LETTER AGREEMENT DATED SEPTEMBER 21, 2010 WITH TEMEX RESOURCES CORP RE: OPTION AND JOINT VENTURE ON THE CROXALL PROPERTY, CANCELLATION OF DECEMBER 12, 2007 OPTION AND JOINT VENTURE JAMES BAY LOWLANDS
EXHIBIT 4.3
LETTER AGREEMENT DATED SEPTEMBER 21, 2010 WITH
TEMEX RESOURCES CORP RE: OPTION AND JOINT VENTURE ON THE
XXXXXXX PROPERTY, CANCELLATION OF DECEMBER 12, 2007
OPTION AND JOINT VENTURE XXXXX BAY LOWLANDS
TEMEX RESOURCES CORP.
0000-000 Xxxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx XXXXXX X0X 0X0
tel: 000-000-0000 fax: 000-000-0000
website: xxx.xxxxxxxxx.xxx
email: xxxx@xxxxxxxxx.xxx
September 21, 2010
0000 Xxxxxx Xxxx XX
Xxxxxxx, XX X0X 0X0
Attention: Xxxxx X. Xxxxx, President
Dear Xxx:
Re: Option and Joint Venture on the Xxxxxxx Property,
Cancellation of December 12, 2007 Option and Joint Venture Xxxxx Bay Lowlands
Temex Resources Corp. (“Temex”) is pleased to confirm the basis upon which they will grant to Mill City Gold Corp. (“Mill City”) an option to earn an undivided 75% participating interest (the “Option”) in the Xxxxxxx Property. The subject matter of this letter agreement is the Xxxxxxx Property comprising 59 mining claims totalling 60 claim units (the “Claims”) currently recorded in the name of Temex Resources Corp. but held by Temex Resources Corp. pursuant to an agreement dated June 22, 2009 with the vendors of the Xxxxxxx property namely, Xxxxx X. Xxxxxxx, Xxxxxxxx X. Xxxxxx, and Xxxxxx Xxxx XxXxxxx, a true and complete copy of which is enclosed herewith (the “Xxxxxxx Agreement”). The Xxxxxxx Property (as more particularly described on Schedule A and depicted on Figure 1 hereto annexed) is located near Timmins in Northern Ontario within Xxxxx, Price and Thorneloe townships in the Porcupine Mining Division.
To exercise the Option, Mill City shall be required:
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1.
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subject to TSX-V approval, to issue 250,000 Mill City common shares to Temex within 30 days of execution and delivery (“upon signing”) hereof;
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2.
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to incur not less than $250,000 of exploration expenditures on or in respect of the Xxxxxxx Property before the first anniversary of signing;
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3.
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to incur not less than an additional $500,000 (an aggregate of $750,000 inclusive of the $250,000 firm commitment referred to in paragraph 2) of exploration expenditures on or in respect of the Xxxxxxx Property before the fourth anniversary of signing; and
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4.
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to make all remaining cash payments in a timely manner as required under the Xxxxxxx Agreement (items 2.2.3 and 2.2.4 and any advanced royalty payments required in the Xxxxxxx Agreement). Temex shall be responsible to issue the Temex shares due to the vendors under the Xxxxxxx Agreement;
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5.
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to execute a document agreeing to immediately and finally terminate its agreement with Temex regarding the “Option and Joint Venture Agreement dated December 12, 2007 covering 1012 claim units in the Sachigo Greenstone Belt in the Xxxxx Bay Lowlands in northern Ontario (the Northern and Southern Star Eagle claims) for no additional consideration
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provided that, the obligations set forth in paragraphs 1 and 2 and 5 are firm commitments made by Mill City to Temex , and the obligations set forth in paragraphs 3, 4 and are optional in the sole discretion of Mill City, and Mill City shall be entitled to accelerate such obligations at any time in its sole discretion.
Mill City shall be entitled to extend for one year the time for completion of each milestone of the Work Commitment, by notice to Temex if given prior to the applicable anniversary of signing. Each extension shall require Mill City, subject to TSX-V approval, to allot and issue to Temex 125,000 Mill City Shares. For greater certainty, if an extension of time is granted by Temex to Mill City for completion of a specified cumulative level of exploration expenditures by a particular anniversary date, it shall operate to defer the time of performance of each subsequent anniversary expenditure milestone by one year and require Mill City to allot and issue to Temex 125,000 Mill City Shares. If no extension is granted to Mill City in accordance with the foregoing then Mill City shall exercise the Option on or before the fourth anniversary of signing (the expiration of the “Earn-in Period”) provided that each such extension which is granted to Mill City shall extend the Earn-in Period by one year.
Temex is currently the Operator of the Xxxxxxx Property, and Mill City will replace Temex as Operator during the Earn-in Period and shall appoint Temex as its agent (“Agent”) to carry out all exploration programs to be funded by Mill City under this letter agreement or other replacement document. As Agent, Temex is entitled to charge an overhead allowance for managing exploration programs equal to 10% of all exploration expenditures, except where the cost of an individual item exceeds $100,000, in which case such overhead allowance is reduced to 5% of the cost of such items.
If during the Earn-in Period Mill City satisfies all its obligations set forth in paragraphs 1 through 5 inclusive, which are conditions precedent to the exercise of the Option, Mill City shall be entitled to give notice to Temex of the exercise of the Option by certifying compliance with the terms in paragraphs 1 through 5. If the Option is exercised there shall be a novation of the Xxxxxxx Joint Venture Agreement whereby Mill City shall be deemed to have acquired a Participating Interest (as therein defined) in the Xxxxxxx Joint Venture giving Mill City an undivided 75% interest in the Xxxxxxx Property, and the Participating Interest of Temex shall be 25%.
Temex shall then have 60 days from the date of exercise of the Option to elect either:
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(a)
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to continue to participate in the Xxxxxxx Joint Venture with Mill City for the further exploration and development of the Xxxxxxx Property; or
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(b)
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Temex shall allow its interest in the Joint Venture to be diluted by Mill City
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provided that, Temex shall have the right to participate at any time until its interest is diluted to less than 10% at which time its interest in the Xxxxxxx Property shall automatically and for no further consideration be reduced to zero.
For clarity of matters relating to the Joint Venture on the Xxxxxxx Property and the operations to be carried out thereupon, the parties agree to negotiate the framework for the Joint Venture on the Xxxxxxx Property in good faith subsequent to the exercise of the Option by Mill City. In the absence of such agreement for any reason, the parties agree that the document dated December 12, 2007 between the parties referred to above shall provide the terms and conditions that will govern the parties in relation to this property (with the appropriate changes to claim numbers etc. contained herein).
Any advance royalty payments due after the formation of the Joint Venture shall be an expense of the Joint Venture.
If Temex elects to continue to participate in the Xxxxxxx Joint Venture with Mill City for the further exploration and development of the Xxxxxxx Property, then Temex shall be deemed to have an initial investment in the Xxxxxxx Joint Venture of $750,000, and Mill City shall be deemed to have an initial investment of $750,000 as at the date of exercise of the Option, for the purposes of establishing dilution under the Xxxxxxx Joint Venture Agreement.
Temex agrees to, while this agreement or any subsequent agreement relating to the Xxxxxxx Property remains in full force and effect, vote any and all of its Mill City shares in favour of the then current management.
If you concur with the foregoing please so signify by signing and returning a copy hereof to Temex.
Yours very truly,
TEMEX RESOURCES CORP.
Xxx Xxxxxxxx, President and CEO
/s/ Xxx Xxxxxxxx
Agreed to and accepted this 21st day of September, 2010
by and on behalf of
/s/ Xxxxx X. Xxxxx
Xxxxx X. Xxxxx, President and CEO
SCHEDULE A: Claims Description
Recorded Holder: Temex Resources Corp. 100%
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Claim
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Township/Area
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G-Plan
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Units
|
Acres
|
Recording Date
|
Claim Due Date
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|
1
|
849065
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
2
|
849066
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
3
|
849067
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
4
|
849068
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
5
|
849069
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
6
|
871790
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-17
|
2016-Mar-17
|
|
7
|
871791
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-17
|
2016-Mar-17
|
|
8
|
871792
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-17
|
2016-Mar-17
|
|
9
|
871793
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-17
|
2016-Mar-17
|
|
10
|
871794
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-17
|
2016-Mar-17
|
|
11
|
871795
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
12
|
871796
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
13
|
871797
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
14
|
880296
|
THORNELOE
|
G-3229
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
15
|
880297
|
THORNELOE
|
G-3229
|
1
|
40
|
1986-Feb-14
|
2016-Feb-14
|
|
16
|
880298
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
17
|
880299
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
18
|
880300
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
19
|
880301
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
20
|
880302
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
21
|
880303
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
22
|
880304
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
23
|
880305
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
24
|
880306
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
25
|
880307
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
26
|
880308
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
27
|
880309
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
28
|
880310
|
PRICE
|
M-0307
|
1
|
40
|
1986-Feb-28
|
2016-Feb-28
|
|
29
|
889259
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
30
|
889260
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
31
|
889261
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
32
|
889262
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
33
|
889263
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
34
|
889264
|
PRICE
|
M-0307
|
1
|
40
|
1986-Mar-26
|
2016-Mar-26
|
|
35
|
900409
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
36
|
900410
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
37
|
900411
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
38
|
900412
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
39
|
900413
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
40
|
900414
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
41
|
900415
|
PRICE
|
M-0307
|
1
|
40
|
1986-Apr-01
|
2016-Apr-01
|
|
42
|
905586
|
THORNELOE
|
G-3229
|
1
|
40
|
1986-Aug-19
|
2016-Aug-19
|
|
43
|
905587
|
THORNELOE
|
G-3229
|
1
|
40
|
1986-Aug-18
|
2016-Aug-18
|
|
44
|
905588
|
PRICE
|
M-0307
|
1
|
40
|
1986-Aug-19
|
2016-Aug-19
|
|
45
|
988131
|
PRICE
|
M-0307
|
1
|
40
|
1987-May-06
|
2016-May-06
|
|
46
|
988132
|
PRICE
|
M-0307
|
1
|
40
|
1987-May-06
|
2016-May-06
|
|
47
|
988133
|
PRICE
|
M-0307
|
1
|
40
|
1987-May-06
|
2016-May-06
|
|
48
|
998017
|
XXXXX
|
G-3979
|
1
|
40
|
1987-Aug-11
|
2016-Aug-11
|
|
49
|
998021
|
XXXXX
|
G-3979
|
1
|
40
|
1987-Aug-11
|
2016-Aug-11
|
|
50
|
998246
|
XXXXX
|
G-3979
|
1
|
40
|
1987-Jul-28
|
2016-Jul-28
|
|
51
|
998247
|
XXXXX
|
G-3979
|
1
|
40
|
1987-Jul-28
|
2016-Jul-28
|
|
52
|
998248
|
XXXXX
|
G-3979
|
1
|
40
|
1987-Jul-28
|
2016-Jul-28
|
|
53
|
1033734
|
PRICE
|
M-0307
|
1
|
40
|
1988-Mar-31
|
2016-Mar-31
|
|
54
|
1033736
|
PRICE
|
M-0307
|
1
|
40
|
1988-Mar-31
|
2016-Mar-31
|
|
55
|
1033737
|
PRICE
|
M-0307
|
1
|
40
|
1988-Mar-31
|
2016-Mar-31
|
|
56
|
1126672
|
PRICE
|
M-0307
|
1
|
40
|
1994-Mar-02
|
2016-Mar-02
|
|
57
|
1159644
|
THORNELOE
|
G-3229
|
1
|
40
|
1991-Feb-18
|
2016-Feb-18
|
|
58
|
1159645
|
THORNELOE
|
G-3229
|
1
|
40
|
1991-Feb-18
|
2016-Feb-18
|
|
59
|
1177832
|
THORNELOE
|
G-3229
|
2
|
80
|
1993-May-25
|
2016-May-25
|
|
59
|
60
|
2400
|
