EXHIBIT 99.1
EXPLORATION AGREEMENT WITH OPTION FOR JOINT VENTURE
(BEOWAWE PROJECT)
THIS EXPLORATION AGREEMENT WITH OPTION FOR JOINT VENTURE (BEOWAWE PROJECT) is
made this 21st day of September, 2005 (the "Effective Date") by and between ATNA
RESOURCES, LTD., a Canadian corporation, and its wholly owned U.S. subsidiary,
ATNA RESOURCES, INC., a Nevada corporation (referred to collectively as "Atna");
and APOLO GOLD & ENERGY INC., a Nevada Corporation ("Apolo").
RECITALS
A. Atna owns or controls the following interests in real property which
constitute the "Beowawe Project" situated in Lander and Eureka Counties,
Nevada:
1. Leases known as Parcel One (Xxxxxx), Parcel Two (Xxxxxxxxx Property),
Parcel Three (Xxxxxx Family Trust), and Parcel Four (Xxxxxx and
Kornze). Said leases are attached as Schedule 1 of this Agreement.
2. Mining Claims as shown on Map attached to Agreement as Schedule 2.
The foregoing property interests, together with all ores, minerals, surface
and mineral rights, and the right to explore for, mine, and remove the
same, and all water rights and improvements, easements, licenses,
rights-of-way and other interests appurtenant thereto, shall be referred to
collectively as the "Property."
B. The parties now desire to enter into an agreement by which Apolo can
acquire an undivided fifty-five percent (55%) interest in the Property. The
Agreement will govern the actions of Apolo and Atna during Apolo's earn-in
period, and set forth essential terms of a Joint Venture Agreement for
further development of the Property.
THEREFORE, the parties have agreed as follows:
SECTION ONE
Terms and Definitions
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1.1 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.
1.2 Area of Interest shall mean any land within one mile of the Property
boundary.
1.3 Agreement means this Agreement, which sets forth the business arrangement
between the Parties during the option period described in Section 3 below.
1.4 Assets mean the Property, products, and all other real and personal
property, tangible and intangible, held for the Parties hereunder.
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1.5 Bankable Feasibility Study means a detailed report prepared or verified by
an independent firm of consultants demonstrating the feasibility of placing
the Property into commercial production. The study shall be in such form
and include such details as is customarily required by institutional
lenders of major financing for mining projects.
1.6 Budget means a detailed estimate of all costs to be issued by the Parties
with respect to a Program and a schedule of cash advances to be made by the
Parties.
1.7 Costs means all expenditures whatsoever, direct or indirect, with respect
to Operations incurred by the Operator after the Participation Date,
including the Operator's fee contemplated by Section 5.1(a).
1.8 Earn-In Obligation means the minimum amount Apolo must expend pursuant to
Sections 3.2, 3.3, 3.4, and 3.5 below in order to acquire a 55%
Participating Interest in the Property.
1.9 Exploration means all activities directed toward or incident to
ascertaining the existence, location, quantity, quality, or commercial
value of deposits of Products including without limitation those activities
included in Section 1.10, "Exploration Expenditures."
1.10 Exploration Expenditures shall mean all costs properly incurred for the
benefit of the Property pursuant to Programs and Budgets approved pursuant
to this Agreement, recorded in accordance with generally accepted
accounting principles consistently applied. Exploration Expenditures shall
include the following:
Actual salaries, benefit costs, and wages of employees or contractors of
the Operator directly assigned to and actually performing Exploration and
related activities within or benefiting the Property. Employees and
contractors shall include geologists, geophysicists, engineers, engineering
assistants, technicians, draftsmen, engineering clerks, and other personnel
performing services connected with Exploration of the Property; actual
costs and expenses of use of machinery, equipment and supplies required for
such activities; travel expenses and transportation of employees,
contractors, materials, equipment and supplies necessary or convenient for
the conduct of such activities; all payments to contractors for work on
such activities; costs of assays, metallurgical testing and analysis and
other costs incurred to determine the quantity and quality of Products
including preparation of feasibility studies; costs incurred to obtain
permits, rights-of-way and other similar rights in connection with such
activities; costs incurred in preparation and acquisition of environmental
permits necessary to commence and complete such activities; costs and
expenses of holding and maintaining the Property, such costs and expenses
to include performing, completing and filing all annual assessment work to
maintain the Property in good standing and the payment of U.S. Bureau of
Land Management claim maintenance fees, all taxes levied against the
Property or any interest in the Property except, however, that option and
lease payments; expenditures related to BLM claim fees, and county taxes
and fees are not eligible as earn-in expenditures; the cost of insurance
premiums or bonds; costs of title search and remediation and curative work;
costs of staking and recording additional claims or other rights within the
Area of Interest; and any and all capital items acquired for the
Exploration of the Property; and a management fee based on the foregoing
charges and expenditures of ten percent (10%) to cover head office
overhead, general and administration expenses.
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1.11 Interest shall have the same meaning as 1.18, Participating Interest.
1.12 Joint Venture Agreement shall refer to the business arrangement between the
Parties after formation of a Joint Venture pursuant to Section 4.1 below.
1.13 Management Committee means the committee established under Section 4.2.
1.14 Operations means the activities carried out under this Agreement.
1.15 Operator means the person or entity appointed under Sections 3.3 and 5.1,
to manage Operations, or any successor Operator, as provided for by this
Agreement.
1.16 Participation Date means the date of the formation of a joint Venture
hereunder as provided in Section 4.1.
1.17 Participating Interest means the percentage interest representing the
operating ownership interest of a Party in Assets, and all other rights and
obligations arising under this Agreement, as such interest may from time to
time be adjusted hereunder. Participating Interests shall be calculated to
three decimal places and rounded to two (e.g. 1.519% rounded to 1.52%).
Decimals of .005 or more shall be rounded up to .01 decimals of less than
.005 shall be rounded down. The initial Participating Interests of the
Parties are set forth in Section 4.1.
1.18 Party shall refer to Apolo or Atna individually, and Parties shall refer to
Apolo and Atna collectively.
1.19 Prime Rate means the interest rate quoted as "Prime" by the Bank of
America, at its head office, as said rate may change from day to day (which
quoted rate may not be the lowest rate at which the Bank loans funds).
1.20 Products mean all ores, minerals, and mineral resources produced from the
Property under this Agreement.
1.21 Program means a description in reasonable detail of Operations to be
conducted by the Operator on or for the benefit of the Property pursuant to
this Agreement.
1.22 Property means Atna's interests in the Beowawe Project, as described in
Recital A and Exhibit A of this Agreement, and all other rights or
interests in real property (including royalty interests) within the Area of
Interest that may be acquired and held pursuant to the Agreement.
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1.23 Supplementary Program means a Program proposed by the Operator after the
approval of a then current Program which contemplates additional
exploration activity or changes to the construction or production concepts
or methods contained in, or the assets to be acquired under, the then
current Program, which shall also include a supplementary budget relating
thereto, which budget shall reflect only the additional or reduced costs
associated with the additional or changed work contemplated by the
Supplementary Program.
1.24 Venture means the business arrangement of the Parties under the Joint
Venture Agreement.
1.25 $ refers to United States dollars.
SECTION TWO
Representations and Warranties
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2.1 Atna's Warranties. Atna hereby represents and warrants that, as of the date
of the execution of the Agreement:
a. Atna Resources, Ltd is a corporation in good standing under the laws of
British Columbia, and Atna Resources, Inc. is a corporation in good
standing under the laws of the State of Nevada and it has the right to
enter into this Agreement, and the performance of its obligations hereunder
shall not be in breach of, or in conflict with any agreements or
undertakings between it and any governmental authority in the United
States, or any other Parties.
b. To the best of Atna's knowledge, the Property is free and clear of all
liens and encumbrances, recorded or unrecorded, for all leases as described
in Recital A. Should there be any liens on any of the leases as described
in Recital A, as of September 21, 2005, Atna will undertake to have such
liens removed at its expense..
c. Atna is not aware of any pending or threatened claims, liens, or
litigation by any person or entity with respect to the Property.
d. To the best of Atna's knowledge and belief (1) the mining claims that
comprise the Property have been properly located and maintained in
accordance with State and Federal mining laws; (2) Atna has paid the
federal rental fees for the 2005-2006 assessment year and made all
necessary filings with Lander and Eureka, Counties, in order to maintain
the claims in good standing; and (3) the claims are presently valid and in
good standing. Atna makes no warranty regarding the presence of valuable
minerals on the claims.
e. Atna is not aware of any environmental liability or reclamation
obligations affecting the Property, or of any judicial or administrative
order or action requiring remedial action with respect to the Property.
f. Atna has the right to enter into this Agreement, and the unrestricted
right to assign an undivided 55% interest to Apolo, and the entering into
and execution of this Agreement has been duly authorized by all necessary
corporate proceedings of Atna.
g. Atna has obtained the permits from the U.S. Bureau of Land Management
and the Nevada Division of Environmental Protection allowing operations on
the Property:
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2.2 Apolo's Warranties: Apolo hereby represents and warrants that, as of the
date of the execution of the Agreement:
a. Apolo is a Corporation in good standing under the laws of the State of
Nevada and has the right to enter into this Agreement, and the performance
of its obligations hereunder shall not be in breach of, or in conflict with
any agreements or undertakings between it and any governmental authority in
the United States, or any other party.
b. The entering into and execution of this Agreement has been duly
authorized by all necessary corporate proceedings of Apolo.
SECTION THREE
Option to Acquire Interest in Property
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3.1 Scope of Section 3. The terms of Section 3 set forth the relationship
between Apolo and Atna during the earn-in period.
3.2 Right to Earn Interest. Atna hereby grants to Apolo the exclusive right and
option to acquire an undivided fifty-five percent (55%) Interest in the
Property on the terms and conditions set forth below in this Section 3.
3.3 Expenditures. Apolo may acquire its undivided 55% Interest in the Property
by expending a cumulative total of ONE MILLION SEVEN HUNDRED THOUSAND
DOLLARS ($1,700,000.00) in Exploration Expenditures on the Property within
a period of four years from the Effective Date of this Agreement. The
minimum Exploration Expenditures for each year shall be as follows:
Year Exploration Cumulative Exploration
---- Expenditures Expenditures
------------ ------------
1 $250,000 $250,000.00
2 $350,000 $600,000.00
3 $450,000 $1,050,000.00
4 $650,000 $1,700,000.00
Total: $1,700,000
Apolo must fulfill the first year's Exploration Expenditures obligation.
Thereafter, Apolo may terminate this Agreement at any time by giving
written notice to Atna. If Apolo terminates after July 1 of any year, Apolo
shall pay the federal maintenance fees due in August of that year. Any
excess of Exploration Expenditures in one year may be applied to subsequent
years.
If Apolo does not complete its required Exploration Expenditures on the
Property within four years from the Effective Date, this Agreement shall
automatically terminate.
Conversely, if Apolo accelerates the work done in any one year, the excess
work completed over the minimum budget specified, shall be carried forward
to the next year as part of the following year's budget requirements.
3.4 Cash Payments. None.
3.5 Assumption of Lease Obligations. Apolo agrees to assume and discharge all
obligations set forth in the underlying lease in accordance with their
terms. Following termination of this Agreement for any reason, Apolo shall
continue to make any lease payment required by the underlying lease
agreements coming due within six months of written termination notice to
Atna.
3.6 Stock Distribution. Upon execution of this Agreement, Apolo shall deliver
ONE HUNDRED THOUSAND (100,000) restricted shares of its common stock to
Atna. On the first anniversary following the signing of this Agreement,
Apolo shall deliver an additional FIFTY THOUSAND (50,000) restricted shares
of its common stock to Atna, or FIFTY THOUSAND DOLLARS ($50,000.00) in
shares, based on the market price for the twenty (20) trading days
proceeding the anniversary date, whichever is greater. The stock shall be
subject to such restrictions as may be required by regulatory authorities
under rule 144.
3.7 Operator during Earn-In. Apolo shall be Operator during the earn-in period,
with full control, authority, and responsibility for all Operations to be
conducted on the Property. Apolo shall conduct all Operations hereunder in
a proper and workmanlike manner, in full compliance with all applicable
laws and regulations, and subject always to the terms and conditions of
this Agreement. Apolo shall defend, indemnify, and hold Atna harmless from
all claims and liabilities, including environmental liabilities and/or
reclamation obligations, resulting from its activities during the earn-in
period, which responsibility shall survive termination of this Agreement.
It is expressly understood and agreed that Atna shall remain solely
responsible for any environmental liability and/or reclamation obligations
resulting from Atna's activities on the Property prior to execution of this
Agreement.
Apolo and Atna will meet on or before the end of February of each year to
discuss prior year exploration results and develop exploration plans for
the following year. Subject to the rights and obligations of this
Agreement, Apolo shall have final decision authority regarding the
Exploration work to be conducted during the earn-in period.
3.8 Claim Maintenance. Apolo shall maintain the Property in good standing,
including payments, filings, and any other actions necessary to maintain
the mining claims in good standing. On or before June 1 of each year Apolo
shall pay federal claim maintenance fees or perform annual assessment work,
as required by the laws of the United States. On or before June 1 of each
year, Apolo shall file an Affidavit and Notice of Intent to Hold or
Affidavit or Annual Assessment Work in Lander and Eureka, Counties, as
required by State law. Apolo shall provide Atna with evidence of these
filings immediately after payment and recording.
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3.9 Reports and Inspections. Apolo will provide Atna with quarterly progress
reports. By February 15 of each year, Apolo shall provide Atna with reports
describing its Exploration Expenditures and the data and information
obtained from its Operations on the Property during the preceding year.
Atna will be notified of all material information without delay. All such
information shall be kept confidential by Atna, except as to those matters
strictly required to be disclosed by regulatory agencies.
Atna shall, upon prior notice, have access, at its sole risk and expense,
to the Property or other lands for the purpose of viewing the work
conducted thereon and shall also have reasonable access to all records,
including accounting records, of Apolo respecting Exploration work carried
on the Property. However, such access shall not unduly interfere with or
disrupt the activities of Apolo.
The Parties shall approve in writing, prior to release, all public
announcements, or press releases, and/or disclosures to third parties, to
be issued by either Party regarding the Agreement and all matters related
thereto. This limitation on disclosure shall not apply to the Affiliate(s)
of any Party. Approval by either Party shall not be unreasonably withheld.
3.10 Liens and Insurance. Apolo shall keep the Property free and clear of all
liens and encumbrances resulting from its activities, and shall maintain
comprehensive general liability and automobile insurance with a minimum of
$2,000,000.00 in coverage protecting the Parties to this Agreement from
third party claims. Apolo shall also maintain worker's compensation
insurance in compliance with the laws of the State of Nevada. Apolo shall
provide evidence of insurance coverage to Atna.
3.11 Assignment and First Right of Refusal. No Party shall sell, assign, or
transfer its interest in the Property or any other Assets before or after
the Participation Date, except to an Affiliate without first having offered
same to the other Party in writing on the same or more favorable terms. If
the non-transferring Party declines to elect to acquire the offering
Party's interest or right within 30 days of receipt of its offer, the
offering Party shall then have the right to transfer its interest or right
without further restriction on the same terms as offered to the other Party
hereunder or less favorable terms within sixty (60) days following such
declination, failing which the terms of this clause shall again come into
effect with respect to the offering Party's interest hereunder. Any sale or
assignment shall be made subject to the rights and obligations created by
this Agreement (or the Joint Venture Agreement, as the case may be),
including those with regard to assignment.
3.12 Property Acquisitions.
a. Any interest or right to acquire any interest in real property
(including royalty interests) within the Area of Interest acquired during
the term of this Agreement or of the Joint Venture Agreement (during or
following Apolo' earn-in period) by or on behalf of either Party, or any
Affiliate, shall be subject to the right of the other Party to make such
acquired interests or rights subject to this Agreement or the Joint Venture
Agreement, as the case may be, within a thirty (30) day election notice
provision. The election by such other Party shall be subject to payment by
such Party of a portion of the acquisition costs in proportion to its
Participating Interest (except to the extent such acquisition costs, if
incurred by Apolo, are included as part of Apolo' Earn-In Obligation). Any
interest or right acquired by the Operator within the Area of Interest
pursuant to an approved Program and Budget shall automatically become
subject to the Joint Venture Agreement.
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b. If any Property or rights are abandoned by the Parties, any
re-acquisition of such abandoned Property or rights shall be subject to the
provision of Section 3.8(a).
c. The rights and obligations of the Parties under this Section 3.8 shall
terminate upon termination of this Agreement. However, if Apolo terminates
the Agreement through election or default prior to fulfilling its Earn-In
Obligation, Apolo or any Affiliate of Apolo shall not acquire any interest
or rights within the Area of Interest for a period of one (1) year from the
date of Apolo' termination.
3.13 Default. If either Party defaults in performing its obligations under this
Agreement, the non-defaulting Party may give written notice to the
defaulting Party specifying the nature of the default. The defaulting Party
shall have thirty (30) days to remedy any default in payment, and thirty
(30) days to remedy any other default under this Agreement. If the
defaulting Party fails to remedy the default within the specified period,
the non-defaulting Party may terminate this Agreement by written notice,
which remedy shall be in addition to all other remedies allowed by law and
equity.
SECTION FOUR
Joint Venture
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4.1 Scope of Sections 4 through 7. The provisions of this Section 4 and
Sections 5 through 7 which follow shall govern the relationship between
Atna and Apolo during the formation and conduct of their Joint Venture
following Apolo's earn-in.
4.2 Option for Additional Earn-In. If Apolo maintains the option in good
standing and satisfies the Earn-In obligations described in Sections 3.3,
3.4, 3.5, and 3.6 above (the "Phase 1 Earn-In"), it shall have earned a
fifty-five percent (55%) interest and shall give written notice to Atna
substantiating its expenditures.
Apolo will have the right, but not the obligation, to elect within sixty
(60) days of vesting its fifty- five percent (55%) to earn an additional
fifteen percent (15%) interest in the Property, for a total of seventy
percent (70%), by paying all expenditures associated with preparation of a
Bankable Feasibility Study for the Project. If Apolo chooses to earn this
additional interest, the Bankable Feasibility Study must be completed
within thirty-six (36) months of completing the Phase 1 Earn-In. Completion
of the Bankable Feasibility Study shall be referred to as the "Phase 2
Earn-In." If Apolo fails to complete a Bankable Feasibility Study within
the thirty-six month period, its interest shall automatically revert to
fifty-five percent (55%) and a Joint Venture shall be formed. It is
understood that as long as Apolo has more than a 50% earned interest in the
Beowawe Project it shall have the right to be the Operator if it chooses.
4.3 Formation of Joint Venture. Upon completion of the Phase 1 Earn-In (if
Apolo chooses not to proceed to the Phase 2 Earn-In), or upon completion of
Phase 2 Earn-In, as the case may be, Atna and Apolo will form a Joint
Venture in accordance with Sections 4 through 7 and, to the extent
applicable, Section 8 below, and in the general format of Form 5A ("Form
5A") prepared by the Rocky Mountain Mineral Law Foundation. The Parties may
mutually agree to use Form 5A-LLC in place of Form 5A, and all references
in this Agreement to Form 5A shall then refer to Form 5A-LLC. The date of
formation of the Joint Venture is referred to as the "Participation Date."
The Parties will negotiate in good faith to execute the Joint Venture
Agreement within 90 days of notice given by Apolo pursuant to this Section
4.1. Atna shall simultaneously convey the Property to the Joint Venture. In
the event of any inconsistency between Sections 4 through 8 below and Form
5A, the provisions of this Agreement shall control. Apolo may make such
expenditures as are necessary to maintain the Property and comply with laws
and regulations pending execution of the Joint Venture Agreement, which
expenditures shall be shared by the Parties in accordance with their
Participating Interests.
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Upon completion of the Phase 1 Earn-In Obligation, Apolo shall have a
vested right to a 55% ownership interest in the Property irrespective of
any delay in execution of the Joint Venture Agreement.
4.4 Management Committee. Following formation of the Joint Venture pursuant to
Section 4.1 above, Apolo and Atna shall jointly participate in exploring
and developing the Property, with each providing its share of costs and
each sharing in production in accordance with their respective
Participating Interests.
A Management Committee consisting of one representative of each Party shall
be established and shall be responsible for approving Programs and Budgets,
and for determining the general policies and direction to be adopted by the
Operator in the conduct of the Operations under this Agreement.
4.5 Meetings and Decisions. The Management Committee shall meet at least once
annually and otherwise on ten (10) days written notice given by either
Party. Such notices shall be accompanied by an agenda of matters to be
discussed and/or decided at the meeting. Other than as provided in this
Section 4.3 and subject to Section 6.4(c) below, all decisions of the
Management Committee shall be by majority vote. Each Party's representative
shall be entitled to a vote equal to the Participating Interest such Party
holds. In the event of a deadlocked vote the Operator shall have the
deciding vote, except that the following decisions shall require the
unanimous approval of the Management Committee: (a) acquisition or
disposition of Property; (b) conduct of business other than for
exploration, development or mining of the Property; (c) borrowing or
entering into any form of credit arrangement which involves the pledge of
all or part of any Party's Participating Interest; (d) any subsequent
changes in the definition of the authority and responsibilities of the
Operator; (e) approval of any subsequent revisions in the accounting
procedures as adopted by the Venture; (f) except as set forth in Section
6.4(c), material changes to approved Programs and Budgets that would
require a call for a cash contribution from the Parties not previously
approved as part of a Program and Budget; (g) whether to establish a tax
partnership for federal income tax purposes; (h) adoption of annual
programs and budgets; (i) production decisions; and (j) closure decisions.
SECTION FIVE
Operator
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5.1 Designation of Operator.
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a. Apolo shall be the initial Operator for the joint Venture. The Operator
shall have exclusive charge of all Operations hereunder and shall conduct
such operations in accordance with approved Programs established by the
Management Committee. The Operator shall be entitled to charge and receive
from the joint Venture Parties, for the Operator's costs of supervision in
carrying out each Program where such Program consists primarily of
Exploration, 10% on all work incurred by the Operator. Where the Program
relates to development and construction and/or operation of a mine, the
Operator shall be entitled to charge its actual costs of supervision and
administration in carrying out a Program hereunder, such that the Operator
neither makes a profit nor incurs a loss as a result of acting as the
Operator.
b. The non-Operator may, upon thirty (30) days prior written notice, elect
to replace the Operator upon the Participating Interest of the Operator
becoming less than 50%; provided, however, that the non-Operator has, at
such time, at least a 50% Participating Interest. Where the Operator is
replaced by the non-Operator, the Operator shall provide to the
non-Operator, within the above thirty (30) day notice period, all
exploration data, drill core, geochemical samples and related records.
c. Operator may at any time resign as Operator upon thirty (30) days
notice, at which time the non-Operator with the greatest Participating
Interest may elect to become the new Operator, failing which the Management
Committee shall meet to select a new Operator.
5.2 Operator's Duties .
a. The Operator shall conduct all Operations in a good workmanlike and
efficient manner, in accordance with sound mining and other applicable
industry standards and practices, but in no event shall the Operator be
liable to the non-Operator for any act or omission resulting in damage or
loss or for bearing the non-Operator's share of the costs thereof except to
the extent caused by or attributable to the Manager's willful misconduct or
gross negligence.
b. The Operator shall prepare and submit reports on a monthly basis to the
non-Operator respecting results obtained from the implementation of a
Program. The Operator shall submit an annual report to the non-Operator on
or before February 15 of each year describing its expenditures and the
geologic data obtained from its Operations on the Property during the
preceding calendar year. The non-Operator shall, upon prior notice, have
access at its sole risk and expense to the Property for the purpose of
viewing the work conducted thereon and shall also have access to all
records of the Operator respecting Exploration and development work carried
out on the Property, provided, however, that such access shall not unduly
interfere with or disrupt the activities of the Operator. The Parties shall
approve in writing, prior to release, all public announcements, press
releases and/or disclosures to third parties, to be made by either Party
regarding the Agreement and all matters related thereto. Approval by either
Party shall not be unreasonably withheld.
c. During the currency of this Agreement, the Operator shall, subject to
Section 5.2(d) below, keep the Property in good standing, free and clear of
all liens and encumbrances resulting from its activities, and shall
maintain adequate insurance coverage protecting the Parties to this
Agreement from third party claims.
d. Should the Operator recommend that any of the mining claims comprising
the Property be dropped, it shall give the non-Operator thirty (30) days
notice and the non-Operator may elect to have such claims transferred to
it. If the non-Operator fails to respond to the Operator's notice within
thirty (30) days then the Operator may drop such claims and such claims
shall thereupon cease to be part of the Property.
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5.3 Indemnification . Each Party shall indemnify and save the Operator harmless
from and against any action, claim, demand, damage or expense (including,
without limiting the generality of the foregoing, all legal fees and
disbursements) resulting from any acts or omission of the Operator or its
officers, employees or agents, except to the extent caused by or
attributable to the Operator's willful misconduct or gross negligence.
The obligation of each of the Parties to indemnify and save the Operator
harmless pursuant to Section 5.3 shall be in proportion to its Interest as
of the date that the action, cause of action, claim, demand, damage or
expense occurred or arose.
SECTION SIX
Programs and Budgets.
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6.1 Programs by Operator . The Operator shall propose Programs and Budgets to
the Management Committee at least annually for periods determined necessary
or appropriate by the Operator. Programs and Budgets for Exploration or
mining Operations shall not exceed one year without unanimous approval of
the Participants. The Management Committee will vote upon the proposed work
plan and budget within 30 days after delivery by the Operator. Each Party
shall give notice to the Operator within 30 days after a Program and Budget
is approved by the Management Committee, whether it will fund its share of
expenditures in respect of such Program and Budget. Each Party who elects
to fund its share shall be obligated to do so.
6.2 Programs by Non-Operator. If the Operator (including any replacement
Operator who has become the Operator pursuant to this Section 6.2) does not
propose a Program and Budget requiring a total annual expenditure of
$200,000 or more prior to the beginning of an annual budget period, then,
within 30 days after the beginning of the annual period, the non-Operator
may propose a Program and Budget requiring an annual expenditure of
$200,000 or more, and the non-Operator shall thereupon become the Operator.
The former Operator shall be entitled to meet with the new Operator to
discuss the proposed Program and Budget and suggest any changes it feels
are appropriate. The new Operator shall immediately thereafter finalize the
Program and Budget and deliver it to the former Operator, whereupon it
shall be deemed to have been approved by the Management Committee. If the
non-Operator does not present such a proposal within 30 days after the
beginning of the annual period, then the non-Operator will have waived its
right to do so for that annual period.
6.3 Dilution of Interests.
a. When Apolo has completed the Phase 1 Earn-In Obligation, Apolo's
initial investment base in the Venture for dilution purposes shall be
$1,700,000.00 and Atna's initial investment base shall deemed to be
$1,390,910 for a total of $3,090,910. Additional expenditures by each
Party shall be added to its investment base.
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b. If a Party does not commit to pay its share of any approved Program
and Budget, its Participating Interest shall be diluted on a straight
line basis so that it corresponds to the percentage of total
investment (including the investment contemplated by the Program and
Budget in which the Party has elected not to participate) represented
by the investment of the non-participating Party (including the deemed
initial investment of Atna). The Participating Interest of the
participating Party shall then be determined by subtracting the
resulting percentage from 100%. If less than 80% of such approved
Program and Budget is actually spent by the participating Party, then
the diluted Party may recover its previous interest by paying to the
participating Party, within 60 days after the end of such budget
period its share (before the dilution occurred) of the expenditures
actually made plus interest at the Prime Rate.
c. Upon a Party's Participating Interest having been reduced to 20%
pursuant to either Section 6.3(b) or 7.1(a), its Participating
Interest shall be automatically converted to a royalty on production
from the Property equal to a fifteen percent (15%) net profits
interest, and the Party shall have no further interest in the Assets
or under this Agreement except its royalty interest.
d. If either Party's Participating Interest is converted under this
Section 6.3, upon the date of such conversion, such Party shall convey
and assign to the other Party all of its rights and interests in the
Property, except the royalty interest described in Section 6.3(c), and
the other Party shall become the beneficial owner of 100% of the
Property.
6.4 Cash Calls .
a. The Operator shall make monthly cash calls in advance based upon
expenditure projections for an approved Program, and each Party shall
remit its proportionate share within ten (10) business days after
receipt. Following completion and delivery to Atna of a Bankable
Feasibility Study, Atna will have a period of sixty (60) days in which
to decide whether to participate in the mining project described and
evaluated in the Bankable Feasibility Study. If Atna elects not to
participate in the venture, its participating interest will be
converted to a fifteen percent (15%) net profits interest. The term
"net profits interest" is defined in Schedule 3 attached hereto.
b. If actual expenditures for a month exceed the expenditure projection
for the month then the Operator shall provide to each Party a
financial accounting of the overrun. Upon receipt of such accounting
each Party shall remit to the Operator its share of funds required to
fund the overrun, subject to Section 6.4(c) below.
c. If the Operator incurs expenditures under an approved Program that are
more the 110% of the approved Budget then, unless the Management
Committee unanimously approved the funding of such excess, those
expenditures exceeding 110% of the relevant approved Budget shall be
paid by the Operator and shall not be included as expenditures for the
purpose of calculating Participating Interests. Budget overruns of 10%
or less shall be borne by the Parties in proportion to their
respective Participating Interests as of the time the overrun occurs.
However, in the case of emergency, the Operator may take any
reasonable action it deems necessary to protect life, limb, or
property, to protect the Assets of the joint Venture, or to comply
with law or government regulations. The Operator may also make
reasonable expenditures for unexpected events which are beyond its
reasonable control and which do not result from a breach by it of its
standard of care. Costs of emergency actions determined to have been
properly incurred for the protection and benefit of the Venture, shall
be funded by the Parties pro-rata in accordance with their respective
Participating Interests at the time of the emergency action.
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d. The Operator may propose Supplementary Programs or amendments to the
Budget of a current Program covering portions of any calendar year by
presenting such supplementary Programs or amendments to the Budget of
a current Program to the Management Committee.
6.5 Audits. The accounting and financial records of the Operator regarding
costs charged for the account of the Venture shall be subject to audit,
following the procedures regarding audits as generally outlined by Form 5A.
Any request for an audit or audit proceeding shall in no way defer or delay
the obligation of the Parties to contribute their respective pro-rata share
of Costs as provided by this Agreement.
6.6 Venture Liabilities and Credits. Except as otherwise provided, pursuant to
the Joint Venture Agreement, all costs, expenses and liabilities accruing
or resulting from the conduct of Venture operations shall be Venture
liabilities, and all sales or other dispositions arising out of Venture
operations (except for the taking of production in kind by the Parties)
shall constitute credits to the Venture, to be allocated between the
Parties in accordance with their Participating Interests.
SECTION SEVEN
Default and Dilution
--------------------
7.1 Default. Should either Party (" Defaulting Party") fail to provide its
share of funds toward an approved Program, after electing to do so, then
the Operator may thereafter deliver a notice ("Default Notice") requesting
the immediate payment of the required funds. If the Defaulting Party fails
to remit the required funds within 15 days of receipt of the Default Notice
then:
a. For a default relating exclusively to an Exploration Program and
Budget, the non-defaulting Party may pay all or a portion of the
defaulted amount and, without waiving its other remedies, increase its
participating interest by adding twice the amount it pays of the
defaulted amount to its investment and then recalculating the parties'
Participating Interests.
b. For a default relating to a Program and Budget covering in whole or in
part development and construction and/or operation of a mine, the
defaulting Party shall be deemed to have withdrawn from the Venture
and to have automatically relinquished its Participating Interest to
the non-defaulting Party; provided, however, that the defaulting
Participant shall have the right to receive only from five percent
(5%) of Net Profits, if any, and not from any other source, an amount
equal to the defaulting Participant's aggregate contributions to the
Venture pursuant to Sections 6.3(a) and 6.4 above. The defaulting
Party shall thereafter have no further right, title, or interest in
the Assets or under this Agreement.
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7.2 Security. Each Party's Participating Interest and its interest in Venture
Assets, including the Property, shall be pledged as security for the
performance of its obligations under this Agreement.
7.3 Dilution, Conversion, and Liability .
a. Dilution (or conversion) of a Party's Participating Interest pursuant
to Sections 6.3 and 7.1 shall not act so as to relieve that Party from
its obligation to indemnify the Operator under Section 5.3.
b. Any reduction (or conversion) of a Party's Participating Interest
under Sections 6.3 or 7.1 shall not relieve such Party of its share of
any liability, whether it accrues before or after such reduction (or
conversion), arising out of Operations conducted prior to such
reduction (or conversion). Such Party's share of such liability shall
be equal to its participating Interest at the time such liability was
incurred.
c. Each Party acknowledges that the exploration, development, and
operation of the Property involves significant financial risks and
that the conveyance and assignment of one Party's Interest in the
Property to the other pursuant to Sections 6.3 and 7.1 does not
constitute a penalty but rather is based on a genuine assessment of
the increased financial risks associated with the other Party's
increased contribution to Costs.
SECTION EIGHT
General Provisions
------------------
8.1 Title Held in Trust . Following earn-in, the Joint Venture shall retain
title to the Property to be held in trust for the Parties in accordance
with their respective Participating Interests.
8.2 No Partnership. The rights, duties, obligations and liabilities of the
Parties under the joint Venture shall be several and not joint and several,
it being the express purpose and intention of the Parties that their
respective Participating Interests be held as tenants in common. Nothing in
this Agreement shall be construed as creating a partnership of any kind or
as imposing upon either Party any partnership duty, obligation or liability
to the other.
8.3 Force Majeure. Neither Party hereto shall be liable to the other Party and
neither Party hereto shall be deemed in default under this Agreement for
any failure or delay to perform any of its covenants and agreements caused
or arising out of any act not within the control of the Party, but
excluding lack of funds. Such acts shall include, without limitation, acts
of God, strikes, lockouts, or other industrial disputes, acts of the public
enemy, riots, fire, storm, flood, explosion, government restriction,
failure to obtain any approvals required from regulatory authorities,
including environmental protection agencies, unavailability of equipment,
interference of environmental or native rights advocacy groups, or other
causes whether of the kind enumerated above or otherwise. Any period for
performance affected by such events shall be extended for a period
commensurate with the period of the delay. So far as possible, the Party
affected will take all reasonable steps to remedy the delay caused by the
events referred to above, provided, however, that nothing contained in this
Section shall require any Party to settle any industrial dispute or to test
the constitutionality of any law.
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8.4 Other Activities. Each of the Parties may be engaged on its own behalf and
on behalf of persons other than the Parties in the general mining business
outside of the Area of Interest and each of the Parties hereby consents to
such involvement by the other. Each of the Parties shall have the free and
unrestricted right to independently engage in and receive the full benefits
of any and all business endeavors, other than the business endeavors within
the boundaries of the Area of Interest without consulting the other Party
or inviting or allowing the other Party to participate. The legal doctrine
of "corporate opportunity" sometimes applied to persons occupying a
fiduciary status shall not apply in the case of any endeavor of either
Party other than the endeavors within the boundaries of the Area of
Interest. In particular, neither Party shall have any obligation to the
other as to any opportunity to acquire any mining property, interest or
right offered to it other than within the boundaries of the Area of
Interest.
8.5 Communications. All invoices, payments, notices, consents, demands and
other communications required or permitted (in this Section collectively
called "Communications") under this Letter Agreement shall be in writing
and may be delivered personally, sent by telecopier, or sent by overnight
courier service to the address for each Party. Any Communication delivered
or sent by facsimile transmission shall be deemed to be given and received
on the business day next following the date of transmission. Any
Communication delivered by overnight courier service shall be deemed to be
given two business days following the date sent. Communications given by
other means shall be deemed to have been given when actually received.
Communications shall be addressed as follows:
TO ATNA: Atna Resources Ltd.
000 - 000 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
TO APOLO: Apolo Gold & Energy Inc.
1209 - 000 Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Either Party may by a written Communication to the other Party change its
address for Communications hereunder.
8.6 Waiver. No waiver of any breach of this Agreement shall be binding unless
evidenced in writing, executed by the Party against whom the waiver is
asserted. Any waiver shall extend only to the particular breach so waived
and shall not limit any rights with respect to any future breach.
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8.7 Entire Agreement . This Agreement constitutes the entire agreement between
the Parties hereto and supersedes all prior agreements and understandings
between the Parties relating to the subject matter hereof. Any amendment or
variation of this Agreement shall only be binding upon a Party if evidenced
in writing, executed by that Party.
8.8 Time of the Essence. Time is of the essence of this Agreement; provided,
however, that if the Parties set new times for the performance of any of
their obligations or the exercise of any of their rights, then time shall
again be of the essence of such new times.
8.9 Inurement. This Agreement shall enure to the benefit of and be binding upon
the Parties hereto and their respective successors and permitted assigns.
8.10 Additional Documents. Each Party shall execute such documents, assignments,
endorsements, instruments and evidences of transfer and give such further
assurances as shall be necessary or appropriate in connection with the
performance of its obligations under this Agreement.
8.11 Severable Provisions . If any term or condition herein contained shall be
in conflict with or inconsistent with applicable law, the same shall be
deemed to be severable herefrom and shall not invalidate the remaining
terms and conditions herein contained. This Agreement with any such terms
and conditions severed shall continue in full force and effect.
8.12 Governing Law. The Parties agree that this Agreement shall be interpreted
and governed according to the laws of the State of Nevada.
8.13 Arbitration. In the event of disputes, controversies or claims arising from
an alleged breach of the Joint Venture Agreement; or disputes arising out
of or related to the Joint Venture Agreement over substantial factual
issues concerning technical mining or metallurgical matters, the Parties
agree to be bound by binding arbitration to be conducted in Reno, Nevada in
accordance with the Commercial Arbitration Rules of the American
Arbitration Association. All disputes arising out of or related to the
Joint Venture Agreement over issues concerning technical mining or
metallurgical matters shall be resolved by arbitrators who are experts in
the relevant fields. The applicable substantive law shall be the law of the
State of Nevada and discovery shall be conducted pursuant to the Nevada
Rules of Civil Procedure, and the Nevada Rules of Evidence shall apply. In
the event of a deadlock, the Parties agree to fund operations at a level
comparable with the last adopted Program and Budget, which in any event
shall be sufficient to maintain and protect the Assets of the Joint Venture
in good standing, until the deadlock is resolved.
8.14 Memorandum of Agreement. Simultaneously with execution of this Agreement,
the Parties shall enter into and execute a Memorandum of Agreement
referencing this Agreement for recording purposes.
8.15 Changes in Mining Law. In the event of repeal or substantial change in the
Mining Law of 1872, this Agreement and the Joint Venture Agreement shall
apply to any form of ownership or rights which replace or modify the
unpatented mining claims described in Exhibit A.
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8.16 Announcements and Reports. Public announcements or reports (including press
releases) by a party of any information relating to this Agreement, the
transaction and the Property (whether given to a stock exchange or
otherwise), shall be made on the basis of agreed texts approved in good
faith in advance of issuance by the other parties, such approval not to be
unreasonably withheld. Each party (the "Reporting Party") accordingly
agrees with the other party that it will, in advance of reporting to a
stock exchange or otherwise, advise the other party of the text of the
proposed report and provide the other party with the opportunity to make,
acting reasonably, comment upon and changes to the form and content thereof
before the same is issued. Such comments or changes, as the case may be,
shall be communicated to the Reporting Party within a reasonable time
having due regard to the urgency of the announcement but, in any event, not
later than 48 hours after its communication to the other party.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
ATNA RESOURCES, LTD, a Canadian Corporation,
By: /s/ Xxxxx Xxxxxxx
-----------------
ATNA RESOURCES, INC., a Nevada Corporation
By: /s/ Xxxxx Xxxxxxx
-----------------
APOLO GOLD & ENERGY INC., a Nevada
Corporation
By: /s/ Martial X. Xxxxxxxxx
------------------------
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this _______ day of _____________, 2005, before me, a Notary Public in and
for said County and State, personally appeared ________________, _____________
of ATNA RESOURCES, LTD, a Canadian corporation, personally known (or proved) to
me to be the person who executed the above EXPLORATION AGREEMENT WITH OPTION FOR
JOINT VENTURE (BEOWAWE PROJECT), and acknowledged to me that he executed the
same for purposes stated therein.
NOTARY PUBLIC
17
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this _______ day of _____________, 2005, before me, a Notary Public in and
for said County and State, personally appeared ________________, _____________
of ATNA RESOURCES, INC, a Nevada corporation, personally known (or proved) to me
to be the person who executed the above EXPLORATION AGREEMENT WITH OPTION FOR
JOINT VENTURE (BEOWAWE PROJECT), and acknowledged to me that he executed the
same for purposes stated therein.
NOTARY PUBLIC
STATE OF NEVADA )
) ss.
COUNTY OF WASHOE )
On this _______ day of _____________, 2005, before me, a Notary Public in and
for said County and State, personally appeared _______________________, ________
of APOLO GOLD & ENERGY INC., a Nevada corporation, personally known (or proved)
to me to be the person who executed the above EXPLORATION AGREEMENT WITH OPTION
FOR JOINT VENTURE (BEOWAWE PROJECT), and acknowledged to me that he executed the
same for purposes stated therein.
NOTARY PUBLIC
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