LUMINA COPPER CORP. 1550 - 625 Howe Street Vancouver, BC V6C 2T6 Phone: 604-687-0407 Fax: 604-687-7041 LETTER OF INTENT
EXHIBIT 23.13
LUMINA COPPER CORP.
0000 - 000 Xxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Phone: 000-000-0000 Fax: 000-000-0000
Ref.: Regalito Project
In Xxxxxxxx de Chile, on October 16, 2003, the following Letter of Intent has been executed between Minera Lumina Copper Chile S.A., a Chilean subsidiary of Lumina Copper Corp., referred to as “Lumina” hereafter, represented in Chile by Xxxx X. Xxxxxxx, with Chilean Identity Card No. 14.427.974-3, both domiciled at Padre Xxxxxxx Nº 277, suite 502, Providencia, Santiago, hereinafter “Promisee Purchaser” and as the other party, hereinafter the “Promisor Vendors” consisting of two companies; 1) La Compañía Minera Caserones, represented by Sr. Xxxxx Xxxxxxxxx Xxxxxxx, domiciled at Los Xxxxxxxx Xx 000, xxxxx 000, Xx Xxxxxx, Xxxxx and 2) Sociedad Legal Minera California Una de la Sierra Xxxx Negra, represented by Sr. Lionel Polgatti San Xxxxxxxxx, domiciled at Xxxxxxxx Xxxxxxx Xx 000 , Xxxxxxxxxxx, Xxxxxxxx, Xxxxx.
This Letter of Intent will serve to confirm an agreement (the “Agreement”) to allow the parties to execute a promise to purchase agreement (the Promise to Purchase Agreement) in accordance to the terms contained in paragraph one of article 169 of the Mining Code, which states that it will be optional for the Promisee Purchaser to celebrate or not celebrate the Promised Purchase Agreement (the Promised Purchase Agreement). The parties to the Promise to Purchase Agreement shall be Lumina Copper Corp. or its subsidiary Minera Lumina Copper Chile S.A., who shall have the capacity of a Promisee Purchaser and the offerors Compañía Minera Caserones and Sociedad Legal Minera California Una de la Sierra Xxxx Negra, who shall have the capacity of Promisor Vendors. The objective of the Promise to Purchase Agreement shall be the mining exploitation claims duly described in Schedule A of this Letter of Intent, in addition to the rights in the mining exploration claims “pedimentos” described in Schedule B (which together with all ancillary use, occupancy or access rights is referred to as the “Property”).
The terms of the Agreement are as follows:
| 1. | Subject to the terms and conditions hereof, the Promisor Vendors hereby agrees to grant to the Promisee Purchaser a Promise to Purchase Agreement related to 100% of the mining claims and interests comprising the Property as follows: The Total Price consists of a Fixed Price (FP) which is stated in paragraph 1 (a) plus an Increment of the Fixed Price which is stated in 1 (b), which shall be applicable in case there is a sustained increase in the Copper Price, before commercial production is achieved plus a Variable Price based on a Net Smelter Return (Net Smelter Return, |
N.S.R.) which is stated in 1 (c) to be paid in case of the occurrence of commercial production: The total Purchaser Price which is indicated in this clause 1 shall be distributed among the Promisor Vendors and shall be paid according to the following percentages: -Compañía Minera Caserones
32,5% |
|
| (a) | The Fixed Price (FP) portion is an option as follows: |
| Payment of Price US$ |
|
| 1st Anniversary | 25,000 |
| 2nd Anniversary | 50,000 |
| 3rd Anniversary | 75,000 |
| 4th Anniversary | 100,000 |
| 5th Anniversary | 125,000 |
| 6th Anniversary | 150,000 |
| 7th Anniversary | 175,000 |
| 8th Anniversary | 200,000 |
| Total | 900,000 |
The terms for the purpose of the Fixed Purchase Price Payments shall be counted as of the Anniversary of the execution of the present Letter of Intent dated October 16, 2003. This provision shall apply to any payment that has as a reference an Anniversary of the present document. On completion of the payment of US$ 900,000 either per this schedule or by prepayment ahead of this schedule, Lumina may request the Promisor Vendors the execution of the Promised Purchase Agreement and shall acquire the mining claims and rights singularized in Schedule A and B of the present instrument and which conforms the Property. |
|
| (b.1) | Price Increment Bonus in case of higher Price
of Copper. If at any time during the term of 8 years to pay the Fixed
Purchase Price which is stated in clause 1 (a) the Copper Price determined
by the London Metals Exchange (LME) reaches US$ 1.00 per pound and remains
at or above US$ 1.00 for an entire calendar year, Lumina will pay a minimum
of US$ 200,000 for that year, deducting from that amount the value of
the installment of the FP payable on that year. During the period prior
to the exercise of the execution of the Promised Purchase Agreement any
incremental increase over the Fixed Price stated above will be deemed
a bonus payment and will not be considered as part of the Fixed Price
(FP) of US$ 900,000 (Example 1, if in year 5, the price of Cu exceeds
on average US$ 1.00 per pound, the Promisee Purchaser will pay a total
of US$ 200,000 assigning to this amount the installment of US$ 125,000
which has been determined for that year (FP) and US$ 75,000 shall be classified
as a bonus). (Example 2, if in year 8, the price of Cu exceeds on average
US$ 1.00 per pound, the Promisee Purchaser will |
2
only pay a total of US$ 200,000 which
corresponds to the FP installment of US$ 200,000 without having to pay
any amount in addition by concept of the Copper Price bonus for that year).
The incremental payment, if applicable, will be made within 60 days following
the end of the calendar year. |
|
| (b.2) | After the 8th anniversary of this Agreement or once the Promised Purchase Agreement has been executed by the parties and prior to the establishment of commercial production, the Bonus for the Increase of the Copper Price payment of US$ 200,000 which is stated in clause (b.1) shall be paid to the Promisor Vendors and will be considered as an Advance Variable Price (AVP). Upon achieving commercial production and, if the Variable Price VP defined in clause 1 (e) in the first calendar year exceeds US$ 200,000, the Promisee Purchaser may deduct from the Variable Price (VP) payable 50% of the amount in excess over US$ 200,000 and apply this amount against the accumulated Advance VP payments in each succeeding year until the accumulated Advance Variable Payments have been fully offset. (Example 3, it is assumed that commercial production is initiated in the year 12, with an accumulated AVP of US$ 1,000,000 and that the Promisor Vendors have the rights to receive as VP in that year 12 the amount US$ 500,000, the Promisee Purchaser have the rights to deduct 50% from the sum of US$ 300,000 (US$ 500,000 minus US$ 200,000 which corresponds to the minimum payment), therefore, a deduction US$ 150,000 of that payment will be made as an offset to recover a portion of the Advance Variable Price (US$ 1,000,000) as it has been stated in paragraph (b.2)). In each year when production occurs the payment of the VP (minus the deduction to recover the AVP if applicable) shall be made within 90 days following the end of the corresponding calendar year. |
| (c) | If Lumina makes all the payments set
out in Section 1(a) above it will be deemed that the Promisee Purchaser
has the rights to execute the Promised Purchase Agreement and the Promisor
Vendors the obligation to execute the said agreement in accordance to
the terms of article 169 of the Mining Code and executed the said agreement
the Promisee Purchaser shall be the owner of the Property, free from liens
and encumbrances, and the Promisor Vendors shall take all accessory steps
required to complete any required transfer contemplated in this Agreement. |
| (d) | So long as the rights of the Promisee
Purchaser to execute the Promised Purchase Agreement remains in effect,
Lumina shall be responsible for payment of the annual Patentes and the
legal expenses to maintain and defend the mining properties indicated
in Schedule A and B. In addition Lumina shall pay the Patents for year
2003 and the past patents which are estimated approximately as follows: |
| Patents US$ | |
| On signing this Letter Agreement |
17,000 |
On signing |
36,000 |
3
| (e) | On establishment of commercial production, Lumina shall pay a Variable Price Payment (VP) based on the Net Smelter Return as follows: |
| Price of Cu/lb US$ | Variable Price Payment % of NSR |
| Less than $1.00 | 1.0 |
| 1.00-1.2499 | 2.0 |
| More than 1.25 | 3.0 |
The Net Smelter Return (NSR) is defined as all revenues received from the sale of products extracted from the Property less all costs of transporting, off-site smelting and refining, and commercialization of said products. NSR shall be paid provisionally within a 60 days following the end of each quarter of a calendar year (March, June, September and December) duly evidenced by the proper documentation related to the commercialization of the products. Within a 60 day period following the end of the respective calendar year, Lumina shall make the adjustments which may be required to determine the final NSR which corresponds to said year and shall pay within the same 60 day terms any difference to the benefit of the Promisor Vendors, if applicable, reflected on the sale of minerals which has been used to determine the final NSR. It is further agreed that in the event that any additional production related taxes or royalties shall be imposed on the Property or any project in respect thereof, the Variable Price Payment shall be re-negotiated to offset the impact of such taxes. |
|
| 2. | The Promisee Purchaser shall, during
the term that it has to execute the Promised Purchase Agreement, have
exclusive access and control of the Property. Except to conduct any work
needed to keep the Property claims and interests in good standing as required
in Paragraph 4, there are no exploration or work commitments under this
Agreement. During the duration of this Agreement, Lumina shall be responsible
to ensure that all work it elects to do is carried out in accordance with
all applicable laws and good industry practices. Lumina shall keep the
Property in good standing, free from all liens and encumbrances and shall
provide the Promisor Vendors with reasonable access to the Property (at
the Promisor Vendor’s risk and expense) to ensure compliance with
the terms hereof. |
| 3. | Each party is responsible for its own
legal and other costs applicable to the preparation, review and actions
required of it under this Agreement. |
| 4. | The parties which have executed this
Letter of Intent acknowledge that this Agreement is subject to the approval
of the TSX Venture Exchange (Toronto Stock Exchange), approval which should
be granted in a maximum period of 180 days following the execution of
this Letter of Intent. |
| 5. | Lumina represents and warrants to the
Promisor Vendors that Lumina has the corporate power and authority to
enter into this Agreement and that, other than the approval of the |
4
| TSX Venture Exchange, no consents or other approvals are required by Lumina in connection with this Agreement. | ||
| 6. | The Promisor Vendors represents
and warrants to Lumina that: |
|
| (a) | The Promisor Vendors have a 100% interest
on the mining claims comprising the Property indicated in Schedule A and
that these mining claims are free from all liens and encumbrances and
all such claims are, subject to the payments of past patent fees referred
to in Section 1(b), in good standing as of the date hereof; |
|
| (b) | The Promisor Vendors have complied with
any and all legal and contractual obligations in acquiring and keeping
their interest in the Property in force, excepting the obligation to pay
pending patent fees for year 1999 and have no knowledge of any measure
against the validity of their Property ownership; |
|
| (c) | The Promisor Vendors have all mining
rights necessary to explore, develop and mine the Property; |
|
| (d) | The Promisor Vendors have no obligations
other than the past due Patents for 1999 in respect of the Property; |
|
| (e) | The Promisor Vendors have the authorization
to execute with Lumina a Promise to Purchase Agreement in accordance to
the terms of article 169 of the Mining Code and the Promised Purchase
Agreement; and |
|
| (f) | The Promisor Vendors have the corporate
power and authority to enter into this Agreement and to sell the property
to Lumina and no other consents or other approvals are required by the
Promisor Vendors in connection with this Agreement. |
|
| 7. | This Agreement refers to
a Promise to Purchase Agreement under the terms of article 169 of the
Mining Code. If Lumina shall fail to make any payment within the terms
indicated for this purpose in the Promise to Purchase Agreement after
30 days have elapsed from the date of each payment without Lumina complying
with its obligation to make such a payment within the 30 days extension
period hereof, it will be deemed that Lumina will not pursue to carry
on with this Promise to Purchase Agreement and that there will be no pending
obligation towards the Promisor Vendors for the said abandonment in respect
to this Agreement, except the obligation of Lumina which commits to turn
over the mining claims: i) free of all liens and encumbrances, ii) with
the Patents paid to that date, iii) free of all environmental obligation,
iv) with all the information generated for the Regalito Project by Lumina
to be turned over to Promisor Vendors within a period of 60 days following
the termination of the contractual relation. |
|
5
| 8. | Further, if Lumina shall fail to pay
the Incremental Price after the 8th Anniversary when due and
when the Price of Copper is at US$ 1.00 or more for any calendar year
as indicated in the Promise to Purchase Agreement and 30 days have elapsed
after the date stipulated for this payment and Lumina still fails to pay,
the Promisor Vendors shall have the right to give notice to the Promisee
Purchaser to re-possess the Property and in this case Lumina commits to
turn over the mining claims: i) free of all liens and encumbrances, ii)
with the Patents paid to that date, iii) free of all environmental obligation,
iv) with all the information generated for the Regalito Project by Lumina
to be turned over to the Promisor Vendors within a maximum period of 60
days following the termination of the contractual relation, with all its
legal and environmental obligations completed, within a period of 90 days
following the notice to the Promisor Vendors. |
| 9. | As soon as possible after signing this
Letter of Intent and assuming successful completion of legal and technical
due diligence and that TSX accepts that Lumina carries on this negotiation,
and in any event not later than 180 days after signing this Letter of
Intent the parties will negotiate and sign a Promise to Purchase Agreement
based on the terms agreed to herein, plus any other documents which may
be reasonably required by Lumina to effect and register its rights on
the Property and all Lumina’s interests therein. |
| 10. | Lumina shall be empowered to assign
the present Agreement and its rights in the Promise to Purchase Agreement
and in the Promised Purchase Agreement as long as the new purchaser and
assignee through a public document declares to know the obligations contained
in the assigned agreements and that they will be obligated to honor its
commitments, being all obligations as their own; and in the same manner
they will not be able to assign the said agreements without incorporating
into them a similar provision which obligates a new purchaser or assignee
to comply with all and each of the obligations which are stated in this
Agreement in the Promise to Purchase Agreement and in the Promised Purchase
Agreement, as the case may be. Lumina can assign this Agreement to its
subsidiary or a wholly owned entity without prior approval. Further, the
Promisor Vendors may not sell, assign or otherwise dispose of its rights
and obligations under this Agreement or in relation to the other agreements
there are indicated in this instrument without the prior written consent
of Lumina, consent which cannot be unreasonably withheld. |
| 11. | The Promisor Vendors understands that
Lumina will, as part of its “technical due diligence”, request
a technical review of the Property by specialized consultants (AMEC) to
confirm that a copper mineral resource of approximately 200 million tones
may be properly disclosed by Lumina to shareholders according to the regulations
of Canadian National Instrument 43-101. The Promisor Vendors shall grant
a 180 days period from the execution of this agreement for the preparation
of the Technical Report and other documents required under Canadian Securities
Regulations and for the execution of the Promise to Purchase Agreement
stated above. Lumina commits itself to grant to the Promisor Vendors a
copy of the Technical Report of the Property which will be prepared by
the specialized consultants (AMEC). |
6
| 12. | The general provisions applicable
to this Agreement are that: |
||
(a) |
it is made and shall be
enforceable in Chile; |
||
(b) |
the Area of Interest incorporated
in this Agreement extends 2 kilometers outside the existing mineral claims
as represented on the attached map; |
||
(c) |
time is of the essence hereof; |
||
(d) |
the term of the Agreement
is 99 years; |
||
(e) |
it shall inure to the benefit
and be binding upon the parties hereto and their successors and permitted
assigns; |
||
(f) |
each of the parties shall,
from time to time and without request for further consideration, execute
such further documents and assurances as may reasonably be required by
the other party to effect the terms hereof; |
||
(g) |
notices shall be effectively
given the day following the day it is sent by fax by one party to the
other, |
||
| if to Lumina, directed to | |||
| Xx. Xxxx X. Xxxxxxx, Legal Representative of Minera Lumina
Chile S.A., Domiciled at Xxxxx Xxxxxxx 000, xxxxxx 000, Xxxxxxxxxxx, Xxxxxxxx
xx Xxxxx. Telephone, (00-0) 000-0000, Fax (00-0) 000-0000, E-mail xxxxxxxx@xxxx.xx |
|||
| and if to Promisor Vendors, directed to | |||
| Mr. Xxxxx Xxxxxxxxx Xxxxxxx, Legal Representative
of Compañia Minera Caserones, domiciled at Xxx Xxxxxxxx 000, Xxxxxx
000, Xx Xxxxxx, Xxxxx. Telephone (56-51) 226920, Fax (56-51) 229613, E-mail xxxxx@xxxxxxxxxxx.xx And also to Mr. Lionel Polgatti San Xxxxxxxxx, Domiciled at Xxxxxxxx Xxxxxxx 000, Xxxxxxxxxxx, Xxxxxxxx xx Xxxxx. Telephone 56-2- 0000000, Fax 00-0-0000000, E-mail xxxxx@xx.xx |
|||
(h) |
all monetary references
herein are to lawful currency of the United States of America; |
||
(i) |
in the event of any dispute
between the parties hereto it shall be resolved first by good faith negotiations
and secondly by arbitration in Chile in accordance with the rules of the
Chamber of Commerce; |
||
7
| (j) | the Parties agree that this Agreement
shall be executed in Spanish and that the Promise to Purchase Agreement
and the Promised Purchase Agreement shall be extended by public document.
Each party hereto shall be responsible for any English translation it
may require; and |
|
| (k) | the Parties agree that, should Lumina
be required to provide any document in support of this agreement (ie.
resolution) or its execution, such document will be in Spanish having
Lumina to translate it into English at its cost. |
|
| (l) | the Parties agree to maintain resident
Legal Representation in Chile at all times during the term of this agreement.
Any changes in legal representation or addresses for notification with
be communicated promptly. |
If you are in agreement with the terms set out, please execute the acknowledgment provided below.
Yours truly,
MINERA LUMINA COPPER CHILE S.A.
/s/ Xxxx X. Xxxxxxx
Xxxx X. Xxxxxxx
COMPAÑIA MINERA CASERONES
/s/ Xxxxx Xxxxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxx Xxxxxxx
SOCIEDAD LEGAL MINERA CALIFORNIA UNA DE LA SIERRA XXXX NEGRA
/s/ Lionel Polgatti San Xxxxxxxxx
Xxxxxx Polgatti San Xxxxxxxxx
8
