EXHIBIT 4.115
XXXXX & XXXXXX PROPERTIES - ONTARIO
This Agreement is dated for reference the 10th day of April, 2006.
BETWEEN:
XXXXXXXXX X. XXXX (AS TO 66 2/3%)
000 Xxxx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
XXXXX XXXXXXX (AS TO 33 1/3%)
000 XxXxxxxxx Xxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
COLLECTIVELY OF THE FIRST PART
(the above hereinafter referred to collectively as the
"Optionor")
AND:
XXXXXX GOLD CORP.
711 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the above hereinafter referred to as the "Optionee")
OF THE SECOND PART
WHEREAS the Optionor is the recorded and beneficial owner of certain mining
claims situated in Xxxxx and Xxxxxx Townships, Ontario more particularly
described in Schedule "A" attached hereto (the "Xxxxx Property and Xxxxxx
Property or collectively as the Properties");
AND WHEREAS the Optionor desires to grant and the Optionee is desirous of
obtaining an option to acquire a 100% undivided interest in and to the
Properties upon terms and subject to the conditions herein contained.
NOW THEREFORE in consideration of the premises and the mutual covenants and
agreements herein contained, the parties agree as follows:
1. GRANT OF OPTION
The Optionor grants to the Optionee the sole, exclusive and irrevocable right
and option (the "Option") to acquire an undivided 100% right, title and interest
in either or both Properties, subject to the Royalty Interest pursuant to
paragraph 6 hereof, in accordance with the terms of this Agreement.
2. OPTION ONLY
This is an option only and except as specifically provided otherwise, nothing
herein contained shall be construed as obligating the Optionee 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
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obligating the Optionee to do any further act or make any further payment. If
this Agreement is terminated before the Optionee has earned its 100% interest in
the Properties the Optionee shall not be bound thereafter in debt, damages or
otherwise under this Agreement and all payments theretofore paid by the Optionee
shall be retained by the Optionor as the sole consideration for entering into
this Agreement and for the rights conferred on the Optionee thereby.
3. TERMS OF THE OPTION
In order to maintain the Option in good standing and earn 100% right, title and
undivided interest in and to the Xxxxx Property or the Xxxxxx Property the
Optionee, subject to paragraph 2, shall:
for the XXXXX PROPERTY:
(a) pay to the Optionor $21,000 within 10 days of signing;
(b) pay to the Optionor a further $30,000 on or before the date
which is 12 months from the date of regulatory approval;
(c) pay to the Optionor a further $39,000 on or before the date
which is 24 months from the date of regulatory approval;
(d) issue to the Optionor 60,000 common shares of the Optionee
upon receipt of regulatory approval;
(e) issue to the Optionor a further 90,000 common shares of the
Optionee on or before the date which is 12 months from the
date of regulatory approval;
(f) issue to the Optionor a further 120,000 common shares of the
Optionee on or before the date which is 24 months from the
date of regulatory approval;
(g) incur up to $15,000 in exploration expenses on the Property on
or before the date which is 12 months from the date of
regulatory approval;
(h) incur at least an aggregate of $50,000 in exploration expenses
on the Property on or before the date which is 24 months from
the date of regulatory approval; and
(i) incur at least an aggregate of $90,000 in exploration expenses
on the Property on or before the date which is 36 months from
the date of regulatory approval.
(the "XXXXX PROPERTY OPTION")
for the XXXXXX PROPERTY:
(j) issue to the Optionor a 50,000 common shares of the Optionee
upon receipt of regulatory approval;
(k) issue to the Optionor a further 50,000 common shares of the
Optionee on or before the date which is 12 months from the
date of regulatory approval; and
(l) issue to the Optionor a further 50,000 common shares of the
Optionee on or before the date which is 24 months from the
date of regulatory approval.
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(the "XXXXXX PROPERTY OPTION")
4. EXERCISE OF THE OPTION
If the Optionee has paid $90,000 and issued 270,000 common shares of the
Optionee to the Optionor, the Optionee shall be deemed to have exercised the
Xxxxx Property Option and will have acquired an undivided 100% right, title and
interest in and to the Xxxxx Property, subject only to the Royalty Interest
reserved to the Optionor pursuant to paragraph 6 hereof.
If the Optionee has issued 150,000 common shares of the Optionee to the
Optionor, the Optionee shall be deemed to have exercised the Xxxxxx Property
Option and will have acquired an undivided 100% right, title and interest in and
to the Xxxxxx Property, subject only to the Royalty Interest reserved to the
Optionor pursuant to paragraph 6 hereof.
5. RIGHT OF ENTRY
During the term of the Xxxxx Property Option and Xxxxxx Property Option the
Optionee and its employees, agents and any person duly authorized by the
Optionee shall have the sole and exclusive right to:
(a) enter in, under and upon the Properties;
(b) have exclusive and quiet possession thereof;
(c) do such prospecting, exploration, development or other mining
work thereon and thereunder as the Optionee in its sole
discretion may consider advisable;
(d) bring upon and erect upon the Properties such mining
facilities as the Optionee may consider advisable; and
(e) remove from the Properties and sell or otherwise dispose of
mineral products derived therefrom.
6. ROYALTY INTEREST
The Optionor shall be entitled to receive and the Optionee shall pay to the
Optionor a royalty equal to 3% of the net smelter returns (the "Royalty
Interest") calculated and payable from the Properties in accordance with the
provisions of Schedule "B" attached hereto.
The Optionee may at any time purchase two-thirds of the Royalty Interest for the
Properties from the Optionor for a single payment of $1,500,000, thereby leaving
the Optionor with a 1% Royalty Interest for the Properties.
The Optionor grants to the Optionee a right of first refusal on any sale of the
Royalty Interest.
7. NOTICE OF DEFAULT AND TERMINATION BY OPTIONOR
If the Optionee should be in default in making any payments or performing any
other of its obligations hereunder, the Optionor may give written notice to the
Optionee specifying the default. The Optionee shall not lose any rights granted
under this Agreement so long as, within
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thirty (30) days after the giving of such notice of default by the Optionor, the
Optionee takes reasonable steps to cure the specified default. If the Optionee
fails to take reasonable steps within the thirty (30) day period to cure the
default the Optionor shall be entitled thereafter to terminate this Agreement by
giving written notice of termination to the Optionee. Upon termination of this
Agreement by the Optionor the provisions of paragraph 14 shall apply.
8. NO PRODUCTION OBLIGATION
The Optionee shall be under no obligation whatsoever to place the Properties
into production, and in the event commercial production is commenced the
Optionee shall have the right at any time to curtail or suspend such production
as it in its absolute discretion may determine.
9. TRANSFER OF PROPERTY
The Xxxxx Property will be transferred to the Optionee when the Xxxxx Property
is exercised. The Xxxxxx Property will be transferred to the Optionee when the
Xxxxxx Property is exercised.
10. EXCLUSION OF PROPERTY
The Optionee shall have the right at any time and from time to time to elect to
exclude from this Agreement any portion of the Properties by written notice to
the Optionor of this election; provided that any portion of the Properties so
excluded shall be in good standing, free and clear of all liens and encumbrances
with a minimum of two years assessment applied. The Optionee may also terminate
either the Xxxxx Property Option or the Xxxxxx Property Option to the exclusion
of the other before meeting the respective property provisions in paragraph 3
and still retain the other property.
11. COVENANTS OF THE OPTIONEE
During the currency of this Agreement, the Optionee shall:
(a) keep the Properties in good standing by doing and filing of
all assessment work or by making payments in lieu thereof, and
by the doing all other acts and things and making all other
payments which may be necessary in that regard;
(b) permit the Optionor, or its representative, duly authorized by
it in writing, at its own risk and expense, access to the
Properties at all reasonable times and to all records prepared
by the Optionee in connection with work done or with respect
to the Properties, provided the Optionor shall not, without
the prior written consent of the Optionee, such consent not to
be unreasonably withheld, disclose any information obtained by
it or communicated to it, to any third party except as may be
required by regulatory bodies having jurisdiction or agreed to
by the Optionee or its representative alike; and
(c) conduct all work on or with respect to the Properties in a
careful and workmanlike manner and in compliance with the
applicable laws of the jurisdiction in which the Properties
are located and indemnify and save the Optionor harmless from
any and all claims, suits or actions made or brought against
the Optionors as a result of work done by the Optionee on or
with respect to the Properties.
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12. COVENANTS OF THE OPTIONOR
During the currency of this Agreement, the Optionor covenants and agrees with
the Optionee to:
(a) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Optionee hereunder;
(b) make available to the Optionee and its representatives all
records and files relating to the Properties in its possession
and permit the Optionee and its representatives to take
abstracts therefrom and make copies thereof;
(c) co-operate with the Optionee in obtaining any water
appropriation license, and any surface and other rights on or
related to the Properties, the Optionee deems desirable; and
(d) promptly provide the Optionee with any and all notices and
correspondence from government agencies, including but not
limited to the Ministry of Northern Development and Mines, in
respect of the Properties.
13. REPRESENTATIONS AND WARRANTIES OF THE OPTIONOR
The Optionor hereby represents and warrants to the Optionee that:
(a) the Optionor is the legal and beneficial owner of the
Properties;
(b) the Properties consists of those mining claims more
particularly described in Schedule "A", all of which were duly
and validly located and recorded in accordance with the
applicable laws of Ontario and are valid and subsisting as of
the date of execution and delivery of this Agreement;
(c) the Properties are in good standing, free and clear of all
liens, charges and encumbrances;
(d) there are no pending or threatened actions, suits, claims or
proceedings regarding the Properties; and
(e) the Optionor has the exclusive right and authority to enter
into this Agreement and to dispose of the Properties in
accordance with the terms hereof, and that no other person,
firm or corporation has any proprietary or other interest in
the same.
The representations and warranties of the Optionor herein before set out, form a
part of this Agreement and are conditions upon which the Optionee has relied on
in entering into this Agreement and shall survive the exercise of the Xxxxx
Property Option and the Xxxxxx Property Option by the Optionee. The Optionor
shall indemnify and save the Optionee 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 contained in this
Agreement. The Optionor acknowledges and agrees that the Optionee has entered
into this Agreement relying on the warranties and representations and other
terms and conditions of this Agreement and that no information which is now
known or which may hereafter become known to the Optionee or its officers,
directors or professional advisors shall limit or extinguish the right to
indemnity hereunder. The Optionee may deduct the amount of any such loss or
damage from any amounts payable by it to the Optionor hereunder.
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14. TERMINATION PRIOR TO ACQUISITION OF INTEREST
If this Agreement is terminated prior to the exercise of the Option by the
Optionee, the Optionee shall forthwith:
(a) return to the Optionor at no cost to the Optionor 100%
undivided right, title and interest in the Properties, in good
standing, free and clear of all liens and encumbrances;
(b) deliver copies of all exploration and development data not
previously delivered; and
(c) remove from the Properties within twenty four (24) months of
the effective date of termination all mining facilities
erected, installed or brought upon the Properties by or at the
instance of the Optionee, and any mining facilities remaining
on the Properties after the expiration of the said period of
twenty four (24) months shall, without compensation to the
Optionee, become the properties of the Optionor at his option.
15. ADDITIONAL TERMINATION
In addition to any other termination provisions contained in this Agreement, the
Optionee shall at any time have the right to terminate this Agreement without
liability therefore by giving notice in writing of such termination to the
Optionor, and in the event of such termination, this Agreement, save and except
for the provisions of paragraph 14 hereof, shall be of no further force and
effect.
16. FORCE MAJEURE
If the Optionee is prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lockouts, labour shortages, power shortages,
fires, wars, acts of God, governmental regulations restricting normal operations
or any other reason or reasons beyond the control of the Optionee, the time
limited for the performance of the various provisions of this Agreement as set
out above shall be extended by a period of time equal in length to the period of
such prevention and delay. The Optionee, insofar as is possible, shall promptly
give written notice to the Optionor of the particulars of the reasons for any
prevention or delay under this paragraph, and shall take all reasonable steps to
remove the cause of such prevention or delay and shall give written notice to
the Optionor as soon as such cause ceases to subsist.
17. NOTICE
Any notice required to be given under this Agreement shall be deemed to be well
and sufficiently given if delivered or if mailed by registered mail in Canada,
(save and except during the period of any interruption in the normal postal
service within Canada) or sent by facsimile transfer or courier to either party
at the addresses first set out above and any notice given as aforesaid shall be
deemed to have been given, if delivered or by facsimile transfer, when
delivered, or if by mail, or courier, on the third business day after the date
sent by mail or courier thereof. Either party may from time to time by notice in
writing change its address for the purpose of this paragraph.
18. PAYMENTS AND SHARE ISSUANCES
The Optionor acknowledges that any issuance of common shares under this
Agreement shall be subject to the approval of the TSX Venture Exchange and that
the Optionee shall not therefore be
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considered in default with respect to such payment while actively pursuing such
approval, but in any event, such common shares must be issued within sixty (60)
days after the due date. The Optionor acknowledges that a hold period may be
required pursuant to applicable securities laws.
In the event of a capital reorganization, reclassification, subdivision or
consolidation of the capital stock of the Company, or the merger, amalgamation,
or other corporate combination of the Company with, or the sale of all or
substantially all of its assets to, one or more other entities, or of any other
events in which new securities of any nature are delivered in exchange for
common shares of the Optionee (collectively or individually a "Fundamental
Change") prior to the common share issuances pursuant to paragraph 3 hereof,
then at the time the common shares would have been issued pursuant to this
Agreement and in lieu of issuing the common shares which, but for such
Fundamental Change and this provision would have been issued pursuant to this
Agreement, the Optionee or its successor shall instead issue and deliver to the
Optionor that number and class of shares and/or other securities and property
that would have been issued and delivered as a result of the Fundamental Change
in exchange for the common shares which the Optionee is obligated to pay, if
such issuance had occurred prior to the occurrence of the Fundamental Change.
The adjustments so provided for herein are cumulative.
19. FURTHER ASSURANCES
The parties hereto agree to execute all such further or other assurances and
documents and to do or cause to be done all acts necessary to implement and
carry into effect the provisions and intent of this Agreement.
20. ASSIGNMENT
This Agreement and any agreement contemplated hereby may be assigned by the
Optionee at its sole discretion, except that the Optionee agrees that it shall
not dispose of more than a 49% interest in and to the Xxxxx Property or Xxxxxx
Property to a related party (as defined herein) without the written consent of
the Optionor. For the purposes of this section a related party shall have the
meaning ascribed to it by the TSX Venture Exchange or such other stock exchange
as the Optionee may have its shares listed.
21. TITLES
The titles to the respective paragraphs hereof shall not be deemed to form part
of this Agreement but shall be regarded as having been used for convenience of
reference only.
22. SCHEDULES
The Schedules to this Agreement shall be construed with and as an integral part
of this Agreement to the same extent as if they were contained in the body
hereof.
23. VOID OR INVALID PROVISION
If any term, provision, covenant or condition of this Agreement, or any
application thereof, should be held by a court of competent jurisdiction to be
invalid, void or unenforceable, all provisions, covenants and conditions of this
Agreement, and all applications thereof not held invalid, void or unenforceable
shall continue in full force and effect and in no way be affected, impaired or
invalidated thereby.
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24. SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and be binding upon the parties
hereto and their respective successors, assigns, heirs, executors or
administrators as the case may be.
25. APPROVALS
The Optionee and the Optionor hereby acknowledge that this Agreement shall be
subject to all necessary regulatory approvals and the approval of the Board of
Directors of the Optionee.
26. ARBITRATION
If any question, difference or dispute shall arise between the parties or any of
them in respect of any matter arising under this Agreement or in relation to the
construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
(a) the party or parties sharing one side of the dispute shall
name a first arbitrator and give notice thereof to the party
or parties sharing the other side of the dispute (the "First
Arbitrator");
(b) the party or parties sharing the other side of the dispute
shall, within fourteen (14) days of receipt of the notice,
name a second arbitrator (the "Second Arbitrator"); and
(c) the First Arbitrator and Second Arbitrator shall, within
fifteen (15) days of the naming of the latter of them, select
a third arbitrator.
The expense of the arbitration shall be borne by the losing party to the
dispute. If the parties on either side of the dispute fail to name their
arbitrator within the time limited or to proceed with the arbitration, the
arbitrator named may decide the question. The arbitration shall be conducted in
accordance with the provisions of the Arbitration Act of the Province of
Ontario, and the decision of the arbitrator or a majority of the arbitrators, as
the case may be, shall be conclusive, non appealable to any court and binding
upon all the parties.
27. GOVERNING LAW
This Agreement shall be governed by and interpreted in accordance with the laws
of the Province of Ontario and the parties hereto attorn to the jurisdiction of
the courts thereof and irrevocably agree that the proper venue for any action
commenced with respect to matters arising out of this Agreement shall be
Ontario.
28. PRIOR AGREEMENTS
This Agreement supersedes all prior agreements between the parties hereto with
respect to the Properties, which said prior agreements shall be deemed to be
null and void upon the execution hereof.
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29. EXECUTION IN COUNTERPARTS
This Agreement may be executed in any number of counterparts with the same
effect as if all parties had signed the same document.
30. TIME OF ESSENCE
Time shall be of the essence of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed these presents as of the day
and year first above written.
SIGNED, SEALED and DELIVERED by )
XXXXXXXXX X. XXXX in the presence of: )
)
BY: /S/ XXXXX CHALGIN ) BY: /S/ XXXXXXXXX X. XXXX
------------------------------------ -----------------------------
Name ) XXXXXXXXX X. XXXX
TIMMINS, ON )
------------------------------------
Address )
EDUCATOR )
------------------------------------
Occupation )
SIGNED, SEALED and DELIVERED by )
XXXXX XXXXXXX in the presence of: )
)
BY: /S/ XXXXX CHALGIN ) BY: /S/ XXXX XXXXXXX
------------------------------------ -----------------------------
Name ) XXXX XXXXXXX
TIMMINS, ON )
------------------------------------
Address )
EDUCATOR )
------------------------------------
Occupation )
The COMMON SEAL of )
XXXXXX GOLD CORP. )
was hereunto affixed in the presence of: )
)
____________________________________ ) c/s
Authorized Signatory )
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SCHEDULE "A"
REFERRED TO IN THE AGREEMENT DATED FOR REFERENCE THE 10TH DAY OF APRIL, 2006
BETWEEN XXXXXXXXX X. XXXX, XXXXX XXXXXXX AND XXXXXX GOLD CORP.
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The Property consists of the following claim numbers, units and expiry dates:
CLAIM NUMBERS TOWNSHIP UNITS EXPIRY DATES
XXXXX PROPERTY
4209640 Xxxxx 9 Jan 26, 08
4209650 Xxxxx 9 Jan 26, 08
4209631 Xxxxx 16 Jan 31, 08
4209632 Xxxxx 15 Jan 31, 08
4209633 Xxxxx 12 Jan 31, 08
3001100 Xxxxx 12 May 4, 06
3010211 Xxxxx 12 Jul 27, 06
3017351 Xxxxx 1 Sep 1, 06
XXXXXX PROPERTY
4201784 Xxxxxx 14 Dec 28, 07
4203155 Xxxxxx 4 Dec 28, 07
4209638 Xxxxxx 16 Feb 13, 08
3019097 Xxxxxx 4 Nov 5, 06
4207699 Xxxxxx 4 Nov 22, 07
*************************************************************************
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SCHEDULE "B"
REFERRED TO IN THE AGREEMENT DATED FOR REFERENCE THE 10TH DAY OF APRIL, 2006
BETWEEN XXXXXXXXX X. XXXX, XXXXX XXXXXXX AND XXXXXX GOLD CORP.
--------------------------------------------------------------------------------
ROYALTIES
1. For all diamonds, gems and other precious and semi-precious stones
("STONE PRODUCTS") mined or produced from the Property, the Optionee
shall pay to the Optionor a Royalty equal to a percentage of the net
sales returns ("NSAR") realized from the sale or disposition of the
Stone Products.
2. For all metals, bullion, concentrates or ores ("OTHER PRODUCTS") mined
or produced from the Property, the Optionee shall pay to the Optionor a
Royalty equal to a percentage of the net smelter returns ("NSMR")
realized or deemed to be realized as hereinafter provided, from the
sale or disposition of the Other Products.
3. The aforementioned percentage of the NSAR and percentage of the NSMR
shall be that determined in accordance with the provisions of Section
4.1 of the Agreement to which this Schedule B forms a part; and in the
calculation of the Royalty, such percentage is applied to 100% of the
NSAR or NSMR, as the case may be, regardless of dilution of the
Optionee's working interest or entitlement with respect to the
Agreement, the Properties or the Products.
4. For the purposes of this Schedule B, the term "PRODUCTS" shall be
interpreted as a collective reference to Stone Products and Other
Products and the term "ROYALTY" shall be interpreted as a collective
reference to the NSAR Royalty and the NSMR Royalty.
5. Net Sales Returns Royalty - Stone Products
a. Net sales returns means the gross proceeds from the sale or
disposition of Stone Products to an independent purchaser,
after deducting therefrom the cost of Valuation, Sorting,
Shipping and Insurance in connection with the Stone Products
as well as any sales, excise, production, export and other
duties, levies, assessments and taxes (except income taxes)
payable on the production or sale of Stone Products (but not
income taxes), and for the purposes hereof:
i. "VALUATION" means the establishing of a value for
each lot or group of sorted Stone Products for
purposes of reference when negotiating with a
potential purchaser of the same;
ii. "SORTING" means the final separation of Stone
Products and dividing them into groups according to
quality, size, or other characteristics, and then the
division of such groups into appropriate lots or
groups for valuing and/or sale, it being acknowledged
that in the case of gem quality Stone Products, a
group or lot may be a single stone;
iii. "SHIPPING" means all methods of transportation or
places of storage of Stone Products from the moment
they leave the Property until the passing of title
thereto or risks therefor (whichever is the later) to
an independent purchaser, including, without
limitation, any cost that may be incurred by reason
of such methods or places used or any sorting or
valuation facilities being situated off the Property;
and
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iv. "INSURANCE" means all insurance that the Optionee
considers advisable to protect all or part of the
Stone Products in the possession or control of the
Optionee (including, without limitation, during
shipping) until the passing of title thereto or risks
therefor (whichever is the later) and including,
without limitation, the insurance or bonding of any
person who does or may come into contact with any
such Stone Products at any point during the
operations of the Optionee whether such person is an
employee of the Optionee or otherwise.
b. If Stone Products are sold to any entity with which the
Optionee does not deal at arm's length, the Stone Products
shall for the purposes hereof be deemed to have been sold at
prices determined by an independent valuator chosen by the
Optionor.
c. The Optionee shall not have the right to commingle Stone
Products produced from the Properties with similar products
produced from other properties.
6. Net Smelter Returns Royalty - Other Products
a. Net smelter returns means the gross proceeds from the sale or
disposition of Other Products removed from the Properties
after deducting the costs of treatment, tolling, smelting,
refining and minting of such products and all costs associated
therewith such as transporting, insuring, handling, weighing,
sampling, assaying and marketing, as well as all penalties,
representation charges, referee's fees and expenses, import
taxes and export taxes; and the term "smelter" shall mean
conventional smelters as well as any other type of production
plant used in lieu of a conventional smelter to reduce ores or
concentrates.
b. If smelting, refining, treatment, assay or sampling of Other
Products is performed by facilities owned or controlled by the
Optionee or any of its affiliates, all charges, costs and
penalties therefor to be deducted pursuant to the foregoing
paragraph shall be equal to and not exceed actual costs
incurred by the Optionee in carrying out such processes and
shall not exceed such amounts which the Optionee would have
incurred if such operations were conducted at facilities
operating at arm's length to the Optionee, and which were then
offering comparable services for comparable quantities and
quality of Other Products.
c. The Optionee shall have the right to commingle Other Products
produced from the Properties with ores and minerals produced
from other properties. Before commingling, Other Products from
the Properties shall be weighed, sampled, assayed, measured or
gauged by the Optionee in accordance with sound mining and
metallurgical practices for moisture, penalty substances and
payable content. Records shall be kept by the Optionee for a
reasonable time showing weights, moisture and assays of
payable content. Prior to commingling, the Optionee shall give
thirty (30) days notice to the Optionor specifying its
decision to commingle and outlining the procedures it proposes
to follow.
7. General
a. Royalties shall accrue at the time of sale or deemed sale, as
applicable, and they shall become due and payable in cash on a
calendar quarter basis, on the twentieth (20th) day of the
month next following the calendar quarter in which they
accrue.
b. At the time of making each Royalty payment to the Optionor,
the Optionee shall provide the Optionor with a certificate of
a senior officer of the Optionor certifying as to the accuracy
of the calculations of the Royalty payment and setting out the
method of the calculation thereof to which shall be attached a
true copy of the related smelter or sales receipt or receipts.
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c. Net sales returns and net smelter returns upon the respective
Products shall be calculated exclusively as provided herein,
and the Royalty computed thereon shall be determined without
regard to any "hedging", "forward", "futures" or comparable
sales (collectively referred to as "FUTURE TRADING") of such
Products by or on behalf of the Optionee. The Optionor shall
not be entitled to any benefit of or be subject to any loss
attributable to such future trading by the Optionee.
d. The Optionee shall cause to be kept proper books of account,
records and supporting materials covering all matters relevant
to the calculation of Royalties payable to the Optionor, and
the reasonable verification thereof; and the Optionor shall
have, from time to time, the unfettered right, during regular
business hours and on reasonable notice, to carry out at its
sole cost and expense an audit by established independent
professionals chosen by the Optionor, of the methodology and
manner of calculating all Royalty payments hereunder and the
Optionee shall provide, during regular business hours and on
reasonable notice, unrestricted access to its books, accounts,
records, vouchers, smelter settlements, sales receipts and
related documentation for this purpose. Should there be any
difference in the amount of the Royalty payment or payments
which are ultimately determined by the process described in
Article 8 of the Agreement to be in the Optionor's favour,
which exceed three (3%) percent of the amount of the Royalty
paid to the Optionor, then the cost of said audit, to the
extent reasonable, shall be reimbursed to the Optionor by the
Optionee.
e. Any dispute relating to the quantum or methodology of
calculating all Royalties payable hereunder shall be settled
by arbitration pursuant to the provisions of Article 24 of the
Agreement.
