OPTION AGREEMENT
BETWEEN
LA TEKO RESOURCES LTD.
LA TEKO RESOURCES, INC.
SILVERADO GOLD MINES LTD.
AND
SILVERADO GOLD MINES INC.
DATED AS OF
DECEMBER 19, 1997
SCHEDULES
SCHEDULE "A" LIST OF CLAIMS
SCHEDULE "B" COPIES OF UNDERLYING AGREEMENTS AND PERMITTED
ENCUMBRANCES
SCHEDULE "C" FEASIBILITY AND PERMITTING PLAN
SCHEDULE "D" LIST OF PERMITS
SCHEDULE "E" COPY OF RECLAMATION PLAN
EXHIBITS:
EXHIBIT "A" ESCROW AGREEMENT
OPTION AGREEMENT
THIS AGREEMENT is made as of the 19th day of December, 1997
BETWEEN:
LA TEKO RESOURCES LTD., a corporation incorporated under the laws of British
Columbia, Canada (hereinafter called "La Teko")
OF THE FIRST PART
AND
LA TEKO RESOURCES, INC., a corporation incorporated under the laws of Nevada,
U.S.A.(hereinafter called "La Teko Inc.", and collectively with La Teko called
the "Vendors")
OF THE SECOND PART
AND
SILVERADO GOLD MINES LTD., a company incorporated under the laws of British
Columbia, Canada (hereinafter called "Silverado")
OF THE THIRD PART
AND
SILVERADO GOLD MINES INC., a corporation incorporated under the laws of Alaska,
U.S.A.(hereinafter called "Silverado Inc." and collectively with Silverado
called the "Purchasers")
OF THE FOURTH PART
WHEREAS:
A. La Teko Inc. is the owner of and has the exclusive right to deal with
and dispose of, free of any and all agreements, liens, charges and encumbrances,
except as expressly stipulated herein, approximately 79 mineral claims, located
on the southeast flank of Ester Dome, approximately eight miles west of
Fairbanks in the State of Alaska, as more particularly described in Schedule "A"
attached hereto;
X. Xx Xxxx Inc. wishes to grant to Silverado Inc. an option to acquire
all of its right, title and interest in and certain rights to prospect, explore
and evaluate the Mining Property subject to the terms and conditions hereinafter
provided;
X. Xx Xxxx and Silverado entered into a Letter of Intent dated July 10,
1997 for the purpose of granting Silverado an option in respect of the Mining
Property and the parties now wish to enter into a more formal and comprehensive
Option and Purchase Agreement;
X. Xx Xxxx Inc. is a wholly owned subsidiary of La Teko and Silverado
Inc. is a wholly owned subsidiary of Silverado.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the recitals and
of the mutual covenants and agreements hereinafter contained, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 In this Agreement, unless there is something in the subject matter or
context inconsistent therewith;
(a) "Affiliate" means any person, partnership, joint venture, corporation
or other form of enterprise which directly or indirectly controls, is controlled
by, or is under common control with, a Party. For purposes of the preceding
sentence, "control" means possession, directly or indirectly, of the power to
direct or cause direction of management and policies through ownership of voting
securities, contract, voting trust or otherwise;
(b) "Agreement", "herein", "hereby", "hereof', "hereunder", and similar
expressions mean or refer to this Agreement or instrument supplementary or
ancillary hereto; and the expressions "Article", "paragraph" or "subparagraph"
followed by a number mean and refer to the specified Article, paragraph or
subparagraph of this Agreement;
(c) "Costs" means all costs incurred and monies expended by Tri-Con Mining
Inc. and Tri-Con Mining Alaska Inc. and Tri-Con Mining Ltd. for or on behalf of,
or by, Silverado or Silverado Inc., as the case may be, in doing Work, which
shall include, but not be limited to, all costs incurred and monies expended in
doing geophysical, geochemical, land or geological examinations and surveys in
searching for, digging, trenching, sampling, assaying, testing, working,
developing, mining or extracting Ore, minerals and metals; in doing diamond and
other drilling; in erecting and installing mining plant, ancillary facilities,
buildings, machinery, tools, appliances or equipment; in construction of access
roads or facilities on the Mining Property and the milling plant and ancillary
facilities located off the Mining Property for use in relation to the Mining
Property; in transporting Ore, minerals, metals, personnel, supplies, mining or
milling plant, buildings, machinery, tools, appliances or equipment in, to or
from the Mining Property; in paying wages and salaries (including "fringe
benefits") of contractors, subcontractors and other personnel engaged in
performing such Work; in paying assessments or contributions under the worker's
compensation, the unemployment insurance, statutory pension or other similar
legislation or ordinances relating to such personnel; in supplying food, lodging
and other reasonable needs for such personnel; in obtaining independent legal
services directly relating to Work to be performed hereunder; in keeping the
Mining Property in good standing under applicable legislation and regulations;
all reasonable costs of improving, protecting or perfecting title to the Mining
Property; in preparing engineering or, geological, studies and/or reports for
the Mining Property and Work related thereto; in connection with any
applications and necessary studies for the obtaining of permits, licenses, and
other regulatory approvals, including without limitation, the preparation for
and attendance at hearings and other meetings relating to the Mining Property;
in preparing a mining feasibility study and/or any reports supplementary
thereto; plus 10% of the foregoing for general overhead and administrative
costs, except that:
(i) during the period of two years calculated from the date hereof "Costs"
shall not include costs incurred or money expended in mining, extracting or
transporting Ore, minerals or metals, and
(ii) in the case of Work done by Tri-Con Mining Inc., Tri-Con Mining Alaska
Inc. and Tri-Con Mining Ltd., Costs shall be calculated as actual costs incurred
and monies expended by such companies (which costs will to the extent reasonably
practicable be incurred at competitive industry standards) plus 10% of such
aggregate amount, which shall be added to compensate such companies for general
overhead and administrative costs, plus an 8% markup on the amount of such
Costs, notwithstanding the actual amount of charges or markup that may be agreed
to between such companies and Silverado; and (iii) Costs incurred by Silverado
and Silverado Inc. will not be subject to and increased by 10% for general
overhead and administrative costs;
(d) "Escrow Agent" means Xxxxx & Company, barristers and solicitors, or
such other party as may be mutually agreed to by the Parties; (e) "Escrow
Agreement" means the agreement between Silverado, La Teko and the Escrow Agent
referred to in paragraph 2.12;
(f) "Feasibility and Permitting Plan " means the plan pursuant to which
Work on the Mining Property is to be performed by Silverado and Silverado Inc.,
a copy of which is attached as Schedule "C";
(g) "Interest" means any right, title or interest of the Parties in and to
the Mining Property;
(h) "Letter of Intent" means the letter agreement dated July 10, 1997
between Silverado and La Teko and the attachment thereto referred to in Recital
C;
(i) "Mining Property" means the mineral claims referred to in the first
recital to this Agreement which are more particularly described in Schedule "A"
which is attached hereto and shall include any lease granted pursuant to the
provisions of any applicable legislation or regulations in respect thereof;
(j) "Ore" means all materials containing a mineral or minerals of
commercial economic value extracted or derived from the Mining Property;
(k) "Party" or "Parties" means the initial parties to this Agreement and
their respective successors and permitted assigns which become parties to this
Agreement;
(1) "Permits" means all of the permits described in Schedule "D" attached
hereto and any other permits, rights and licenses held or acquired by La Teko or
La Teko Inc. or Xxxx Xxxx Mines, Inc. relating to the Mining Property or any of
their activities thereon;
(m) "Permitted Encumbrances" means the encumbrances referred to in
paragraph 2.1;
(n) "Product" means all Ore and concentrates or other products derived
from the Mining Property;
(o) "Purchase Price" means the sum of $12,000,000.00 and 1,000,000 common
shares in the capital of Silverado payable by Silverado to La Teko hereunder;
(p) "Reclamation Plan" means the plan titled "Reclamation Plan Xxxx Xxxx
Mine Site July 1997 as submitted to the United States Bureau of Land Management,
Northern District", a copy of which is attached as Schedule "E";
(q) "Silverado Option" means the right and option granted to Silverado and
Silverado Inc. pursuant to the provisions of paragraph 2.1;
(r) "Underlying Agreements" means those certain mining and property
agreements, copies of which are attached as Schedule "B" hereto; and
(s) " Work" means prospecting, exploration, assessment, evaluation,
development or other mining work, environmental monitoring and reclamation work
and permitting performed on or in relation to the Mining Property or any portion
thereof, but does not during the period of two years calculated from the date
hereof include mining work other than prospecting, exploration, assessment,
evaluation or development work.
1.2 Words importing the singular number shall mean and include the plural
and vice versa, and words importing the masculine gender shall include the
feminine and neuter genders.
1.3 Any Schedule annexed hereto shall form part of this Agreement.
1.4 Any statement of or reference to dollar amounts in this Agreement
shall mean coin or currency of the United States of America.
1.5 The division of this Agreement into Articles and paragraphs, the
provision of any index hereto and the insertion of headings are for convenience
of reference only and shall not affect the construction or interpretation
hereof.
ARTICLE 2
SILVERADO OPTION
2.1 In consideration of the payment and delivery by Silverado to La Teko,
concurrently with the execution and delivery of this Agreement, of 1,000,000
common shares in the capital of Silverado, which shares will be subject to
restrictions in resale only for a period of 40 days under Regulation S to the
Securities Act of 1933, La Teko Inc. hereby grants the Purchasers and each of
them the sole and exclusive right and option to acquire one hundred percent
(100%) of all right, title and interest in and to the Mining Property and the
Permits, free and clear of all encumbrances except this Agreement and except for
any encumbrances referred to in Schedule "B" (the "Permitted Encumbrances"),
provided that Silverado and Silverado Inc. fulfil all of their respective
conditions and obligations contained in paragraphs 2.3, 2.4, 2.5, 2.7 and 2.10.
2.2 Intentionally deleted.
2.3 Silverado shall on January 30, 1998 pay to La Teko $200,000, and shall
on February 27,1998 pay to La Teko $450,000, and hereby commits to spend not
less than $1,000,000 on Work from the date hereof to December 1, 1998. Silverado
shall, within 30 days of the end of each three month period commencing on June
1, 1998, provide to La Teko a written report summarizing in general terms the
Work and the Costs incurred thereon during such three month period. If Silverado
has not spent the required $1,000,000 on such Work by November 30, 1998
Silverado shall have the right, within 60 days following the delivery of the
report relating to the period ending on November 30, 1998, to pay to La Teko or
expend on the Mining Property, as provided in paragraph 2.13, an amount equal to
the shortfall between the required $1,000,000 and the amount actually spent by
Silverado on such Work by November 30, 1998, and the Silverado Option will
remain in good standing, subject to the payment being made by Silverado to La
Teko as referred to in paragraph 2.4.
2.4 Silverado shall on December 1, 1998 pay to La Teko $300,000, and
commit to spend not less than an additional $1,000,000 on Work by December 1,
1999 to keep the Silverado Option in good standing. Silverado shall, within 30
days of the end of each three month period commencing on December 1, 1998,
provide to La Teko a written report summarizing in general terms the Work and
the Costs incurred thereon during such three month period. If Silverado has not
spent the required $1,000,000 on such Work by November 3O, 1999 Silverado shall
have the right, within 60 days following the delivery of the report relating to
the period ending on November 30, 1999, to pay to La Teko or expend on the
Mining Property, as provided in paragraph 2.13, an amount equal to the shortfall
between the required $1,000,000 and the amount actually spent by Silverado on
such Work by November 3O, 1999, and the Silverado Option will remain in good
standing subject to the payment being made by Silverado to La Teko as referred
to in paragraph 2.5.
2.5 Silverado shall on or before December 1, 1999 pay to La Teko $400,000
and, unless Silverado has by December 1, 1999 already made the payment to La
Teko referred to in paragraph 2.10(a), commit to spend not less than an
additional $1,000,000 on Work by December 1, 2000 to keep the Silverado Option
in good standing. Silverado shall, within 30 days of the end of each three month
period commencing on December 1, 1999, provide to La Teko a written report
summarizing in general terms the Work and the Costs incurred thereon during such
three month period. If Silverado has not spent the required $1,00O,000 on such
Work by November 30, 2000 and has not made the payment to La Teko referred to in
paragraph 2.10(a), Silverado shall have the right, within 60 days following the
delivery of the report relating to the period ending on November 30, 2000, to
pay to La Teko or expend on the Mining Property, as provided in paragraph 2.13,
an amount equal to the shortfall between the required $1,000,000 and the amount
actually spent by Silverado on such Work by November 30, 2000, and the Silverado
Option will remain in good standing subject to the payment being made by
Silverado to La Teko as referred to in paragraph 2.7.
2.6 The Reclamation Plan sets forth a program for reclamation, remediation
and monitoring activities in respect of the Mining Property. Silverado will, in
conjunction with and as a part of the Work referred to in paragraphs 2.3 and
2.4, continue the reclamation, remediation and monitoring activities during such
periods substantially in accordance with the Reclamation Plan, as may be amended
or subsequently negotiated between Silverado and the regulatory bodies having
jurisdiction over the matters in the Reclamation Plan, recognizing that the
Reclamation Plan will be modified to take into account the Work to be undertaken
under the Feasibility and Permitting Plan and having regard to the necessity of
Silverado completing the Work in the manner and on the schedule as outlined in
the Feasibility and Permitting Plan attached hereto as Schedule "C".
2.7 Silverado shall on or before December l, 2000 pay to La Teko $700,000,
and shall on or before December 1, 2000, provided all requisite permits for
construction have been issued to Silverado (or if such permits have not been
issued, then promptly after the issuance to Silverado of such permits), have
commenced to construct the milling facilities reasonably necessary to place the
Mining Property into commercial production.
2.8 The Costs of Work to be spent by Silverado referred to in paragraphs
2.3, 2.4 and 2.5 shall be calculated on a cumulative basis, and any Costs
incurred in any particular period in excess of those required for that
particular time period may be carried forward and applied towards the required
Costs for the next succeeding time periods.
2.9 Silverado may in its sole discretion at any time elect by notice in
writing to La Teko to terminate the Silverado Option granted hereunder. If
Silverado gives such notice to La Teko, Silverado will not have any obligation
thereafter to incur further Costs or to pay the Purchase Price hereunder, and
upon such election the Silverado Option will immediately terminate and neither
of the Purchasers will have any further Interest in the Mining Property,
provided however that notwithstanding such termination' Silverado will
thereafter remain liable for and will and does hereby indemnify La Teko for all
costs required for remediation and reclamation arising from Work of Silverado or
Silverado Inc. on the Mining Property during the period from July 17, 1997 to
the date that Silverado elects to terminate the Silverado Option. If Silverado
elects to terminate the Silverado Option, it shall as a condition of such
termination:
(a) make any payments that will be due and payable to third parties in
respect of the Mining Property within the 60 day period following the date of
the notice by Silverado to La Teko terminating the Silverado Option; and
(b) deliver up to La Teko all maps, drill logs, assay results and other
factual data compiled by the Purchasers or either of them relating to the Mining
Property.
The obligations of Silverado under paragraphs 4.2(c) and 4.2(e) shall survive
the termination of the Silverado Option as provided in this paragraph 2.9.
2.10 As consideration for the purchase by the Purchasers, or either of
them, of all the Interest of the Vendors in the Mining Property, Silverado shall
pay the Purchase Price to La Teko. One million shares in the capital of
Silverado, as referred to in paragraph 2.1, are being delivered to La Teko
herewith, $1,900,000.00 of the Purchase Price shall be payable in accordance
with paragraphs 2.3 (as to $500,000.00) 2.4, 2.5 and 2.7, and the balance of the
Purchase Price shall be payable to La Teko as follows:
(a) $3,000,000.00 will be payable upon the earlier of:
(i) completion of construction of the milling facility and a maximum
30 day mill tune-up period, as described in paragraph 2.11; and
(ii) 30 days after the commencement of commercial production of Ore
from the Mining Property by any method; and
(b) the balance of the Purchase Price, after credit has been given to
Silverado for prior payments on account of the Purchase Price as referred to in
paragraph 2.11, and after credit has been given for the payments by Silverado to
La Teko as described in paragraphs 2.3, 2.4, 2.5 and 2.7, shall be paid six
months after the date upon which payment is required under paragraph 2.10 (a).
For the purpose of subparagraph 2.10 (a)(ii), "commencement of commercial
production of Ore" means the first day of the month in which Ore from the Mining
Property has been milled or shipped for 30 consecutive days at a rate, averaged
over such 30 day period, of not less than 60% of the average daily rate for the
projected capacity of the mill to be constructed for processing Ore from the
Mining Property, or the first day of the first month following 60 days after the
date on which Ore from the Mining Property is first milled or shipped, whichever
shall first occur. The milling or shipping of bulk samples for testing purposes
shall not be considered for the purpose of establishing the date of commencement
of commercial production of Ore. Any revenues, payments or proceeds from the
sale of Products or Ore from the Mining Property up to a maximum of
$3,000,000.00 prior to Silverado making the payments referred to in paragraph
2.10(a) shall be paid to La Teko and will be credited against the payment
referred to in paragraph 2.10(a).
2.11 If Silverado has made the payment referred to in paragraph 2.7 and has
commenced to construct facilities as described therein, Silverado shall continue
diligently with such mill construction, the intent of the Parties being that the
construction shall have been completed not later than June 1, 2002. If the mill
construction and tune-up is not completed and the Mining Property not placed
into commercial production with a mill for processing Ore operating and tuned up
by June 1, 2002, Silverado shall have the right to extend the period of
construction for one year provided that it pays to La Teko $500,000 prior to
June 1, 2002 (the "Extension Payment"). 75% of the Extension Payment will be
credited against the Purchase Price referred to in paragraph 2.10. If the mill
construction is not completed during the one year period to which the above
Extension Payment relates, Silverado will have the right to extend the period
for completion of mill construction for an additional period of one year, and up
to a further three successive periods of one year thereafter, for a total of up
to five successive one year extension periods, by paying further Extension
Payments of $500,000 for each year, with 75% of such Extension Payments to be
applied to the Purchase Price referred to in paragraph 2.10.
2.12 Upon execution of this Agreement La Teko shall lodge with the Escrow
Agent such deeds, title documents and other evidences as may be reasonably
requested by Silverado relating to the Mining Property together with any
required endorsements, bills of sale, assignments and transfers of the mineral
claims comprising the Mining Property to record Silverado Inc. as the
registered, recorded, legal and beneficial owner of the Mining Property and the
Permits, or in the case of mining claims in-which La Teko Inc. holds a leasehold
interest, the registered, recorded and beneficial holder of such leasehold
interest, (collectively the "Escrow Documents"), in accordance with the terms of
the Escrow Agreement in the form attached hereto as Exhibit "A". La Teko shall
also, upon execution of this Agreement, to the extent requested by Silverado,
transfer to Silverado Inc. the Permits and any bonding or other sureties held or
obtained by La Teko or La Teko Inc. or Xxxx Xxxx Mines, Inc. in relation to the
Work. La Teko shall, from time to time, as and when requested by Silverado,
execute and deliver or cause to be executed and delivered all other documents,
instruments and transfers which are, in the opinion of Silverado, reasonably
necessary or advisable to effect legal transfer of the Mining Property to
Silverado Inc., and any such documents shall be included in the Escrow Documents
and shall be subject to the terms of this Agreement and the Escrow Agreement.
Silverado shall have the right, upon making the payment referred to in paragraph
2.4, to obtain the release of the Escrow Documents. Upon the release from escrow
of the Escrow Documents to Silverado in accordance with the terms of the Escrow
Agreement a 100% undivided Interest in and to the Mining Property shall vest in
Silverado Inc. free and clear of all liens, charges and encumbrances, subject
only to the terms and conditions of this Agreement.
2.13 Subject to prior termination pursuant to the provisions of this
Agreement, Silverado shall, not later than 30 days after December 1, 1998 and
December 1, 1999, deliver to La Teko a written notice signed by an officer of
Silverado either confirming that Silverado has incurred the required minimum
cumulative Costs as provided herein or indicating that Silverado has not
incurred such minimum cumulative Costs, and attaching thereto a report
summarizing all Work done on the Mining Property. In addition, Silverado shall
within 60 days after December 1, 1998 and December 1, 1999 deliver to La Teko a
written statement in reasonable detail prepared by the independent accountants
acting for Silverado setting out the particulars of such Costs. If the statement
indicates that Silverado has incurred the required minimum cumulative Costs and
if La Teko disputes the amount of expenditures on such statement, then either
Silverado will agree with La Teko's calculations or La Teko and Silverado will
agree with some revised calculations. In either case, Silverado will, within 60
days of agreeing to or settling the calculations, either pay the amount of the
deficiency to La Teko or expend the amount of the deficiency on further Work on
the Mining Property. If the dispute as to the calculation is not resolved
between La Teko and Silverado, then La Teko may refer the matter to arbitration
before a single arbitrator pursuant to the provisions of the Commercial
Arbitration Act (British Columbia). The decision of the arbitrator shall be
final and binding on the Parties hereto. If the arbitrator determines that there
is a shortfall in costs incurred as set forth in the statement referred to
above, then Silverado shall pay the amount of the deficiency to La Teko within
30 days of the determination, and provided such payment is made, this Agreement
shall remain in full force and effect.
ARTICLE 3
RIGHT TO ENTER AND DO WORK
3.1 Subject to the provisions of this Agreement, the Purchasers, their
respective servants, agents, independent contractors, successors and assigns
shall prior to the payment of the Purchase Price have the sole and exclusive
right:
(a) to enter in, under or upon the Mining Property;
(b) to have exclusive and quiet possession of the Mining Property;
(c) to carry out such Work as the Purchasers, in their sole discretion,
consider advisable including bringing or erecting upon the Mining Property
machinery, equipment and ancillary facilities including, without limiting the
generality of the foregoing, housing, utility services, roads, conveyors,
plants, buildings, and disposal areas or systems; and
(d) to prepare Ore for delivery and remove Ore, minerals or metals from
the Mining Property in reasonable quantities for the purpose of obtaining assays
or making other tests and for Ore processing from the Mining Property; provided
however that the Purchasers shall not, prior to payment in full of the Purchase
Price, process Ore on the Mining Property or conduct heap xxxxx operations or
dispose of tailings on the Mining Property.
3.2 The Purchasers shall have the right, in their sole discretion and at
their own expense, to do such acts and things as are reasonably necessary to
protect and improve any right, title or interest in and to the Mining Property,
which right shall include, without limitation, the right to obtain mineral
leases or mining licenses for the Mining Property or any part thereof in
accordance with the provisions of the applicable legislation and regulations, in
which event such leases and licenses shall forthwith constitute part of the
Mining Property and be subject to the terms and conditions of this Agreement.
Silverado shall, during the term of this Agreement, maintain the Mining Property
and the claims included therein and pay such royalty payments, assessments,
rentals and taxes as are necessary to keep the Mining Property and the interests
of the parties thereto in good standing.
3.3 During the period subsequent to December 1, 2000 and prior to the
payment in full of the Purchase Price, Silverado shall provide to La Teko,
within 30 days of the end of each three month period commencing on December 1,
2000, a report summarizing the expenditures incurred on the Mining Property
during such three month period. At the end of each year, calculated from
December 1, 2000, the report from Silverado will include a technical report by
Silverado outlining the progress of Work during the year, which report need not
include supporting data or documentation.
ARTICLE 4
REPRESENTATIONS AND COVENANTS
4.1 The Vendors hereby jointly and severally represent and warrant that:
(a) each of La Teko and La Teko Inc. is a corporation duly incorporated
and in good standing in its jurisdiction of incorporation, and La Teko Inc. is
qualified to do business in the jurisdiction wherein the Mining Property is
located;
(b) each of La Teko and La Teko Inc. has the right to enter into this
Agreement, and all corporate and/or other actions required to authorize it to
enter into and perform this Agreement have been properly taken;
(c) La Teko Inc. is the registered, recorded, legal and beneficial and
recorded owner of all of the mineral claims and permits comprising the Mining
Property free and clear of all encumbrances save and except for the Xxxxxxxxxxx
Property and save and except for the other Permitted Encumbrances. The
Xxxxxxxxxxx Property is owned by Xxxx Xxxxxxxxxxx as the registered and recorded
owner thereof, and is subject only to the leases or other agreements (the
"Xxxxxxxxxxx Agreements") referred to in Schedule "B", copies of which have been
initialed for identification by La Teko and delivered to Silverado, and La Teko
Inc. is the registered, recorded and beneficial holder of such leasehold
interest. All of the Xxxxxxxxxxx Agreements are in good standing and all
payments thereunder to date have been made in accordance with the terms thereof.
(d) the Mining Property comprises all of the mineral claims and permits
and mining interests owned by either of La Teko or La Teko Inc. and which are
described as the Xxxx Xxxx property in the 1996 Annual Report of La Teko;
(e) there is no adverse claim or challenge against or to the ownership of
or title to the Mining Property, nor to the knowledge of La Teko or La Teko Inc.
is there any basis therefor, and there are no outstanding agreements or options
between the Vendors or either of them and any third party whatsoever with
respect to the Mining Property or any portion thereof other than as specifically
described herein;
(f) no person, firm or corporation has any proprietary interest in the
Mining Property and no person, firm or corporation is entitled to any royalty or
other payment in the nature of rent or royalty on any Ore removed from the
Mining Property save for those indicated in Schedule B attached hereto;
(g) to the knowledge of the Vendors, Schedule "E" contains and refers to
the required reclamation, remediation and monitoring programs sufficient to
fulfill all regulatory reclamation and remediation requirements for the Mining
Property as of the date hereof
All representations, warranties and covenants of the Vendors and each of them
contained in this Agreement and contained in any certificates or documents
submitted, executed or delivered pursuant to or in connection with this
Agreement and the transactions herein provided for shall survive the completion
of the purchase of the Mining Property by the Purchasers or either of them and
shall survive the termination of this Agreement, notwithstanding the completion
of the purchase or the termination of this Agreement, and regardless of any
investigation by or on behalf of the Purchasers or either of them with respect
thereto, shall continue in full force and effect for the benefit of the
Purchasers and each of them.
4.2 The Purchasers hereby jointly and severally covenant and agree during
the period of the Silverado Option prior to payment in full of the Purchase
Price:
(a) to carry out the Work in a prudent and miner-like manner and in
accordance with good mining, processing, engineering and environmental
practices generally prevailing in the mining industry and in accordance with all
applicable laws and regulations and all agreements, permits and licenses
relating to the Mining Property;
(b) to pay and discharge all wages and accounts for materials and
services and all other costs and expenses that may be incurred by them in
connection with the Work on the Mining Property, and to save the Vendors
harmless from and against all liens in respect of such Work which may be filed
against the Mining Property, and in the event of any liens being so filed, to
proceed forthwith to have the same removed, provided that the foregoing
provision shall not prevent the Purchasers from properly contesting in good
faith any claims for liens which they consider unjustified;
(c) to maintain the Mining Property in good standing under applicable
legislation and regulations;
(d) to indemnify and save the Vendors, their respective directors,
officers, employees or representatives harmless from all claims and demands,
costs (including reasonable attorneys' fees and expenses incurred by them),
damages, actions, suits or other proceedings whatsoever arising out of or
attributable to the activities of the Purchasers, their respective employees or
representatives under this Agreement;
(e) to maintain and keep in force and, upon request by La Teko, provide
reasonable documentary verification of the following insurance in respect of
their activities on the Mining Property, which shall protect the interests of
the Vendors within the limits of such insurance:
(i) Comprehensive General Liability Insurance - covering
liability for bodily injury and property damage arising from operations and
activities under this Agreement. This insurance shall include coverage for
the contingent liability with respect to the operations and activities of
contractors and subcontractors (or coverage will be provided independently
by such contractors and subcontractors), the contingent employer's
liability of the Purchasers and the liability assumed by the Purchasers
under this Agreement. The limits of such insurance shall be not less than
$1,000,000 inclusive for any one occurrence, with aggregate coverage of not
less than $2,000,000.
(ii) Workers' Compensation Insurance - covering all employees
engaged in the Work under this Agreement to the extent required by the laws
of the State of Alaska or any other governmental authority having
jurisdiction over the Purchasers' operations under this Agreement;
(f) to permit La Teko, its employees or duly authorized representatives,
or guests of La Teko if accompanied by a duly authorized representative of La
Teko, on reasonable notice to Silverado, access to the Mining Property in order
to examine any Work carried out by or on behalf of Silverado, provided, however,
that neither La Teko nor its duly authorized representatives and guests shall
interfere with or obstruct the operations of the Purchasers, their respective
employees, agents, contractors or subcontractors on the Mining Property, and
provided further that La Teko and its duly authorized representatives and guests
shall enter upon the Mining Property at their own risk and expense, and La Teko
hereby agrees to indemnify and save the Purchasers and their respective
directors, officers, employees, representatives, contractors and subcontractors
harmless from all claims and demands, costs (including reasonable attorneys'
fees and expenses incurred by the Purchasers), damages, actions, suits or other
proceedings whatsoever arising out of or attributable to the activities of La
Teko, its employees, duly authorized representatives or guests on the Mining
Property;
(g) to maintain the Mining Property in good standing by the performance of
work and recording of same during each assessment year;
(h) to respond promptly to all reasonable requests by La Teko for
information relating to Work on the Mining Property;
(i) to leave the Mining Property upon termination of this Agreement,
unless terminated pursuant to the provisions of paragraph 6.1(d), in a condition
that will not require any reclamation work, from work performed by the
Purchasers;
(j) to pay all rentals and royalties necessary to maintain the Underlying
Agreements in good standing; and
(k) to cause any operator performing Work on the Mining Property to assume
responsibility for and comply with the requirements of all existing plans and
Permits relating to the Work and referred to in Schedule "D".
4.3 Silverado and Silverado Inc. hereby jointly and severally represent
and warrant that:
(a) each of Silverado and Silverado Inc. is a corporation duly
incorporated and in good standing in its jurisdiction of incorporation and
Silverado Inc. is qualified to do business in the jurisdiction wherein the
Mining Property is located; and
(b) each of Silverado and Silverado Inc. has the right to enter into this
Agreement and all corporate and/or other actions required to authorize it to
enter into and perform this Agreement have been properly taken.
All representations, warranties and covenants of the Purchasers and each of them
contained in this Agreement and contained in any certificates or documents
submitted, executed or delivered pursuant to or in connection with this
Agreement and the transactions herein provided for shall survive the completion
of the purchase of the Mining Property by the Purchasers or either of them and
shall survive the termination of this Agreement, notwithstanding the completion
of the purchase or the termination of this Agreement, and regardless of any
investigation by or on behalf of the Vendors or either of them with respect
thereto, shall continue in full force and effect for the benefit of the Vendors
and each of them.
ARTICLE 5
RIGHT TO PRESERVE TITLE AND REMOVE ASSETS
5.1 The Parties agree that they may protect their Interests under this
Agreement by registering this Agreement or a short form thereof, the transfers
and documents referred to in paragraph 2.12, or any other document or documents
which they may consider reasonably advisable in order to protect their rights
and interests hereunder against the title to all or part of the Mining Property,
provided that Silverado Inc. shall hold title to the Mining Property subject to
the terms and conditions of this Agreement. 5.2 At any time, and from time to
time, and for a period of one year after the termination of this Agreement if
terminated prior to the completion of the purchase by the payment of the
Purchase Price, Silverado may, and at La Teko's request within such period after
termination, Silverado shall, at its own expense, enter upon and remove from the
Mining Property any and all buildings, plant, machinery, tools and equipment or
other property of Silverado or Silverado Inc. Any property not so removed within
such period after termination shall become the property of La Teko.
5.3 La Teko shall, on or before January 30, 1998, remove from the Mining
Property all of its equipment, tools, machinery and other personal property
(except for any maps, drill logs, assay results and other factual technical data
compiled by the Vendors or either of them relating to the Mining Property, all
of which shall be retained by the Purchasers), and shall leave thereon all
buildings, structures and other improvements thereto, including the
meteorological station in its current location and attitude, for the sole and
absolute benefit of the Purchasers, subject to the terms of this Agreement. All
hazardous materials currently located in the laboratory portion of the on-site
warehouse structure shall be removed from the Mining Property by Silverado Inc.
ARTICLE 6
TERMINATION
6 1 Subject to the provisions of paragraphs 2.2, and 2.9 end the last
sentence of paragraphs 2.10 and 6.2, this Agreement shall terminate as follows:
(a) if Silverado both fails to incur the Costs or pay in lieu of incurring
Costs on or before the relevant dates as set forth in paragraphs 2.3, 2.4 and
2.5, or fails to make the payments to La Teko on account of the Purchase Price
as provided in paragraphs 2.3., 2.4, 2.5, 2.7, or 2.10, and fails to rectify
said default within 30 days of receiving notice from La Teko of such default,
then upon the date immediately following the expiry of such 30 day period; or
(b) upon receipt by La Teko of notice from Silverado given prior to the
payment in full of the Purchase Price that Silverado is terminating this
Agreement;
(c) if Silverado does not exercise the Silverado Option during the period
of the Silverado Option, then at the expiry of the Silverado Option; or
(d) upon payment of the Purchase Price in full by Silverado to La Teko.
6.2 Upon any termination hereof by Silverado, except pursuant to paragraph
6.1 (d), Silverado shall at La Teko's request, within thirty (30) days
thereafter, release, quit claim and/or transfer to La Teko Inc. for an aggregate
consideration of one dollar ($ 1.00), all right, title and interest in and to
the Mining Property or the relevant portion thereof, provided that Silverado
shall be responsible for and obligated to ensure that the Mining Property
remains in good standing in respect of assessment work or credit as of the date
of such termination. La Teko shall have the right, at its option, for the period
of two years from the date of termination of this Agreement pursuant to
paragraphs 6. l(a), (b) or (c), to take possession of any Ore taken by the
Purchasers, and stockpiled off of the Mining Property.
6.3 Except as otherwise herein specifically provided, this is an option
agreement only and nothing herein contained and no act done, payment made or
amount expended hereunder shall obligate Silverado to do any further or other
act, to make any further or other payment or to expend any further amount in
doing Work hereunder, and in no event shall this Agreement or any act done,
payment made or amount expended in doing Work hereunder be construed as creating
an obligation on Silverado to make any other payments, or to perform any other
Work hereunder or to proceed with a view to bringing the Mining Property or any
part thereof into commercial production.
6.4 If this Agreement is terminated pursuant to paragraphs 6.1(a), (b) or
(c), Silverado shall deliver up to La Teko all maps, drill logs, assay results
and other factual data compiled by the Purchasers or either of them relating to
the Mining Property.
ARTICLE 7
CONFIDENTIAL INFORMATION
7.1 The Parties agree to treat this Agreement and all terms and conditions
hereof, and all data, reports, records, and other information, coming into the
possession of the Parties by virtue hereof as confidential except if disclosure
is required by law, by regulation, by any securities commission or stock
exchange or in connection with the filing of a prospectus or exchange offering
prospectus by any Party or its Affiliates. Such information shall not be
otherwise disclosed to any person without the prior consent of the other
Parties, which consent shall not be unreasonably withheld.
7.2 Subject to paragraph 7.1 and during the period of the Silverado
Option, each of the Parties may make public announcements or press releases with
respect to the existence of this Agreement and with respect to activities on the
Mining Property provided however that any such announcements and releases shall
be communicated to the other Parties concurrently with their dissemination to
the public.
ARTICLE 8
TRANSFER OF INTEREST IN MINING PROPERTY
8.1 In this article, the word "assign" means sell, assign, transfer,
sublet, grant an option, make a declaration of trust or otherwise convey an
Interest.
8.2 Any of the Vendors or the Purchasers may assign their rights and
interest in this Agreement to a third party with the prior written consent of
the other parties, which consent will not be unreasonably withheld or delayed
provided that the assignee shall be subject to all the terms of this Agreement.
8.3 If an assigning Party wishes to assign all, but not less than all, of
its Interest to an assignee, the assigning Party shall require that such
assignee shall enter into an agreement with the other Parties concurrent with
such assignment containing:
(a) a covenant by such assignee to be bound by this Agreement to the same
extent as if this Agreement had been originally executed by the assigning Party
and such assignee as joint and several obligors making joint and several
covenants; and
(b) a provision subjecting any further sale, transfer or other disposition
of such Interest to the restrictions contained in this Article 8.
8.4 A Party may assign its Interest to an Affiliate at any time, provided
that the Affiliate delivers to the other Parties concurrently with such
assignment an agreement containing the covenant and provision described in
paragraph 8.3, and that the assigning Party shall continue to remain principally
liable to the other Parties for the performance of its obligations under this
Agreement.
ARTICLE 9
AREA OF INTEREST
9.1 The Vendors shall not be under any obligation to locate or otherwise
acquire any mineral claims or other mining properties adjoining or in the
vicinity of the Mining Property, however any right, title or interest in any
other mineral claims located or other mining property acquired by the Vendors or
either of them or any Affiliate thereof during the term of this Agreement in the
area that is located within one mile of the outer boundary of the original
mineral claims comprising the Mining Property shall be so located or acquired
for the sole benefit of Silverado Inc.
ARTICLE 10
NOTICES
10.1 All payments, notices, reports or other communications required or
permitted by this Agreement shall be deemed to have been properly given and
delivered when delivered by hand or sent by telecommunication or registered mail
with all postage or delivery charges fully prepaid and addressed to the Parties,
respectively, as follows:
To SILVERADO
And To SILVERADO INC.: SILVERADO GOLD MINES LTD.
Xxxxx 000, 0000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Telecopier Number: (000) 000-0000
Attention: President
To LA TEKO
And To LA TEKO INC.: LA TEKO RESOURCES LTD.
Xxxxx 000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, X0X 0X0
Telecopier Number: (000) 000-0000
Attention: President
or to the latest known address of the Party concerned, as furnished pursuant to
paragraph 10.3.
10.2 Any payment, notice, report or communication which is mailed shall be
deemed to have been received by the addressee on the fifth business day
following posting thereof. In all other instances, the date of receipt by
addressee shall be the date of actual delivery or receipt of the
telecommunication.
10.3 A Party may change its address or telecopier number for the purpose
hereof by giving written notice of such change to the other Parties at the
latest address provided in accordance with this Article.
ARTICLE 11
ARBITRATION
11.1 If any dispute shall arise between the Parties or any of them in
respect of any matter relating to this Agreement or with respect to the
interpretation of this Agreement, the same shall be submitted to arbitration in
accordance with the following provisions.
11.2 The dispute shall be referred to and finally resolved by arbitration
in Vancouver, British Columbia, under the rules of the British Columbia
International Commercial Arbitration Centre ("BCIAC'), in accordance with its
"Procedure for cases under the BCIAC Rules. " The award of the arbitrator shall
be final and binding. The arbitral tribunal shall consist of a sole arbitrator
selected by agreement of the Parties, failing such agreement within 20 days
after the filing of the request for arbitration the sole arbitrator shall be
appointed by the BCIAC from a list of ten persons submitted to the Parties. Each
of the Parties shall have the right to delete four persons from such list and
the arbitrator shall be one person not deleted from such list. Each person on
such list shall have substantial experience and recognized expertise in the
fields of the matters in dispute. The Parties hereby stipulate that the
arbitrator's fee shall be a reasonably hourly rate agreed to by the Parties,
multiplied by the total time of the arbitrator spent concerning the arbitration.
The arbitrator shall be entitled to receive payment for reasonable
disbursements. If the Parties are unable to agree on a fee within 30 days after
the filing of the request for arbitration, then the fee shall be established by
the BCIAC Rules. The Parties further stipulate that the administrative charge
shall be a reasonable average hourly rate agreed by the Parties for the services
of the BCIAC personnel administering the arbitration, plus a reasonable
percentage (not to exceed 10%) for overhead, plus reasonable disbursements.
Failing an agreement of the Parties within 30 days of the request for
arbitration, the charge will be determined by the BCIAC. If any Party refuses to
arbitrate or institutes any proceeding to stay or enjoin arbitration, the other
Parties shall be awarded reimbursement of all expenses and legal fees incurred
in connection with any such proceeding to stay or enjoin arbitration.
11.3 The decision of the arbitrator shall be in writing and signed by the
arbitrator and shall be final and binding upon the Parties as to any question or
questions so submitted to arbitration.
11.4 Unless otherwise determined by the arbitrator, the compensation and
expenses of such arbitrator shall be paid as follows:
(a) if the matter in dispute is determined against a Party, the
compensation and expenses shall be paid by that Party;
(b) if the matter in dispute is determined partly in favour of one Party
and partly in favour of another Party or Parties the compensation and expenses
shall be allocated among the Parties to the dispute in the same proportions, as
nearly as possible, as the arbitrator's determination of the dispute; and
(c) if the matter is determined otherwise that in the foregoing manner,
the compensation and expenses shall be paid in equal proportions by the Parties
involved in the dispute.
ARTICLE 12
FORCE MAJEURE
12.1 Time shall be of the essence of this Agreement, provided, however,
that the time or times within which any right hereunder may be exercised shall
be extended by a period of time equal to all periods of time during which the
Parties or their respective representatives, agents, contractors or employees
are prevented or seriously impeded in doing any Work or performing any
obligation hereunder by reason of any event of force majeure, which events shall
include but shall not be limited to fire; power shortage, strike, lockout or
other labour dispute; inability to obtain suitable machinery or labour;
inability to arrange access to the Mining Property; inability or delay in
obtaining permits or licenses, inability to arrange or unavailability of any
transportation services, facilities or equipment; wars, riots or civil
disorders; Acts of God or the enemies of the United States of America;
governmental, whether Federal, State or Borough, laws, regulations or
requirements; or any other cause beyond the reasonable control of the Parties or
their respective representatives, agents, contractors or employees. The settling
of labour disputes shall for the purposes of this paragraph be deemed to be
beyond the control of the Parties and their respective representatives, agents,
contractors, subcontractors or employees and nothing herein contained shall
place any obligation upon them to settle any labour dispute. The payment of
monies from one Party to another Party shall be deemed to be within the
reasonable control of the Parties and the lack of funds for such payments shall
not be considered an event of force majeure.
12.2 Any Party hereto claiming suspension of its obligations, as aforesaid,
shall promptly notify the other Parties to that effect and shall take all
reasonable steps to remove or remedy the cause and effect of the force majeure
described in the said notice in so far as it is reasonably able to do so and as
soon as possible; provided the terms of settlement of all labour disturbances or
disputes, strikes or lockouts, shall be wholly in the discretion of the Party
claiming suspension of its obligations by reason thereof; and that Party shall
not be required to accede to the demands of its opponents in any such labour
disturbance or dispute, strike or lockout solely to remedy or remove the force
majeure thereby constituted.
12.3 The extension of time for observance of conditions or performance of
obligations as a result of force majeure shall not relieve Silverado from its
obligations to keep the Mining Property in good standing.
ARTICLE 13
GENERAL
13.1 Each Party shall, from time to time, and at all times, perform all
acts and execute and deliver the deeds and documents and give such assurances as
are reasonably required in order to perform, carry out, and give effect to the
terms of this Agreement.
13.2 A waiver of any breach of a provision of this Agreement shall not be
binding upon a Party unless the waiver is in writing and such waiver shall not
affect such Party's rights in respect of any subsequent breach.
13.3 All terms and provisions of this Agreement shall run with and be
binding upon the lands and estates affected thereby during the term hereof.
13.4 The terms of this Agreement expresses and constitutes the entire
agreement between the Parties
13.5 Save as aforesaid, this Agreement supersedes and replaces all previous
agreements, whether written or oral, between the Parties in respect of the
Mining Property.
13.6 This Agreement shall be governed by and construed in accordance with
the laws of the state of Alaska and the federal laws of the United States of
American applicable therein.
13.6 This Agreement shall inure to the benefit of and be binding upon the
Parties hereto, their respective successors and their permitted assigns.
IN WITNESS WHEREOF, the Parties hereto have entered into this Agreement
effective as of the day and year first above written.
LA TEKO RESOURCES LTD. LA TEKO RESOURCES, INC.
/s/ Xxxxxx X. Xxxxxxx /s/ Xxxxxx X. Xxxxxxx
Authorized Signatory Authorized Signatory
SILVERADO GOLD MINES LTD. SILVERADO GOLD MINES INC.
/s/ Xxxxx X. Xxxxxxx /s/ Xxxxx X. Xxxxxxx
Authorized Signatory Authorized Signatory
SCHEDULE "A"
This is SCHEDULE "A" to the Option Agreement dated as of December 19, 1997
between LA TEKO RESOURCES LTD., LA TEKO RESOURCES, INC., SILVERADO GOLD MINES
LTD. and SILVERADO GOLD MINES INC.
LIST OF CLAIMS
SCHEDULE "A''XXXX XXXX MINES, INC.
LAND STATUS AS OF 3 FEBRUARY, 1997
Claim Group Location Claim Owner
------------------ --------------------- -----------------
Xxxx Xxxx-Patented T1N, R2W, Xxx 0, 0, 0 Xxxxx Xxxxxxxxxxx
Xxxx Xxxx Claim XXX, X0X, Sec. 32,33 X.X. Xxx 0000
Xxxxx-Xxxxxxxxxx Xxxxxxxxx Xxxxxx Xxxxxx, XX 00000
Blue Bird Group T1S, R2W, Sec. 4, 5,8 La Teko Resources, Inc
Bar Claim Block XXX, X0X, Sec. 32,33 000 X 0000 Xxxxx
Xxxxxx Fractions Claim Fairbanks Xxxxxxxx Xxxxx 000
Xxxxx Xxxx Xxxx Xxxx, XX 00000
La Teko Fraction Group
Ace Claims
St. Xxxxxxx Group
Long Association Group
Note: These claims are overlapped by ADL558408 through ADL558423, presently held
by La Teko Resources, Inc
Table 1: Xxxx Xxxx Claim Block Table 2: Xxxx Xxxx Claim
Unpatented Federal Claims Block Patented Federal
-------------------------------- ------------------------------
Claim Name Serial Number Claim Name Serial Number
---------- ------------- ---------- -------------
Ijim MS0826
Balboa FF061654 Eva MS0826
Xxxxxxxxxxx FF061656 Xxxx MS0826
Extension
Comet FF061657 Xxxx No. 1 MS0826
Comet Fraction FF061658 Xxxxxx MS0826
Curlew Extension FF061659 Gem MS1602
Evadna FF061660 Xxxx No. 2 MS1603
The Golden Queen FF061661 XLCR MS1603
Iving FF061662 Curlew MS2230
Xxxxxx Xxx No. 2 FF061663 Combination MS2230
XxXxxxxx FF061664
Merion FF061665
Merion Extension FF061666
Xxxx FF061667
Rose Quartz FF061668
Democrat FF061670
Association
Table 3: La Teko Fraction Group-State Claims
----------------------------------------------
Claim Name: Serial Number
------------------- -------------
Xx Xxxx Xxxxxxxx #0 XXX000000
Xx Teko Fraction # 2 ADL550396
La Teko Fraction # 3 ADL558397
La Teko Fraction # 4 ADL558398
La Teko Fraction # 5 ADL558399
La Teko Fraction # 6 ADL558400
La Teko Fraction # 7 XXX000000
La Teko Fraction # 8 ADL558402
La Teko Fraction # 9 ADL558403
La Teko Fraction # 10 ADL558404
La Teko Fraction # 11 ADL558405
La Teko Fraction # 12 ADL558406
La Teko Fraction # 13 ADL558407
Table 4 Long Association Federal Patented Placer
------------------------------------------------
Claim Name: Serial Number
---------------- ---------------
Long Association MS 847
Table 5 Blue Bird Group Patented Federal Claims
-----------------------------------------------
Claim Name: Serial Number
---------------- --------------
Bluebird MS2170
Bluebird Fraction MS2170
Table 6 Bar Claim Block State Claims
-----------------------------------------------
Claim Name: Serial Number
----------------- --------------
Bar #1 ADL509257
Bar #2 ADL509258
Bar #3 ADL509259
Bar #4 ADL50926O
Bar #5 ADL509261
Bar #6 ADL523236
Bar Fraction #7 ADL558394
Table 7 St. Xxxxxxx Group-State Mining Claims
-----------------------------------------------
Claim Name: Serial Number
----------------- --------------
St Xxxxxxx #1 ADL308083
St Xxxxxxx #2 ADL308084
St. Xxxxxxx #3 ADL308085
St Xxxxxxx #4 ADL308086
Table 8 Mohawk Fractions Group-State Claims
-----------------------------------------------
Claim Name: Serial Number
----------------- --------------
Mohawk #4 ADL557975
Mohawk #5 ADL557976
Mohawk #6 ADL557977
Mohawk #7 ADL558098
Mohawk #8 ADL558389
Mohawk #9 ADL558390
Mohawk #10* ADL558391*
Mohawk #11* ADL558392*
Mohawk #13 XXX000000
Table 9 Ace Claims- State Claims
-----------------------------------------------
Claim Name: Serial Number
----------------- --------------
Ace #22 ADL500119
Ace #23 ADL500120
* Quit claim deed executed by La Teko Resources Inc. November 28, 1997
SCHEDULE "B"Copies of Underlying Agreements and Permitted Encumbrances.
[Omitted]
