix the sum of US$517,500 as full repayment of a loan delivered to Arian by the Company in September 2009. The remaining payment obligations was a payment of US$1.55 million on or before February 23, 2011, payable at Geologix's election in cash, or up to 50% in Geologix shares valued at the 10-day average closing price of the Company's shares immediately prior to the time of each payment.
Geologix assumed the balance of Arian's obligations under the terms of an underlying property option agreement whereby Geologix completed payments to the underlying property vendor in order to earn its 100% interest in the property.
The Tepal claims are subject to a 2.5% net smelter return ("NSR") to the underlying vendor, Minera Tepal S.A. de C.V. Under the terms of the NSR agreement, Geologix has a right of first refusal to purchase the NSR from Mineral Tepal.
