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BONANZA GOLD
PROJECT ACQUISITION AGREEMENT
BETWEEN
GALAXY MINERALS INC.
AND
SEARCHLIGHT EXPLORATION, LLC.
Dated as of March 14, 2005
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PROJECT ACQUISITION AGREEMENT
This PROJECT ACQUISITION AGREEMENT (this "Agreement"),
dated as of
March 14, 2005 is made by and between Galaxy Minerals Inc.., a Florida
corporation, having offices at 500 Park Ave.,
Suite 203, Lake Villa,
IL 60046
U.S.A. ("Company") and
Searchlight Exploration LLC, an Arizona limited
liability
company with offices at 5821
Pristine Falls Ave., Las Vegas, NV 89131 U.S.A.
("Searchlight" or
"Claimholder") .
1.
Grant of Lease,
Purchase Option and 75% Net Profits Interest. In
consideration for the sum of US$5,000 to be paid
by Company to
Claimholder
on
signing (the "Initial
Payment"),
the further payments
of $10,000 to be paid by
Company to Claim holder
quarterly during the Lease Term ("Quarterly Payments"),
250,000 shares of common stock of Galaxy Minerals Inc. and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Claimholder hereby leases the unpatented placer and / or lode
mining claims known as the
Bonanza Gold Project
(which includes the
Burnt Well
Project) and more
particularly described in Exhibit A hereto (the "Property")
to
Company (the "Lease") and grants to Company a 75% net
profits interest and
an
exclusive irrevocable option (the "Purchase Option") to
purchase the Property,
each on the terms and
conditions set forth below. Provided the Initial Payment
has been made, the term of the Lease shall commence on the date hereof and,
provided that all Quarterly
Payments are made,
shall run to and including March
15, 2008 (the "initial
term"), with the right of Company at its option to
extend
the Lease for up to three (3)
additional three year
terms on the same terms and
conditions to and including
March 15, 2017 (an "extended term") (the initial and
extended terms being
hereinafter referred to as the "Lease Term"). Company
shall
have the right to sooner
terminate the Lease
pursuant to Section 6 and, subject
to Section 15 below,
to exercise the
Purchase Option
pursuant to Section 7
at
any time during the Lease
Term. The Purchase
Option may be exercised by Company
only upon the delivery to
Claimholder
of each of (a) a
"positive"
feasibility
study for the Property,
(b) corporate
resolution of the Company (and any parent
company thereof) evidencing
an affirmative
production decision for the Property
and (c) evidence satisfactory to Claimholder that Company has obtained
the
financing necessary to
develop and operate the Property. Upon transfer of title
pursuant to exercise of the
Purchase Option, the Lease shall terminate.
1A.
Additional
consideration made
payable no later than 10 days from the
date this
agreement is dually
signed, Galaxy Minerals Inc. will pay a
locator
fee to Serpent Mining
Limited in the Sum of 50,000,000 Shares of
Stock
Subject to Restriction under SEC rule 144.
2. Title
to the Property.
A.
Claimholder hereby represents and warrants to Company as
follows:
(i)
Claimholder owns or is able to convey a full and undivided interest
in
and to each of the unpatented
mining claims
included in the
Property as of the
date hereof;
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<PAGE>
(ii) To
the best of the knowledge, information and belief of
Claimholder,
all such claims have been
validly located and
maintained in accordance with all
applicable laws and
regulations;
(iii)
All such claims are free and clear of all liens, claims, and
encumbrances whatsoever, subject only to the paramount
interest of the
United
States of America and / or
the State of Arizona; all taxes, if any, which may be
or which may become a lien
upon the Property, as
of the date hereof,
have been
paid;
(iv) The
Property is not in any manner encumbered as a result of any
conduct or activity of
Claimholder;
(vi)
Having secured the approval of its sole member to the terms and
conditions of this
Agreement,
Claimholder
has full and complete
authority
to
execute this Agreement and to
grant the rights herein conferred on Company; and
(vii)
Claimholder
has no knowledge that any of the mining claims
comprising the Property are
invalid, or that,
except for patented
ground lying
within the Project Area and
the senior unpatented
claims of E. Mack
comprising
the Rawhide Mine which
conflict with the SMG#1 and SMG#2 claims, there are
other
senior mining claims in
conflict with any of such claims.
3. Lease
Payments and Other Payments.
A. During the Lease Term, Company shall make the following
payments
to Claimholder, which shall constitute a portion of the
purchase price for the
Property:
(i) The Initial Payment of $5,000, on signing; and
(ii) The Quarterly
Payments each in the amount of $10,000,
payable on June 15,
September 15,
December 15 and March
15 of each year during
the Lease Term, commencing
with June 15, 2005.
B. Following Company's exercise of the Purchase Option under
Section
7 and resulting termination
of the Lease as provided in Section 1, Company shall
pay to Claimholder (i) the Claimholder's net profits interest (NPI) under
Section 8A and (ii) the
Claimholder's
net smelter
return (NSR)
royalty
under
Section 8B. Company's
obligation to make payment under Section 8A and Section
8B
shall cease to accrue on the first to
occur of (i)
completion by
Company of
mining operations, residual
leaching and reclamation in the Project Area or (ii)
other decision of Company to terminate
operations
in the Project Area
and, if
Claimholder so desires, to
reconvey the property to Claimholder once reclamation
and other environmental
obligations have been satisfied, although this provision
shall not relieve
Company from its
obligation
to make payments that accrued
prior to such
occurrence.
C. All payments shall be paid in US$dollars in immediately
available
funds.
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<PAGE>
D. Company hereby represents and warrants to Claimholder that it
has
adequate financial resources
to make the payments required under this Section 3,
as well as the Work
Expenditures
required under Section 4.
E. Company shall
reimburse Searchlight
on or before April 1,
2005
for the cost of staking and
filing the 18 lode claims located in December 2004
in the Project Area at the
rate of $150 per claim.
F. Company shall also deliver to Searchlight, on or before April 1,
2005, 250,000 shares of common stock of Galaxy
Minerals Inc.
("GAXY"), said
number to be increased
proportionally
in the event of any
stock splits by GAXY
between the date of this
Agreement and the date
of delivery of the shares. The
shares shall be validly
issued, fully paid and
nonassessable. The
shares shall
be duly endorsed to
Searchlight, with
accompanying stock
powers, but shall
be
restricted and eligible for
resale pursuant to
Rule 144 in accordance with said
rule. Company shall use its best efforts to induce GAXY to comply with its
reporting obligations under applicable securities law so as to enable
Searchlight to utilize Rule 144 for resale of the shares following the
applicable holding
period.
4. Work
Expenditures.
During the Lease Term,
until terminated by Company
under Section 6 or until the
Purchase Option is exercised under Section 7,
Company shall make work
expenditures ("Work Expenditures") on or for the benefit
of the Property in the
following amounts:
A. The sum
of $100,000 on or
before March 15,
2006. This is a
firm commitment. If
Company fails to perform the total amount
of such Work
Expenditures, Company
shall pay Claimholder the
deficiency in immediately available funds.
B. The sum
of $100,000 on or before March 15, 2007.
C. The
sum of $100,000 on or before March 15 of each year
thereafter.
Any excess of Work
Expenditures
in any year
shall be carried forward to the
succeeding year. If Work Expenditures in any year after the
period ended March
15, 2006 are deficient and Company desires to maintain the Lease and
Purchase
Option in effect, Company
shall pay Claimholder in immediately available funds a
sum equal to the deficiency in lieu of the Work Expenditure shortfall. For
purposes of this Agreement, "Work Expenditures" is defined as sums spent
or
incurred by Company
directly on the
Property for exploration and development of
the Property, including
drilling, geochemical
sampling, geophysical
or seismic
survey, assaying, and ore reserve calculation; metallurgical and
engineering
analyses; environmental and permitting analyses and activities; feasibility
studies; and financing
investigations;
plus 5% of such direct
costs in lieu of
headquarters overhead and
general and administrative expenditures.
5. Rights
and Obligations
During Lease Term.
The parties shall have
the
following rights and
obligations during the Lease Term:
A. Access to Property and Provision of Data. Company shall have
full
access to the Property to conduct such investigations and examinations as
Company may deem desirable and to all information and data in Claimholder's
possession and control pertaining to the Property necessary or desirable
to
enable Company to fully
evaluate the Property
and its commercial
feasibility.
Claimholder agrees to
cooperate fully with Company in its investigation.
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<PAGE>
B. Activities by Company. Company shall have exclusive possession
of
the Property, subject to the paramount rights of
the United States and / or the
State of Arizona with respect to unpatented mining claims included in the
Property, and shall have the exclusive right to conduct such exploration,
evaluation, and development
activities on the Property (including bulk sampling)
as Company may desire. Claimholder shall provide at Company's expense all
reasonable assistance to
Company for the obtaining of any permits, licenses, and
third party consents needed
for such work. Company
shall also have the right to
contact the pertinent
federal, state, and local permitting agencies, and to
negotiate with such
agencies.
C. Maintenance of Property. Company shall maintain in good
standing
all unpatented mining claims that comprise the Property.
Company shall, as
required by the Federal
Government with
respect to unpatented
mining claims on
federal lands, perform required assessment work or timely pay all claim
maintenance or rental fees and all required
property taxes, and shall timely
make all filings and
recordings in the appropriate governmental offices
required
in connection with such payments. In the event Claimholder makes any such
payment (although it shall have no
obligation to do so), Company shall promptly
reimburse Claimholder for payment of such
holding costs upon receipt by Company
of evidence of such
payment. Company shall have the right to
amend or relocate
in the name(s) of
Claimholder
any unpatented mining claims included in the
Property, to locate different types of claims on ground
covered by
existing
claims, and to locate any
fractions.
D. Sharing of Data. During each year of the Lease Term, Company
will
share with Claimholder all information (including interpretive and
non-interpretive data, subject to typical
disclaimers
regarding interpretive
data and statements
that Claimholder may not rely upon the
same) obtained from
the exploration, evaluation, and development activities pertaining to the
Property, including providing a copy of any geological and other principal
reports relating to the Property,
and will report to
Claimholder in writing at
least quarterly regarding the progress of the
exploration and
evaluation work
and Work Expenditures made
during the period.
E. Claimholder
Access to Property.
Claimholder may have
access to
the Property at its sole risk on
reasonable
notice, and shall be entitled
to
conduct tours of the Property
for investor relations
and financing
activities.
Claimholder's exercise of its access rights
shall not interfere in any way with
Company's operations on the Property,
which shall take
precedence in the event
of any conflict.
F. Conduct of
Operations
by Company at the
Property. All of the
exploration, development, mining, milling and related work and any other
activities which may be performed by Company or its agents or contractors
hereunder shall be performed in accordance
with all of the terms and conditions
of this Agreement and good
mining practices, but
the timing, nature, manner and
extent of any exploration, development or any other operations or
activities
hereunder shall be in the sole discretion of Company, and there shall be no
implied covenant to begin or
continue any such operations or activities.
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G. Indemnity. Except
for damages sustained
by Claimholder while on
the Property pursuant to Section 5F., Company agrees to indemnify and hold
Claimholder and its affiliates, and their respective, officers, directors,
employees, agents, members, partners and agents harmless from
and against any
loss, liability, cost, expense or damage (including
reasonable attorney's fees)
that may be incurred for
injury to or death of persons or damage to property, or
otherwise, as a result of Company or its
agents or contractors
conducting
any
operations on or in
connection with the Property.
H. Insurance. Company
agrees to carry such insurance, covering all
persons working at or on the
Property for Company, as will fully comply with the
requirements of the statutes of the State of Arizona
pertaining
to worker's
compensation and occupational
disease and disabilities as are now in force or as
may be hereafter amended or enacted. In addition, Company agrees to carry
liability insurance with
respect to its operations at the Property in reasonable
amounts in accordance
with accepted
industry practices. Company agrees that
Claimholder shall be named as an additional
insured on all such
policies,
and
agrees to forward to
Claimholder
certificates of such
insurance policies not
later than 10 days prior to
the date that Company
commences any such activities
on the Property. Company shall have no right to commence
any such
activities
until such certificates are
delivered to Claimholder.
I. Compliance with
Laws. Company agrees
to conduct and perform all
of its operations at the Property during the term of this Agreement in
compliance with all valid and
applicable federal,
state and local laws,
rules
and regulations, including without limitation laws, rules and regulations
pertaining to environmental protection, human health and safety, social
security, unemployment compensation, wages and hours and conditions of
labor,
and Company shall indemnify
and hold Claimholder
harmless from and
against any
loss, liability, cost, expense or damage (including
reasonable attorney's fees)
arising from or related to
Company's failure to comply with said laws.
J. Taxes. During the term of this Agreement, Company shall be
responsible for payment of all taxes levied or assessed upon or against the
Property, as well as any
facilities or improvements located
