Exhibit 10.5
XXXX XXXX AGREEMENT
MINERAL LEASE AGREEMENT & OPTION TO PURCHASE
This Mineral Lease Agreement & Option to Purchase is made and entered
into between GOLDEN PHOENIX MINERALS, INC.(GPM),the lessee, and XXXX
XXXX ("XXXX"), the owner.
RECITALS
X. XXXX is the owner of eleven state mining claims situated in the
Fairbanks recording district, Alaska known as the Banner Creek Claims situated
in the Xxxxxxxxxx Mining District more particularly described in Exhibit A
(including the map which is a part of Exhibit A) attached to this Agreement and
by this reference incorporated herein. The foregoing state mining claims are
referred to in this Agreement as the "Claims."
B. GOLDEN PHOENIX desires to lease the Claims to conduct mineral
exploration activities on the Claims to develop a commercial mine and to have
the option to purchase the Claims.
X. XXXX desires to reserve to himself the placer rights associated with
the Claims unless the Claims are purchased by GOLDEN PHOENIX.
NOW, THEREFORE, in consideration of the parties' promises in this
Agreement, the parties agree:
AGREEMENT
1. Grant of Rights and Term. XXXX grants to GPM all rights, which XXXX
has acquired from the State of Alaska through the ownership of the Claims, to
enter upon the Claims to conduct such exploration and prospecting operations as
GPM may deem appropriate to determine the presence, location, quantity and value
of minerals contained within the Claims, excepting therefrom the placer rights.
Such operations may include, but shall not be limited to, mapping, sampling
including bulk sampling, trenching, drilling, testing, assaying, conducting
environmental studies and other geochemical and geophysical exploration methods
whether now known or in the future developed. GPM may establish drill sites and
construct such minor roads as may be necessary to the conduct of the foregoing
activities, provided GPM secure permits from the appropriate permitting
authorities. GPM agrees to provide XXXX with ten (10) days notice of any
drilling activities. GPM may also mine and remove such amount of minerals as GPM
may deem appropriate for sampling, assaying, metallurgical testing and
evaluation of the Property without
exercising the Option to purchase, however, minerals may not be removed for sale
unless the Option to Purchase has been exercised and the full purchase price
paid. The term of this Agreement shall expire on January 1, 2003 unless sooner
terminated in accordance with the terms of this Agreement.
2. Payments, Work Commitments and Net Returns Production Royalty.
2.1 On execution of this agreement GPM shall pay XXXX the sum
of FIVE THOUSAND DOLLARS ($5,000.00).
2.2 During the term of this Agreement GPM shall make the
following payments to XXXX:
Date
Cash Payment
On or before August 1, 1998
$3,000.00
On or before August 1, 1999
$7,500.00
On or before August 1, 2000
$15,000.00
On or before August 1, 2001
$20,000.00
On or before August 1, 2002
$25,000.00
2.3 GPM agrees to perform work upon the claims in the amount
and during the time frames stated herein as follows:
Work Commitment
Period within which work is to be performed
$20,000.00
Before August 1, 1998
$20,000.00
Before August 1, 1999
$50,000.00
Before August 1, 2000
$100,000.00
Before August 1, 2001
$100,000.00
Before August 1, 2002
2.4 GPM agrees to pay a two percent (2%) net returns
production royalty ("Net Returns Royalty) for any production from the
Banner Creek Claims subject to this Agreement. The Net Returns Royalty
shall be calculated and payable on a calendar quarter basis payable on
all minerals, ores, concentrates, metals and other materials
("Minerals") produced from the Claims during "Commercial Production."
2.5 The term "Commercial Production" shall be defined as the
mining, extraction, processing, and recovery for sale of Minerals from
the Claims. Commercial Production shall not include the taking of
Minerals from the Claims for the purpose of determining the amenability
to beneficiation processes or mining thereof, including bulk sampling.
2.6 The term "Net Returns Royalty" shall mean the total "Gross
Sale Proceeds" or "Deemed Gross Sale Proceeds" less deduction for the
following total actual costs paid by, charged to or otherwise incurred
by GPM within that calendar quarter which are attributed to handling,
treatment and sale of individual Minerals within that calendar quarter;
(1) All smelting, refining, treatment, assaying, sampling,
umpiring, selling, or other costs, charges and penalties
charged by any refinery, smelter or other purchaser of
Minerals;
(2) All taxes paid on production of Minerals, except income
taxes, including but not limited to, production, severance,
sales and privilege taxes, and all local, state and federal
royalties that are based upon the production of Minerals;
(3) All costs of loading, securing, transporting and insuring
Minerals from the Claims to the refinery, smelter or
purchaser;
3. Option to Purchase.
3.1 XXXX grants to GPM the option ("the "Option"), exercisable
by GPM in its sole and exclusive discretion at any time during the term
of this Agreement, to purchase all of the Claims for a purchase price
of One Million Dollars ($1,000,000.00). All cash payments paid to XXXX
prior to the exercise of the Option shall be credited against the
purchase price.
3.2 If GPM timely exercises the Option, the closing shall be
no later than March 1, 2003. The closing shall be held at a time and
place as may be mutually agreed upon by the parties. At the closing
XXXX shall deliver to GPM a properly executed and acknowledged
assignment or other form of conveyance document conveying the Claims
free and clear of liens and encumbrances other than the Net Returns
Royalties as provided for in Section 2.4 payable from production from
the Claims and GPM shall deliver the balance of the purchase price. The
parties agree that they will execute and deliver such other documents
and take such other action as may be necessary to carry out their
obligations under this Agreement.
4. Indemnification & Insurance. GPM shall indemnify and save harmless
XXXX, his successors and assigns, of and from any liability for any claims,
actions or damages arising from the occupation and use of the Claims by GPM
pursuant to this Agreement. GPM agrees to maintain liability insurance in the
amount of One Million Dollars ($1,000,000.00) and to provide XXXX, with evidence
thereof. XXXX shall indemnify and save harmless GPM, its successors and assigns,
from liability for any claims, actions or damages arising from occupation and
use of the Claims by XXXX before the Effective Date of this Agreement.
5. Compliance with the Law. All exploration and development work
performed by GPM on the Property during the term of this Agreement shall conform
with the applicable laws and regulations of the state in which the Property is
situated and the United States of America. GPM shall be fully responsible for
compliance with all applicable Federal, state and local reclamation statutes,
regulations and ordinances related to such work. GPM agrees to post a
reclamation bond prior to exploration activities involving heavy equipment. XXXX
agrees to cooperate with GPM and GPM's application for governmental licenses,
permits, zoning changes and approvals, the cost of which shall be born by GPM.
6. No Partnership. This Agreement shall not constitute any party the
partner, agent or legal representative of any other party nor create any
partnership, mining partnership or fiduciary relationship among the parties for
any purpose.
7. Annual payments. XXXX hereby represents that he has paid all current
fees for the claims described in Exhibit A. GPM agrees to pay all further claim
fees due and payable prior to termination of this Agreement. GPM agrees to pay
the State of Alaska 6(i) mining claim rent by October 1 of each year the lease
is in effect and provide XXXX with evidence of that payment within ten (10)
working days thereof. GPM agrees to provide XXXX with a copy of the recorded
Affidavit of Annual Labor by October 15 of each year this lease is in effect.
8. Assignment. Either party may sell, assign, transfer, convey or
otherwise dispose of or deal with its interest in the Agreement upon giving the
other party written notice thereof fifteen (15) days prior to the intended
transfer. The parties hereto agree that the assignment of either parties
interest shall not increase the obligations of the other party nor change any of
the terms of the Agreement.
9. Amendment, Relocation and Conversion of Claims. Subject to XXXX'x
approval, which shall not be unreasonably withheld, GPM shall have the right, in
its sole and exclusive discretion, to amend or relocate the Claims. If the
mining laws of the United States or the State of Alaska are amended or repealed
or law enacted which permit or require the conversion of the Claims from
unpatented mining claims to leases, licenses, privileges or other interests, GPM
may, in its sole and exclusive discretion, elect to convert the Claims in which
case the interest of GPM in any such leases, licenses, privileges or other
interests shall be subject to the terms of this Agreement. To the extent GPM
elects not to convert the Claims in accordance with this Section 9 and such
claims become subject to surrender, abandonment or forfeiture, the right and
obligations of GPM and XXXX with respect to any Claims or portion of the Claims
subject to the surrender, abandonment or forfeiture shall be subject to the
provisions of Section 10.1. GPM shall have no obligation or liability to XXXX
for any claim or assertion of loss or damage resulting from the amendment,
relocation, conversion or attempted conversion of the Claims in accordance with
the terms of this Section 9.
10. Abandonment, Surrender and Termination. GPM shall have the right to
abandon or surrender any portion of the Property or terminate this Agreement as
provided below.
10.1 Abandonment of Claims.
GPM may, in its sole and exclusive discretion, abandon any of
the Claims. GPM shall give written notice to XXXX of its election to
abandon a Claim which notice shall describe the Claim to be abandoned.
XXXX shall have thirty (30) days after its receipt of the notice of
abandonment to elect, in his sole and exclusive discretion, to take
from GPM a quitclaim deed for the Claim to be abandoned. XXXX shall
deliver written notice of his election. If XXXX does not elect to take
a quitclaim deed of the Claim, GPM shall have the absolute right to
abandon such Claim. On conveyance of the Claim to XXXX or abandonment
of the Claim by GPM , the obligations of GPM to XXXX under this
Agreement with respect to such conveyed or abandoned Claim shall cease,
except such obligations as have accrued before the date of abandonment
or reconveyance.
10.2 Termination of Agreement.
GPM may at any time terminate this Agreement by giving written
notice to XXXX. Termination of this Agreement by GPM shall be deemed to
be an election by GPM to abandon the Claims and to surrender any right,
title and interest therein.
14. 11. GPM Representations.
11.1 GPM is a corporation duly incorporated under the laws of
the State of Minnesota, is validly existing and is in good standing
under the laws of Minnesota, and is duly qualified to conduct business
in the State of Alaska.
11.2 GPM has the authority to enter into this Agreement and
the Officer signing this Agreement has the authority to enter into this
Agreement.
15. 12. XXXX Representations.
12.1 XXXX is the sole legal and equitable owner of the Claims
(subject to the paramount title in the State of Alaska).
12.2 The Claims are free and clear of all liens and
encumbrances and outstanding adverse claims and interests, except taxes
not yet payable.
16. 13. Force Majeure.
GPM shall not be deemed in default of this Agreement during any period
when it is hindered, prevented or delayed from complying therewith in whole or
in party by, including but not limited to: acts of God; acts of the public
enemy; labor disturbances; civil disorders; war; unavoidable accidents;
unusually severe weather; unforeseen geological conditions; inability to obtain
any necessary permits, bonds or operating approvals whether by action or
inaction of governmental agency under asserted authority; environmental
restrictions or conditions; or any other cause reasonably beyond the control of
GPM, other than financial or economic delays, each of which is called a "Force
Majeure." The term of this Agreement shall be extended by the period of any
Force Majeure. GPM shall not be required to compensate XXXX for any loss
occasioned by a Force Majeure. GPM shall promptly notify XXXX of any suspension
caused by a Force Majeure and it shall use reasonable diligence to remedy or
eliminate the cause of such suspension. However, GPM shall not be required to
remedy the effects of any Force Majeure by settlement of any labor difficulty
contrary to its wishes or contest the validity of any law, regulation or any
action or inaction by a civil or military authority. The handling of those
controversies shall be entirely within GPM's discretion.
17. 14. Disputes not to Interrupt Operations.
Disputes or differences between GPM and the XXXX shall not interrupt
performance of this Agreement. In the event of any dispute or difference, GPM
may continue operations and pay any Net Returns Royalties in the same manner as
prior to the dispute until the matters have finally been determined between GPM
and XXXX by judicial determination, if necessary.
18. 15. Memorandum Agreement.
GPM and XXXX shall sign and acknowledge a memorandum of this Agreement
suitable for recording to give notice hereof to third parties. GPM shall record
the memorandum at its expense. This Agreement shall not be recorded.
19. 16. Notices.
Any notice or other communication ("Notice") required to be given under
the terms of this Agreement shall be in writing and shall become effective; when
personally served upon the party to be given such Notice; when posted by
certified or registered mail, return receipt requested; or when delivered by
telex, telegram,
telecopier or other wire service.
The addresses for such Notices shall be:
XXXX: XXXX XXXX
000 Xxxx Xxxx Xxxx
Xxxxxxxxx, XX 00000
(000) 000-0000 - phone
GPM: Golden Phoenix Minerals, Inc.
0000 Xxxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
ATTN: Xxxxxxx X. Xxxxxxxxxxx, President
(000) 000-0000 - phone
(000) 000-0000 - telecopier
20. 17. Binding Effect of Obligations.
All covenants, conditions and terms of this Agreement shall be of
benefit to and run with the Property and shall bind and inure to the benefit of
the parties hereto, their respective heirs, representatives, assigns and
successors in interest.
21. 18. Whole Agreement.
This Agreement and exhibits attached hereto set for the entire
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement supersedes all prior written and oral negotiations, discussions,
agreements and understandings related to such subject matter. Any modification
of the terms of this Agreement must be in writing, dated subsequent to the
Effective Date, and signed by each of the parties hereto.
22. 19. Governing Law.
This Agreement is to be governed by and construed under the laws of the
State of Alaska.
23. 20. Multiple Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed to be an original, but all of which shall constitute the same Agreement.
24. 21. Severability.
Any provision of this Agreement prohibited by the laws of the United
States or the State of Alaska shall be ineffective to the extent of such
prohibition without invalidating the remaining provisions of this Agreement.
25. 22. Summary Reports.
In each year during the term of this Agreement, XXXX may request that
GPM deliver a summary report of GPM's activities on the Claims for the preceding
calendar year. GPM shall deliver the summary report to XXXX within sixty (60)
days from GPM's receipt of the request. GPM shall have no liability to XXXX or
any other party arising from or relating to the information in the summary
report.
26. 23. Effective Date.
The effective date of this Agreement shall be December 1, 1997.
The parties hereto have executed this Agreement on the dates set forth
hereafter.
XXXX:
--------------------------- -------------------------------
XXXX XXXX Taxpayer Identification Number
State of ALASKA )
)ss.
County of________________)
This Agreement was acknowledged before me on this ______ day of
____________, 1997 by XXXX XXXX.
---------------------------------
NOTARY PUBLIC
GOLDEN PHOENIX MINERALS, INC.
----------------------------
BY: Xxxxxxx Xxxxxxxxxxx
Title: President
State of NEVADA )
)ss.
County of WASHOE__________)
This Agreement was acknowledged before me on this ____ day of
_______________________, 1997 by Xxxxxxx Xxxxxxxxxxx as the President of GOLDEN
PHOENIX MINERALS, INC.
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NOTARY PUBLIC
