Exhibit 10.1
Mexicana I Agreement dated as of February 13, 1998
MEXICANA I
THIS AGREEMENT dated as of the 12th day of February, 1998.
BETWEEN:
ING. XXXXXXXXXX XXXXXX XXXXXXX, a businessman, having an
address at Dakota Xx. 000 - 000, Xxx. Xxxxxxx, 00000 Xxxxxx,
X.X. married under the separate property regime as is
evidenced with a copy of the marriage certificate attached
hereto as Schedule "A"
(hereinafter called the "Concessionaire")
AND:
LA MEXICANA RESOURCES S.A. DE C.V., a body corporate and
having an address to receive notices at Paseo De La Reforma
000, Xxxxx xx Xxxxxxxxxxx, 00000 Xxxxxx, D.F., a subsidiary of
Xxx Xxx Resources Inc.
(hereinafter called the "Company")
A. The Concessionaire is the beneficial and registered concessionaire of
100% of the Exploration Mining Concession of the "Mexicana 1" Lot, title number
204,721, located in the State of Durango, Municipality of Pueblo Nuevo, and
registered in the Public Registry of Mining under number 302, pages 151, volume
294 of the Mining Concessions Book on April 25, 1997, as more particularly
described in Schedule "B" attached hereto (hereinafter called the "Property",
jointly with the exploitation mining concession which may be derived therefrom).
B. The Concessionaire has agreed to grant to the Company the exclusive
right to explore the Property and, if applicable, the right to develop the Lot,
and the exclusive right and option to acquire up to an undivided 70% right,
title and interest in and to the Property on the terms and conditions
hereinafter set forth.
C. The Company has agreed that the Concessionaire shall not have to incur
any further expenditures with respect to the Lot until such time as the option
mentioned in clause 1.0 following is either exercised or terminated as
hereinafter provided.
NOW THEREFORE THIS AGREEMENT WITNESSES that in consideration of the premises and
of the covenants hereinafter set forth the parties hereto covenant and agree as
follows:
1.0 GRANT AND DURATION
1.1 The Concessionaire hereby grants to the Company the sole and exclusive
right and option to purchase an undivided 70% interest in the Property, together
with all rights, privileges and appurtenances pertaining thereto recorded and
unrecorded to which it is entitled in respect thereof (hereinafter called the
"Option").
1.2 The Option herein granted shall be exercised by the Company on or
before February 12, 2001 (the "Expiry Date").
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1.3 The duration of this Agreement shall be from February 12, 1998 to
February 12, 2001.
2.0 EXERCISE OF OPTION
2.1 In consideration for the exploration rights and, if applicable,
exploitation rights and the Option, the Company shall cause the following
payments and share issuances to be made to the Concessionaire:
a) US$25,000.00 (twenty five thousand dollars of the
United States of America) previously paid upon the execution
of this Agreement.
b) US$25,000.00 (twenty five thousand dollars of the
United States of America) upon the execution of this
Agreement;
c) US$50,000.00 (fifty thousand dollars of the United
States of America) every six months from the date of this
Agreement until the Expiry Date or until a bankable
feasibility study is completed which ever is the sooner; d)
250,000 shares of Pubco upon the approval of this Agreement by
any regulatory authority having jurisdiction over this
Agreement;
e) a further 750,000 shares of Pubco within three years
of the Listing Date. The Company agrees to make application
for a minimum of 250,000 shares of Pubco to be issued to the
Concessionaire every six months from the date of the issuance
of the shares pursuant to paragraph (d) herein. The issuance
of any shares pursuant to this section shall be subject to the
regulatory approval, if required; and
f) a minimum amount of US$1,500,000 (one million fifty
hundred thousand dollars of the United States of America)
shall be invested on work commitments, according to the
following budget schedule: US$300,000 during the first year,
US$500,000 in the second year and the remaining US$700,000 in
the third.
The Company shall also be responsible for the payment of value added
tax. In order to calculate the taxes that may arise from the payment of the
share consideration mentioned in this section, according to the applicable law,
the closing price per share of Pubco, as quoted on the most senior stock
exchange or quotation system on which the shares of Pubco are then listed on the
last trading day immediately prior to the date on which the Company delivers the
shares of Pubco mentioned above to the Concessionaire, shall be used.
It shall be considered that the Company has exercised the Option, upon
the Company paying to the Concessionaire all consideration mentioned in this
section 2.1.
3.0 NON OBLIGATION OF THE OPTIONEE TO MAKE ANY FURTHER ACTS OR PAYMENTS
3.1 The doing of any act or the making of any payment by the Company shall
not obligate the Company to do any further acts or make any further payment.
4.0 ACQUISITION OF INTEREST
4.1 Upon the exercise of the Option by the Company as described in Section
2.0, the Company shall have acquired an undivided 70% interest in and to the
Property and the
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Concessionaire shall have an undivided 30% interest in and to the Property.
4.2 The Company shall pay to the Concessionaire as consideration for the
assignment of the 70% interest in and to the Property the amount of US $10.00,
plus the corresponding value added tax, at the execution of the assignment
agreement mentioned in the following section 5.0.
5.0 ASSIGNMENT AGREEMENT
5.1 Upon the exercise of the Option, the Concessionaire shall within 15
calendar days of the date the Company has exercised its Option, execute an
assignment agreement before a Notary Public selected by the Company, assigning
and undivided 70% interest in the Property in favor of the Company. At the
request of the Company, the Concessionaire shall execute the assignment in favor
of Newco (as defined below).
6.0 RIGHT OF ENTRY
6.1 During the term of this agreement, the Company shall have the exclusive
right to explore, and, if applicable, to exploit the Lot and without restricting
the generality of the foregoing and subject to the Company obtaining appropriate
surface rights and governmental authorizations, the Company shall have the right
to:
a) enter upon and inspect the Lot, provided that the
Concessionaire and his representatives shall have at all
reasonable times, at their risk and expense, to enter upon the
Lot and inspect the Company's work;
b) carry out exploration and, if applicable, development work on
the Lot;
c) place and use thereon excavations, openings, shafts, ditches
and drains, and construct, erect, maintain, use, and at its
election, remove any and all buildings, structures, plants,
machinery, equipment, railroads, roadways, pipelines,
electrical power lines and facilities, stockpiles, waste
piles, tailings ponds and facilities, settlings ponds, and all
other improvements, property and fixtures as may be necessary,
convenient, or suitable for mining, removing, beneficiating,
concentrating, smelting, extracting, leaching, refining and
shipping of ores and minerals thereof, or for any activities
incidental thereto or to any of the rights or privileges of
the Company hereunder; and
d) divert streams, remove lateral and subjacent supports, cave,
subside or destroy the surface or any part thereof, deposit
earth, rocks, waste, lean ore and materials on any parts of
the Lot where it will not interfere with mining, xxxxx the
same, and commit waste to the extent necessary, usual or
customary in carrying out any or all of the above rights,
privileges and purposes.
7.0 WARRANTIES AND REPRESENTATIONS OF THE CONCESSIONAIRE
7.1 The Concessionaire hereby represents and warrants to the Company that:
a) the Property consists of an exploration mining concession over
the "Mexicana 1" Lot, title 204,721, duly and validly staked
and recorded pursuant to the laws of Mexico, which is
accurately described in Schedule "B" hereto, is in good
standing on the date hereof and is free and clear of all
liens, charges and encumbrances;
b) the Concessionaire holds an undivided 100% interest in the
Property;
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c) the Concessionaire has the exclusive right to enter into this
Agreement and all necessary authority to dispose of an
interest in and to the Property in accordance with the terms
of this agreement;
d) there is no agreement respecting the Property to which the
Concessionaire is a party other than this Agreement and no
person, firm or corporation has any interest in the Property
hereunder and no person or entity is entitled to any royalty
or other payment in the nature of rent or royalty on any
minerals, ores, metals or concentrates or any other such
products removed from the Lot;
e) all required consents, approvals or conditions precedent to
the acquisition by the Company of an interest in the Property
as contemplated by the terms of this Agreement have been
obtained or satisfied; and
f) there is no adverse claim or challenge to the ownership of or
title to the Property, nor is there any basis thereof, and
there are no outstanding agreements or options to acquire or
purchase the Property or any portion thereof, and no person,
has any royalty or other interest whatsoever in production
from the Lot.
7.2 The representations and warranties herein before set out are conditions
on which the parties have relied in entering into this agreement and shall
survive the acquisition of any interest in the Property by the Company and each
of the parties will indemnify and save the other harmless from all loss, damage,
costs, actions and suits arising out of or in connection with any breach of any
representation, warranty, covenant, agreement or condition made by them and
contained in this agreement.
8.0 COVENANTS OF THE CONCESSIONAIRE
8.1 During the currency of this agreement, the Concessionaire covenants and
agrees with the Company to:
a) not do or permit or suffer to be done any act or thing which
would or might in any way adversely affect the rights of the
Company hereunder;
b) make available to the Company and its representatives all
records and files relating to the Property and the Lot and
permit the Concessionaire and its representatives at their own
expense to take abstracts therefrom and make copies thereof;
c) cooperate fully with the Company in obtaining any surface and
other rights on or related to the Lot as the Company deems
desirable;
d) promptly provide the Company with any and all notice and
correspondence from government agencies in respect of the
Property; and
e) not lien or encumber in any manner the Property.
9.0 REPRESENTATIONS AND WARRANTIES OF THE COMPANY
9.1 The Company represents and warrants to the Concessionaire that:
a) it is a company duly incorporated which is evidenced in
notarial deed 19,689, dated February 12, 1998, granted before
Lic. Xxxx Xxxxx Xxxxxx Xxxxxxxx. Notary Public 102 of the
Federal District and registered in the Public Registry of
Property and Commerce of the Federal District under mercantile
folio 231,942 and in the Public registry of Mining under
number 72, volume 36 of the Society Mining
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Book on October 23, 1998, organised and validly subsisting
under Mexican Law and is qualified to carry on business in
Mexico;
b) it has full power and authority to carry on its business and
to enter into this agreement and any agreement or instrument
referred to or contemplated by this agreement; and
c) the execution and delivery of this agreement and the
agreements contemplated hereby will not violate or result in
the breach of the laws of any applicable jurisdiction or
constating documents.
10.0 COVENANTS OF THE COMPANY
10.1 The Company hereby covenants and agrees with the Concessionaire as
follows:
a) that during the currency of this agreement it will maintain
the Property in good standing and shall pay all mining duties
on the Property under the Federal Duties Law of Mexico and,
where relevant, it shall conduct exploration work on the Lot
and record all assessment work reports, in the terms of the
Mining Law of Mexico and its Regulations. In the event that
the Company fails to pay the mining duties in respect of the
Property when the same become due and owing, or fails to
record the assessment work report on or before May 20 of each
year, the Concessionaire may, at his option, pay such duties
and record such assessment work reports and the Company agrees
that any amounts so paid by the Concessionaire shall be added
to the purchase price and shall be paid by the Company with
the next payment, if any, or if no payment remains, within one
month of payment by the Concessionaire and to compensate the
Concessionaire for any cost incurred for such recording;
b) conduct all work on or with respect to the Lot in a careful
and miner-like manner and in accordance with all applicable
Federal, State and Municipal laws, rules orders and
regulations, and indemnify and save the Concessionaire
harmless from any and all claims, suits or actions made or
brought against it as a result of work done by or with respect
to the Lot except to the extent that such claims, suits or
actions relate to issues or disputes regarding title to the
Property;
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 on the Property so that no claim or lien can
arise thereon or upon the ore and mineral contained therein
and it will indemnify the Concessionaire and save him harmless
from any and all loss, cost, actions, suits, damages or claims
which may be made against the Concessionaire in respect of the
operations carried out upon the Lot and that it will discharge
any liens or encumbrances which may arise in respect of or be
recorded against the Property as a result of the operations of
the Company thereon, provided however that the Company shall
have the right to contest the validity of any such lien or
claim of lien;
d) that it will permit the Concessionaire, or the representatives
of the Concessionaire duly authorized in writing, to visit and
inspect at reasonable times and intervals the Lot and any data
obtained by the Company as a result of its operation thereon,
and to take samples for testing purposes from any part of the
Lot, provided always that the Concessionaire or its
representatives shall abide by the rules and regulations laid
down by the Company relating to matters of safety and
efficiency in its operations and that the Company shall be
under no liability to the Concessionaire
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or his representatives for any personal injury, including
death, or any damage to property other than such as might be
occasioned by or through any neglect on the part of the
Company, its servants or agents;
e) that it will keep full, true and accurate reference reports,
maps and other surveys of all exploration, development and
mining work done on the Lot;
f) that it will keep full, true and accurate records of all ore
and waste from the Lot and will take sufficient samples of ore
removed and will make accurate surveys of ore removed all in
accordance with good mining practice;
g) that it will save and keep the Concessionaire harmless from
all claims, costs, loss or damage which may arise by reason of
injury (including injury resulting in death) to any person
employed by the Company in or upon the Lot or any part thereof
or which may arise by reason of injury (including injury
resulting in death) to any person or damage done to any
property as a result of any work or operations of the Company
or of its possession or occupancy of the Lot;
h) that the Company shall deliver to the Concessionaire all
reports of the studies made by the Company on the Lot within
the following 180 days from the date of termination of this
Agreement for whatever reason other than the exercise of the
Option.
11.0 SALE OF INTEREST
11.1 The Concessionaire agrees that if the Company decides to sell,
transfer, assign or otherwise dispose of its interest to an arm's length third
party then the Concessionaire shall also sell, transfer, assign or otherwise
dispose of its interest to the arm's length third party at the same price per
percentage interest or share as the Company shall dispose of its interest or
shares to the arm's length third party, provided the sale by the Company is made
at fair market value. If the parties cannot agree on a fair market value, the
matter shall be referred to arbitration which shall be governed by section 15.1.
12.0 DEFAULT AND TERMINATION
12.1 Notwithstanding anything in this Agreement to the contrary, if any
party (a "Defaulting Party") is in default of any requirement herein set forth,
the party affected by such default shall give written notice to the Defaulting
Party specifying the default and the Defaulting Party shall not lose any rights
under this agreement, unless within 30 days after the giving of notice of
default by the affected party the Defaulting Party has failed to take reasonable
steps to cure the default by the appropriate performance and if the Defaulting
Party fails within such period to take reasonable steps to cure any such
default, the affected party shall be entitled to seek any remedy it may have on
account of such default.
12.2 The Company may terminate this agreement at any time upon 30 days'
written notice to the Concessionaire (the "Termination").
12.3 Upon such Termination, all rights title and interest of the Company
under this agreement shall terminate, and the Company shall not be required to
make any further payments, or to perform any further obligations of this
agreement, including those payments in Section 2.1 above, which become due after
the termination.
13.0 RIGHTS UPON TERMINATION
13.1 The Company shall leave the Lot within a period of 30 days from the
Termination Date.
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The Company shall have the right, within a period of 30 days following the
Termination Date, to remove from the Lot all buildings, plants, equipment,
machinery, tools, appliances and supplies which have been brought upon the Lot
by the Company or on behalf of the Concessionaire, and any such property not
removed within such 30 days Period shall become the property of the
Concessionaire.
14.0 CO-CONCESSIONAIRES' OR SHAREHOLDERS AGREEMENT
14.1 After the exercise of the Option, the Concessionaire and the Company
shall either become co-concessionaires of the Property or incorporate a new
company ("Newco") that shall acquire the title to the Property:
a) to further explore and, if deemed warranted as herein
provided, to develop the Lot and equip it for commercial
production;
b) to operate the Lot as a mine; and
c) to engage in such other activity as may be considered by the
parties to be necessary or desirable in connection with the
foregoing.
14.2 The parties shall have three months after the exercise of the Option to
negotiate the terms of a co-concessionaires' agreement or to incorporate Newco
and negotiate a shareholders' agreement for the further exploration and
development of the Lot with the intent of putting the Lot into production. The
parties shall use their best efforts to negotiate a structure and an agreement
and do all necessary acts to enter into an agreement. If the co-concessionaires'
agreement or shareholders' agreement, as the case may be, is not finalized
within three months of the exercise of the Option, then the parties will submit
themselves to binding arbitration to determine the structure and to settle the
agreement having regard to the terms of this agreement.
14.3 The parties agree that the co-concessionaires' agreement or
shareholders' agreement shall contain terms customary in a relationship of that
nature and shall contain the following terms which are non-negotiable shall form
part of the co-concessionaires' agreement or shareholders' agreement, as the
case may be:
a) the Concessionaire and the Company shall each subscribe for
and pay for their respective portion of the costs of the
shares of Newco, if Newco's incorporation is elected by the
Company;
b) the initial interests of the parties in the Property or Newco,
as the case may be, shall be 70% as to the Company's interest
and 30% of the Concessionaire's interest. For further
certainty, shares of Newco shall be deemed to be an "Interest"
or "Interests" for the purposes of this section 14.3;
c) a party shall be entitled to recover any monies lent by it for
the development of the Property before there is any
distribution of profits to the Concessionaire and the Company;
d) the co-concessionaires agreement or Newco, as the case may be,
shall be managed by a Management Committee or Board of
Directors, which shall be comprised of one member or director
appointed by each party. The Management Committee or Board of
Directors shall have the power to appoint the operator/manager
of the Property;
e) the members of the Management Committee or Board of Directors
shall have voting power, proportional to the interest in the
co-concessionaire agreement or in
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Newco held by the party appointing such member or director;
f) no party shall do, transact, perform or undertake anything in
the name of the other parties or in the name of Newco;
g) nothing contained in the agreement shall, except to the extent
specifically authorized thereunder, be deemed to constitute a
party, an agent or legal representative of any other party.
15.0 ARBITRATION
15.1 All matters of dispute between the parties hereto concerning this
agreement which cannot be resolved or settled by the parties, shall be finally
settled by arbitration in Vancouver, British Columbia. The party desiring
arbitration shall appoint one arbitrator, and shall notify the other party of
such appointment, and the other party shall within 15 days after receiving such
notice, appoint an arbitrator, and two arbitrators so named, before proceeding
to act, shall within 30 days of the appointment of the last appointed
arbitrator, unanimously agree on the appointment of the third arbitrator to act
with them and be chairman of the arbitration herein provided for. If the other
party shall fail to appoint an arbitrator within 15 days after receiving notice
of the appointment of the first arbitrator, the first arbitrator shall be the
only arbitrator, and if the two arbitrators appointed by the parties shall be
unable to agree on the appointment of the chairman, the chairman shall be
appointed under the provisions of the ARBITRATION ACT (British Columbia). Except
as specifically or otherwise provided in this paragraph, the arbitration herein
provided for shall be conducted in accordance with such Act. The chairman or, in
the case where only one arbitrator is appointed, the single arbitrator, shall
fix the time and place in Vancouver, British Columbia, and he shall preside over
the arbitration and determine all questions of procedure not provided for under
such Act or this paragraph. After hearing any evidence or representations that
the parties may submit, the single arbitrator, or the arbitrators, as the case
may be, shall make an award and reduce the same to writing and deliver one copy
thereof to each of the parties. The expense of the arbitration shall be paid in
the manner specified in the award. The parties agree that the award of the
majority of the arbitrators, or in the case a single arbitrator, shall be final
and binding upon each of them.
16.0 ASSIGNMENT
16.1 The Concessionaire may not during the term of this agreement assign any
or a part of its interest in this agreement or the Property and the Company may
at any time assign its rights contained in this agreement provided that the
assignor agrees to be bound by the terms and conditions of this agreement.
17.0 GENERAL TERMS AND CONDITIONS
17.1 If this agreement is terminated for any cause whatsoever except the
exercise of the Option granted hereby by the Company, the Company shall deliver
to the Concessionaire copies of all reports, data, assay results and other
material relating to its exploration and development work on the Lot.
18.0 COVENANT FOR FURTHER ASSURANCES
18.1 The parties hereto hereby covenant and agree that they will execute
such further agreements, conveyances and assurances as may be requisite, or
which counsel for the parties may deem necessary to effectually carry out the
intent of this agreement.
19.0 ENTIRE AGREEMENT
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19.1 This agreement shall represent the entire understanding between the
parties with respect to the Property. No representations or inducements have
been made save as herein set forth. No changes, alterations, or modifications of
this agreement shall be binding upon either party until and unless a memorandum
in writing to such effect shall have been signed by all parties hereto.
20.0 TIME OF ESSENCE
20.1 Time shall be of the essence in the performance of this agreement.
21.0 TITLES
21.1 The titles to the paragraphs to this agreement shall not be deemed to
form part of this agreement but shall be regarded as having been used for
convenience or reference only.
22.0 LAWS OF AGREEMENT
22.1 This agreement shall be governed by and interpreted in accordance with
the applicable laws in Mexico, Federal District, Mexico, for local matters and
with the applicable laws of the Mexican Republic for federal matters.
23.0 ENUREMENT
23.1 This agreement shall enure to the benefit of and be binding upon the
parties hereto, and their respective heirs, successors, personal representatives
and assigns.
24.0 NOTICES
24.1 Any notice under this agreement shall be given personally to the
parties at the address set forth on the first page hereof or to such other
address as the parties may hereinafter designate in writing to the other
parties.
IN WITNESS WHEREOF the parties have hereunto caused these presents to be
executed as of the day and year first above written.
ING. XXXXXXXXXX XXXXXX XXXXXXX
LA MEXICANA RESOURCES S.A. DE C.V.
PER:
AUTHORIZED SIGNATORY
