OPTION AGREEMENT YAGO PROPERTY
OPTION AGREEMENT YAGO PROPERTY
THIS AGREEMENT is dated for reference the 12th day of February, 2007.
BETWEEN:
ALMADEN MINERALS LTD. (“Almaden”), a body corporate amalgamated under the laws of British Columbia, having an office at 1103 – 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0 and XXXXXX XXXXXXX, S.A. de C.V. (“Minera”), a Mexican Incorporated, and wholly owned subsidiary of Almaden with an office at Xxxxxxx Xxxxxx Xxxxx 67, Int. 0-X Xxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx 00000, Xxxxxx
(Collectively, the “Optionors” or “Optionor”)
OF THE FIRST PART
AND
CONSOLIDATED SPIRE VENTURES LTD. (“Spire”) a body incorporated pursuant to the laws of British Columbia, having offices at 615 – 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, X.X. X0X 0X0 and COMPANIA MINERA SPIRE, S.A. de C.V. (“Compania”), a Mexican Incorporated, and wholly owned subsidiary of Consolidated Spire Ventures Ltd. with an office located on Xxxxxxx Xxxxxx Xx. 0000, Xxxxxxxxxx, Xxxxxxxxx 00000, Xxxxxx
(Collectively, the “Optionees” or “Optionee”)
OF THE SECOND PART
WHEREAS:
A.
The Optionor is the legal and beneficial owner of the claims, which are located in the State of Nayarit, Mexico and are collectively generally known and described as the “Yago Property";
B.
The Optionors have agreed to grant an option to the Optionee to acquire up to a 60% interest in the Property in consideration of the Optionee undertaking a work program on the Property aggregating US $3,500,000 and issuing an aggregate of 800,000 shares of the Optionee to Almaden as set forth herein; and
C.
The Optionee is a TSX-V listed company.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the sum of $10 now paid by the Optionee to the Optionors, the receipt and sufficiency of which is hereby expressly acknowledged, and of the mutual promises, covenants, conditions, representations and warranties herein set out, the parties hereto agree as follows:
1.
INTERPRETATION
1.1
For the purposes of this Agreement, including the recitals and any schedules hereto, unless there is something in the subject matter or context inconsistent therewith, the following words and expressions shall have the following meanings:
(a)
"Agreement" means this Agreement, as amended from time to time;
(b)
“Area of Interest” means that area within 2 kilometers from the boundary of any of the claims comprising the Property;
(c)
“Environmental Claims” means any and all administrative, regulatory or judicial actions, suits, demands, claims, liens, notices of non-compliance or violation, investigations or proceedings relating in any way to any Environmental Law or any permit issued under any such Environmental Law, including, without limitation;
(i)
any and all claims by governmental or regulatory authorities for enforcement, clean-up, removal, response, remedial or other actions or damages pursuant to any applicable Environmental Law; and
(ii)
any and all claims by any third party seeking damages, contribution, indemnification, cost recovery, compensation or injunctive or other relief resulting from hazardous materials, including any release thereof, or arising from alleged injury or threat of injury to human health or safety (arising from environmental matters) or the environment;
(d)
“Environmental Law” means all requirements of the common law, civil code or of environmental, health or safety statutes, regulations, rules, ordinances, policies, orders, approvals, notices, licenses, permits or directives of any federal, state, territorial, provincial or local judicial, regulatory or administrative agency, board or governmental authority including, but not limited to those relating to (i) noise, (ii) pollution or protection of the air, surface water, ground water or land, (iii) solid, gaseous or liquid waste generation, handling, treatment, storage, disposal or transportation, (iv) exposure to hazardous or toxic substances, or (v) the closure, decommissioning, dismantling or abandonment of any facilities, mines or workings and the reclamation or restoration of lands;
(e)
“Effective Date” means the date on which this agreement is accepted for filing by the TSX Venture Exchange;
(f)
"Mining Work" means every kind of work done on or in respect of the Property or the products there from by or under the direction of or on behalf of or for the benefit of a party and, without limiting the generality of the foregoing, includes assessment work, geophysical, geochemical and geological surveying, studies and mapping, investigating, drilling, designing, examining, equipping, improving, surveying, shaft sinking, raising, crosscutting and drifting, searching for, digging, trucking, sampling, working and
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procuring minerals, ores, metals and concentrates, surveying and bringing any mineral claims or other interests to lease or patent, reporting and all other work usually considered to be prospecting, exploration, development and mining work;
(g)
"Option" means the sole and exclusive right and option to acquire and undivided 60% legal and beneficial interest in the Property; and
(h)
"Property" means those mineral properties more particularly described in Schedule "A" hereto together with any surface rights, mineral rights, personal property and permits associated therewith, and shall include any renewal thereof and any other form of successor or substitute title thereto;
1.2
In this Agreement, all dollar amounts are expressed in lawful currency of the United States of America.
1.3
The titles to the respective Articles hereof shall not be deemed to be a part of this Agreement but shall be regarded as having been used for convenience only.
1.4
Words used herein importing the singular number shall include the plural, and vice-versa, and words importing the masculine gender shall include the feminine and neuter genders, and vice-versa, and words importing persons shall include firms, partnerships and corporations.
2.
REPRESENTATIONS AND WARRANTIES
2.1
The Optionee represents and warrants to the Optionors that:
(a)
it has full power and authority to carry on its business and to enter into this Agreement and any agreement or instrument referred to in or contemplated by this Agreement;
(b)
it has full power and has received full corporate authority for the execution, delivery and performance of this Agreement and the execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated will not conflict with, or accelerate the performance required by or result in any breach of any covenants or agreements contained in or constitute a default under, or result in the creation of any encumbrance, lien or charge under any indenture, agreement or other instrument whatsoever to which they are a party or by which they are bound or to which they may be subject and will not contravene any applicable laws;
(c)
Any matters which arise which impede or delay the progress of work on the property by the Optionee or which may reasonably be anticipated to impede or delay the progress of work on the Property, for whatever cause, must be reported to the Optionor in a timely manner.
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2.2
The Optionors represent and warrant to the Optionee that:
(a)
each has full legal capacity and competence to enter into this Agreement and any agreement or instrument referred to in or contemplated by this Agreement and to carry out and perform all of their obligations and duties hereunder;
(b)
it has full power and authority for the execution, delivery and performance of this Agreement and the execution, delivery and performance of this Agreement and the consummation of the transactions herein contemplated will not conflict with, or accelerate the performance required by or result in any breach of any covenants or agreements contained in or constitute a default under, or result in the creation of any encumbrance, lien or charge under any indenture, agreement or other instrument whatsoever to which they are a party or by which they are bound or to which they may be subject and will not contravene any applicable laws;
(c)
Minera is the sole owner of, and holds good and marketable title to an undivided 100% right, title and interest in and to claims of the Property;
(d)
the Property is properly and accurately described in Schedule “A” hereto, and is in good standing under the laws of the jurisdiction in which the Property is located to and the conditions on and relating to the Property respecting all past and current operations thereon are to the best of its knowledge in compliance with all applicable federal and state laws including all Environmental Laws; and
(e)
all taxes, assessment, rentals, levies or other payments relating to the Property and required to be made to any federal and state governmental instrumentality have been made.
3.
OPTION
3.1
The Optionors hereby grant to the Optionee the sole and exclusive right and option to acquire a 60% undivided interest in the Property by incurring expenditures for Mining Work (“Expenditures”) including property claim taxes and issuing shares of its capital (“Share Requirements”) as follows:
(a)
the Optionee spend US$ 250,000 in Expenditures (which must include drilling) on the Property by the first anniversary of the Effective date (firm commitment);
(b)
the Optionee makes Expenditures of an additional US$ 250,000 on the Property by the second anniversary of the Effective date;
(c)
the Optionee makes Expenditures of an additional US$ 750,000 on the Property by the third anniversary of the Effective date;
(d)
the Optionee makes Expenditures an additional US$ 1,000,000 on the Property by the fourth anniversary of the Effective date;
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(e)
the Optionee makes Expenditures an additional US$ 1,250,000 on the Property by the fifth anniversary of the Effective date;
(f)
the Optionee issues 100,000 common shares of the Optionee to Almaden within 5 business days of the Effective Date;
(g)
the Optionee issues an additional 150,000 shares of the Optionee to Almaden on or before the first anniversary of the Effective Date;
(h)
the Optionee issues an additional 150,000 shares of the Optionee to Almaden on or before the second anniversary of the Effective Date;
(i)
the Optionee issues an additional 200,000 shares of the Optionee to Almaden on or before the fourth anniversary of the Effective Date; and
(j)
the Optionee issues an additional 200,000 shares of the Optionee to Almaden on or before the fifth anniversary of the Effective Date;
Any Expenditures in excess of the Expenditures for such period shall be credited towards the Expenditures required for a succeeding period or periods.
The shares to fulfill the Share requirements set forth in section 3.1 (f) to 3.1 (j) shall be issued to Almaden. The Optionee shall use its best endeavours to ensure that all shares are issued without restriction on transfer or if issued with restriction on transfer that such restrictions are removed as soon as possible.
OPTION EXERCISE
4.1
Upon the fulfillment of the Expenditure requirements and the Share Requirements as set forth in section 3.1 the Optionee shall be deemed to have earned an undivided 60% interest in the Property (the “Option Exercise”), subject always to compliance with the provisions of Section 6.3 (h).
5.
OPTIONEE’S RIGHTS
5.1
Except as otherwise provided in this Agreement, until the Option is exercised or terminated in accordance with the terms of this Agreement, the Optionee, its servants and agents shall have the sole and exclusive right to:
(a)
enter in, under or upon the Property and conduct Mining Work;
(b)
exclusive and quiet possession of the Property;
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(c)
bring upon the Property and to erect thereon such mining facilities as it may consider advisable; and
(d)
remove from the Property and dispose of for its own account ore or mineral products for the purpose of bulk sampling, pilot plant or test operations.
6.
POWERS, DUTIES AND OBLIGATIONS OF OPTIONEE
6.1
Until the Option is exercised or terminated in accordance with the terms of the Agreement, the Optionee shall have full right, power and authority to do everything necessary or desirable to carry out an exploration program on the Property and to determine the manner of exploration and development of the Property and, without limiting the generality of the foregoing, the right, power and authority to:
(a)
regulate access to the Property, subject only to the right of the Optionors and its representatives to have access to the Property at all reasonable times for the purpose of inspecting work being done thereon but at their own risk and expense;
(b)
employ and engage such employees, agents and independent contractors as it may consider necessary or advisable to carry out its duties and obligations hereunder and in this connection to delegate any of its powers and rights to perform its duties and obligations hereunder; and
(c)
execute all documents, deeds and instruments, do or cause to be done all such acts and things and give all such assurances as may be necessary to maintain good and valid title to the Property and each party hereby irrevocably constitutes the Optionee its true and lawful attorney to give effect to the foregoing and hereby agrees to indemnify and save the Optionee harmless from any and all costs, loss or damage sustained or incurred without gross negligence or bad faith by the Optionee directly or indirectly as a result of its exercise of its powers pursuant to this Subsection 6.1(c).
6.2
In the event of any subdivision, consolidation or other change in the share capital of the Optionee prior to the exercise in full of the Option, the number of shares to be delivered or issued to the Optionor thereafter in connection with the exercise of the Option shall be adjusted in accordance with such subdivision, consolidation or other change in the share capital of the Optionee. In the event the Optionee undertakes an amalgamation, merger, reorganization or other arrangement prior to the exercise in full of the Option, the number of shares to be delivered or issued to the Optionor thereafter shall be adjusted in accordance with such amalgamation, merger, reorganization or other arrangement.
6.3
Until the Option is exercised or terminated in accordance with the terms of this Agreement, the Optionee shall have the duties and obligations to:
(a)
Keep the Property free and clear of all liens and encumbrances arising from its operations hereunder (except liens contested in good faith by the Optionee);
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(b)
Keep the Property in good standing by the doing and filing, or payment in lieu thereof, of all necessary assessment work and payment of all taxes required to be paid and by the doing of all other acts and things and the making all other payments required to be made which may be necessary in that regard, and shall provide to the Optionors proof of such filing and payment or payment in lieu not less than 30 days before the due date of such filing or payment;
(c)
Permit the Optionors and representatives, duly authorized in writing by them or either of them, access to all records prepared by the Optionee in connection with Mining Work. The Optionee shall prepare and deliver to the Optionor at reasonable intervals, but in any event not less frequently than once each calendar quarter, reports on all Mining Work conducted by the Optionee. A formal written report prepared by a qualified person under the meaning of National Instrument 43-101 is required by the Optionor no later than May 15th of each year, to detail and describe the work performed during the preceding 12 months; If the optionor terminates the agreement before this date, the report is required within 14 days of the notice of termination;
(d)
Conduct all work on or with respect to the Property in a careful and minerlike manner and in accordance with the applicable laws of the jurisdiction in which the Property is located and indemnify and save the Optionor harmless from any and all claims, suits or actions made or brought against the Optionor as a result of work done by the Optionee on or with respect to the Property;
(e)
Maintain true and correct books, accounts and records of operations hereunder;
(f)
During the term of the Option, the Optionee shall pay all taxes, complete and file all assessment work and make all necessary payments and do such further and other acts as may be required to maintain the Property in good standing and shall not abandon or terminate the Option at any time less than 90 days prior to the date on which any act is required to maintain the Property in good standing. These expenditures will count toward the Expenditures of Section 3.1;
(g)
provide to the Optionor copies of all news releases and other continuous disclosure documents filed or disseminated by the Optionee under securities laws of Canada and such other jurisdictions to which the Optionee may be subject which releases or documents shall comply with appropriate disclosure standards including, without limitation, NI 43-101; and
(h)
Within 90 days after the end of each period within which Expenditures are required (“Qualifying Expenditures”) to be made by the Optionee to maintain this Option Agreement in good standing the Optionee and before earning an interest in accordance with the provisions of Sections 3.1 of this agreement, shall supply to the Optionor a geological or engineering report in writing reporting in detail as to the work conducted and a report of the Qualifying Expenditures made by the Optionee. Such report of Qualifying Expenditures shall, if required by the Optionors, be certified to by the Optionee’s auditors. Should such reports not be provided or should such reports not
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demonstrate expenditures sufficient to meet the required expenditures for the period covered by such report this Option Agreement may on notice in accordance with Section16.1 terminate the Option and the Secondary Option., or, at the election of the Optionors, require additional Qualifying Expenditures to be made or require payment in lieu of such expenditures.
7.
JOINT VENTURE
7.1
Upon the Optionee earning its interest under 3.11 all operations shall be conducted on a joint venture basis the basic terms of which venture shall be as set forth in Schedule “B” or such further or other terms as the parties may agree upon.
8.
TERMINATION OF OPTION
8.1
In the event of default in the performance of the requirements of Section 3.1then, subject to the provisions of Sections 8.2 and 16.1 of this Agreement, the Option and this Agreement shall terminate.
8.2
The Optionee shall have the right to terminate this Agreement by giving 30 days' written notice of such termination to the Optionors and upon the effective date of such termination this Agreement shall be of no further force and effect except the Optionee shall be required to satisfy any requirements which have accrued under the provisions of this Agreement which have not been satisfied.
8.3
Notwithstanding any other provisions of this Agreement, in the event of termination of this Agreement, the Optionee shall:
(a)
deliver to the Optionor, any and all reports, samples, drill cores and engineering data of any kind whatsoever pertaining to the Property or related to Mining Work which have not been previously delivered to the Optionor;
(b)
upon notice from the Optioner, remove all materials, supplies and equipment from the Property; provided however, that the Minera may retain ore and, at the cost of the Optionee, dispose of any such materials, supplies or equipment not removed from the Property within one hundred and eighty (180) days of receipt of such notice by the Optionee; and
(c)
ensure that, at the effective date of termination of this Agreement, the Property is free and clear of all liens and encumbrances arising from its operations hereunder (except liens contested in good faith by the Optionee) and in good standing for at least the next ensuing 12 months whether by having done and filed, or paid in lieu thereof, all assessment work necessary for that purpose.
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9.
CONFIDENTIALITY
9.1
All information and data concerning or derived from Mining Work shall be confidential and, except to the extent required by law or by regulation of any securities commission, stock exchange or other regulatory body, shall not be disclosed to any person other than a party's professional advisors without the prior written consent of the other party or parties, which consent shall not unreasonably be withheld.
10.
NOTICE
10.1
Any notice, direction, or other instrument required or permitted to be given under this Agreement shall be in writing and shall be given by the delivery of same or by mailing same by prepaid registered or certified mail or by sending same by telegram, telex, telecommunication or other similar form of communication, in each case addressed to the intended recipient at the address of the respective party set out on the first page hereof.
10.2
Any notice, direction, or other instrument aforesaid will, if delivered, be deemed to have been given and received on the day it was delivered, and if mailed, be deemed to have been given and received on the fifth business day following the day of mailing, except in the event of disruption of the postal service in which event notice will be deemed to be received only when actually received and, if sent by telegram, telecommunication or other similar form of communication, be deemed to have been given and received on the day it was actually received.
10.3
Any party may at any time give notice in writing to the others of any change of address, and from and after the giving of such notice, the address therein specified will be deemed to be the address of such party for the purposes of giving notice hereunder.
11.
FURTHER ASSURANCES
11.1
Each of the parties covenants and agrees, from time to time and at all times, to do all such further acts and execute and deliver all such further deeds, documents and assurances as may be reasonably required in order to fully perform and carry out the terms and intent of this Agreement.
12.
AREA OF INTEREST
12.01
If at any time during the subsistence of this Agreement either the Optionor or the Optionee stakes any mineral property located wholly or partly within the Area of Interest, such party give written notice of the acquisition of such Interest to the other party within 30 days of the acquisition which sufficiently describes the acquisition, including the cost thereof. Within 30 days of receiving such notice the non-acquiring party shall notify the acquiring party in writing as to whether or not it intends that the acquisition should become part of the Property. If the non-acquiring party fails to so notify the acquiring party within 30 days of receipt of the notice of the acquisition, then the
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acquisition shall be for the sole interest of the acquiring party and not subject to the terms of the option.
12.02
If the acquiring party is the Optionor and the Optionee has notified the Optionor of its intention that the acquisition should become part of the Property, the Optionee shall pay the Optionor within 30 days, the cost of acquisition. Upon payment of the cost of the acquisition by the Optionee,Minera and Optionee shall each become the beneficial owner of an interest in the acquisition (in the proportions set forth in this option in effect at the date of the acquisition) and the acquisition will become part of the option and is subject to the terms of this option save and except for the provisions of this Article 12.
12.03
If theacquiring party is the Optionee and the Optionor has notified the Optionee of the intention that the acquisition should become part of the Property, Minera and the Optionee shall each become beneficial owner of an interest in the acquisition (in the proportions set forth in this option in effect at the date of the acquisition ) and the acquisition shall become part of the option and subject to the terms of the option, save and except for the provisions of this Article 12.
12.04
If an acquisition by the Optionee becomes part of the Property as provided for herein, the
cost of the acquisition shall be credited towards the expenditures in Article 3.
13.
TIME OF THE ESSENCE
13.1
Time shall be of the essence in the performance of this Agreement.
14.
ENUREMENT
14.1
This Agreement shall enure to the benefit of and be binding upon the parties and their respective successors and permitted assigns.
15.
FORCE MAJEURE
15.1
No party will be liable for its failure to perform any of its obligations under this Agreement due to a cause beyond its reasonable control including, but not limited to, acts of God, fire, storm, flood, explosion, strikes, lockouts or other industrial disturbances, acts of public enemy, war, riots, laws, rules and regulations or orders of any duly constituted governmental authority, or non-availability of materials or transportation (each an "Intervening Event").
15.2
All time limits imposed by this Agreement will be extended by a period equivalent to the period of delay resulting from an Intervening Event.
15.3
A party relying on the provisions of Section 14.1 hereof, insofar as possible, shall promptly give written notice to the other party of the particulars of the Intervening Event, shall give written notice to all other parties as soon as the Intervening Event ceases to exist, shall take all reasonable steps to eliminate any Intervening Event and will perform its obligations under this Agreement as far as
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practicable, 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 Agreement if an Intervening Event renders completion impossible.
16.
DEFAULT
16.1
If a party (the "Defaulting Party") is in default of any requirement herein set forth, the party affected by such default (the "Non-Defaulting Party") shall give written notice to all other parties within thirty (30) days of becoming aware of such default, specifying the default, and the Defaulting Party shall not lose any rights under this Agreement, nor shall the Agreement or the Option terminate, nor shall the Non-Defaulting Party have any rights, remedies or cause of action pursuant to this Agreement, or otherwise hereunder as a result of such default, unless within ten (10) days after the giving of notice of default by the Non-Defaulting Party, the Defaulting Party has failed to cure the default by the appropriate performance, and if the Defaulting Party fails within such period to cure such default, the Non-Defaulting Party shall only then be entitled to seek any remedy it may have on account of such default.
17.
TRANSFERS
17.01
The Optionee with the consent of the Optionors first had and obtained, such consent to be not unreasonably withheld, may at any time during the Option Period sell, transfer or otherwise dispose of all or any portion of its interest in the Property and/or its rights and obligations under this Agreement; provided that any purchaser, grantee or transferee of any such interest delivers to the Optionors its agreement related to this Agreement and to the Property , containing:
(a) a covenant by such transferee to perform all the obligations of the Optionee to be performed under this Agreement in respect of the interest to be acquired by it from the Optionee to the same extent as if this Agreement had been originally executed by such transferee as principal obligant; and
(b) a provision subjecting any further sale, transfer or other disposition of such interest in the Property and/or this Agreement or any portion thereof to the restrictions contained in this section;
and further provided that any shares delivered to the Optionor in connection with the exercise of the Option must be shares of the Optionee, unless otherwise agreed in writing by the Optionor.
17.02
No assignment by the Optionee of any interest less than its entire interest in this Agreement shall, as between the Optionee and the Optionor, discharge it from any of its obligations hereunder, but upon the transfer by the Optionee of the entire interest at the time held by it in this Agreement (whether to one or more transferees and whether in one or in a number of successive transfers), the Optionee shall be deemed to be discharged from all obligations hereunder save and except for obligations which arose prior to the date of transfer.
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17.03
If the Optionor or the Optionee (the "Vendor") should at any time after exercise of the Option receive a bona fide offer from an independent third party (the "Proposed Purchaser") dealing at arm's length with the Vendor to purchase all or substantially all of its interest in and to the Property, which offer the Vendor desires to accept, or if the Vendor intends to sell all or substantially all of its interest in and to the Property, the Vendor shall first make an offer (the "Offer") of such interest in writing to the other party (the "Offeree") upon terms no less favourable than those offered by the Proposed Purchaser or intended to be offered by the Vendor, as the case may be.
17.04
Each Offer shall specify the price and terms and conditions of such sale, the name of the Proposed Purchaser (which term shall, in the case of an intended offer by the Vendor, mean the person or persons to whom the Vendor intends to offer its interest) and, if the offer received by the Vendor from the Proposed Purchaser provides for any consideration payable to the Vendor or otherwise than in cash, the Offer shall include the Vendor's good faith estimate of the cash equivalent of the non-cash consideration.
17.05
If within a period of 60 days of the receipt of the Offer the Offeree notifies the Vendor in writing that it will accept the same, the Vendor shall be bound to sell such interest to the Offeree (subject as hereinafter provided with respect to price) on the terms and conditions of the Offer.
17.06
If the Offer so accepted by the Offeree contains the Vendor's good faith estimate of the cash equivalent consideration as aforesaid, and if the Offeree disagrees with the Vendor's best estimate, the Offeree shall so notify the Vendor at the time of acceptance and the Offeree shall, in such notice, specify what it considers, in good faith, the fair cash equivalent to be and the resulting total purchase price.
17.07
If the Offeree so notifies the Vendor, the acceptance by the Offeree shall be effective and binding upon the Vendor and the Offeree and the cash equivalent of any such non-cash consideration shall be determined by binding arbitration under the Commercial Arbitration Act of British Columbia and shall be payable by the Offeree, subject to prepayment as hereinafter provided, within 60 days following its determination by arbitration; and the Offeree shall in such case pay to the Vendor, against receipt of an absolute transfer of clear and unencumbered title to the interest of the Vendor being sold, the total purchase price which is specified in its notice to the Vendor and such amount shall be credited to the amount determined following arbitration of the cash equivalent of any non-cash consideration.
17.08
If the Offeree fails to notify the Vendor before the expiration of the time limited therefor that it will purchase the interest offered, the Vendor may sell and transfer such interest to the Proposed Purchaser at the price and on the terms and conditions specified in the Offer for a period of 60 days, provided that the terms of this paragraph shall again apply to such interest if the sale to the Proposed Purchaser is not completed within the said 60 days.
17.09
Any sale hereunder shall be conditional upon the Proposed Purchaser delivering a written undertaking to the Offeree, in form and substance satisfactory to its counsel, to be bound by the terms and conditions of this Agreement.
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18.
SEVERABILITY
18.1
If any one or more of the provisions contained herein should be invalid, illegal or unenforceable in any respect in any jurisdiction, the validity, legality and enforceability of such provisions shall not in any way be affected or impaired thereby in any other jurisdiction and the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be affected or impaired thereby.
19.
AMENDMENT
19.1
This Agreement may not be changed orally but only by an agreement in writing, signed by the party against which enforcement, waiver, change, modification or discharge is sought.
20.
ENTIRE AGREEMENT
20.1
This Agreement constitutes and contains the entire agreement and understanding between the parties and supersedes all prior agreements, memoranda, correspondence, communications, negotiations and representations, whether oral or written, express or implied, statutory or otherwise between the parties or any of them with respect to the subject matter hereof.
21.
OPTION ONLY
21.1
This Agreement provides for an option only, and except as specifically provided otherwise, nothing herein contained shall be construed as obligating the Optionee to do any acts or make any payments hereunder and any act or acts or payment or payments as shall be made hereunder shall not be construed as obligating the Optionee to do any further act or make any further payment.
22.
GOVERNING LAW AND ARBITRATION
21.1
This Agreement shall be governed by and interpreted in accordance with the laws of the Province of British Columbia and the federal laws of Canada applicable therein and the parties hereby irrevocably attorn to the jurisdiction of the Courts and mediation/arbitral authorities of the Province of British Columbia.
22.2
Any dispute arising between the parties shall if possible be settled by mediation. Failing resolution by mediation, the matter shall be determined by binding arbitration conducted under the Commercial Arbitration Act (British Columbia) and the place of arbitration shall be Vancouver, British Columbia.
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ALMADEN MINERALS LTD. on behalf of itself and XXXXXX XXXXXXX, S.A. de C.V.
“Xxxxxx Xxxxxxxx”
Authorized Signatory
CONSOLIDATED SPIRE VENTURES LTD. on behalf of itself and COMPANIA MINERA SPIRE, S.A. de C.V.
“Xxxxx Xxxxxxxx”
C/S
Authorized Signatory
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SCHEDULE “A”
Claim Data
Claim Name | Type | Title No. | File No. | Area (Hectares) | Expiry Date |
SAGITARIO | EXPLOIT. | 219840 | 3/1.3/494 | 96.7719 | 00-Xxx-00 |
XX XXXXXXXXX | XXXXXXX. | 000000 | 321.1/3-42 | 18.0000 | 00-Xxx-00 |
XX XXXXX | XXXXXXX. | 000000 | 59/3743 | 9.0000 | 6-Jul-28 |
LA CUCARACHA | EXPLOIT. | 194422 | 3/1.3/221 | 84.0000 | 29-Dic-41 |
YAGO I | EXPLOIT. | 200955 | 3/1.3/254 | 465.7668 | 16-Oct-44 |
XXXXXXXXXX XX XXXXX | XXXXXXX. | 000000 | 3/1.3-0380 | 9.0000 | 00-Xxx-00 |
XXXXX XXX XXXX | XXXXXXX. | 000000 | 3/1.3/543 | 35.5988 | 16-Oct-52 |
LA NUEVA MAGNOLIA | EXPLOIT. | 218232 | 3/1.3/542 | 9.0000 | 16-Oct-52 |
AMP. LA NUEVA MAGNOLIA | EXPLOIT. | 218227 | 3/1.3/541 | 16.0000 | 16-Oct-52 |
AMP. NUEVO SAN XXXX | EXPLOIT. | 218254 | 3/1.3/544 | 6.4169 | 16-Oct-52 |
TEPIC 4 | EXPLOR. | 219437 | 59/6722 | 14.9151 | 5-Mar-53 |
TEPIC 3 FRACCIÓN I | EXPLOR. | 220036 | 59/06715 | 34.9507 | 26-May-53 |
TEPIC 3 FRACCIÓN II | EXPLOR. | 220037 | 59/06715 | 27.0496 | 26-May-53 |
TEPIC 5 | EXPLOR. | 220289 | 59/06728 | 13.0882 | 2-Jul-53 |
XXX XXXXXX | EXPLOR. | 213559 | 59/06540 | 21.7568 | 17-May-51 |
TEPIC 7 |
| 228596 | 59/07001 | 1869.9784 | 11-Dic-56 |
SCHEDULE "B"
JOINT VENTURE TERMS
1.
Participating Interests
Initial interests and initial investments of Almaden and the /Optionee will be as set forth in the Option agreement
2.
Management Committee
The joint venture will be under the management of a management committee consisting of one representative of each participant and at least one alternate representative. A quorum for any Management Committee meeting shall be present if the representatives of all parties are present. The representative of the Operator shall be the chairman of Management Committee meetings. The Management Committee shall decide every question submitted to it by a vote with each representative being entitled to cast that number of votes which is equal to its party’s interest percentage. The Management committee shall make decisions by simple majority.
3.
Operator
(a)
The Optionee will be the first operator and remain so unless its interest is reduced below 50% or it resigns or is removed for default. Upon the Optionee ceasing as operator Almaden shall become operator failing which, the Management Committee shall thereupon select another party to become Operator.
(b)
The non-operator may refer a question of operator default to arbitration if it is outvoted on a management committee motion to remove the operator for default.
(c)
The operator must keep the property in good standing and free of encumbrances, comply with laws, and maintain proper books and accounts and adequate insurance.
(d)
The operator must conduct joint venture activities according to approved programs and budgets, with sole responsibility for non-approved overruns exceeding 20% on exploration programs and 10% on development and other programs, and otherwise in accordance with good mining practices.
(e)
The operator will have the right to cash call in advance to cover anticipated approved program expenditures, including a reasonable amount of working capital.
(f)
The operator's charges for management will be: 10% of exploration costs, reduced to 5% on any single third party contract exceeding $50,000; 1% of construction costs; and 2% of mine operating costs. This charge is intended as a reimbursement of the costs of the time incurred by head office management and support functions in respect of approved programs on the Claims, which is not otherwise billed as a cost. The charge has been
established as an estimate of anticipated management and administrative costs and on the basis that the party acting as Operator shall not profit nor suffer loss by virtue of acting in its capacity as Operator providing these services.
(g)
After commencement of commercial production the operator will have a lien on the non operator’s interest to secure the non operator’s cost share of expenditures and the right to advance the cost share of a party in default, any such advances to be accounted for in dilution formulae outlined in Sections 5 (c) and 5 (d) of this Schedule.
(h)
Prior to a production decision, the operator will submit annual exploration programs for management committee approval, and will report on results on a quarterly basis.
(i)
Unless a feasibility study was delivered prior to the formation of the joint venture, the Management Committee may approve a program which contemplates the preparation of a feasibility report at such time, if any, as it deems fit.
(j)
A development program will be prepared by operator based on a feasibility study approved by the Management Committee.
(k)
Each party must finance its own cost share of development costs, with the right to pledge its interest for such purpose.
(l)
After commencement of commercial production, operator will submit annual operating programs for management committee approval.
4.
Participation in Programs and Dilution
(a)
Parties will have an election as to whether to participate in any approved exploration program or approved development program up to the amount of its interest at such time.
(b)
Electing to participate in an approved program will make a participant liable for its agreed cost share of all expenditures for that program.
(c)
Electing not to participate in an approved program will result in dilution of interest, i.e. each party's interest will be calculated as follows:
AB + Y
B + C
(Where:
A = the interest of the party being diluted prior to the start of the Relevant Program, as defined below;
B = the sum of all deemed and prior contributions of all parties prior to the start of the Relevant Program;
Y = the actual contributions (if any) of the diluting party to the Relevant Program; and
C = the total amount actually contributed by all parties to the Relevant Program; and
“Relevant Program” means a program to which the diluting party elected not to contribute and the Program is subsequently funded by the other party increasing its contribution by the amount of the shortfall.)
and the contributing party's interest will be correspondingly increased.
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(d)
Notwithstanding (c) above, in the case of a development program which involves construction of mining facilities and bringing a mine to commercial production based on a feasibility study, a party electing to participate in such program in an amount less than its interest at the time (including not to participate at all) will result in dilution of such party's interest to that percentage of budgeted expenditures which it has agreed to contribute, subject to (f) below.
(e)
Until commencement of commercial production, a participant’s failure to pay its cost share of an approved program after electing to participate will constitute default and result in double dilution of interest, i.e. the defaulting party's interest will be:
AB + Y
2[B + C]
(A, B, Y and C having the meanings given above.)
and the non-defaulting party's interest will be correspondingly increased.
After commencement of commercial production, a participant’s failure to pay its cost share of an approved program after electing to participate will constitute default and result in dilution of interest, such that the defaulting party's interest will be:
AB + Y
B + 2C
(A, B, Y and C having the meanings given above.)
and the non-defaulting party's interest will be correspondingly increased.
(f)
Dilution to 10% will effect a deemed surrender of an interest in the joint venture, and conversion of such interest to a 2.0% net smelter royalty, which will be in a form to be agreed by the parties or as set forth in Appendix 1 hereto
5.
Disposition of Production
(a)
Each participant shall have the right to take its share of production in kind.
(b)
The operator will be free to sell the share of production of any participant who fails to take its share in kind or make arrangements for sale, deducting its costs and expenses from the proceeds.
6.
Transfers of Interests
(a)
Any transfer of interest in the property and the joint venture agreement will be subject to a right of first offer of the other participant substantially in the form set forth in the Option Agreement under the heading “ Transfers”. Such a transfer cannot be made without the consent of the other party, which consent cannot be unreasonably withheld, and is subject to the transferee agreeing to be bound by the terms of the Joint Venture Agreement.
(b)
No encumbrances of any interest will be permitted except for financing of development and then subject to the joint venture agreement.
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7.
Withdrawal and Winding Up
No withdrawal by a party or winding up of the joint venture will be permitted without adequate payment of or security for reclamation and closure costs.
8.
Dispute Resolution
Arbitration administered by the British Columbia International Commercial Arbitration Centre.
9.
Other
(a)
Force majeure
(b)
Confidentiality
(c)
Subject to British Columbia law.
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APPENDIX “1”
NET SMELTER RETURN ROYALTY
The Royalty which may be payable to a party (hereinafter called “Payee”) by the remaining party (hereinafter called the “Payor”) will be payable in accordance with the terms of this Appendix “1”.
The Royalty (as herein defined) shall be payable on minerals produced, saved and sold from the Property on the terms and subject to the conditions herein specified.
Capitalized terms used but not defined herein shall have the respective meanings described to such terms in the Option Agreement to which this is a Schedule.
1.
Production Royalty. If the Payor commences production of Products that are mined from the Property, the Payor shall pay Payee a Production Royalty equal to two percent (2%) of the Net Smelter Returns from all ores and minerals produced, saved and sold from the Property (the “Production Royalty”), computed as herein provided. No Production Royalty shall be due upon bulk samples extracted by the Payor for metallurgical testing purposes during the Payor’s exploration or development work on the Property.
The term “commences production” as used herein shall mean the first day of the month following expiration of the first consecutive two month period within which milling (or other treatment) of ores produced from the Properties has yielded concentrate of commercial quality and quantity.
2.
Net Smelter Returns. As used herein, “Net Smelter Returns” means the Gross Proceeds less Allowable Deductions.
(a)
As used herein, “Gross Proceeds” shall have the following meaning:
i)
If the Payor causes refined gold (meeting the specifications of the London Bullion Market Association) to be produced from Products, Net Smelter Returns shall be paid on the refined gold, as herein provided. For purposes of determining Net Smelter Returns, the refined gold shall be deemed to have been sold at the Monthly Average Gold Price and the Gross Proceeds shall be determined by multiplying Gold Production during the calendar month by the Monthly Average Gold Price for such month. As used herein, “Gold Production” shall mean the quantity of refined gold outturned during the calendar month to the Payor’s account by an independent third party refinery from Products, on either a provisional or final settlement basis as used herein. “Monthly Average Gold Price” shall mean the average London Bullion Market Association P.M. Gold Fix, calculated by dividing the sum of all such prices reported for the month by the number of days for which such prices were reported.
ii)
If the Payor causes refined silver (meeting the specifications for refined silver subject to the New York Silver Price published by Handy & Xxxxxx) to be produced from Products, Net Smelter Returns shall be paid on refined silver as herein provided. For purposes of determining Net Smelter Returns, the refined silver shall be deemed to have been sold at the Monthly Average Silver Price ad the Gross Proceeds shall be determined by multiplying Silver Production during the calendar month by the Monthly Average Silver Price for such month. As used herein, “Silver Production” shall mean the quantity of refined silver outturned during the calendar month to thePayor’s account by an independent third party refinery from Products, on either a provisional or final settlement basis. As used herein, “Monthly Average Silver Price” shall mean the average New York Silver Price as published daily by Handy & Xxxxxx, calculated by
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dividing the sum of all such prices reported for the calendar month by the number of days for which such prices were reported.
iii)
If the Payor causes refined metals other than refined gold and refined silver to be produced from Products, Net Smelter Returns shall be paid on the refined metal produced as herein provided and the Gross Proceeds shall be equal to the amount of the proceeds actually received by the Payor during the calendar month from the sale of such refined metal.
iv)
If the Payor sells raw ore mined from the Property or doré or concentrates produced from Products to an independent third party in an arm’s length transaction, then the Gross Proceeds shall be equal to the amount of the proceeds actually received by the Payor during the calendar month from the sale of such raw ore, doré, or concentrates.
v)
If the Payor sells raw ore mined from the Property or doré or concentrates produced from Products in other than an arm’s length sale to an independent third party, then the Gross Proceeds shall be equal to the fair market value of such raw ore, doré or concentrates.
b)
As used herein, “Allowable Deductions” shall mean all costs, charges and expenses paid by the Payor for or with respect to processed Products, after such Products are shipped from the Property, including:
i)
Charges for treatment in the smelting and refining processes (including handling, processing, interest and provision for settlement fees, costs of umpires, sampling, assaying and representation fees, penalties, and other deductions made by the processor or imposed by law and specifically excluding mining and milling costs);
ii)
Actual costs of transportation (including loading, freight, insurance security, transaction taxes, handling, port, demurrage, delay, and forwarding expenses incurred by reason of or in the course of such transportation) of Products from the Property to the place of treatment and then to the place of sale;
iii)
costs or charges of any nature for or in connection with insurance, storage, or representation at a smelter or refinery for Products; and
iv)
sales, use, severance, excise, net proceeds or mine, and any other tax on or measured by mineral productions.
3.
Calculation and Payment of Production Royalty.
a)
The obligation to pay Production Royalty shall accrue upon the outturn of refined metals, on which Production Royalty is payable to the Payor’s account or the sooner sale of unrefined metals, doré, concentrates, ores or other Products, as hereinafter provided.
b)
Where outturn of refined metals is made by an independent third party refinery on a provisional basis, the Net Smelter Returns shall be based upon the amount of refined metal credited by such provisional settlement, but shall be adjusted in subsequent statements to account for the amount of refined metal established by final settlement by the refinery.
c)
Production Royalty shall become due and payable quarterly on the last day of the month next following the end of the quarter in which the same accrued. Production Royalty payments shall be accompanied by a statement showing in reasonable detail the quantities and grades of the refined Products produced and sold or deemed sold by the Payor monthly; the average monthly price
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determined as herein provided for refined metals on which Production Royalty is due; Allowable Deductions; and other pertinent information in sufficient detail to explain the calculation of the Production Royalty payment.
d)
All Production Royalty payments shall be considered final and in full satisfaction of all obligations of the Payor with respect thereto, unless Payee gives the Payor written notice describing and setting forth a specific objection to the determination thereof within 12 months setting of receipt by Payee of a Production Royalty statement. If Payee objects to a particularly quarterly statement as herein provided, Payee shall, for a period of 60 days after the Payor’s receipt of notice of such objection, have the right, upon reasonable notice and at reasonable time, to have the Payor’s accounts and records relating to the calculation of the Production Royalty in question audited by a certified public accountant acceptable to Payee and to the Payor. If such audit determines that there has been a deficiency or an excess in the payment made to Almaden such deficiency or excess shall be resolved by adjusting the next monthly Production Royalty payment or credit due hereunder. Payee shall pay all costs of such audit unless a deficiency of 5% or more of the amount determined by the Payor to be due to Payee is determined to exist. The Payor shall pay the costs of such audit if a deficiency of 5% or more of the amount due is determined to exist. All books and records used by the Payor to calculate Production Royalty due hereunder shall be kept in accordance with generally accepted accounting principles consistently applied. Failure on the part of Payee to make claim on the Payor for adjustment in such 12 month period shall establish the correctness and preclude the filing of exceptions thereto or making of claims for adjustment thereon; providing that nothing herein shall limit the time in which Payee may commence a proceeding for fraud, concealment or misrepresentation.
e)
If Almaden is the Payee, the Production Royalty shall be in addition to any other royalty due to a third party. If the interest in any parcel of the Property acquired by the Company from Almaden was less than the whole and undivided 100% interest therein, then the Production Royalty shall be paid to Almaden only in the proportion that the interest so conveyed by Almaden bears to the whole and undivided ownership in such parcel of the Property.
f)
The Payor shall have the right of mixing or commingling, at any location and either underground or at the surface, any Products from the Property with any ores, metals, minerals, or mineral products from other lands, provided that the Payor shall determine the weight or volume of, sample and analyze for grade and amenability to process all such Products and ores, metals, minerals and mineral products (including the recovery factor) before the same are so mixed or commingled. Any such determining of weight or volume, sampling and analytical practices and procedures applied by the Payor shall be used as the basis of allocation of Net Smelter Returns payable to Payee hereunder in the event of a sale by the Payor of materials so mixed or commingled or of products produced therefrom. Prior to commencement of commercial production, the Payor shall notify Payee how the Payor proposes to determine the weight of volume of, sample and analyze all such materials. Payee may, within 30 days after receipt of such notice, object thereto in writing, specifying with particularity the grounds for such objection. If Payee does not serve a timely objection, Payee shall be deemed to have consented to procedures described in the Company’s notice. If Payee does object to the Payor’s proposed procedures within such 30 day period, the Payor and Payee shall attempt for a period of 15 days to reach agreement concerning the procedures to be used. If the Payor and Payee fail to reach agreement within such 15 day period, either party may initiate binding arbitration in accordance with the provisions of this Agreement, to determine the procedures to be used. Based on its operating experience, the Payor may subsequently propose modifications to the approved procedures for determining the weight or volume of, sampling and analyzing ores or mineral products to be mixed or commingled, following the same procedures set forth above, including arbitration. Notwithstanding the foregoing, nothing herein shall require or permit the operations of
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the Payor or its mixing or commingling or Products with any ores, metals, minerals or mineral products from other lands to be hindered, delayed or interrupted pending the determination of the procedures to be used.
g)
The Payor may but need not engage in forward sales, future trading or commodity options trading, and other price hedging, price protection, and speculative arrangements (“Trading Activities”) which may involve the possible delivery of base or precious metals produced from the Property. The parties acknowledge and agree that Payee shall not be entitled to participate in the proceeds or be obligated to share in any losses generated by the Payor’s Trading Activities.
4.
No Implied Covenants. The timing, nature, manner and extent of any exploration, development, mining, production and sale of Products, if any, shall be at the sole discretion of the Payor. No implied covenants or conditions whatsoever shall be read into the Deed, including without limitation any covenants or conditions relating to exploration, development, prospecting, mining, production or sale of Products, except for the covenants of good faith and fair dealing.
5.
Assignment. The Payor shall have the right to assign the Property, in whole or in part and shall have sole and absolute discretion concerning the sale, assignment, transfer, conveyance, venturing, encumbrance or other disposition of the Property, in whole or in part, on such terms and conditions as it determines appropriate. The Payor shall require any transferee or assignee of any interest in the Property to assume in writing the obligation to pay Payee the Production Royalty in accordance with the terms and conditions set forth herein, and upon such assumption, the Payor shall be released from all liability hereunder with respect to the transferred interest in the Property, except for such liability as has accrued prior thereto.
6.
Treatment of Product. The Payor may, but shall not be obligated to, treat, mill, heap xxxxx, sort, concentrate, refine, smelt, or otherwise process, beneficiate or upgrade the ores, concentrates , and other mineral product produced from the Property, at sites located on or off the Property, prior to sale, transfer, or conveyance to a purchaser, user or other consumer. The Payor shall not be liable for mineral values lost in processing under sound practices and procedures, and no Production Royalty shall be due on any such lost mineral values.
7.
Arbitration. Any dispute, controversy or claim arising out of or relating to the calculation or payment of Production Royalty shall be settled by binding arbitration.
a)
The arbitration shall be conducted in accordance with the commercial arbitration rules of the British Columbia International Commercial Arbitration Centre in effect at the time of the arbitration, except as they may be modified herein or by the mutual agreement of the parties. The arbitration shall be the sole and exclusive forum for resolution of the dispute, controversy or claim and the award shall be in writing and shall be final and binding on the parties. The costs and fees of arbitration, including the arbitrator’s fees and the parties’ attorney’s fees, shall be awarded in the manner determined by the arbitrator. Judgement thereon may be entered by any court having jurisdiction thereof or having jurisdiction over the parties or their assets.
b)
There shall be one arbitrator selected by the mutual agreement of the party initiating arbitration (“Claimant”) and the party named as respondent (“Respondent”). If the Claimant and the Defendant cannot agree on an arbitrator within 20 days after receipt of notice of arbitration by the Respondent, the Claimant and the Respondent shall each name an arbitrator within 20 days after the expiration of the initial 20 day period. The two arbitrators so chosen shall, within a period of 30 days after their selection, select a third arbitrator to serve as the sole arbitrator. If any party to this Agreement entitled to name an arbitrator should fail to do so, or if the two arbitrators appointed by the parties fail
4
or are unable to appoint the sole arbitrator, British Columbia International Commercial Arbitration Centre shall appoint such arbitrator. The arbitrator selected by the parties or by the two arbitrators shall be impartial and independent from the parties and shall be technically competent with respect to the issues submitted for arbitration.
c)
The arbitration hearing will be held in Vancouver, B.C.
8.
Assignment. Almaden may assign its rights under this Net Smelter Return Royalty Agreement to any of its Affiliates; provided, however, than any change in ownership of rights shall be accomplished in such manner that the Company shall not be required to make payments to or give notice to more than one person, firm, corporation, or entity. No change or division in the ownership of the Production Royalty, however accomplished, shall enlarge the obligations of diminish the rights of the Company. No change or division in the ownership of the Production Royalty shall be binding on the Company until ten (10) days after the Company has received a copy of the assignment instrument duly recorded in the Public Mining Registry evidencing the change or division in ownership.
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