EXHIBIT NUMBER 4.2
LETTER OF INTENT MADE BETWEEN THE COMPANY,
IMA EXPLORATION INC. AND INVERSIONES MINERAS ARGENTINAS S.A.
DATED MARCH 6, 2003
AMERA RESOURCES CORPORATION
SUITE 709 - 000 XXXX XXXXXXXX XXXXXX
XXXXXXXXX, X.X.
X0X 0X0
March 6, 2003
IMA Exploration Inc.
Xxxxx 000, 000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X.
X0X 0X0
- and -
Inversiones Mineras Argentinas S.A.
Av. Xxxxxxx De xx Xxxx 670 (E)
Xxx Xxxx, Xxx Xxxx Xxxxxxxx, 0000
Xxxxxxxxx
Gentlemen:
RE: Letter of Intent (the "Letter of Intent") granting an Option to Purchase a
51% Undivided Interest in the group of mineral rights known as Mogote
located in the San Xxxx Province of Argentina, as more particularly
described in Schedule "A" appended hereto (the "Property"), by IMA
Exploration Inc. and Inversiones Mineras Argentinas S.A. (collectively the
"Optionor") to Amera Resources Corporation (the "Optionee")
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This Letter of Intent will confirm our understanding of your grant to us of an
irrevocable option to earn a 51% undivided interest in the Property, on the
following material terms and conditions:
1. REPRESENTATIONS AND WARRANTIES
1.1 The Optionor, pursuant to the terms of an option agreement dated June
7, 2000 (the "Underlying Option Agreement") entered into between Inversiones
Mineras Argentinas S.A., the wholly owned subsidiary of IMA Exploration Inc.,
and Xxxxxx Xxxxx Xxxxxx (appended as Schedule "B" hereto) holds the sole and
exclusive right to acquire a 100% interest in the Property, subject to the terms
and conditions of such Underlying Option Agreement.
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1.2 The Optionor represents and warrants that the Underlying Option
Agreement is currently in good standing and that, subject only to the terms and
conditions of such Underlying Option Agreement, the Property is free and clear
of all liens, charges and encumbrances, and is properly recorded and staked in
accordance with the laws of the Republic of Argentina, and is in good standing
with respect to the filing of annual assessment work.
1.3 The Optionor has the absolute right to enter into this Letter of Intent
without first obtaining the consent of any other person or body corporate and no
other person or body corporate has any agreement, option, right or privilege
capable of becoming an agreement for the purchase of the Property or any
interest therein.
1.4 The Optionor has completed all necessary and proper corporate acts and
procedures for the Optionor to enter into this Letter of Intent and carry out
its terms to the full extent.
2. OPTION
2.1 The Optionor irrevocably grants to the Optionee the sole and exclusive
right and option to acquire a 51% undivided interest in and to the Property (the
"Option") free and clear of all liens, charges, royalties, encumbrances and
claims (subject only to the terms and conditions of the Underlying Option
Agreement) in accordance with the terms and conditions of this Letter of Intent.
3. EXERCISE OF OPTION
3.1 The Optionee may exercise the Option by (i) issuing to IMA Exploration
Inc. an aggregate 1,650,000 common shares in the capital stock of the Optionee
(the "Shares") and by (ii) incurring an aggregate of One Million Two Hundred and
Fifty Thousand Dollars USD (US$1,250,000) in exploration and development
expenditures on the Property, in the instalments and on or before the dates
specified below:
MINIMUM EXPLORATION
AND DEVELOPMENT
DATE FOR COMPLETION NUMBER OF COMMON EXPENDITURES TO BE
SHARES TO BE ISSUED INCURRED
------------------- ------------------- -------------------
Approval Date 100,000 -
(as defined below)
July 1, 2004 100,000 US$ 250,000*
July 1, 2005 250,000 US$ 300,000
July 1, 2006 300,000 US$ 300,000
July 1, 2007 900,000 US$ 400,000
--------- ---------
TOTAL 1,650,000 US$ 1,250,000
========= =========
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* All expenditures incurred to date by the Optionor in respect of the
Property shall be re-imbursed by the Optionee and shall be included
in the calculation of the minimum expenditures to be incurred by the
Optionee during the period ending July 1, 2004.
3.2 Any work expenditures incurred in excess of the requirements for any
period set out above will be credited against the requirements of the next
succeeding period. In the event any share issuance or work requirement for any
period is not met, the Option will terminate, subject to the notice provisions
of paragraph 7.1 hereof.
3.3 During the term of the Option, the Optionee shall be responsible for
making all payments required to maintain the Property in good standing including
all rentals, levies, duties, royalties, assessments, fees, taxes or other
governmental charges levied with respect to the Property or its operations
thereon and shall assume the Optionor's obligations under the Underlying Option
Agreement including all payments due thereunder, and all such costs shall be
included in the minimum expenditures to be incurred by the Optionee hereunder.
3.4 The Optionor shall be the operator of the Property (the "Operator")
throughout the term of the Option and the Optionee will subcontract with the
Optionor for the provision of exploration services by the Optionor to the
Optionee at competitive prices in respect of the exploration and development
work on the Property.
3.5 Upon issuing the Shares and incurring the expenditures set out in
paragraph 3.1, the Optionee shall have earned a 51% undivided interest in and to
the Property; prior thereto, beneficial ownership of the Property will remain
with the Optionor.
4. JOINT VENTURE
4.1 In the event that the Optionee exercises the Option in accordance with
the terms of this Letter of Intent, then the Optionor and the Optionee agree to
associate on a joint venture basis for the further exploration and development
of the Property, sharing the costs of such exploration and development in
accordance with their respective interest in the Property, and agree to
negotiate, in good faith, a formal joint venture agreement containing the
essential terms described in Schedule "C" appended hereto (the "JV Agreement").
5. ABANDONMENT OR TERMINATION OF OPTION
5.1 In the event that the Optionee decides to abandon the Option and the
Property, or any portion thereof, the Optionee will provide forty five (45) days
prior written notice to the Optionor of such abandonment.
5.2 In the event that the Option is terminated or abandoned as set out
above, the Optionee will have no further right or interest in the Property and
will have no further obligations hereunder, save and except that the Property
will be left in good standing with respect to the filing of annual assessment
work and the payment of rental fees for a period of at least sixty (60) days
from the effective date of such termination or abandonment.
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5.3 In the event that the Option is terminated or abandoned as set out
above, the Optionee will forthwith deliver to the Optionor all data, maps,
reports and other information with respect to the Property, in its possession or
under its control.
6. RIGHT OF ENTRY
6.1 During the term of the Option, the Optionor will have the right to
enter upon the Property, enjoy quiet possession thereof, explore for minerals
thereon, bring and erect upon the Property such mining facilities as it may
consider advisable and remove material for the purposes of bulk testing or pilot
plant operations.
6.2 The Optionee grants to the Optionor or its duly authorized
representatives in writing, access to the Property provided that such access is
not disruptive to the exploration or mining activities of the Optionee.
7. DEFAULT
7.1 In the event that the Optionee is in default of any of its obligations
hereunder, the Optionee will not lose any rights under this Letter of Intent
until the Optionor has given to the Optionee notice of such default and the
Optionee does not take any reasonable steps to cure such default within sixty
(60) days from the Optionee's receipt of such notice.
8. OPTION ONLY
8.1 This is an option only and nothing herein will be construed as
obligating the Optionee to do any acts or make any payments hereunder and any
acts or payments as are made hereunder will not be construed as obligating the
Optionee to do any further act or make any further payment.
9. COVENANTS OF THE OPTIONEE
9.1 The Optionee hereby covenants and agrees with the Optionor as follows:
(a) that it shall carry out and record or cause to be carried out and
recorded all assessment work upon the Property as may be required in
order to maintain the Property in good standing at all times;
(b) that it will carry out its operations on the Property in a careful and
miner like manner in accordance with the applicable laws and
regulations of the Province of San Xxxx and the Republic of Argentina;
(c) that it will properly pay all accounts of every nature and kind for
wages, supplies, Workers' Compensation Assessments, income tax
deductions and all other accounts and indebtedness incurred by it so
that no claim or lien will attach to the Property or upon the ore or
mineral contained therein and it will indemnify the Optionor and save
the Optionor harmless from any and all loss, costs, actions, suits,
damages or claims which may be made against the Optionor in respect of
the operations on the Property,
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provided however, that the Optionee shall have the right to contest
the validity of any such lien or claim;
(d) the Optionee shall indemnify and hold the Optionor harmless from any
and all liabilities, costs, damages or charges arising from the
failure of the Optionee to comply with the covenants contained in this
paragraph or otherwise arising from its operations on the Property.
10. FURTHER ASSURANCES
10.1 The parties hereto agree to do or cause to be done all acts or things
necessary to implement and carry into effect the provisions and intent of this
Letter of Intent.
11. GENERAL
11.1 This Letter of Intent will be governed and construed in accordance
with the laws of the Province of British Columbia.
11.2 This Letter to Intent is intended to create binding legal relations
among the parties and will enure to the benefit of and be binding upon the
parties hereto and their respective successors and assigns as the case may be,
until replaced by the JV Agreement. Until the execution and delivery of the JV
Agreement, this Letter of Intent will remain binding and in effect (unless
terminated pursuant to the provisions thereof).
11.3 In the event that during the term of the Option, any party hereto
acquires any mineral properties or rights thereto, located within two (2)
kilometers of the boundaries of the Property, such mineral properties or rights
thereto shall be included in and form part of the Property herein and the cost
of acquiring and maintaining such mineral properties or rights thereto shall be
included in the minimum expenditures to be incurred by the Optionee hereunder.
11.4 In the event that any provision of this Letter of Intent is held
unenforceable or invalid by a court of law, this Letter of Intent will be read
as if such unenforceable or invalid provision were removed.
11.5 The rights and obligations of the parties created by this Letter of
Intent are not assignable by any party without the prior written consent of the
other party, not to be unreasonably withheld, except for any transfer or
assignment to a wholly owned subsidiary of the party or pursuant to an
amalgamation, merger, or corporate reorganization or arrangement of the party.
11.6 This Letter of Intent is subject to the prior acceptance for filing by
the TSX Venture Exchange on behalf of the Optionee. The Optionee will use its
best efforts to obtain such acceptance within one hundred and twenty (120) days
of the execution of this Letter of Intent (the date of such acceptance being
referred to as the "Approval Date" herein).
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If the foregoing terms and conditions, and the attached schedules which form a
part of this Letter of Intent, accurately set out our mutual understandings,
please indicate your acceptance by signing this letter where indicated below and
returning to us the enclosed copy duly signed.
Yours very truly,
AMERA RESOURCES CORPORATION
Per:
/s/ Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxx,
President and Chief Executive Officer
Terms and conditions approved as of the date first above written.
IMA EXPLORATION INC. INVERSIONES MINERAS
ARGENTINAS S.A.
Per: /s/ Xxxxxxx Xxx Per: /s/ Xxxxxx Xxxxxxxxxxx
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Authorized Signatory Xxxxxx Xxxxxxxxxxx, Director
THIS IS SCHEDULE "A" TO THE LETTER OF INTENT DATED MARCH 6, 2003
MADE BETWEEN AMERA RESOURCES CORPORATION, IMA EXPLORATION INC.
AND INVERSIONES MINERAS ARGENTINAS S.A.
DESCRIPTION AND MAP OF PROPERTY
CATEO HECTARES
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338 579-R-92 2259
NAME DISCOVERY HECTARES
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Xxxxx #1 425-098-A-2000 2000
Mogotes Norte 520-0275-R-97 1650
Mogotes Sur 520-0274-R-97 2100
MINA
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NAME FILE NUMBER HECTARES
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Mogote 1 156.277-S-79 48
Mogote 4 156.277-S-76 48
Mogote 9 156.285-S-76 48
Mogote 14 156.290-S-76 48
[MAP OF PROPERTY]
THIS IS SCHEDULE "B" TO THE LETTER OF INTENT DATED MARCH 6,2003
MADE BETWEEN AMERA RESOURCES CORPORATION, IMA EXPLORATION INC.
AND INVERSIONES MINERAS ARGENTINAS S.A.
Copy of Underlying Option Agreement dated June 7, 2000 made between Inversiones
Mineras Argentinas S.A., the wholly owned subsidiary of IMA Exploration Inc.,
and Xxxxxx Xxxxx Xxxxxx.
THIS IS SCHEDULE "C" TO THE LETTER OF INTENT DATED MARCH 6,2003
MADE BETWEEN AMERA RESOURCES CORPORATION, IMA EXPLORATION INC.
AND INVERSIONES MINERAS ARGENTINAS S.A.
MATERIAL TERMS OF JOINT VENTURE AGREEMENT
Under paragraph 4.1 of the Letter of Intent, the Optionee and the Optionor
and/or its assigns agree to execute and deliver a joint venture agreement for
the future exploration and development of the Property on a joint venture basis
on the following material terms:
1. The initial interest of the parties in and to the Property and all other
assets, liabilities, benefits or losses (the "Project") will be the Optionee as
to a 51% undivided interest, and the Optionor as to a 49% undivided interest,
subject to variation from time to time as set out below. The parties will be
deemed to have initially contributed the following costs for the Project: the
Optionee US$1,250,000 and the Optionor $612,500.
2. The parties will form a management committee consisting of one member
appointed by each party (the "Management Committee"). The Management Committee
will have the power and authority to make binding decisions on behalf of the
parties with respect to the exploration and development of the Property and the
Project, and all matters incidental thereto, including the approval of annual
work programs and budgets for all exploration and development work. All
decisions of the Management Committee will be made by a simple majority of
votes, each party having one vote for each one percent (1%) of interest held in
the Project. In the event of a tie vote, the Operator will have a casting or
deciding vote.
3. The Management Committee will appoint a person or company to act as the
daily manager and administrator of the exploration and development work on the
Property (the "Operator"), and the first Operator will be the Optionee until its
resignation or removal by the Management Committee.
4. The Operator will prepare and submit for the consideration of the
Management Committee annual work programs and budgets for the exploration and
development work on the Property (collectively the "Programs" and individually a
"Program"). If the Operator has not submitted a Program within sixty (60) days
of any calendar year end, the non-Operator will be entitled to prepare and
submit a Program to the Management Committee for its consideration.
5. Within sixty (60) days following the Management Committee's approval of
a Program, the parties will elect by notice in writing to the Management
Committee to either not participate in the Program, participate in the Program
to the full extent of their cost share, or participate in the Program for an
amount less than their cost share. A party's cost share will be equal to its
proportionate share of cost of a Program based upon its interest held in the
Project. If a party elects to not participate or elects to participate for an
amount less than its cost share, that party will suffer dilution of its interest
in the Property and the Project in accordance with the provisions below.
6. If a party elects not to contribute or elects to contribute less than
its entire cost share, such party's interest in the Project will be reduced to a
percentage equal to the fraction the numerator of which is the total costs for
the Project paid or deemed paid by the party and the denominator of which is the
total costs for the Project of all parties paid or deemed paid, multiplied by
100, and the
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other party's interest will be accordingly increased. If any party's interest is
reduced below ten percent (10%) by the operation of this paragraph, such party
will transfer its remaining interest in the Project to the other party, and will
receive as consideration therefor either a ten percent (10%) net profits royalty
or a 1.5% net smelter returns royalty at the election of the non-contributing
party, made at the time of the conversion of its interest (if the
non-contributing party fails to so elect within thirty (30) days of the date of
conversion, the other party will be entitled to make the election). "Net
profits" from production will be calculated in accordance with generally
accepted accounting principles including deductions for interest, taxes and
royalties (other than income taxes), amortization of capital expenditures and
pre-production expenditures, a reserve for three (3) months working capital, and
a management fee not to exceed fifteen percent (15%) of operating costs. "Net
smelter returns" will be calculated from the gross receipts received by the
contributing party from any smelter or refinery, less smelter treatment charges,
production taxes or royalties, and transportation expenses to the smelter or
other purchaser.
7. The parties electing to contribute to a Program will have thirty (30)
days from receipt of the Operator's invoice to pay their cost share in
proportion to their interest in the Project. If a party fails to pay its cost
share within such time, the defaulting party's interest will suffer dilution in
accordance with the provisions of paragraph 6 above, but at one and one-half (1
1/2) times the normal rate, and the Operator will have a lien upon that party's
share of production to a value equal to one hundred fifty percent (150%) of the
amount in default with interest at twelve percent (12%) per annum calculated
from the date of default to the date of repayment. The Operator will be entitled
to render invoices for costs of a Program in advance, provided that such a
request for an advance does not exceed the estimated cost for the next one (1)
month's operations.
8. The Operator will be entitled to charge the parties a management fee
equal to fifteen percent (15%) of any Program's budget.
9. The non-Operator will be entitled to enter upon the Property after 24
hours advance notice to the Operator, at the non-Operator's own risk, provided
that such access is not disruptive to the exploration or mining activities of
the Operator.
