LETTER OF INTENT
EXHIBIT 10.1
This Letter of Intent is made the 18th day of May, 2005
BETWEEN:
GARUDA MINERALS INC., a Nevada corporation with its principal executive offices located at 502 – 0000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
(“Garuda”)
OF THE FIRST PART
AND:
NEWHAVEN RESOURCES LIMITED, a Ghanaian registered mining, exploration and services company, located at X.X. Xxx 0000 (Xxxxxxx), Xxxxx, Xxxxx.
(“Newhaven”)
OF THE SECOND PART
AND:
AQUARIAN GOLD CORPORATION, a corporation incorporated in the U.S. with its principal executive offices located at 000-000 Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx.
(“Aquarian”)
OF THE THIRD PART
This letter of intent constitutes an agreement and is legally binding on all parties,
WHEREAS Newhaven has represented that it is the sole recorded and beneficial owner in and to a recognisance licence in the Ho Property (the “Property”) described in Schedule “A” attached hereto, previously optioned to Aquarian;
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AND WHEREAS Newhaven, now wishes to grant to Garuda or its planned subsidiary, a Ghanaian corporation, the exclusive right and option to acquire a 65% right, title and interest in and to the Property on the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of the premises, the mutual covenants herein set forth and the sum of One Dollar of U.S. currency now paid by Garuda to Newhaven (the receipt whereof is hereby acknowledged) and the sum of One Dollar of U.S. currency now paid to by Garuda to Aquarian (the receipt whereof is hereby acknowledged), the Parties hereto do hereby mutually covenant and agree as follows:
| 1. | Definitions |
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The following words, phrases and expressions
shall have the following meanings: |
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| (a) |
“Work Commitment” includes
all direct or indirect expenses (net of government incentives and net
of payments to Newhaven pursuant to Paragraph 2 hereof of or incidental
to Explorations Operations); |
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| (b) |
“Mineral Products” means the
commercial end products derived from operating the Property as a mine;
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| (c) |
“Exploration Operations” includes:
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| (i)
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every kind of work done on or with respect to the
Property by or under the direction of Garuda during the Option Period
or pursuant to an approved Work Program except expansion of the property
boundaries; and |
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| (ii) |
without limiting the generality of the foregoing,
includes the work of assessment, geophysical, geochemical and geological
surveys, studies and mapping, investigating, drilling, designing, examining
equipping, improving, surveying, shaft sinking, raising, cross-cutting
and drifting, searching for, digging, trucking, sampling, working and
procuring minerals, ores and metals, in surveying and bringing any mineral
claims to lease or patent, in doing all other work usually considered
to be prospecting, exploration, development, a feasibility study, mining
work, milling, concentration, bonification or ores and concentrates, as
well as the separation and extraction of mineral products; |
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| (d) |
“Option Period” means the
period from the date hereof to the date at which Garuda has performed
its obligations to acquire its 65% interest in the Property or the date
the option expires as set out in Section 2 hereof, whichever shall be
the lesser period; |
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| (e) |
“Work Program” means, a program
of work reasonably acceptable to both parties in respect of a particular
Property, contained in a written document setting out in reasonable detail:
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(i) |
an outline of the Explorations Operations proposed
to be undertaken and conducted on the Property, specifically stating the
period of time during which the work contemplated by the proposed program
is to be done and performed; and |
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(ii) |
the estimated cost of such Explorations Operations
including a proposed budget providing for estimated monthly cash requirements
in advance and giving reasonable details. |
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reasonably acceptable to
both parties hereto. |
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(g) |
“Property” means
the recognisance exploration mining leases or claims described in Schedule
“A”. |
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| 2. | Option |
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Newhaven hereby grants to Garuda the sole exclusive right and option (the “Option”) to earn a 65% interest in the Property exercisable as follows:
| (a) | on or before May 17, 2006 Garuda makes a Work Commitment of $300,000 on the Property |
and following which Garuda shall be deemed to have exercised the Option (the “Exercise Date”) and shall be entitled to 65% right, title and interest in and to the Property with the full right and authority to equip the Property for production and operate the Property as a mine, subject to the rights of Newhaven and Aquarian.
3. Transfer of Title
Garuda shall be entitled to record the Garuda Transfer with the appropriate government offices to effect transfer of legal title of the Property into its own name upon the full and complete exercise of the Option by Garuda. In the event Garuda Transfer is recorded Newhaven and Aquarian shall be entitled to record notices of each of their interests.
4. Exploration Operations during and after Option
During the Option Period, Garuda, through its subsidiary, a Ghanaian company to be incorporated, shall conduct the Exploration Operations on the Property in conjunction with Newhaven. Newhaven shall invoice Garuda in respect of its expenses of such Explorations Operations from time to time and the prompt payment of such invoices when due shall constitute Expenditures by Garuda as contemplated under Section 2 hereof. After the expiration of the Option Period, each of the parties shall contribute to ongoing operations in their respective percentages, except that Newhaven shall only contribute to expenses once Garuda and Acquarian have spent a further $200,000 on the Property.
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5. Assignment
During the Option Term, no party shall sell, transfer, assign, mortgage, pledge or otherwise encumber its interest in this Agreement or its right or interest in the Property without the consent of the other parties, such consent to be not unreasonably withheld, provided that any party shall be permitted to assign this Agreement to an “affiliate”, as that term is defined in The Company Act (Nevada). It will be a condition of any assignment under this Agreement that such assignee shall agree in writing to be bound by the terms of this Agreement applicable to the assignor.
6. Termination
This Agreement shall forthwith terminate in circumstances where:
| (a) | Garuda fails to make the payments for or carry out
the expenditures required in Section 2 of this Agreement on or before
the dates set out herein; or |
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| (b) | Garuda gives notice of termination to Newhaven,
which it shall be at liberty to do at any time after the execution of
this Agreement and the payment of the amount set forth in clause 4(b)
hereof. If and when Garuda elects to terminate this agreement, at such
time the Property will be returned to Newhaven. |
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7. Representations, Warranties and Covenants of Newhaven
Newhaven represents, warrants and covenants to and with Garuda as follows:
| (a) | Newhaven has full power and authority to carry on
its business and to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement; |
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| (b) | the Agreement constitutes a legal, valid and binding
obligation of Newhaven; |
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| (c) | the Property is accurately described in Schedule
“A”, is in good standing under the laws of the jurisdiction
in which it is located and is free and clear of all liens, charges and
encumbrances; |
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| (d) | Newhaven is the sole recorded and beneficial owner
of a recognisance licence on the Property and has the exclusive right
to enter into this Agreement and all necessary authority to transfer its
interest in the Property in accordance with the terms of this Agreement;
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| (e) | no person, firm or corporation has any interest
in a recognisance, prospecting or mining licence on the Property other
than Newhaven, and no person, firm or corporation is entitled to any royalty
or other payment in the nature of rent or royalty on any minerals, ores,
metals or concentrates or any other such products removed from the Property
other than the government of the country of Ghana pursuant to statute;
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| (f) | upon request by Garuda, and at the sole cost of
Garuda, Newhaven shall deliver or cause to be delivered to Garuda copies
of all available maps and other documents and data in its possession respecting
the Property; and |
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| (g) | subject to performance by Garuda of its obligations
under Section 2, during the Option Period, Newhaven will keep the Property
in good standing, free and clear of all liens, charges and encumbrances,
will carry out all Explorations Operations on the Property in a miner-like
fashion, will obtain all necessary licenses and permits as shall be necessary.
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8. Representations, Warranties and Covenants of Garuda
Garuda represents, warrants and covenants to and with Newhaven that:
| (a) | Garuda has full power and authority to carry on
its business and to enter into this Agreement and any agreement or instrument
referred to or contemplated by this Agreement; |
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| (b) | this Agreement constitutes a legal, valid and binding obligation of Garuda. | |
9. Aquarian Interest
Upon Garuda exercising the Option and obtaining a 65% ownership interest in the Property, Newhaven shall continue to own 25% of the Property and Aquarian shall be granted the remaining 10% interest in the Property. Aquarian agrees that other than the rights and interests granted to Aquarian pursuant to this agreement, Aquarian has no other right or title in or to the Property and is not entitled to any other rights, fees or claims from either Garuda or Newhaven with respect to the Property. Aquarian represents that it is not entitled to and shall not claim any royalty or other payment in the nature of rent or royalty on any minerals, ores, metals or concentrates or any other such products removed from the Property other than pursuant to its 10% interest.
10. Indemnity and Survival of Representations
The representations and warranties hereinbefore set out are conditions on which the parties have relied in entering into this Agreement and shall survive the acquisition of any interest in the Property by Garuda and each of the parties will indemnify and save the other harmless from all loss, damage, costs, actions and suits arising out of or in connection with any breach of any representation, warranty, covenant, agreement or condition made by them and contained in this Agreement.
Newhaven agrees to indemnify and save harmless Garuda from any liability to which it may be subject arising from any Explorations Operations carried out by Newhaven or at is direction on the Property. Garuda agrees to indemnify and save harmless Newhaven from any liability to which it may be subject arising from any Explorations Operations carried out by Garuda or at its direction on the Property.
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11. Confidentiality
The parties hereto agree to hold in confidence all information obtained in confidence in respect of the Property or otherwise in connection with this Agreement other than in circumstances where a party has an obligation to disclose such information in accordance with applicable securities legislation, in which case such disclosure shall only be made after consultation with the other party.
12. Further Assurances and Long Form Agreement
Each of the parties agrees to negotiate in good faith to reach a long form agreement regarding the subject matter of this Agreement. If no long form agreement is reached, however, this letter of intent agreement shall govern the rights and obligations of and between the parties. Each of the parties to this Agreement shall from time to time and at all times do all such further acts and execute and deliver all further deeds and documents as shall be reasonably required in order fully to perform and carry out the terms of this Agreement.
13. Enurement
This Agreement will enure to the benefit of and be binding upon the parties hereto and their respective successors and permitted assigns.
14. Option Only
This is an option only and except as herein specifically provided otherwise, nothing herein contained shall be construed as obligating Garuda to do any acts or make any payments hereunder, and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating Garuda to do any further act or make any further payment or payments.
15. Currency
All references to currency in this agreement are to U.S. dollars unless otherwise stated.
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement effective as of the 18th day of May, 2005
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| GARUDA MINERALS INC. | ||
| Per: | /s/ C. Xxxxx Xxxxx | |
| Authorized Signatory: | ||
| NEWHAVEN RESOURCES LIMITED | ||
| Per: | /s/ Xxxxx Xxxxxxx | |
| Authorized Signatory: | ||
| AQUARIAN GOLD CORPORATION | ||
| Per: | /s/ Xxxxxx Xxxx | |
| Authorized Signatory: | ||
SCHEDULE A
DESCRIPTION OF PROPERTY
The Property consists of an exploration license in the form of an EPA certificate from the Environment Protection Agency of Ghana on an area of approximately 200 km2 located near the town of Ho, in the Volta region of Ghana.
