ACQUISITION AGREEMENT
EXHIBIT
10.1
THIS
AGREEMENT dated for reference the 28th day of October, 2009
BETWEEN:
Ironwood Gold Corp. 0000 X.
Xxxxxxxx Xxxxxxx #000
Xxxxxxxxxx,
XX 00000
(the
"Acquiror")
AND:
Kingsmere Mining Ltd., 00000
Xxxxxx Xxxxxx Xxxxx
Xxxx Xxxxxx, XX 00000
Xxxx Xxxxxx, XX 00000
("Kingsmere")
AND:
Ironwood Mining Corp. 00000
Xxxxxx Xxxxxx Xxxxx
Xxxx
Xxxxxx, XX 00000
(“Ironwood”)
WHEREAS:
A. Gold
Canyon Partners, LLP (“Gold Canyon”) and Kingsmere entered into an option
agreement dated January 31, 2009, attached hereto as Exhibit “A” (the “Option
Agreement”) wherein Kingsmere acquired an exclusive option to acquire from Gold
Canyon an undivided 100% right, title and interest in and to certain mineral
claims known as the Cobalt Canyon Gold Project, in the Chief District, located
in Lincoln County, Nevada as set out in Schedule “A” of the Option Agreement
(the “Property”);
B. Kingsmere
assigned to Ironwood Mining Corp. all of Kingsmere's right, title and interest
in and to the Option Agreement and the Property in accordance with the terms of
an assignment agreement dated April 15, 2009 attached hereto as
Exhibit “B” (the “Assignment Agreement”); and
C. The
parties to the Option Agreement and the Assignment Agreement consent to the
acquisition by Ironwood Gold Corp. of such Agreements in accordance with the
terms of this Agreement.
NOW
THEREFORE, in consideration of the sum of $10.00 now paid by Ironwood Gold Corp.
to the other parties (the receipt and sufficiency of which are hereby
acknowledged by the such parties), the parties to this Agreement covenant and
agree as follows:
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THE ASSIGNMENT AND
ACCEPTANCE
1.
Kingsmere hereby unconditionally forever assigns and transfers to Ironwood
Mining Corp. all of Kingsmere’s right, title and interest in and to the Option
Agreement and the Property and all benefits and advantages to be derived
therefrom.
2. Ironwood
Mining Corp. hereby unconditionally forever assigns and transfers to Ironwood
Gold Corp. all of Ironwood Mining Corp.’s right, title and interest in and to
the Assignment Agreement and the Property and all benefits and advantages to be
derived therefrom.
3. Kingsmere
and Ironwood Mining Corp. shall have obtained the consent of Gold Canyon to the
assignment and transfer of the Option Agreement and Assignment
Agreement.
THE
CONSIDERATION
The
consideration payable by the respective parties shall consist of:
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4.
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Ironwood
Gold Corp. hereby agrees to issue 15,000,000 restricted shares of common
stock of Ironwood Gold Corp. (the “Consideration Shares”) to Ironwood
Mining Corp.
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5.
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Ironwood
Gold Corp. hereby agrees to issue 1,000,000 restricted shares of common
stock of Ironwood Gold Corp. to each of each of Kingsmere and Gold Canyon
for an aggregate of 2,000,000 shares, which such parties acknowledge has
been issued prior to the date
hereof.
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6.
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In
consideration for the Assignment, Ironwood Gold Corp. hereby agrees to pay
to the Xxxxx Family Trust, owners of the claims comprising the Property,
the following amounts on or before the dates specified
below:
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(a)
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$15,000
on or before May 1, 2009 (which has been paid and is to be reimbursed by
Ironwood Gold Corp. to the payor);
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(b)
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$20,000
on or before December 1, 2009;
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(c)
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$40,000
on or before December 1, 2010; and
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(d)
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$50,000
on or before December 1, 2011.
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7.
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In
consideration for this Agreement, Ironwood Gold Corp. hereby agrees to pay
to Ironwood Mining Corp. $100,000 upon execution of this
Agreement.
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In
addition to the foregoing payment, and also in consideration for this Agreement,
Ironwood Gold Corp. hereby agrees to pay to Ironwood Mining Corp. $350,000 on or
before December 15, 2009.
8. Upon
receipt of the amounts specified in section 7 above, Ironwood Mining Corp. shall
within five (5) business day of receipt, pay such amounts to
Kingsmere.
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9.
The parties hereby covenant and agree with each other
that the consideration payable in this Agreement shall replace all consideration
payable and any share issuances required in the Option Agreement or Assignment
Agreement, other than the required property expenditures under Section 4 of the
Option Agreement, which are hereby assumed by Ironwood Gold Corp.
10.
Ironwood Gold Corp. agrees to all terms and conditions of the
Option Agreement and Assignment Agreement, except as modified by this Agreement.
This includes agreeing to make all royalty payments to Gold Canyon and all
required property expenditures as set out in the Option
Agreement.
11. Ironwood
Gold Corp. represents and warrants to each of Gold Canyon, Kingsmere and
Ironwood, with the knowledge that they rely upon same in entering into this
Agreement, that:
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(a)
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it
is duly incorporated and in good standing in its jurisdiction of
incorporation;
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(b)
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it
has all requisite power and capacity, and has duly obtained all requisite
authorizations and performed all requisite acts, to enter into and perform
its obligations hereunder, it has duly executed and delivered this
Agreement and such constitutes a legal, valid and binding obligation of it
enforceable against it in accordance with the Agreement's terms, and the
entering into of this Agreement and the performance of their obligations
hereunder does not and will not result in a breach of, default under or
conflict with any of the terms and provisions of any of its constituting
documents, any resolutions of their partners, any indenture, agreement or
other instrument to which they are a party or by which they are bound or
may be subject, or any statute, order, judgment or other law or ruling of
any competent authority;
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(c)
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the
Consideration Shares to be issued to Ironwood Mining Corp. upon execution
of this Agreement will, upon issuance, have been duly and validly
authorized and, when issued, will be duly and validly issued, fully paid
and non-assessable.
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(d)
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no
proceedings are pending for, and Ironwood Gold Corp. is unaware of any
basis for, the institution of any proceedings leading to the placing of
Ironwood Gold Corp. in bankruptcy or subject to any other laws governing
the affairs of insolvent parties;
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(e)
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Ironwood
Gold Corp. has completed such due diligence on the Property, the Option
Agreement and the Assignment Agreement as they have deemed
necessary;
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(f)
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Ironwood
Gold Corp. has furnished or made available to the other parties hereto a
true and complete copy of each report, schedule, registration statement
and proxy statement filed by Ironwood Gold Corp. with the SEC
(collectively, and as such documents have since the time of their filing
been amended, the “Ironwood Gold Corp. SEC
Documents”). As of their respective dates, Ironwood Gold Corp. SEC
Documents complied in all material respects with the requirements of the
Securities Act of
1933, or the Securities and Exchange Act of
1934, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such Acquiror SEC Documents. Ironwood
Gold Corp. SEC Documents constitute all of the documents and reports that
Ironwood Gold Corp. was required to file with the SEC pursuant to the
Exchange Act and the rules and regulations promulgated there under by the
SEC;
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(g)
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Ironwood
Gold Corp.’s shares of common stock are currently quoted on the OTC
Bulletin Board and it has not, in the 12 months preceding the date hereof,
received any notice from the OTC Bulletin Board or FINRA or any trading
market on which Ironwood Gold Corp.’s common stock is or has been listed
or quoted to the effect that Ironwood Gold Corp. is not in compliance with
the quoting, listing or maintenance requirements of the OTCBB or such
other trading market; and
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(h)
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To
the best knowledge of Ironwood Gold Corp., there is no claim, charge,
arbitration, grievance, action, suit, investigation or proceeding by or
before any court, arbiter, administrative agency or other governmental
authority now pending or, to the best knowledge of Ironwood Gold Corp.,
threatened against Ironwood Gold Corp. which involves any of the business,
or the properties or assets of Ironwood Gold Corp. that, if adversely
resolved or determined, would have a material adverse effect on the
business, operations, assets, properties, prospects or conditions of
Ironwood Gold Corp. taken as a whole (a “Acquiror Material Adverse
Effect”). There is no reasonable basis for any claim or
action that, based upon the likelihood of its being asserted and its
success if asserted, would have such a Acquiror Material Adverse
Effect.
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12.
Kingsmere and Ironwood Mining Corp., severally and not jointly, represent and
warrant to Ironwood Gold Corp., with the knowledge that Ironwood Gold Corp.
relies upon same in entering into this Agreement, that:
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(a)
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the
mineral claims comprising the Property (as defined therein), the Option
Agreement, the Assignment Agreement, and the mineral agreements in respect
thereof have been, to the best of their knowledge and belief after due
inquiry, duly and validly located, granted, entered into and recorded, as
the case may be, pursuant to the laws of the jurisdiction in which the
Property is situate and are in each case in good standing with respect to
all filings, fees, rentals, taxes, assessments, work commitments and other
obligations and conditions on the date hereof and until the dates set
opposite the respective names;
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(b)
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they
have all requisite power and capacity, and has duly obtained all requisite
authorizations and performed all requisite acts, to enter into and perform
their obligations hereunder, they have duly executed and delivered this
Agreement and such constitutes a legal, valid and binding obligation of
them enforceable against them in accordance with the Agreement's terms,
and the entering into of this Agreement and the performance of their
obligations hereunder does not and will not result in a breach of, default
under or conflict with any of the terms and provisions of any of their
constituting documents, any resolutions of their partners, any indenture,
agreement or other instrument to which they are a party or by which they
are bound or the Property may be subject, or any statute, order, judgment
or other law or ruling of any competent
authority;
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(c)
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there
are neither any adverse claims or challenges against, or to the ownership
or title to, any of the mineral claims comprising the Property or to the
validity or enforceability of any of the mineral agreements in respect
thereof, nor to the knowledge of the Assignors after due inquiry is there
any basis therefor, and there are no outstanding agreements, options or
other rights and interests to acquire or purchase the Property or any
portion thereof or any interest therein, and no person has any royalty or
other interest whatsoever in the production from any of the mineral claims
comprising the Property or
otherwise;
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(d)
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the
Option Agreement and Assignment Agreement are in good standing as at the
date hereof and no default has occurred therein that has not been
cured;
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(e)
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the
Assignors have the legal capacity and competence to enter into and execute
this Agreement and to take all actions required pursuant hereto and they
are duly incorporated and validly subsisting under the laws of its
jurisdiction of incorporation and all necessary approvals by their
directors, shareholders and others have been obtained to authorize
execution and performance of this Agreement on behalf of the Assignors;
and
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(f)
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have
furnished or made available to Ironwood Gold Corp. true and complete
copies of all mineral agreements, title reports, title insurance policies,
personal property filings, financing statements, real property filings,
claims filings, documents, agreements, memoranda, claims and reports that
relate to the Property and the mining claims thereon that are in their
possession or control.
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13.
Ironwood Mining Corp. represents and warrants to Ironwood Gold Corp., with the
knowledge that Ironwood Gold Corp. relies upon same in entering into this
Agreement, that:
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(a)
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Ironwood
Mining Corp. is acquiring the Consideration Shares for Ironwood
Mining Corp.’s own account, and not directly or indirectly for the account
of any other person. Ironwood Mining Corp. is
acquiring the Consideration Shares for investment purposes only and not
with a view to distribution or resale thereof except in compliance with
the Securities Act of 1933, as amended (the “Act”) and any applicable
state laws regulating securities;
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(b)
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Ironwood
Mining Corp. has had the opportunity to ask questions of, and to receive
answers from, appropriate executive officers of Ironwood Gold Corp. with
respect to the terms and conditions of the acquisition of the
Consideration Shares contemplated hereby and with respect to the business,
affairs, financial condition and results of operations of Ironwood Gold
Corp. Ironwood Mining Corp. has had access to such financial
and other information as is necessary in order for Ironwood to make a
fully informed decision as to investment in Ironwood Gold Corp., and has
had the opportunity to obtain any additional information necessary to
verify any of such information to which Ironwood has had
access.
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(c)
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Ironwood
Mining Corp. understands that its acquisition of the Consideration Shares
is highly speculative in nature and is subject to a high degree of risk of
loss in whole or in part;
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(d)
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Ironwood
Mining Corp. has either (i) a pre-existing relationship with Ironwood Gold
Corp. or one or more of its officers or directors consisting of personal
or business contacts of a nature and duration which enable it to be aware
of the character, business acumen and general business and financial
circumstances of Ironwood Gold Corp. or any such officer or director with
whom such relationship exists or (ii) such business or financial expertise
as to be able to protect its own interests in connection with the
acquisition of the Consideration
Shares.
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(e)
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Ironwood
Mining Corp. understands and acknowledges that the Consideration Shares
are not registered under the Act, and that under the Act and other
applicable laws Ironwood Mining Corp. may be required to hold the
Consideration Shares for an indefinite period of time. Each
stock certificate representing the Consideration Shares shall bear the
following legend, as well as any other legend that Ironwood Gold Corp. may
reasonably determine is necessary or
appropriate:
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“THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE, AND MAY
NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER SUCH ACT AND/OR APPLICABLE STATE SECURITIES LAWS, OR UNLESS THE
CORPORATION HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE, REASONABLY
SATISFACTORY TO THE CORPORATION AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
14. The
parties acknowledge that the transfer and sale of the Option Agreement, and the
transfer of the rights and obligations contained therein, remains subject to the
ratification of this Agreement by Gold Canyon, which is to occur as soon as
reasonably practicable, but in any event must occur prior to December 1,
2009. In the event Gold Canyon does not ratify this Agreement by
December 1, 2009, then this Agreement shall be automatically terminated, all
sums paid by Ironwood Gold Corp. shall be refunded, any and all documents
provided by a party shall be returned to that party, and the parties shall have
no further obligations under this Agreement.
15. The
parties will at all times hereafter execute and deliver, at the request of
another party, all such further documents, deeds and instruments, and will do
and perform all such acts as may be necessary or desirable to give full effect
to the intent and meaning of this Agreement. Without limiting the
generality of the foregoing, the Assignors will execute such financing
statements, financing change statements, notices or directions as may be
necessary or advisable to cause all pertinent offices of public record to amend
their records to show the interests of Ironwood Gold Corp. in the Option
Agreement and Assignment.
16. Each
of the parties to this Agreement acknowledges that such party has read this
document and fully understands the terms of this Agreement, and acknowledges
that this Agreement has been executed voluntarily after either receiving
independent legal advice, or having been advised to obtain independent legal
advice and having elected not to do so
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17.
This Agreement will enure to the benefit of the parties and their respective
successors and assigns, and will be binding upon the parties and their
successors and assigns.
18. This
Agreement will be governed by and construed in accordance with the laws in force
in the State of Nevada and the parties submit to the non-exclusive jurisdiction
of the courts of State of Nevada in any proceedings pertaining to the Assignment
or this Agreement.
19.
This Agreement may be executed in any number of counterparts with the same
effect as if all parties hereto had all signed the same document. All
counterparts will be construed together and will constitute one and the same
agreement.
IN
WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year first above written.
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Ironwood
Mining Corp.
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Per:
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Authorized
Signatory
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Ironwood
Gold Corp.
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Per:
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Authorized
Signatory
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Kingsmere
Mining Ltd
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Per:
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Authorized
Signatory
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Exhibit
A
OPTION
AGREEMENT
THIS AGREEMENT made effective
as of the 31st day of
January, 2009
BETWEEN:
Gold Canyon Partners, LLP,
with an office at 75 – 0000 Xxxxxxxxx Xxxx, #00 Xxxxxx Xxxx, XX
00000
(the
"Optionor")
OF THE
FIRST PART
AND:
Kingsmere Mining Ltd., a
company with an office at 00000 Xxxxxx Xxxxxx Xxxxx, Xxxx Xxxxxx, XX
00000
(the
"Optionee")
OF THE
SECOND PART
WHEREAS:
A. The
Optionor entered in to a letter of intent with the Optionee dated January 5,
2009, pursuant to which the Optionee has the exclusive option to acquire an
undivided 100% right, title and interest in and to certain mineral claims known
as the Cobalt Canyon Gold Project, in the Chief District, located in Lincoln
County, Nevada (the "Property") as more particularly set out in Schedule "A"
hereto, subject only to the Royalty, on the terms and conditions hereinafter set
forth;
B. Pursuant
to the terms of the LOI, the Optionee will enter into an agreement with Xxxxxx
Xxxxxxxxx to appoint Xxxxxx Xxxxxxxxx to the Optionee’s board of
directors and issue to Xx. Xxxxxxxxx 50,000 shares in the capital stock of the
Optionee as soon as practicable following the effective date of this Agreement
and issue an additional 50,000 shares in the capital stock of the Optionee on or
before the second year anniversary of appointment to the board; and
C. Pursuant
to the terms of the LOI, the Optionee will enter into an agreement with Xxxxxxxx
X. Xxxxxxx to appoint Xxxxxxxx X. Xxxxxxx to the Optionee’s advisory board and
issue to Xx. Xxxxxxx 25,000 shares in the capital stock of the Optionee as soon
as practicable following the effective date of this Agreement and issue an
additional 25,000 shares in the capital stock of the Optionee on or before the
second year anniversary of appointment to the advisory board;
NOW THEREFORE THIS AGREEMENT
WITNESSES that in consideration of the sum of $10.00 now paid by the
Optionee to the Optionor (the receipt and sufficiency of which is hereby
acknowledged), the parties agree as follows:
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1.
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DEFINITIONS. For
the purposes of this Agreement the following words and phrases shall have
the following meanings, namely:
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(a)
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"Commencement
of Commercial Production" means:
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(i)
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if
a mill is located on the Property, the last day of a period of 40
consecutive days in which, for not less than 30 days, the mill processed
ore from the Property at 60% of its rated concentrating capacity;
or
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(ii)
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if
a mill is not located on the Property, the last day of a period of 30
consecutive days during which ore, dore, or a product of mineral
beneficiation has been shipped from the Property on a reasonably regular
basis for the purpose of earning
revenues,
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but any
period of time during which ore or concentrate is shipped from the Property for
testing purposes, or during which milling operations are undertaken as initial
tune-up, shall not be taken into account in determining the date of Commencement
of Commercial Production;
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(b)
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"Option"
means the option to acquire an undivided 100% right, title and interest in
and to the Property as provided in this
Agreement;
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(c)
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"Option
Period" means the period from the date of this Agreement to and including
the date of exercise or termination of the
Option;
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(d)
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"Property"
means the mineral claims located in the Chief District, Lincoln County,
Nevada as more particularly set out in Schedule "A" hereto, including any
replacement or successor claims, and all mineral/mining leases and other
mining interests derived from any such claims. Any reference
herein to any mineral claim comprising the Property includes any
mineral/mining leases or other interests into which such mineral claim may
have been replaced or converted;
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(e)
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"Property
Rights" means all licenses, permits, easements, rights-of-way,
certificates and other approvals obtained by either of the parties either
before or after the date of this Agreement and necessary for the
exploration of the Property, or for the purpose of placing the Property
into production or continuing production
therefrom;
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(f)
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"Royalty"
means a royalty of 3.5% net smelter returns payable to the Optionor, as
more particularly set out in Schedule "B"
hereto;
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(g)
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"Shares"
means the common shares in the capital of the Optionee, as constituted on
the date hereof, to be issued to the Optionor pursuant to the exercise of
the Option.
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2.
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REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE
OPTIONOR.
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(a)
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The
Optionor represents and warrants to and covenants with the Optionee, with
the knowledge that the Optionee relies upon same in entering into this
Agreement, that:
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(i)
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it
has been duly formed and validly exists in good standing with respect to
the filing of annual reports under the laws of its jurisdiction of
formation;
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(ii)
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no
proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, its dissolution or winding up
or being placed into bankruptcy;
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(iii)
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it
has all requisite power and capacity, and has duly obtained all requisite
authorizations and performed all requisite acts, to enter into and perform
its obligations hereunder, it has duly executed and delivered this
Agreement and such constitutes a legal, valid and binding obligation of it
enforceable against it in accordance with the Agreement's terms, and the
entering into of this Agreement and the performance of its obligations
hereunder does not and will not result in a breach of, default under or
conflict with any of the terms and provisions of any of its constituting
documents, any resolutions of its partners, any indenture, agreement or
other instrument to which it is a party or by which it is bound or the
Property may be subject, or any statute, order, judgment or other law or
ruling of any competent authority;
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(iv)
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it
is legally entitled to hold the Property and the Property Rights and will
remain so entitled until and always to the extent such is required for the
due transfer to the Optionee of its requisite interest in and to the
Property pursuant to and upon the exercise of the
Option;
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(v)
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it
is, and at the time of each transfer to the Optionee of an interest in and
to the Property pursuant to and upon the exercise of the Option it will
be, the beneficial owner of all right, title and interest in and to such
transferred interest, free and clear of all liens, charges, claims,
liabilities and adverse interests of any nature or kind, and no taxes or
rentals are or will be due in respect of the
Property;
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(vi)
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the
mineral claims comprising the Property and the mineral agreements in
respect thereof have been, to the best of the Optionor's knowledge and
belief after due inquiry, duly and validly located, granted, entered into
and recorded, as the case may be, pursuant to the laws of the jurisdiction
in which the Property is situate and are in each case in good standing
with respect to all filings, fees, rentals, taxes, assessments, work
commitments and other obligations and conditions on the date hereof and
until the dates set opposite the respective names thereof in Schedule "A"
hereto;
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(vii)
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there
are neither any adverse claims or challenges against, or to the ownership
or title to, any of the mineral claims comprising the Property or to the
validity or enforceability of any of the mineral agreements in respect
thereof, nor to the knowledge of the Optionor after due inquiry is there
any basis therefor, and there are no outstanding agreements, options or
other rights and interests to acquire or purchase the Property or any
portion thereof or any interest therein, and no person has any royalty or
other interest whatsoever in the production from any of the mineral claims
comprising the Property or
otherwise;
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(viii)
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it
holds all surface rights in respect of the Property which are necessary or
desirable to conduct the exploration and development thereof, including
but not limited to the activities contemplated in Section 6 hereof;
and
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(ix)
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the
Property is not the whole or substantially the whole of the undertaking of
the Optionor.
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(b)
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The
representations and warranties contained in this section are provided for
the exclusive benefit of the Optionee, and a breach of any one or more
thereof may be waived by the Optionee in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution and
performance of this Agreement and of any transfers, assignments, deeds or
further documents or acts of the parties respecting the
Property.
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3.
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REPRESENTATIONS,
WARRANTIES AND COVENANTS OF THE
OPTIONEE.
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(a)
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The
Optionee represents and warrants to and covenants with the Optionor, with
the knowledge that the Optionor relies upon same in entering into this
Agreement, that:
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(i)
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it
has been duly incorporated, amalgamated or continued and validly exists as
a corporation in good standing with respect to the filing of annual
reports under the laws of its jurisdiction of incorporation, amalgamation
or continuation;
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(ii)
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no
proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, its dissolution or winding up
or being placed into bankruptcy or subject to any other laws governing the
affairs of insolvent corporations;
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(iii)
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it
has all requisite corporate power and capacity, and has duly obtained all
requisite corporate authorizations and performed all requisite corporate
acts, to enter into and perform its obligations hereunder, it has duly
executed and delivered this Agreement and such constitutes a legal, valid
and binding obligation of it enforceable against it in accordance with the
Agreement's terms, and the entering into of this Agreement and the
performance of its obligations hereunder does not and will not result in a
breach of, default under or conflict with any of the terms and provisions
of any of its constituting documents, any resolutions of its shareholders
or directors, any indenture, agreement or other instrument to which it is
a party or by which it is bound or the Property may be subject, or any
statute, order, judgment or other law or ruling of any competent authority
applicable to it; and
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(iv)
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it
is lawfully authorized to hold mineral claims and real property under the
laws of the jurisdiction in which the Property is
situate.
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(b)
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The
representations and warranties contained in this section are provided for
the exclusive benefit of the Optionor, and a breach of any one or more
thereof may be waived by the Optionor in whole or in part at any time
without prejudice to its rights in respect of any other breach of the same
or any other representation or warranty, and the representations and
warranties contained in this section shall survive the execution
hereof.
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4.
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GRANT
AND EXERCISE OF OPTION.
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(a)
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The
Optionor hereby grants to the Optionee the sole and exclusive right and
option to acquire up to an undivided 100% right, title and interest in and
to the Property, free and clear of all charges, encumbrances, claims,
liabilities and adverse interests of any nature or kind, except for the
Royalty.
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(b)
|
The
Option shall be in good standing and exercisable by the Optionee by paying
the following amounts on or before the dates specified in the following
schedule:
|
|
|
(i)
|
paying
the Optionor $45,000USD upon the execution of this Agreement and issuing
to the Optionor 1,000,000 shares in the capital stock of the Optionee as
soon as practicable following the effective date of the
Agreement;
|
|
|
(ii)
|
paying
the Optionor $30,000USD on or before the first anniversary of the
execution of this Agreement;
|
|
|
(iii)
|
paying
the Optionor $40,000USD on or before the second anniversary of the
execution of this Agreement;
|
|
|
(iv)
|
paying
the Optionor $50,000USD on or before the third anniversary of the
execution of this Agreement;
|
|
|
(v)
|
paying
the Optionor $75,000USD on or before the fourth anniversary of the
execution of this Agreement;
|
|
|
(vi)
|
paying
the Optionor $75,000USD on or before each subsequent anniversary of the
execution of this Agreement for so long as the option is good standing,
with such payments being treated as advance royalty payments to be applied
against any Royalty payable; and
|
- 13 -
|
|
(vii)
|
paying
all property payments, including the federal unpatented claims and
patented claims.
|
|
|
(c)
|
The
Optionee shall use commercially reasonable efforts to incur the following
annual work commitments as currently recommended and agreed to by the
parties:
|
|
|
(i)
|
exploration
expenditures on the Property of $250,000USD on or before the first
anniversary of the execution of this
Agreement;
|
|
|
(ii)
|
exploration
expenditures on the Property of $350,000USD on or before the second
anniversary of the execution of this
Agreement;
|
|
|
(iii)
|
exploration
expenditures on the Property of $400,000USD on or before the third
anniversary of the execution of this Agreement;
and
|
|
|
(iv)
|
exploration
expenditures on the Property of a minimum of $250,000USD on or before the
fourth through the tenth anniversaries of the execution of this
Agreement.
|
In the
event that the Optionee spends, in any period, more than the specified sum, the
excess shall be carried forward and applied to the exploration expenditures to
be incurred in the succeeding period.
|
|
(d)
|
The
Optionor acknowledges and agrees that the Shares will be subject to hold
periods and restrictions on resale in accordance with applicable
securities laws and it is the Optionor's responsibility to determine what
those hold periods and restrictions are before selling or otherwise
transferring any Shares.
|
|
5.
|
TRANSFER
OF PROPERTY.
|
|
|
(a)
|
Concurrently
with the execution of this Agreement, the Optionor shall deliver to the
Optionee duly executed transfers of the appropriate interest in the
Property which shall be acquired by the Optionee upon exercise of the
Option.
|
|
|
(b)
|
The
Optionee shall be entitled to record such transfers at its own cost with
the appropriate government office to effect legal transfer of such
interest in the Property into the name of the Optionee, provided that the
Optionee shall hold such interest in the Property subject to the terms of
this Agreement, it being understood that the transfer of such legal title
to the Optionee prior to the exercise of the Option is for administrative
convenience only.
|
|
6.
|
RIGHT
OF ENTRY. Throughout the Option Period, the Optionee and its
directors, officers, employees, servants, agents and independent
contractors, shall have the sole and exclusive right in respect of the
Property to:
|
- 14 -
|
|
(a)
|
enter
thereon;
|
|
|
(b)
|
have
exclusive and quiet possession
thereof;
|
|
|
(c)
|
do
such prospecting, exploration, development and other mining work thereon
and thereunder as the Optionee in its sole discretion may determine
advisable;
|
|
|
(d)
|
bring
upon and erect upon the Property such buildings, plant, machinery and
equipment as the Optionee may deem advisable;
and
|
|
|
(e)
|
remove
therefrom and dispose of reasonable quantities of ores, minerals and
metals for the purposes of obtaining assays or making other
tests.
|
|
7.
|
OBLIGATIONS
OF THE OPTIONEE DURING OPTION PERIOD. During the Option Period,
the Optionee shall:
|
|
|
(a)
|
maintain
in good standing those mineral claims comprising the Property by the doing
and filing of assessment work or the making of payments in lieu thereof,
by the payment of taxes and rentals, and the performance of all other
actions which may be necessary in that regard and in order to keep such
mineral claims free and clear of all liens and other charges arising from
the Optionee's activities thereon except those at the time contested in
good faith by the Optionee;
|
|
|
(b)
|
duly
record all exploration work carried out on the Property by the Optionee as
assessment work;
|
|
|
(c)
|
following
commencement of exploration activities, provide the Optionor quarterly
reports on all exploration and drilling work carried out on the Property
and regularly transfer exploration
data;
|
|
|
(d)
|
permit
the partners, employees and designated consultants of the Optionor, at
their own risk and expense, access to the Property at all reasonable
times, and the Optionor agrees to indemnify the Optionee against and to
save it harmless from all costs, claims, liabilities and expenses that the
Optionee may incur or suffer as a result of any injury (including injury
causing death) to any partner, employee or designated consultant of the
Optionor while on the Property;
|
|
|
(e)
|
do
all work on the Property in a good and workmanlike fashion and in
accordance with all applicable laws, regulations, orders and ordinances of
any governmental authority;
|
|
|
(f)
|
indemnify
and save the Optionor harmless in respect of any and all costs, claims,
liabilities and expenses arising out of the Optionee's activities on the
Property, but the Optionee shall incur no obligation hereunder in respect
of any such costs, claims, liabilities and expenses arising or damages
suffered after termination of the Option if upon termination of the Option
any workings on or improvements to the Property made by the Optionee are
left in a safe condition and in full compliance with requirements of all
environmental laws and regulations;
|
- 15 -
|
|
(g)
|
permit
the Optionor, at its own expense, reasonable access to the results of the
work done on the Property during the last completed calendar
year;
|
|
|
(h)
|
deliver
to the Optionor, forthwith upon receipt thereof, copies of all reports,
maps, assay results and other technical data compiled by or prepared at
the direction of the Optionee with respect to the
Property.
|
The
Optionor acknowledges and agrees that all technical and other information
concerning the Property provided by the Optionee to it, directly or indirectly,
shall be treated as confidential information, and it shall not copy, transmit or
otherwise disclose, disseminate or use such information, including but not
limited to use in violation of xxxxxxx xxxxxxx and other provisions of
applicable securities laws, without the express written consent of the
Optionee.
|
8.
|
TERMINATION
OF OPTION.
|
|
|
(a)
|
The
Option shall terminate:
|
|
|
(i)
|
subject
to paragraph 16 hereof, upon the Optionee
failing to make any payment or issuance of Shares which must be made or
issued in exercise of the Option;
|
|
|
(ii)
|
subject
to paragraph 16 hereof, upon the Optionee failing to remedy a default as
provided therein; or
|
|
|
(iii)
|
at
any other time, by the Optionee giving a minimum of sixty (60) days notice
of such termination to the Optionor. In the event that the
Optionee provides such notice less than sixty (60) days prior to September
1st
of any year, the Optionee shall pay all claim maintenance fees and lease
payments for such year.
|
|
|
(b)
|
If
the Option is terminated otherwise than upon the exercise thereof, the
Optionee shall:
|
|
|
(i)
|
leave
in good standing, for a period of at least 12 months from the termination
of the Option Period, those mineral claims comprising the Property, to the
extent allowable by the laws of the jurisdiction in which the Property is
situate;
|
|
|
(ii)
|
deliver
or make available at no cost to the Optionor, within 90 days of such
termination, all drill core, copies of all reports, maps, assay results
and other relevant technical data compiled by, prepared at the direction
of, or in the possession of the Optionee with respect to the Property and
not theretofore furnished or made available to the
Optionor;
|
|
|
(iii)
|
reclaim
the Property in accordance with the requirements of all applicable
environmental laws and regulations, but only to the extent that such
requirements result from the Optionee's activities on the Property
hereunder.
|
- 16 -
|
|
(c)
|
If
the Option is terminated otherwise than upon the exercise thereof, the
Optionee shall have the right, within a period of 180 days following the
end of the Option Period, to remove from the Property all buildings,
plant, equipment, machinery, tools, appliances and supplies which have
been brought upon the Property by or on behalf of the Optionee, and any
such property not removed within such 180 day period shall thereafter
become the property of the
Optionor.
|
|
9.
|
ROYALTY.
|
|
|
(a)
|
Upon
the Commencement of Commercial Production, the Optionee shall pay to the
Optionor the NSR Royalty, being equal to 3.5% of Net Smelter Returns, on
the terms and conditions as set out in this paragraph and in Schedule "B"
hereto.
|
|
|
(b)
|
Installments
of the NSR Royalty payable shall be paid by the Optionee to the Optionor
immediately upon the receipt by the Optionee of the payment from the
smelter, refinery or other place of treatment of the proceeds of sale of
the minerals, ore, concentrates or other product from the
Property.
|
|
|
(c)
|
Within
120 days after the end of each fiscal year, commencing with the year in
which Commencement of Commercial Production occurs, the accounts of the
Optionee relating to operations on the Property and the statement of
operations, which shall include the statement of calculation of NSR
Royalty for the year last completed, shall be audited by the auditors of
the Optionee at its expense. The Optionor shall have 45 days
after receipt of such statements to question the accuracy thereof in
writing and, failing such objection, the statements shall be deemed to be
correct and unimpeachable
thereafter.
|
|
|
(d)
|
If
such audited financial statements disclose any overpayment of NSR Royalty
by the Optionee during the fiscal year, the amount of the overpayment
shall be deducted from future installments of NSR Royalty
payable.
|
|
|
(e)
|
If
such audited financial statements disclose any underpayment of NSR Royalty
by the Optionee during the year, the amount thereof shall be paid to the
Optionor forthwith after determination
thereof.
|
|
|
(f)
|
The
Optionee agrees to maintain for each mining operation on the Property,
up-to-date and complete records relating to the production and sale of
minerals, ore, bullion and other product from the Property, including
accounts, records, statements and returns relating to treatment and
smelting arrangements of such product, and the Optionor or its agents
shall have the right at all reasonable times, including for a period of 12
months following the expiration or termination of this Agreement, to
inspect such records, statements and returns and make copies thereof at
its own expense for the purpose of verifying the amount of NSR Royalty
payments to be made by the Optionee to the Optionor pursuant
hereto. The Optionor shall have the right to have such accounts
audited by independent auditors at its own expense once each fiscal
year.
|
- 17 -
|
|
(g)
|
On
or before four (4) years from date of execution of this Agreement, the
Optionee can acquire up to one and one-half percent (1.5%) of the NSR
Royalty from the Optionor for $500,000 per one-half percent
(0.5%).
|
|
10.
|
POWER
TO CHARGE PROPERTY. The Optionor shall not grant or permit to
exist any liens, charges or mortgages (collectively referred to as an
"encumbrance") upon the property or any portion thereof. At any
time after the Optionee has exercised the Option, in whole or in part, the
Optionee may grant encumbrances upon the Property or any portion thereof,
upon any mill or other fixed assets located thereon, and upon any or all
of the tangible personal property located on or used in connection with
the Property, to secure financing for the development of the Property,
always provided that, unless otherwise agreed to by the Optionor, it shall
be a term of each encumbrance that the encumbrance or other person
acquiring title to the Property upon enforcement of the encumbrance shall
hold the same subject to the Royalty as if the encumbrance or such other
person had executed this Agreement.
|
|
11.
|
TRANSFERS. The
Optionee may at any time either during the Option Period or thereafter,
sell, transfer or otherwise dispose of all or any portion of its interest
in and to the Property and this Agreement provided that any purchaser,
transferee or recipient of any such interest shall have first delivered to
the Optionor a written agreement to be bound by the terms of this
Agreement.
|
|
12.
|
SURRENDER
OF PROPERTY INTERESTS PRIOR TO TERMINATION OF AGREEMENT. The
Optionee may at any time during the Option Period elect to abandon any one
or more of the mineral claims comprised in the Property by giving notice
to the Optionor of such intention. Any claims so abandoned
shall be in good standing under the laws of the jurisdiction in which they
are situate for at least 12 months from the date of
abandonment. Upon any such abandonment, the mineral claims so
abandoned shall for all purposes of this Agreement cease to form part of
the Property and, if title to such claims has been transferred to the
Optionee, the Optionee shall retransfer such title to the Optionor at the
Optionee's expense.
|
|
13.
|
FORCE
MAJEURE.
|
|
|
(a)
|
If
the Optionee is at any time either during the Option Period or thereafter
prevented or delayed in complying with any provisions of this Agreement by
reason of strikes, lock-outs, labour shortages, power shortages, fuel
shortages, fires, wars, acts of God, governmental regulations restricting
normal operations, shipping delays or any other reason or reasons, other
than lack of funds, beyond the control of the Optionee, the time limited
for the performance by the Optionee of its obligations hereunder shall be
extended by a period of time equal in length to the period of each such
prevention or delay, but nothing herein shall discharge the Optionee from
its obligations hereunder to maintain the Property in good
standing;
|
- 18 -
|
|
(b)
|
The
Optionee shall give prompt notice to the Optionor of each event of force
majeure and upon cessation of such event shall furnish to the Optionor
with notice to that effect together with particulars of the number of days
by which the obligations of the Optionee hereunder have been extended by
virtue of such event of force majeure and all preceding events of force
majeure.
|
|
|
(c)
|
After
the Commencement of Commercial Production, the Optionee shall work, mine
and operate the Property during such time or times as the Optionee in its
sole judgment considers such operations to be profitable. The Optionee may
suspend or curtail operations, both before and after Commencement of
Commercial Production, during periods when the products derived from the
Property cannot be profitably sold at prevailing prices or if an
unreasonable inventory thereof, in the Optionee's sole judgment, has
accumulated or would otherwise
accumulate.
|
|
14.
|
CONFIDENTIAL
INFORMATION. No information furnished by the Optionee to the
Optionor hereunder in respect of the activities carried out on the
Property by the Optionee, or related to the sale of minerals, ore, bullion
or other product derived from the Property, shall be published or
disclosed by the Optionor without the prior written consent of the
Optionee, but such consent in respect of the reporting of factual data
shall not be unreasonably withheld, and shall not be withheld in respect
of information required to be publicly disclosed pursuant to applicable
securities or corporation laws, regulations or
policies.
|
|
15.
|
ARBITRATION.
|
|
|
(a)
|
All
questions or matters in dispute under this Agreement shall be submitted to
arbitration pursuant to the terms
hereof.
|
|
|
(b)
|
It
shall be a condition precedent to the right of any party to submit any
matter to arbitration pursuant to the provisions hereof, that any party
intending to refer any matter to arbitration shall have given not less
than 10 days' prior notice of its intention to do so to the other party,
together with particulars of the matter in dispute. On the
expiration of such 10 days, the party who gave such notice may proceed to
refer the dispute to arbitration as provided in paragraph
(c).
|
|
|
(c)
|
The
party desiring arbitration shall appoint one arbitrator, and shall notify
the other party of such appointment, and the other party shall, within 15
days after receiving such notice, either consent to the appointment of
such arbitrator which shall then carry out the arbitration or appoint an
arbitrator, and the two arbitrators so named, before proceeding to act,
shall, within 30 days of the appointment of the last appointed arbitrator,
unanimously agree on the appointment of a third arbitrator to act with
them and be chairman of the arbitration herein provided for. If the other
party shall fail to appoint an arbitrator within 15 days after receiving
notice of the appointment of the first arbitrator, the first arbitrator
shall be the only arbitrator. If the two arbitrators appointed
by the parties shall be unable to agree on the appointment of the
chairman, the chairman shall be appointed under the provisions of the
Commercial Arbitration
Act of British Columbia. Except as specifically
otherwise provided in this section, the arbitration herein provided for
shall be conducted in accordance with such Act. The chairman,
or in the case where only one arbitrator is appointed, the single
arbitrator, shall fix a time and place in Vancouver, British Columbia, for
the purpose of hearing the evidence and representations of the parties,
and he shall preside over the arbitration and determine all questions of
procedure not provided for under such Act or this
section. After hearing any evidence and representations that
the parties may submit, the single arbitrator, or the arbitrators, as the
case may be, shall make an award and reduce the same to writing, and
deliver one copy thereof to each of the parties. The expense of
the arbitration shall be paid as specified in the
award.
|
- 19 -
|
|
(d)
|
The
parties agree that the award of a majority of the arbitrators, or in the
case of a single arbitrator, of such arbitrator, shall be final and
binding upon each of them.
|
|
16.
|
DEFAULT. If
at any time during the Option Period, the Optionee is in default of any
material provision in this Agreement, the Optionor may terminate this
Agreement, but only if:
|
|
|
(a)
|
it
shall have first given to the Optionee a notice of default containing
particulars of the obligation which the Optionee has not performed, or the
warranty breached; and
|
|
|
(b)
|
the
Optionee has not, within 60 days following delivery of such notice of
default, cured such default or commenced proceedings to cure such default
by appropriate payment or performance, the Optionee hereby agreeing that
should it so commence to cure any default it will prosecute the same to
completion without undue delay.
|
Should
the Optionee fail to comply with the provision of subparagraph (b), the Optionor
may thereafter terminate this Agreement by giving notice thereof to the
Optionee, always provided that the default in question has not been cured or
substantially cured at the time of the Optionee giving such notice of
termination.
|
17.
|
NOTICES. Each
notice, demand or other communication required or permitted to be given
under this Agreement shall be in writing and shall be delivered or
telecopied to such party at the address for such party specified
above. The date of receipt of such notice, demand or other
communication shall be the date of delivery thereof if delivered or, if
given by telecopier (with electronic confirmed receipt), shall be deemed
conclusively to be the next business day. Either party may at
any time and from time to time notify the other party in writing of a
change of address and the new address to which notice shall be given to it
thereafter until further change.
|
|
18.
|
GENERAL.
|
|
|
(a)
|
This
Agreement shall supersede and replace any other agreement or arrangement,
whether oral or written, heretofore existing between the parties in
respect of the subject matter of this
Agreement.
|
- 20 -
|
|
(b)
|
No
consent or waiver expressed or implied by either party in respect of any
breach or default by the other in the performance by such other of its
obligations hereunder shall be deemed or construed to be a consent to or a
waiver of any other breach or
default.
|
|
|
(c)
|
The
parties shall promptly execute or cause to be executed all documents,
deeds, conveyances and other instruments of further assurance and do such
further and other acts which may be reasonably necessary or advisable to
carry out fully the intent of this Agreement or to record wherever
appropriate the respective interest from time to time of the parties in
the Property.
|
|
|
(d)
|
This
Agreement shall enure to the benefit of and be binding upon the parties
and their respective successors and permitted
assigns.
|
|
|
(e)
|
This
Agreement shall be governed by and construed in accordance with the laws
of British Columbia.
|
|
|
(f)
|
Time
shall be of the essence in this
Agreement.
|
|
|
(g)
|
Wherever
the neuter and singular is used in this Agreement it shall be deemed to
include the plural, masculine and feminine, as the case may
be.
|
|
19.
|
AREA
OF MUTUAL INTEREST.
|
|
|
(a)
|
The
parties hereby agree that each and every mineral claim (including internal
fractions) or interest therein which they may stake or otherwise acquire
during the currency of this Agreement and which lies in whole or in part
within one mile from the outside perimeter of the Property, or which is
contiguous to such claims which are otherwise within this area of mutual
interest, shall at the option of the other party form a part of the
Property. Any party shall, upon acquisition of any such
additional claims or interests, forthwith give notice to the other party
of same and thereafter the other party shall have thirty days from the
date on which the Option is fully exercised within which to give notice of
its desire to have such additional claims or interests form part of the
Property and to pay to the other party their proportionate share of
acquisition costs. The other party shall be responsible to pay
its proportionate share of costs of acquiring the additional claims or
interests in accordance with its interest in the Property. All
title to such additional claims or interests shall be held subject to the
terms of this Agreement.
|
|
|
(b)
|
Paragraph
(a) shall cease to operate if and when the Optionee loses its right to
exercise the Option in full.
|
- 21 -
IN WITNESS WHEREOF the parties
hereto have executed this Agreement as of the day and year first above
written.
|
SIGNED
AND DELIVERED BY
|
|
|
Gold
Canyon Partners, LLP
|
|
|
Per:
|
|
|
ss: “Xxx Xxxxxxx”
|
|
|
Authorized
Signatory
|
|
|
SIGNED
AND DELIVERED BY
|
|
|
Kingsmere
Mining Ltd.
|
|
|
Per:
|
|
|
ss: “Cam Watt”
|
|
|
Authorized
Signatory
|
|
- 22 -
SCHEDULE
"B"
Definition of Net Smelter
Returns
1. For
the purposes of this Agreement, the term "Net Smelter Returns" shall mean the
net proceeds actually paid to the Optionee from the sale by the Optionee of
minerals mined and removed from the Property, after deduction of the
following:
|
|
(a)
|
smelting
costs, treatment charges and penalties including, but not being limited
to, metal losses, penalties for impurities and charges for refining,
selling and handling by the smelter, refinery or other purchaser;
provided, however, in the case of leaching operations or other solution
mining or beneficiation techniques, where the metal being treated is
precipitated or otherwise directly derived from such xxxxx solution, all
processing and recovery costs incurred by the Optionee, beyond the point
at which the metal being treated is in solution, shall be considered as
treatment charges;
|
|
|
(b)
|
costs
of handling, transporting and insuring ores, minerals and other materials
or concentrates from the Property or from a concentrator, whether situated
on or off the Property, to a smelter, refinery or other place of
treatment; and
|
(c) ad
valorem taxes and taxes based upon production, but not income
taxes.
2. In
the event the Optionee commingles minerals from the Property with minerals from
other properties, the Optionee shall establish procedures, in accordance with
sound mining and metallurgical techniques, for determining the proportional
amount of the total recoverable metal content in the commingled minerals
attributable to the input from each of the properties by calculating the same on
a metallurgical basis, in accordance with sampling schedules and mining
efficiency experience, so that production royalties applicable to minerals
produced from the Property may reasonably be determined.
