RE: Letter Agreement for the Option to Purchase Uranium Properties by Key Gold Corporation (or its designee) from Somuncurah SRL, an Argentine Entity
Exhibit
10.10
Mr.
Xxxx
Xxxxxxxx
Key
Gold
Corporation
December
1, 2006
|
RE:
|
Letter
Agreement for the Option to Purchase Uranium Properties by Key Gold
Corporation (or its designee) from Somuncurah SRL, an Argentine
Entity
|
Dear
Xx.
Xxxxxxxx:
This
Letter Agreement, when signed by both parties, shall constitute the binding
agreement for an option to purchase the 29,950 hectares of uranium claims,
comprising the Guanchin, Cuesta xx Xxxxxxx, Alpasinche, Xxxxxx de Palqui, Huaco,
Xxxxxx de los Xxxx, and Cuesta xx Xxxxxxx I, all in the Province of La Rioja,
Argentina, and as listed in Exhibit A attached hereto (collectively hereinafter
the “Properties”), by Key Gold Corporation (“Key”) or its designee from
Somuncurah SRL (“Somuncurah”), an Argentine entity. Somuncurah shall provide to
Key, pursuant to industry standard confidentiality and non-compete agreements
to
be entered into, historic reports and project descriptions of the Properties,
a
title review of the land status of the Properties, and sufficient information
(financial and otherwise) that may be required to be filed with the Securities
and Exchange Commission by Key in connection with the exercise of the option
on
December 8, 2006 as provided below. Following a reasonable opportunity to review
such reports and land review data, the option to purchase shall be exercised
by
Key by paying US$250,000.00 to Somuncurah on or before December 8, 2006 by
wire
transfer to the account information to be supplied by Somuncurah. Upon such
exercise, Key shall have the option to purchase the Properties on the following
terms and conditions:
|
1.
|
In
order to maintain the purchase option in force, Key shall make the
following payments in the amounts and at the times specified
below:
|
|
On
or before May 10, 2007
|
US$
150,000.00
|
|
On
or before May 10, 2008
|
US$
150,000.00
|
|
On
or before May 10, 2009
|
US$
250,000.00
|
|
On
or before November 10, 2010
|
US$
2,800,000.00
|
|
2.
|
Upon
making the final payment listed above (and, assuming each of the
previous
payments have been made timely), Key shall have completed the purchase
of
all of Somuncurah’s right, title and interest in the Properties, and
Somuncurah, directly and through the best efforts of Xxxxxx Xxxxx
and its
and his respective affiliates, shall promptly convey the Properties
(that
have not been relinquished as provided in paragraph 3 below) to Key,
free
and clear of all liens and encumbrances, except any as shall have
been
suffered to attach to the Properties by any action or inaction of
Key or
any of its officers, directors, agents or successors. In such conveyance,
Somuncurah shall reserve to itself or its assigns a 1.5% Net Smelter
Return royalty interest, determined and documented in accordance
with
industry standards.
|
|
3.
|
At
any time, Key may make any payment or payments called for above in
advance
of the actual date(s) specified. During the time up to and until
all
payments have been made, and so long as the purchase option is in
effect,
Key shall maintain the Properties in full compliance with all regulatory
requirements (except with respect to any Property or Properties that
Key
has previously properly relinquished, as described below), and shall
have
the right to operate mineral exploration and any related exploitation
and
other activities as it sees fit, and shall file all reports and proofs
of
work as reasonable and necessary to maintain the Properties in good
standing with the Province of La Rioja and the Republic of Argentina.
In
addition, in the event that Key at any time desires not to proceed
with
the purchase option with respect to one or more of the Properties,
Key
shall notify Somuncurah at least thirty (30) days in advance of the
date
for the next subsequent payment provided in paragraph 2 above, and
thereafter with respect to any such Property or Properties, Key shall
have
no further responsibility to maintain the good standing thereof,
and the
payment amounts to be made by Key shall be proportionately reduced
in the
ratio of the hectares contained within the relinquished Property
or
Properties to the total amount of hectares of 29,950. In such event,
Somuncurah shall take such Property or Properties from that point
for its
own account. With respect to any Property or Properties so relinquished
by
Key, Key shall have no further obligation to make any payment or
payments
falling due after thirty (30) days of such notice of relinquishment,
or
any other obligation relating to such Property of Properties, except
for
reclamation or other obligations arising from Key’s operations prior to
the time of relinquishment.
|
|
4.
|
Xxxxxx
Xxxxx, Somuncurah, and his and its respective affiliates accept
responsibility for, and shall indemnify and hold Key harmless from
and
against, any and all taxes, governmental fees, and the like that
may
accrue against Xxxxxx Xxxxx, Somuncurah, and his and its affiliates
in
respect of the transactions contemplated
hereby.
|
Upon
the
execution of this Letter Agreement by both parties and the payment of the
initial exercise price of US$250,000.00, this Letter Agreement shall become
a
binding purchase option agreement enforceable in accordance with its terms.
However, the parties may desire to enter into more formal documentation to
enable any reasonable financing or regulatory review as may be required. In
the
event either party desires to do so, it is hereby mutually agreed that the
parties will negotiate in good faith a more formal and definitive purchase
option agreement and use their best efforts to finalize and execute the same
within thirty (30) days from the date that either party notifies the other
of
such desire. Any such formal document shall contain the provisions of this
Letter Agreement and such other usual and customary terms and conditions as
are
within the industry standards, so long as the basic provisions of this Letter
Agreement remain embodied in such document.
2
In
consideration of the foregoing agreements and commitments of the parties and
the
other terms provided above, the undersigned hereby acknowledge their consent
and
agreement to be bound by the terms of this Letter Agreement.
ACCEPTED
AND AGREED THIS 1st
DAY OF
DECEMBER, 2006
KEY
GOLD
CORPORATION
|
By:
|
_______________________ |
|
Xxxx
Xxxxxxxx
|
|
|
Chairman
and CEO
|
ACCEPTED
AND AGREED THIS _____ DAY OF DECEMBER, 2006
SOMUNCURAH
SRL
|
By:
|
_______________________ |
|
Xxxxxx
X. Xxxxx
|
|
|
Its
Attorney in Fact
|
3
EXHIBIT
A
between
Key Gold Corporation (or its designee) and Somuncurah SRL
The
following mining claims in the Province of La Rioja, Argentina:
|
Name
|
Hectares
|
Identifying
Information
|
|
Guanchin
|
3,500
hectares
|
As
filed in La Rioja Official Records
|
|
Cuesta
xx Xxxxxxx
|
4,500
hectares
|
As
filed in La Rioja Official Records
|
|
Alpasinche
|
3,500
hectares
|
As
filed in La Rioja Official Records
|
|
Xxxxxx
de Palqui
|
3,950
hectares
|
As
filed in La Rioja Official Records
|
|
Huaco
|
3,000
hectares
|
As
filed in La Rioja Official Records
|
|
Xxxxxx
de los Xxxx
|
5,500
hectares
|
As
filed in La Rioja Official Records
|
|
Cuesta
xx Xxxxxxx I
|
6,000
hectares
|
As
filed in La Rioja Official Records
|
