EXHIBIT 4.20
LETTER OF INTENT MADE BETWEEN
THE COMPANY AND ASTRAL MINING CORPORATION
DATED JUNE 9, 2006
ASTRAL MINING CORPORATION
SUITE 709 - 000 XXXX XXXXXXXX XXXXXX
XXXXXXXXX, XX X0X 0X0
June 9, 0000
Xxxxx Xxxxxxxxx Xxxxxxxxxxx
Xxxxx 000 - 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Gentlemen:
RE: Letter of Agreement (the "Letter of Agreement") granting an Option to
Purchase up to a 80% Undivided Interest in the group of mineral rights
known as Xxx and Hills located in Nevada, USA, as more particularly
described in Schedule "A" appended hereto (the "Property"), by Amera
Resources Corporation (the "Optionor") to Astral Mining CORPORATION
(THE "OPTIONEE")
This Letter of Agreement will confirm our agreement regarding your grant to us
of an irrevocable option to earn up to a 80% undivided interest in the Property,
on the following material terms and conditions:
1. REPRESENTATIONS AND WARRANTIES
1.1 The Optionor, through its subsidiary, and pursuant to the terms of a
project generation agreement ("Underlying Agreement") attached as Schedule "B",
is the recorded and beneficial owner of certain unpatented mining claims
comprising the Property and holds the sole and exclusive right to acquire a 100%
interest in the Property.
1.2 The Optionor represents and warrants that the Property is currently in
good standing and that the Property is free and clear of all liens, charges and
encumbrances, and is properly recorded and staked in accordance with the laws of
the Nevada, USA, and is in good standing with respect to the filing of annual
assessment work, except a 1% net smelter royalty and other benefits retained by
Xxxxxx X. Xxxxx and described in the Underlying Agreement.
1.3 The Optionor has the absolute right to enter into this Letter of
Agreement without first obtaining the consent of any other person or body
corporate and no other person or body corporate has any agreement, option, right
or privilege capable of becoming an agreement for the purchase of the Property
or any interest therein.
1.4 The Optionor has completed all necessary and proper corporate acts and
procedures for the Optionor to enter into this Letter of Agreement and carry out
its terms to the full extent.
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2. OPTION
2.1 The Optionor irrevocably grants to the Optionee the sole and exclusive
right and option (the "Option") to acquire an initial 65% interest and an
additional 15% interest for a total of up to a 80% undivided interest in and to
the Property, free and clear of all liens, charges, royalties, encumbrances and
claims (subject only to the terms and conditions of the Underlying Agreement) in
accordance with the terms and conditions of this Letter of Agreement.
3. EXERCISE OF OPTION
3.1 To earn an initial 65% undivided interest in the Property, the Optionee
may exercise the Option by (i) issuing to the Optionor an aggregate 500,000
common shares in the capital stock of the Optionee (the "Shares") and (ii)
incurring an aggregate of Two Million Five Hundred Thousand Dollars USD
(US$2,500,000) in exploration and development expenditures on the Property, in
the instalments and on or before the dates specified below:
================================================================================
MINIMUM EXPLORATION
NUMBER OF AND DEVELOPMENT
DATE FOR COMMON SHARES EXPENDITURES
COMPLETION TO BE ISSUED TO BE INCURRED
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Approval Date (as defined below) 100,000 --
--------------------------------------------------------------------------------
July 1, 2007 100,000 US $100,000
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July 1, 2008 100,000 US $150,000
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July 1, 2009 100,000 US $850,000
--------------------------------------------------------------------------------
July 1, 2010 100,000 US $1,400,000
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TOTAL 500,000 US $2,500,000
================================================================================
3.2 Any exploration and development expenditures incurred in excess of the
requirements for any period set out above will be credited against the
requirements of the next succeeding period and any shortfall in such expenditure
can be made up with a cash payment in lieu of work. In the event any share
issuance or expenditure requirement for any period is not met, the Option will
terminate, subject to the notice provisions of paragraph 7.1 hereof.
3.3 During the term of the Option, the Optionee shall be responsible for
making all payments required to maintain the Property in good standing including
all rentals, levies, duties, royalties, assessments, fees, taxes or other
governmental charges levied with respect to the Property or its operations
thereon and shall assume the Optionor's obligations under the Underlying
Agreement including all payments due thereunder, and all such costs shall be
included in the minimum expenditures to be incurred by the Optionee hereunder.
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3.4 The Optionee shall be the operator of the Property (the "Operator")
throughout the term of the Option. In that capacity, the Optionee shall be
eligible to charge a project management fee which shall not exceed 5% of the
actual expenditures incurred.
3.5 Upon issuing the Shares and incurring the expenditures set out in
paragraph 3.1, the Optionee shall have earned a 65% undivided interest in and to
the Property; prior thereto, beneficial ownership of the Property will remain
with the Optionor.
3.6 Further, the Optionee may earn an additional 15% interest in the
Property (for a total undivided interest of 80%) by delivering to the Optionor:
(a) satisfactory evidence that the terms and conditions to firstly
acquire the initial 65% interest in the Property have been
met,
(b) a written notice of election,
(c) a one time issuance of 500,000 of its common shares, and,
(d) a bankable feasibility study.
3.7 In order to earn the additional 15% interest in the Property, the terms
and conditions set out in (3.6) should be completed within three (3) years of
earning the initial 65% interest.
4. JOINT VENTURE
4.1 Upon completion of the issuances of common shares and the minimum
exploration and development expenditures by July 1, 2007 (by which date the
Optionee will have earned a 65% undivided interest in the Property), the
Optionor shall retain a 35% carried interest in the Property until the Optionee
earns the additional 15% undivided interest in the Property, at which time a
joint venture shall be deemed to have been formed and, thereafter, each party
shall be responsible for its proportionate share of the expenses of the further
exploration and development of the Property.
4.2 Upon the Optionee exercising the Option to earn its full 80% interest
in the Property or the Optionee declining to earn the additional 15% interest,
the Optionee and the Optionor agree to associate on a joint venture basis for
the further exploration and development of the Property, sharing the costs of
such exploration and development in accordance with their respective interest in
the Property, and agree to negotiate, in good faith, a formal joint venture
agreement substantially based on the Rocky Mountain Mineral Law Foundation Form
5a LLC and containing the material terms described in Schedule "C" hereto (the
"JV Agreement").
5. ABANDONMENT OR TERMINATION OF OPTION
5.1 In the event that the Optionee decides to abandon the Option and the
Property, or any portion thereof, the Optionee will provide forty five (45) days
prior written notice to the Optionor of such abandonment.
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5.2 In the event that the Option is terminated or abandoned as set out
above, the Optionee will have no further right or interest in the Property and
will have no further obligations hereunder, save and except that the Property
will be left in good standing with respect to the filing of annual assessment
work and the payment of rental fees for a period of at least sixty (60) days
from the effective date of such termination or abandonment.
5.3 In the event that the Option is terminated or abandoned as set out
above, the Optionee will forthwith deliver to the Optionor all data, maps,
reports and other information with respect to the Property, in its possession or
under its control.
6. RIGHT OF ENTRY
6.1 During the term of the Option, the Optionor will have the right to
enter upon the Property, enjoy quiet possession thereof, explore for minerals
thereon, bring and erect upon the Property such mining facilities as it may
consider advisable and remove material for the purposes of bulk testing or pilot
plant operations.
6.2 The Optionee grants to the Optionor or its duly authorized
representatives in writing, access to the Property provided that such access is
not disruptive to the exploration or mining activities of the Optionee.
7. DEFAULT
7.1 In the event that the Optionee is in default of any of its obligations
hereunder, the Optionee will not lose any rights under this Letter of Agreement
until the Optionor has given to the Optionee notice of such default and the
Optionee does not take any reasonable steps to cure such default within sixty
(60) days from the Optionee's receipt of such notice.
8. FORCE MAJEURE
8.1 No party will be liable for its failure to perform any of its
obligations under this Letter of Agreement due to a cause beyond its control
(except those caused by its own lack of funds) including, but not limited to
acts of God, fire, flood, explosion, strikes, lockouts or other industrial
disturbances, laws, rules and regulations or orders of any duly constituted
governmental authority or non-availability of materials or transportation (each
an "Intervening Event").
8.2 All time limits imposed by this Letter of Agreement will be extended by
a period equivalent to the period of delay resulting from an Intervening Event.
8.3 A party relying on the provisions of section 8.1 will take all
reasonable steps to eliminate an Intervening Event and, if possible, will
perform its obligations under this Letter of Agreement as far as practical, but
nothing herein will require such party to settle or adjust any labour dispute or
to question or to test the validity of any law, rule, regulation or order of any
duly constituted governmental authority or to complete its obligations under
this Letter of Agreement if an Intervening Event renders completion impossible.
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9. OPTION ONLY
9.1 This is an option only and nothing herein will be construed as
obligating the Optionee to do any acts or make any payments hereunder and any
acts or payments as are made hereunder will not be construed as obligating the
Optionee to do any further act or make any further payment.
10. COVENANTS OF THE OPTIONEE
10.1 The Optionee hereby covenants and agrees with the Optionor as follows:
(a) that it shall carry out and record or cause to be carried out
and recorded all assessment work upon the Property as may be
required in order to maintain the Property in good standing at
all times;
(b) that it will carry out its operations on the Property in a
careful and miner like manner in accordance with the
applicable laws and regulations of Nevada, USA;
(c) that it will properly pay all accounts of every nature and
kind for wages, supplies, Workers' Compensation Assessments,
income tax deductions and all other accounts and indebtedness
incurred by it so that no claim or lien will attach to the
Property or upon the ore or mineral contained therein and it
will indemnify the Optionor and save the Optionor harmless
from any and all loss, costs, actions, suits, damages or
claims which may be made against the Optionor in respect of
the operations on the Property, provided however, that the
Optionee shall have the right to contest the validity of any
such lien or claim;
(d) that the Optionee shall indemnify and hold the Optionor
harmless from any and all liabilities, costs, damages or
charges arising from the failure of the Optionee to comply
with the covenants contained in this section 10.1 or otherwise
arising from its operations on the Property.
11. FURTHER ASSURANCES
11.1 The parties hereto agree to do or cause to be done all acts or things
necessary to implement and carry into effect the provisions and intent of this
Letter of Agreement.
12. GENERAL
12.1 This Letter of Agreement will be governed and construed in accordance
with the laws of the Province of British Columbia.
12.2 This Letter to Intent is intended to create binding legal relations
among the parties and will enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns as the case may be,
until replaced by the JV Agreement. Until the execution and delivery of the JV
Agreement, this Letter of Agreement will remain binding and in effect (unless
terminated pursuant to the provisions thereof).
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12.3 In the event that during the term of the Option, any party hereto
acquires any mineral properties or rights thereto, located within the noted area
surrounding the boundaries of the Property, referred to as Area of Mutual
Interest and depicted in Schedule A (attached), such mineral properties or
rights thereto shall be included in and form part of the Property herein and the
cost of acquiring and maintaining such mineral properties or rights thereto
shall be included in the minimum expenditures to be incurred by the Optionee
hereunder.
12.4 In the event that any provision of this Letter of Agreement is held
unenforceable or invalid by a court of law, this Letter of Agreement will be
read as if such unenforceable or invalid provision were removed.
12.5 The rights and obligations of the parties created by this Letter of
Agreement are not assignable by any party without the prior written consent of
the other party, not to be unreasonably withheld, except for any transfer or
assignment to a wholly owned subsidiary of the party or pursuant to an
amalgamation, merger, or corporate reorganization or arrangement of the party.
12.6 This Letter of Agreement is subject to the prior acceptance for filing
by the TSX Venture Exchange on behalf of the Optionee. The Optionee will use its
best efforts to obtain such acceptance within one hundred and twenty (120) days
of the execution of this Letter of Agreement (the date of such acceptance being
referred to as the "Approval Date" herein) or such other date as is agreed to.
If the foregoing terms and conditions, and the attached schedules which form a
part of this Letter of Agreement, accurately set out our mutual understandings,
please indicate your acceptance by signing this letter where indicated below and
returning to us the enclosed copy duly signed.
Yours very truly,
ASTRAL MINING CORPORATION
Per: /s/ XXXXXXX XXXXXXXXX
Xxxxxxx Xxxxxxxxx
President & C.E.O.
Terms and conditions approved as of the date first above written.
AMERA RESOURCES CORPORATION
Per: /s/ XXXXXXXX XXXXX
--------------------
Authorized Signatory
THIS IS SCHEDULE "A" TO THE LETTER OF AGREEMENT
DATED JUNE 9, 2006 MADE BETWEEN ASTRAL MINING
CORPORATION AND AMERA RESOURCES CORPORATION
DESCRIPTION AND MAP OF PROPERTY AND AREA OF MUTUAL INTEREST
-----------------------------------------------------------
[GRAPHIC OMITTED][GRAPHIC OMITTED]
Omitted graphic is map showing Area of Mutual Interest of Xxx and
Hills Claims Xxx County, Nevada
THIS IS SCHEDULE "B" TO THE LETTER OF AGREEMENT
DATED JUNE 9, 2006 MADE BETWEEN ASTRAL MINING
CORPORATION AND AMERA RESOURCES CORPORATION
Copy of Underlying Agreement dated June 25, 2004 and July 4, 2004 made
between Amera Resources Corporation and Xxxxxx X. Xxxxx.
THIS IS SCHEDULE "C" TO THE LETTER OF AGREEMENT
DATED JUNE 9, 2006 MADE BETWEEN ASTRAL MINING
CORPORATION AND AMERA RESOURCES CORPORATION
MATERIAL TERMS OF JOINT VENTURE AGREEMENT
Under paragraph 4.1 of the Letter of Agreement, the Optionee and the Optionor
and/or its assigns agree to execute and deliver a joint venture agreement for
the future exploration and development of the Property on a joint venture basis
on the following material terms:
1. The initial interest of the parties in and to the Property and all
other assets, liabilities, benefits or losses (the "Project") will be the
Optionee as to a X% undivided interest, and the Optionor as to a X% undivided
interest, subject to variation from time to time as set out below. The parties
will be deemed to have initially contributed the following costs for the
Project: the Optionee US$X and the Optionor $X.
2. The parties will form a management committee consisting of one member
appointed by each party (the "Management Committee"). The Management Committee
will have the power and authority to make binding decisions on behalf of the
parties with respect to the exploration and development of the Property and the
Project, and all matters incidental thereto, including the approval of annual
work programs and budgets for all exploration and development work. All
decisions of the Management Committee will be made by a simple majority of
votes, each party having one vote for each one percent (1%) of interest held in
the Project. In the event of a tie vote, the Operator will have a casting or
deciding vote.
3. The Management Committee will appoint a person or company to act as the
daily manager and administrator of the exploration and development work on the
Property (the "Operator"), and the first Operator will be the Optionee until its
resignation or removal by the Management Committee.
4. The Operator will prepare and submit for the consideration of the
Management Committee annual work programs and budgets for the exploration and
development work on the Property (collectively the "Programs" and individually a
"Program"). If the Operator has not submitted a Program within sixty (60) days
of any calendar year end, the non-Operator will be entitled to prepare and
submit a Program to the Management Committee for its consideration.
5. Within sixty (60) days following the Management Committee's approval of
a Program, the parties will elect by notice in writing to the Management
Committee to either not participate in the Program, participate in the Program
to the full extent of their cost share, or participate in the Program for an
amount less than their cost share. A party's cost share will be equal to its
proportionate share of cost of a Program based upon its interest held in the
Project. If a party elects to not participate or elects to participate for an
amount less than its cost share, that party will suffer dilution of its interest
in the Property and the Project in accordance with the provisions below.
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6. If a party elects not to contribute or elects to contribute less than
its entire cost share, such party's interest in the Project will be reduced to a
percentage equal to the fraction the numerator of which is the total costs for
the Project paid or deemed paid by the party and the denominator of which is the
total costs for the Project of all parties paid or deemed paid, multiplied by
100, and the other party's interest will be accordingly increased. If any
party's interest is reduced below ten percent (10%) by the operation of this
paragraph, such party will transfer its remaining interest in the Project to the
other party, and will receive as consideration therefor either a ten percent
(10%) net profits royalty or a 1.5% net smelter returns royalty at the election
of the non-contributing party, made at the time of the conversion of its
interest (if the non-contributing party fails to so elect within thirty (30)
days of the date of conversion, the other party will be entitled to make the
election). "Net profits" from production will be calculated in accordance with
generally accepted accounting principles including deductions for interest,
taxes and royalties (other than income taxes), amortization of capital
expenditures and pre-production expenditures, a reserve for three (3) months
working capital, and a management fee not to exceed fifteen percent (15%) of
operating costs. "Net smelter returns" will be calculated from the gross
receipts received by the contributing party from any smelter or refinery, less
smelter treatment charges, production taxes or royalties, and transportation
expenses to the smelter or other purchaser.
7. The parties electing to contribute to a Program will have thirty (30)
days from receipt of the Operator's invoice to pay their cost share in
proportion to their interest in the Project. If a party fails to pay its cost
share within such time, the defaulting party's interest will suffer dilution in
accordance with the provisions of paragraph 6 above, but at one and one-half (1
1/2) times the normal rate, and the Operator will have a lien upon that party's
share of production to a value equal to one hundred fifty percent (150%) of the
amount in default with interest at twelve percent (12%) per annum calculated
from the date of default to the date of repayment. The Operator will be entitled
to render invoices for costs of a Program in advance, provided that such a
request for an advance does not exceed the estimated cost for the next one (1)
month's operations.
8. The Operator will be entitled to charge the parties a management fee
equal to fifteen percent (15%) of any Program's budget.
9. The non-Operator will be entitled to enter upon the Property after 24
hours advance notice to the Operator, at the non-Operator's own risk, provided
that such access is not disruptive to the exploration or mining activities of
the Operator.
