EXHIBIT 10(i)
MINING LEASE WITH OPTION TO PURCHASE
THIS MINING LEASE MADE AND ENTERED INTO on this 10th day of August, 2001,
by and between NORTH XXXX JOINT VENTURE, L.L.C., a Utah limited liability
company (hereinafter referred to as "Lessor") and ANTICLINE URANIUM, INC., a
California corporation (hereinafter referred to as "Lessee").
IN CONSIDERATION of 44,673,100 "restricted" common capital shares of Lessee
to be issued in the name of Lessor and in further consideration of an additional
4,553,269 "restricted" shares of common capital stock also to be issued in the
name of Lessor, par value $0.001 per share, of a newly formed, wholly owned
Nevada subsidiary into which Lessee shall soon merge, all of which will result
in Lessor owning five (5) million "restricted" shares of the survivor in the
merger (i.e., Anticline Uranium, Inc., a Nevada corporation), and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, Lessor does hereby grant, demise and let exclusively unto Lessee
for the duration and for the purposes herein specified, all of Lessor's right,
title and interest in and to the following described patented lode mining claims
comprising 470.097 acres, more or less, and situated in the Tintic Mining
District of Juab County, State of Utah; including all dips, spurs and
appurtenant rights, including water rights, hereinafter collectively referred to
as the "Leased Premises."
FOR "LEASED PREMISES" DESCRIPTION SEE EXHIBIT "A"
ATTACHED HERETO AND MADE A PART HEREOF
I. EXCLUSIVE RIGHTS GRANTED
1.1 The Leased Premises are hereby leased exclusively to Lessee and
its successor-in-interest for the following purposes, all or any of which may be
performed by Lessee in such manner and at such time or times as Lessee may
determine in its absolute discretion, subject to the terms hereof:
a. Exploring and prospecting for, developing, mining, excavating,
leaching, milling, processing and smelting, whether by open pit,
underground, strip mining, solution mining, heap leaching, or any
other methods deemed desirable by Lessee in its sole discretion, all
minerals, ores, valuable rocks, rare earths and materials of all
kinds, including mine dumps and tailings (hereinafter collectively
referred to as "Leased Substances");
b. Processing, concentrating, beneficiating, treating, milling,
smelting, shipping, selling and otherwise disposing of the Leased
Substances and receiving the proceeds of any such sale;
c. Erecting, constructing, maintaining, using and operating in and
on the Leased Premises such buildings, structures, machinery,
facilities and equipment as Lessee deems necessary; and
d. Engaging in any other activity that Lessee deems reasonable and
necessary to achieve the foregoing purposes.
II. TERM OF LEASE
2.1 The term of this Mining Lease shall be for five (5) years from
the effective date set forth above, and may be renewed by Lessee for successive
five (5) year periods upon substantially the same terms and provisions as set
forth herein based upon the then-capital structure of the Lessee, until declared
forfeited and canceled by Lessor or relinquished by Lessee as provided herein.
Lessee shall give Lessor written notice of each renewal at least thirty (30)
days prior to expiration of the respective five-year term.
III. ADVANCE ROYALTY AND WORK COMMITMENT
3.1 A portion of the "restricted" stock received by Lessor shall
constitute an Advance Royalty paid the Lessor as initial consideration upon
execution of this Mining Lease. Such shall further constitute the minimum
advance royalty on or before the anniversary date of each succeeding lease year.
3.2 Lessee shall be entitled to a $30,000 credit in the amount of all such
Advance Royalties paid against Production Royalties otherwise owing to Lessor
pursuant to Article IV of this Lease.
3.3 Lessee shall perform exploration, mining, development, production,
processing or any other activity ("work" herein) which benefits the Leased
Premises at a minimum cost of $15,000 for each successive five (5) year term
during the term of this Mining Lease and commencing on the date of this Lease.
All work on other lands within 500 feet of the boundary of any portion of the
Leased Premises shall be deemed to benefit the Leased Premises for the work
commitment if such work is part of an overall plan or project that includes the
Leased Premises. All costs expended for work in excess of $15,000 for any five
(5) year term shall accrue and be applied to the work commitment for the next
successive 5-year term only; however, the maximum amount that can so accrue for
the next succeeding lease term shall be no more than $15,000.
3.4 In the event that Lessee does not perform work in the amount of the
entire $15,000 minimum expenditure (which amount will include any excess amount
accrued from the prior five year term), Lessee shall pay Lessor the amount of
any such shortage in cash. Within 30 days after the end of each five (5) year
term, Lessee shall submit an accounting report of the expenditures toward the
work commitment and a report containing factual, non-interpretive data
concerning the work of Lessee during the preceding 5-year term. On or before
August 10 of each year, a separate one-year report shall be prepared and
furnished to Lessor containing factual, non-interpretive data concerning work of
Lessee, if any, during the preceding calendar year.
3.5. The breach, by Lessee, of paragraphs 3.3 and/or 3.4 above shall
entitle Lessor to immediately terminate the Lease and in such event, Lessor
waives the right to xxx for monetary damages.
IV. PRODUCTION ROYALTY
4.1 In addition to the consideration set forth herein, Lessee shall
pay Lessor a Three and One Half percent (3.5%) Net Smelter Royalty on all
mineral bearing ores.
4.2 The payment of Production Royalty shall be made not more than 45
days after the close of the month during which the payment is received from the
smelter or buyer on which such Royalty is calculated.
4.3 "Net Smelter Returns" shall mean the net amount of money received
by Lessee from the sale of Leased Substances to a smelter, refinery or other
buyer, after deduction of costs of transportation to point of sale and costs of
any concentration of Leased Substances prior to delivery to the smelter,
refinery or other buyer, and less the deduction of all cost, penalties or
charges required by said smelter, refinery or other buyer to be paid by Lessee
as a condition of sale. In the event a Leased Substance is sold to any buyer
other than a smelter, all costs incurred by Lessee after mining for processing
or treating such substances, including refining, shall be deductible costs.
4.4 The payment of Production Royalty shall be made not more than 45
days after the close of the month during which the payment is received from the
smelter or buyer on which such Royalty is calculated.
4.5 All Leased Substances which the Lessee chooses to market shall be
marketed at the best terms reasonably obtainable, with due regard to freight
differentials, and if such ores or concentrates or other products shall be
treated at a smelter or refinery of Lessee, the smelter or refinery schedules
used for determining the Net Smelter Returns thereon shall not be less favorable
than the terms and conditions either being offered to others or being contracted
with others at the time for products of like character and in similar quantities
for delivery to Lessee's smelters or refineries.
4.6 Lessee shall be entitled to credit all Advance Royalty payments
paid to Lessor pursuant to Article III of this Mining Lease against all
Production Royalties payable to Lessor under this Article IV.
V. INSPECTION, REPORTS, BOOKS AND RECORDS
5.1 Lessor, or its duly authorized agent or representative, shall be
permitted to enter into or upon the Leased Premises for the purpose of
inspection, at all reasonable times during business hours, after 48 hours
advance notice in writing to Lessee. Lessor shall enter upon said Leased
Premises at Lessor's own risk and so as not to hinder the operations of Lessee.
Lessor shall indemnify and hold harmless Lessee from any damage, claim or demand
arising from the entry or inspection by Lessor or its agent or representatives,
or any of them, on the Leased Premises or the approaches thereto.
5.2 The books and records of Lessee insofar as they relate to
operations on the Leased Premises pursuant to this Mining Lease shall be open to
inspection and copying by Lessor or its duly authorized representatives, at the
expenses of Lessor, during regular business hours, after 48 hours advance
request in writing to Lessee. Within twenty-four (24) months after the end of
each calendar year, Lessor may at its sole cost and expense make or have made an
audit of the accounts and records of Lessee concerning operations on the Leased
Premises for that calendar year; provided that Lessor may audit the accounts for
a calendar year only once and provided further that Lessor must notify Lessee in
writing of its intention to cause such an audit to be made sixty (60) days in
advance of such date.
VI. DATA ON THE PROPERTY
6.1 Upon execution of this Mining Lease, Lessor will provide Lessee
with access to all data concerning the Leased Premises then in possession of
Lessor or its agents. Lessee shall have the right to make and remove copies of
all such data at the expense of Lessee, but Lessee shall not remove original
documents without written consent of Lessor. Lessee hereby acknowledges that
Lessor has provided all data in its possession.
VII. PROTECTION FROM LIENS, DAMAGES AND LIABILITY
7.1 Lessee shall keep the Leased Premises free and clear of liens for
labor done or performed or materials furnished on or for the development or
operation of the Leased Premises under this Mining Lease. Lessee will not be
considered in breach of this provision so long as Lessee, in good faith,
contests the validity of any liens or claims against the Leased Premises.
7.2 Lessee shall indemnify and shall hold harmless Lessor and all of
Lessor's partners, agents, and employees, and each of them, from and against any
and all obligations, debts, loss, damage, claims, demands, suits, controversies,
costs, fees, liens, encumbrances, and liabilities whatsoever, including
attorneys' fees, in any way resulting from or arising out of any failure by
Lessee to abide by any material term of the Mining Lease or any negligent or
intentional act or omission by Lessee's contractors arising out of or in
connection with the operations and activities of Lessee hereunder, or out of
its possession and occupancy of the Leased Premises, including environmental
costs resulting from Lessee's operations, or from any similar actions by the
public during the term of this Mining Lease. Lessor shall not be responsible or
liable for any loss or damage to Lessee or to Lessee's property or business that
may be occasioned by or through acts or omissions of persons or entities (other
than for negligent or reckless acts or willful misconduct or omissions by Lessor
or any of its partners, agents or employees) occupying, using, or passing over
any part of the Leased Premises. Lessee shall use and occupy the Leased
Premises at its own risk, and hereby releases Lessor, to the full extent
permitted by law, from all claims of every kind or nature, including claims for
loss of life, personal or bodily injury, or property damage except as otherwise
excluded herein.
7.3 Lessor is informed that the Environmental Protection Agency (EPA) is
involved in a clean-up project in the City of Eureka, Utah, an area near the
Leased Premises. This project is based on alleged lead contamination in the
yards of Eureka city dwellers, contamination that has allegedly only recently
come to the attention of the EPA and which is allegedly the result of mining in
the Tintic Mining District. (Actually the cause of the alleged contamination is
the fact that Eureka city dwellers reportedly took and used a variety of mineral
tailings for fill dirt in their front and back yards.) This project has been
reported in local newspapers. While Lessor does not believe that it has any
liability whatsoever for creating any lead contamination in the City of Eureka,
Lessor cannot guarantee that the EPA will not pursue it, along with other,
similarly situated landowners, for reimbursement of part of the cost of such
clean-up project. Accordingly, Lessor hereby indemnifies and holds Lessee
harmless from any claim by the EPA or some similar state agency based solely on
past mining contamination or violations. In the event the EPA or a similar
state agency brings suit against Lessee as a person in the chain of title,
Lessor further agrees to defend any such suit on Lessee's behalf at its sole
cost and expense.
VIII. COMPLIANCE WITH LAW
8.1 In conducting its operations hereunder, Lessee will cause all
work, development and mining to be done in a careful and miner-like manner, and
Lessee shall fully comply with the terms and provisions of worker's compensation
laws and other laws governing its operations under this Mining Lease, including
but not limited to any mining or environmental obligation, under existing or
hereafter enacted legislation.
IX. TERMINATION BY LESSEE
9.1 Lessee shall have the continuing right to terminate this Mining
Lease at any time and to surrender the Leased Premises to Lessor by giving
Lessor written notice thereof at least 30 days prior to the stated date of
termination.
9.2 In the event of termination, all sums theretofore paid Lessor by
Lessee shall, except in the case of manifest error, be retained by Lessor, and
all obligations of Lessee to make payments (expect those accruing prior to the
date to termination) and perform any other obligation set forth in this Mining
Lease shall terminate.
9.3 In the event of termination, Lessee, upon request by Lessor,
shall make, execute, acknowledge and deliver to Lessor a written relinquishment
of this Mining Lease in recordable form.
X. DEFAULT
10.1 Lessee shall be in default hereunder if either of the following
shall occur:
a. Lessee fails to fulfill an obligation to Lessor, or
does not in good faith contest in writing the particular
obligation, within thirty (30) days after receipt by Lessee of
written notice from Lessor that a required obligation has become
due and has not been satisfied; or
b. Lessee fails to perform any of the other covenants or
agreements herein contained, and such failure continues for a
period of 60 days after receipt by Lessee of written notice from
Lessor of such failure, stating how it may be cured, and Lessee
is not diligently proceeding to cure such failure or is not in
good faith contesting the claimed failure.
10.2 In the event of default by Lessee as provided above, Lessor may
at once enter into and upon the Leased Premises or any part thereof and declare
a forfeiture and cancellation of this Mining Lease.
XI. REMOVAL OF EQUIPMENT
11.1 During the term hereof, Lessee is granted exclusive use of all
structures, improvements and personal property located on the Leased Premises
and owned by Lessor as of the date of this Mining Lease. Lessee acknowledges
the existence of a grazing lease held by Xx. Xxx Xxxxxxxx, Xx., as of the date
hereof and will determine ownership of any structures or personal property on
the Leased Premises prior to use.
11.2 In the case of a valid forfeiture, surrender or other termination of
this Mining Lease, Lessee shall have the right for a period of one hundred
eighty (180) days to remove from the Leased Premises all warehouse stocks,
merchandise, materials, tools, hoists, compressors, engines, motors, pumps,
transformers, electrical accessories, metal or wooden tanks and mine cars and
any and all other machinery, trade-fixtures and equipment erected or placed in
or upon sad Leased Premises by it, except only rails, mine timbers, installed
pipes and connections. All property not removed within said period shall be
deemed abandoned to Lessor, unless such period is extended by agreement of
Lessee and Lessor or by reason of force majeure as defined herein.
XII. TITLE
12.1 Lessor warrants and covenants that it holds title and is in actual and
exclusive possession of the Leased Premises free and clear from all grants,
sales, liens, defects, adverse claims and encumbrances of any kind. Lessor
shall deliver said actual, peaceful and exclusive possession of the Leased
Premises to Lessee for the Term of this Mining Lease, and during the Term of
this Mining Lease Lessor shall not encumber or burden title to the Leased
Premises in any way without the prior written consent of Lessee.
12.2 Lessor agrees to furnish Lessee such abstract, deeds or other evidence
of title as may be in Lessor's possession and control, and to allow and
cooperate with Lessee, at Lessee's option and expense, to have abstracts brought
to date and to take such steps and proceedings to establish title as Lessee
shall deem advisable. Lessee hereby acknowledges that Lessor has provided all
title information in its possession.
12.3 Lessee is aware of Lessor's separate grazing lease with Xx. Xxx
Xxxxxxxx, Xx., and Lessee affirms the rights of the Grazing Lessee to conduct
grazing operations on the Leased Premises, provided the same do not interfere
with Lessee's rights hereunder.
XIII. FORCE MAJEURE
13.1 The obligations of Lessee hereunder shall be suspended to the extent
and for the period that performance of any of Lessee's obligations hereunder is
prevented by any cause, whether foreseeable or unforeseeable, which are
determined to be beyond Lessee's reasonable control (hereinafter "an event of
force majeure") including, without limitation any of the following, acts of
nature; labor disputes; strikes or threats of strike; fire; explosion;
earthquake; storm; flood; landslide; avalanche; drought or other adverse weather
condition; interruption or delay in transportation; war ; insurrection; riot;
laws, regulations, orders, proclamations, instructions or requests of any
government or governmental entity; judgments or orders of any court; inability
to obtain, on reasonably acceptable terms, any public or private license, permit
or other authorization; curtailment or suspension of activities to remedy or
avoid an actual or alleged, present or prospective, enforcement of federal,
state or local environmental standards; unavoidable casualties; shortage of
labor, equipment, fuel, material, parts, supplies, services or equipment; plant
breakdown; or any disabling cause, whether similar or dissimilar to the
foregoing enumeration.
13.2 If an event of force majeure occurs, the suspension of Lessee's
performance hereunder during such occurrence shall not be deemed a breach of the
Mining Lease, and the Term of this Mining Lease shall be extended for a time
period equal to the duration of such suspension. Lessee shall promptly give
notice to Lessor of the suspension of performance, stating therein the cause and
duration thereof. Lessee agrees to use reasonable diligence to remove such
causes of suspension as may occur from time to time, but shall not be required
to settle strikes or other labor difficulties contrary to its own judgment.
XIV. NOTICES
14.1 All notices, payments and elections required, permitted or requested
hereunder shall be made in writing and delivered personally or made in writing
and sent by regular mail, facsimile transmission or e-mail (except notice of
termination or default, which shall be sent by certified mail, return receipt
requested), addressed as follows:
To Lessor: NORTH XXXX JOINT VENTURE, LLC
0000 Xxxxx Xxxxxx Xxxxx
Xxxx Xxxx Xxxx, Xxxx 00000-0000
To Lessee: ANTICLINE URANIUM, INC.
0000 Xxxxx Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx Xxxx Xxxx, Xxxx 00000-0000
Fax No. 000-000-0000
unless otherwise changed or modified by written request of the recipient party.
XV. COMMINGLING OF ORE
15.1 Lessee may commingle ore from the Leased Premises with ore from other
properties, either before or after concentration or benificiation, so long as
the data necessary to determine the weight and grade both of the ore removed
from the Leased Premises and from the premises with which it is commingled, are
obtained by Lessee. Lessee shall then use that weight and grade data to
allocate Net Smelter Returns from the commingled ore between the Leased Premises
and the other properties from which the commingled ore was removed. All such
weight, grade and allocation calculations by Lessee shall be done in a manner
recognized by the mining industry as practical and sufficient at that time.
XVI. TAXES
16.1 Lessee agrees to pay all taxes assessed against the Leased Premises
during the term hereof (expect federal, state or local taxes assessed on income)
including, but not limited to, ad valorem property taxes, net proceeds or mine
taxes, and all taxes for ores mined and ores treated under this Mining Lease.
Payment of such taxes shall be made prior to the delinquency date of the tax.
XVII. INCIDENTAL USE OF PROPERTY
17.1 Lessee may possess, occupy and use, in the course of and as pertinent
to its operations in the vicinity of, or upon the Leased Premises, all or any of
the structures owned by Lessor located upon or within the Leased Premises.
Lessee shall maintain in reasonably good state of repair all such structures
which it elects to use to which it is granted exclusive use within the scope of
such grant in Article XI, except for the ordinary wear and tear and reasonable
depreciation resulting from Lessee's said use and possession. During the period
of use by Lessee, Lessee shall pay the insurance, power, light and miscellaneous
costs that accrue on such structures as Lessee elects to use. Lessor makes no
warranty as to the condition or safety of any structures upon the Leased
Premises and Lessee agrees to accept the risk of loss resulting from its use of
structures.
XVIII. ASSIGNMENT
18.1 Each party reserves the right to assign or convey all or part of its
interest in this Mining Lease or the Leased Premises to any person or entity,
and any such assignment shall be made expressly subject to the terms hereof. No
such assignment shall be valid and effective until the assigning party has
delivered written notice of such assignment to the other party.
XIX. INUREMENT
19.1 The terms, provisions, covenants, warranties and agreements herein
contained shall extend to, be binding upon and inure to the benefit of the
heirs, personal representatives, successors and assigns of the parties.
XX. MEMORANDUM OF LEASE
20.1 Lessor and Lessee agree to execute a Memorandum setting forth the
basic terms and conditions of this Mining Lease. Said Memorandum may be
recorded in all public records where such documents are customarily recorded.
Lessor and Lessee agree that this Mining Lease shall not be recorded.
XXI. PUBLIC ANNOUNCEMENTS
21.1 Except as to public disclosures which are required by law or
regulations, all public announcements in respect of this Mining Lease shall be
made only after both Lessor and Lessee have each consented, in writing, to the
form and content of said announcement.
XXII. OPTION TO PURCHASE
Lessor grants to Lessee the sole and exclusive option to purchase all of
Lessor's right, title and interest in the property (the Leased Premises) for a
total purchase price of THREE MILLION dollars ($3,000,000.00) (hereinafter
referred to as the "Purchase Price"). Exercise of the option shall be effective
upon delivery of written notice thereof to Lessor at Lessor's business address
or the address of Lessor's registered agent. Lessee shall deliver to Lessor a
negotiable instrument in the full amount of the Purchase Price in exchange for a
properly executed and acknowledged Mining Deed in recordable form. Closing
shall occur within sixty (60) days after exercise of the option.
IN WITNESS WHEREOF, the parties undersigned warrant that they are properly
authorized to bind their respective organizations and enter into this Mining
Lease according to all terms and provisions hereof, effective as of the day and
year first above written.
Lessor:
NORTH XXXX JOINT VENTURE, a Utah limited liability
company
By: ________________________________
Xxxx Xxxxxxx Xxxxxx, Managing Member
Lessee:
ANTICLINE URANIUM, INC., a California corporation
By: _________________________
Xxxx Xxxxxxx Xxxxxx, President
Exhibit "A"
to the Mining Lease with Option to Purchase dated August 10, 2001, by and
between North Xxxx Joint Venture, a Utah LLC, as Lessor, and Anticline Uranium,
Inc., a California corporation, as Lessee, and covering the following patented
lode mining claims situate in the State of Utah, County of Juab, Tintic Mining
District to wit:
TOWNSHIP 10 SOUTH, RANGE 3 WEST, USB&M
SECTIONS 11, 12, 13, 24
CLAIM NAME SURVEY OR ACRES
XXX XXXXXX
Xxxxx Xxxx, Xxxxxx & Xxxxxxxxx Xxxxx # 000 34.24
Lulu Lode #4306 12.238
Peru Lode # 341 20.090
Wedge Lode #4448 1.667
Xxxxxxxx & Xxxxxxxxxx Xxxxx # 000 12.240
Pinion & Fraction Lodes #4553 12.859
Black Warrior #3 Lode #4620 6.318
Black Warrior & Fraction Lodes #4552 24.789
West Cable, Cable Fraction, Columbia Xxxxxxx,
Xxx Xxxx & Xxxx Xxxxx #0000 42.339
Magazine Lode #6622 3.041
Xxxxxx #2 Lode #3275 13.652
Revenue, Manhattan, Outcast Lodes #3277 61.025
Stipended Lode #3276 18.750
Xxxx Xxxxx Xxxx #4101 2.305
Last Resort Lode #3215 20.659
Rescue Lode #5347 16.958
North Xxxx & Jorave Lodes #0000 0.000
Xxxxx Xxxx, Xxxxx Bear Fraction, North Seneca Lodes #6795 28.732
Damfino Lode # 262 20.511
Xxxxx Consolidated Lode #4584 13.307
Equator, Cable Lode and Jumbo Lode #4302
#4303
#4304 16.323
Magnet Lode #3968 20.661
Bellmont Lode #4789 19.111
Blossom Lode #4556 0.806
St. Louis Mining Claims #1, 2, 3 and 4 #5267 51.446
containing in all 470.097 acres, more or less
