LETTER AGREEMENT
10 NEVADA PROPERTIES
September 1, 2005
Following are the general terms and conditions between Xxxx Xxxxxx ("Xxxxxx")
and Tornado Gold International Corp. ("Tornado") with respect to the acquisition
of 10 mineral properties in Nevada:
A. Tornado hereby agrees to acquire from Xxxxxx (a non-employee director
of Tornado) 10 mineral properties (about 1,600 claims) as listed below:
1. Golconda
2. North Battle Mountain
3. Dry Hills
4. Horseshoe Basin
5. Xxxx
6. Xxxxx
7. West Whistler
8. South Lone Mountain
9. Xxxxx
10. Stargo
The properties and number of claims at each property are subject to
availability and are being acquired by Tornado without warranty from
Xxxxxx as to total availability and/or mineral potential. Tornado
further agrees to indemnify, hold harmless, and defend Xxxxxx against
any action by Tornado or shareholders of Tornado as a result of this or
other property agreements with Xxxxxx.
X. Xxxxxx and Tornado shall execute Letter Agreements with respect to
these mineral properties as per Exhibit I.
C. As part of its commitment for 10 properties and as part of the Initial
Advance Minimum Royalty Payment, Tornado shall pay Xxxxxx US$50,000
upon signing.
D. The remainder, US$30,000 per property, of the initial Advance Minimum
Royalty Payment for each property shall be made in two equal payments
to Xxxxxx as follows:
November 30, 2005 ------------------ US$ 150,000
December 30, 2005 ------------------ US$ 150,000
E. Tornado shall issue shares in the form of warrants, options, or other,
to be mutually agreed to, of 100,000 shares of the company for each of
the properties to Xxxxxx.
LETTER AGREEMENT
10 NEVADA PROPERTIES
September 1, 2005
Page 2
F. Tornado shall make available all money necessary to complete the claim
staking and filing process for each property prior to December 1, 2005.
Tornado Gold International Corp. and Xxxx Xxxxxx hereby agree to and are bound
by the terms as presented above.
/s/ Xxxx X. Xxxxxx November 10, 2005
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Xxxx X. Xxxxxx, President Date
Tornado Gold International Corp.
/s/ Xxxx X. Xxxxxx November 10, 2005
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Xxxx X. Xxxxxx Date
EXHIBIT I
LEASE/PURCHASE
LETTER AGREEMENT
September 1, 2005
XXXXXX Property
Following are the principal terms which outline the lease/purchase agreement for
the XXXXXXXXX Property (the "Property") being acquired by Tornado Gold
International Corp. (the "Company") from Xxxx Xxxxxx ("Xxxxxx"):
1. The Property is listed per Exhibit A.
2. The Advance Minimum Royalty payments for the Property are as follows:
a. US$35,000 upon signing, plus 100,000 shares of the Company.
b. US$55,000 first anniversary.
c. US$75,000 second anniversary.
d. US$100,000 third anniversary.
e. US$125,000 fourth anniversary.
f. US$150,000 fifth anniversary.
g. US$200,000 sixth anniversary and each anniversary thereafter.
3. Upon completion of a bankable feasibility study, the Company shall own
100% of the Property subject to the greater of a 4% Production Royalty
Payments or Advance Minimum Royalty Payments as shown above. All
Advance Minimum Royalty Payments may be deducted from Production
Royalty Payments.
4. Future land acquisition costs and filing fees for the Property shall be
paid by the Company. This may include additional claim staking costs
and filing fees.
5. The Company shall have the option to purchase 2% of the 4% Production
Royalty for US$4 million prior to completion of the bankable
feasibility study.
6. The Company shall carry out at least 5,000 feet of drilling on the
Property within three years followed by a yearly commitment of 7,500
feet until completion of the bankable feasibility. Excess footage
drilled on the Property in any year can be carried forward to
subsequent years, and the Company shall have the option to pay Xxxxxx
US$10 per foot committed to and not drilled.
7. An Area of Interest ("AI") of one mile shall extend around the Property
such that any mineral rights acquired by either party shall be subject
to the terms of this agreement, except that Xxxxxx shall only retain a
1% royalty on mineral rights acquired from a third party within the AI.
8. Annual holding fees will be committed to and paid by the Company for
the Property through September 1, 2006. Each year thereafter, the next
due fees shall be paid by the Company if the lease is terminated on or
after May 1 of any year.
9. The Company shall be responsible for all environmental liabilities and
reclamation obligations it creates and shall indemnify Xxxxxx from
such. Neither Xxxxxx nor the Company shall be liable for pre-existing
conditions.
10. The Company may terminate this lease at any time by giving Xxxxxx 30
days notice so long as there are no outstanding environmental or
reclamation liabilities, all Advance or Production Royalty Payments are
current, drilling or payments in lieu of drilling is complete for the
lease year, and all annual holding fees due during the lease year are
made.
11. This agreement becomes effective and binding upon signing on this date
of October 6, 2005. The Company and Xxxxxx shall within 90 days enter
into a definitive agreement which will incorporate these principal
terms as well as define all operating procedures and conditions for
both parties.
Agreed to by:
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Xxxx X. Xxxxxx, President Date
Tornado Gold International Corp.
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Xxxx X. Xxxxxx Date
