Exhibit 10.11
MINERALS EXPLORATION AGREEMENT AND OPTION TO LEASE OR PURCHASE
SOLEDAD-MOJAVE MINING SYNDICATE, a Nevada corporation, (hereinafter referred
to as "LICENSOR") and GOLDEN QUEEN MINING CO., INC., a California
corporation, (hereinafter referred to as "LICENSEE"), agree effective as of
January 25, 1996 as follows:
1. GRANT. Pursuant to the terms of this Agreement, LICENSOR grants to
LICENSEE: the exclusive right to conduct mineral exploration activities
within and upon and the exclusive right to either purchase or lease with
option to purchase the following premises (hereinafter the "PREMISES"):
The West on-half(1/2) of Xxxxxxx 0, Xxxxxxxx 00 Xxxxx, Xxxxx 00 Xxxx,
XXXX and referred to by the Xxxx County Tax Assessor as parcel number
429-02001-00-4. LICENSOR reserves all oil and petroleum deposits in the
PREMISES without right to enter upon the surface.
2. TERM. The term of this Agreement shall be three (3) years, commencing
on the effective date of this agreement, unless LICENSOR exercises one
of its options or terminates.
3. CONSIDERATION.
3.1. In consideration for the granting of the rights set forth herein,
LICENSEE agrees to pay to LICENSOR the following sums:
Upon execution of this Agreement $ 50,000.00
Effective date anniversary, 1997 $ 50,000.00
Effective date anniversary, 1998 $ 50,000.00
Effective date anniversary, 1999 $100,000.00
A license year is defined to be the twelve (12) month period beginning
the effective date and the anniversary date of the effective date in
subsequent years.
4. CONDUCT OF OPERATIONS. During the term of this Agreement, LICENSEE
shall have possession of, and free and unrestricted access to, the
PREMISES and shall have the right to explore, investigate, measure,
sample (including bulk sample), examine, test, work, use manage, control
and develop the PREMISES. LICENSOR shall further receive in addition to
the consideration set forth in Paragraph 3, above, an accounting and
production royalty, pursuant to the terms of Lease/Option to Purchase
attached hereto as EXHIBIT "A", for all ores, minerals and concentrates
removed and sold from the PREMISES during the term hereof and prior to
exercise of the option to lease. LICENSEE may trench or drill any part
of the PREMISES, may rehabilitate existing mine workings, construct new
workings, and may erect, construct, use, and maintain on the PREMISES
such roads, building structures, equipment and machinery as in its
reasonable discretion it may deem necessary to its exploration
operations.
Royalty payments due for all ores, minerals, and concentrates removed
and sold from the PREMISES during the three (3) year term hereof and
prior to any exercise of the option to lease shall be paid quarterly at
the address set forth in Paragraph 5 by mail or personal delivery.
Should LICENSEE exercise its option to purchase said property all
pre-exercise royalty payments actually received by LICENSOR shall be
credited against the agreed purchase price set forth in Paragraph 10.5,
hereof.
5. NOTICE. Any notices required or permitted to be given to LICENSOR or
LICENSEE hereunder shall be given in the manner provided herein and be
considered as delivered and received when the same are delivered in
person or received by the addressee following deposit in the United
States mail, return receipt requested, with postage prepaid. All notices
given hereunder shall be addressed to the persons and addresses given
below or such other persons or addresses as the parties may designate
from time to time. Any change in the names and/or addresses of the
persons listed below shall be effective thirty (30) days from the giving
of the notice to the other party as provided herein.
LICENSEE: Golden Queen Mining Co., Inc.
Xxxxxx Xxxxxx, Xxx. 0
Xxx 000
Xxxxxxxx, XX 00000-0000
LICENSOR: Soledad-Mojave Mining Syndicate
c/o Xxxxxxx Xxxx
000 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
6. TERMINATION. Subject to the provisions of Paragraphs 8 and 16, LICENSEE
may terminate this agreement within thirty (30) days of the last day of
each license year; if, LICENSEE has not so terminated, then this License
shall continue in effect for the subsequent license year. Upon
termination or surrender under the terms of this License, all rights of
LICENSEE under this Agreement, except as provided in Paragraph 11, shall
terminate and all payments heretofore made under this agreement shall be
retained by LICENSOR as full compensation, as rental, for the use and
occupancy of said PREMISES and as consideration for which this Agreement
is given.
7. INSURANCE. LICENSEE shall carry at all times during the term of this
Agreement worker's compensation and other insurance required by the laws
and mining regulations of the State of California.
7.1. WORKMEN'S COMPENSATION INSURANCE. LICENSEE at its sole expense
shall cause to be issued and maintained during the term of this
Agreement and at all times while conducting activity upon the
PREMISES workmen's compensation insurance in accordance with the
provisions of the applicable laws of the State of California.
7.2. PUBLIC LIABILITY INSURANCE. LICENSEE shall at its sole expense
cause to be issued and maintained during the term of this Agreement
comprehensive general public liability insurance coverage in
responsible insurance carriers qualified to conduct insurance
business in the State of California. Such policy or policies shall
name LICENSOR as an additional insured and shall be in the total
amount of not less the One Million Dollars ($1,000,000.00).
7.3. CERTIFICATE OF INSURANCE. LICENSEE shall within thirty (30) days
of execution of this Agreement by all parties furnish to LICENSOR
certificates of insurance for all insurance policies required
hereunder. LICENSEE shall cause LICENSOR to be notified not less
that thirty (30) days prior to any cancellation or restrictive
modification of the above enumerate policies.
8. INDEMNITY.
8.1. LICENSEE shall protect and indemnify and hold LICENSOR harmless
from and against any and all claims, actions or causes of action,
including, without limitation, employees of LICENSEE, contractors
and employees of contractors of LICENSEE, for injury to or death of
persons or damage to property arising out of or in connection with
LICENSEE'S exploration activities.
8.2. LICENSOR shall protect and indemnify and hold LICENSEE harmless
from and against any and all claims, actions or causes of action,
including without limitation, claims brought by employees of
LICENSOR, contractors and employees of contractors of LICENSOR, for
injury to or death of persons or damage to property arising out of
or in connection with LICENSOR'S rights to take samples and observe
facilities and operations as authorized in this Agreement.
9. COMPLIANCE WITH LAWS. LICENSEE shall conduct all exploration activities
in full compliance with the applicable laws and regulations of the State
of California and the United States of America including, but not
limited to, the provisions of the Federal Land Management and Policy Act
of 1976 and the regulations promulgated pursuant thereto, and the
provisions of Article 16 hereof.
10. OPTION TO LEASE OR PURCHASE.
10.1. During the term of this Agreement, or during the term of any
extension hereof, and provided that LICENSEE is not in
default, LICENSEE may exercise an option to lease the PREMISES
with an option to purchase pursuant to the terms and
conditions set forth in the formal Lease/Option to Purchase
attached hereto as EXHIBIT "A" and made a part hereof as
though set forth in its entirety.
10.2. Also during the term of this agreement, or during the term of
any extension hereof and provided Licensee is not in default,
Licensee may exercise an option to purchase the premises
pursuant to the terms set forth in paragraph 10.4 below.
10.3. The option to lease/option to purchase as described in
paragraph 10.1 above shall be deemed exercised when LICENSOR
has received two (2) copies of EXHIBIT "A" executed by
LICENSEE and LICENSEE has tendered the amount required as set
forth in EXHIBIT "A". LICENSOR shall sign one copy and return
it promptly to LICENSEE.
10.4. The Option to Purchase the premises pursuant to 10.2 above
shall be deemed exercised when LICENSEE has sent notice to
LICENSOR and requested in writing that Chicago Title of
Bakersfield act as escrow agent. The parties agree to execute
escrow instructions consistent with the terms of the Agreement
and as may be reasonably required by the escrow holder. Said
instructions shall provide for the proration of taxes, the
closing of escrow within sixty (60) days from the date of
exercise of the Option to Purchase, equal division of escrow
fees and costs, for LICENSOR/SELLER to supply and ALTA policy
of title insurance, and, LICENSOR/SELLER to convey by grant
deed in the form normally used by escrow holder but in
conformance with all terms of this agreement.
10.5. The purchase price of the PREMISES payable in full at close of
escrow shall be determined as follows:
PURCHASE PRICE
If option exercised prior to the
anniversary of the effective date
of this Agreement in 1997 $500,000.00
If option exercised prior to the
anniversary of the effective date
of this Agreement in 1998 $470,000.00
option exercised prior to the
anniversary of the effective date of
this Agreement in 1999 and before
termination of this Agreement $450,000.00
10.6. LICENSOR, in addition to receiving payment of the cash
purchase price as hereinafter provided, reserves to itself,
and LICENSEE hereby agrees to pay to the LICENSOR, for all
minerals mined or extracted from the PREMISES sold hereunder,
a production royalty interest equal to five percent (5%) of
the Net Smelter Return as hereinafter defined.
10.7. The term "Net Smelter Return" shall be defined to be the gross
amount received from the sale of all minerals mined and
extracted from the PREMISES, less all taxes levied, incurred
or imposed on the sale, severance or production of such
minerals and less reasonable costs of transportation to the
smelter and refinery, smelting and refining charges and costs
of sale, determined in accordance with generally accepted
accounting principles.
10.8. All minerals mined, removed and extracted from the PREMISES
shall be sold under the name of LICENSEE and a royalty
settlement sheet accounting for such transactions shall be
furnished to LICENSOR on or before the twenty-fifty (25th) day
of the next succeeding calendar month for all sales made and
received during the preceding calendar quarter. All production
royalty payments, accompany by a settlement sheet required by
this Agreement shall be made to the LICENSOR monthly at the
addresses set forth in Paragraph 5 by mail or personal
delivery. So long as it is not in default hereunder, LICENSEE
shall receive a cumulative credit against monthly production
royalties equal to the total of the cash purchase price paid
to LICENSOR under Paragraph 10.5. Production royalties shall
not become payable to LICENSOR until the amount of the
cumulative production royalty credit set forth in the
paragraph exceed the purchase price paid by LICENSEE pursuant
to Paragraph 10.5.
If all or any part of the minerals are sold to, or processed
by, a smelter or refinery owned, operated, affiliated with or
controlled by LICENSEE, in no event shall the royalties
computed herein be less that would have been paid had the ore
been sold to or processed by a major smelter or refinery not
owned, operated, affiliated with, or controlled by LICENSEE.
10.9. LICENSEE may commingle ore from the PREMISES with ore from
other properties, either before or after concentration or
beneficiation, provided that the method and procedures
LICENSEE uses to commingle the ore and to determine the weight
and grade of the ore removed from the PREMISES and of the ore
with which it is commingled shall be a method recognized by
the mining industry and conducted in accordance with generally
accepted accounting principles. LICENSEE shall use that method
to determine weight and grade and to allocate net returns from
the commingled ore between the PREMISES and the other
properties from which the other commingled ore was removed and
to assure that the share of production received by LICENSOR is
representative of the ore that was produced from the PREMISES.
All such weight, allocations, and calculations by LICENSEE
shall be done in accordance with generally accepted accounting
principles and in a manner recognized by the mining industry
as practical and sufficient at that time. If it is impractical
to determine which portions of any of the costs and expenses
described in Paragraph 10.7 above are directly attributable to
ore removed from the PREMISES, such costs and expenses shall
be allocated on a straight-line, per-ton basis among all ores
that give rise to those expenses, in accordance with generally
accepted accounting standards.
10.10. LICENSEE is hereby granted the right, if it so desires, to
mine or remove from the PREMISES any ores, waste, water and
other materials existing therein or thereon or in any part
thereof, through or by means of shafts, openings or pits which
may be sunk or made upon other property owned, controlled, or
operated by or for LICENSEE (hereinafter "Other Property").
LICENSEE also may stockpile any ores, waste or other materials
and/or concentrated products of ores, waste or other materials
and/or concentrated products of ores or materials
(collectively "Products") from the PREMISES, or any part
thereof, upon stockpile grounds situated upon such Other
Property. In the event LICENSEE stockpiles Products from the
PREMISES on Other Properties, LICENSEE shall execute or cause
to be executed such instruments as LICENSOR may reasonably
request in writing to evidence LICENSOR'S royalty interest in
the PRODUCTS so stockpiled. Any such instrument executed by
LICENSEE, however, expressly shall acknowledge LICENSEE'S
right to sell the stockpiled Products. LICENSEE also, if it so
desires, may use the PREMISES and any part thereof and any
shafts, openings, pits and stockpile grounds sunk or made for
the mining, removal and/or stockpiling of any Products from
the PREMISES and/or from Other Property, or for any purpose or
purposes connected therewith, provided, however, that such use
of the PREMISES does not prevent or interfere with the mining
or removal of ore from the PREMISES.
10.11. The term of the production royalty provided herein shall be
for twenty (20) years from and after the close of escrow and
for so long thereafter as LICENSEE is in production on
properties located with a one (1) mile radius of the PREMISES.
For purposes of this Paragraph 10, production shall be defined
as the processing of in excess of 10,000 tons of ore per year.
LICENSEE may terminate this production royalty agreement as
hereinafter provided, by delivery to LICENSOR of a quitclaim
deed to the PREMISES, provided that LICENSEE is not then in
default under the terms of this agreement and further provided
one of the following circumstances exists:
10.11.1. If LICENSEE is not in production on both the PREMISES and
any Other Property owned or controlled by LICENSEE within
a one (1) mile radius of the PREMISES, in which event
LICENSEE may terminate this production royalty agreement
upon one (1) year's notice.
10.11.2. If LICENSEE is not in production on the PREMISES and is
not utilizing the PREMISES for the operation of equipment
and facilities related to crushing, beneficiation,
milling, treatment, processing, leaching, refining and
concentrating minerals or materials, in which event
LICENSEE may terminate this royalty agreement upon three
(3) year's notice.
10.11.3. Upon such termination, LICENSEE shall be liable for all
obligations affecting the PREMISES and accrued as of the
date of termination, including all obligations for
indemnification of LICENSOR under Paragraph 16 hereof,
which obligations shall survive the termination
hereunder.
related to the PREMISES semi-annually during the term hereof,
which information shall be received and held by LICENSOR in
total confidence.
12.2. LICENSOR agrees to hold LICENSEE harmless from any and all
claims, actions, or causes of action, without limitation,
arising from LICENSOR'S reliance on information obtained from
LICENSEE.
12.3. Upon execution of the Agreement, LICENSOR shall provided
LICENSEE access to all geologic, geophysical and geochemical
data concerning the PREMISES which has been acquired,
generated, or compiled by LICENSOR.
12.4. Any and all data, information, reports and samples provided by
LICENSEE to LICENSOR under this terms of the Agreement shall
be treated and held confidential for the term of this
Agreement, and for the term of the Lease/Option to Purchase
attached as EXHIBIT "A", if LICENSEE should exercise its
Option to Lease.
12.5. LICENSEE agrees to permit LICENSOR, or its duly authorized
representative, at reasonable times, and not less frequently
than monthly, access to all exploration activities for the
purpose of taking samples and observing the activities and
operations of LICENSEE. LICENSEE shall facilitate in every
reasonable manner such inspection, sampling and acquisition of
the information concerning the exploration activities of
LICENSEE. Upon written request by LICENSOR, LICENSEE shall
further permit LICENSOR, or its authorized representative,
quarterly access to the books and records of LICENSEE covering
operations on the PREMISES.
13. DEFAULT AND TERMINATION.
13.1. DEFAULT. The occurrence of any of the following events shall
constitute an event of default on the part of LICENSEE:
13.1.1. BREACH OF COVENANTS. Failure (i) to perform any of
LICENSEE'S covenants hereunder, including, but not
limited to the failure to make a LICENSEE shall be
excused to the extent made necessary by such force
majeure and this Agreement shall be extended by a length
of time equal to its continuance not to exceed a maximum
term of extension for any one or more causes of force
majeure of three (3) years from the initial occurrence of
any of such cause or causes. The term "force majeure" as
used herein shall include, but not be limited to, acts of
God, acts of civil or military authority, acts of war or
the public enemy, legislation, acts or orders of any
court, acts or failure to act of regulatory agencies or
administrative bodies having jurisdiction with respect to
the performance of this Agreement, insurrections, riots,
strikes, boycotts or other labor disturbances, fire,
flood, windstorm, explosion and other causes not within
the reasonable control of the parties directly affected
and claiming suspension of its obligation whether or not
like or similar to the causes or occurrences specifically
enumerated above and which by exercise of due diligence
and foresight could not reasonably have been avoided.
16. HAZARDOUS MATERIAL. LICENSOR hereby expressly acknowledges that
LICENSEE intends to use the PREMISES for the purpose of conduction
mining and/or mineral concentrating and processing operations
(hereinafter collectively referred to as "Operations"). LICENSEE shall
obtain, prior to engaging in Operations, such governmental approvals
(including, but not limited to, a closure or reclamation plan) as may be
required under applicable laws. LICENSEE shall make available to
LICENSOR copies of all approvals. In the course of conducting Operations
it is expected that LICENSEE will us materials which may be considered
"Hazardous Materials" as defined below and which are authorized for use
by appropriate permit or authorization. LICENSOR hereby expressly grants
permission for LICENSEE to use such materials in the course of
conduction Operations. If LICENSEE breaches its obligation as imposed by
any permit or authorization, and the unauthorized presence of Hazardous
Material on the PREMISES results in contamination of the PREMISES, or,
if any other damage to the PREMISES by Hazardous Material occurs, then
LICENSEE shall indemnify, defend, save and hold LICENSOR harmless from
and against any and all claims, judgments, damages, penalties, fines,
costs, liabilities, or losses, and reasonable sums paid in settlement of
claims, attorneys' fees, consultants' fees and expert fees which arise
during or after the term hereof or any extension, as applicable, as a
result of such contamination or otherwise as a result of the presence,
use, generation, storage, release, threatened release, manufacture or
disposal of Hazardous Material on the PREMISES or the transportation to
or from the PREMISES of Hazardous Material. This indemnification of
LICENSOR by LICENSEE includes, without limitation, costs incurred in
connection with any investigation of site conditions or any cleanup,
remedial, removal or restoration work required by any federal, state or
local governmental agency or political subdivision because of Hazardous
Material present in the soil or groundwater on or under the PREMISES and
shall continue in full force and effect in the event LICENSEE acquires
the fee ownership of the PREMISES pursuant to Paragraph 10.4.
In the event that LICENSEE shall fail to comply with any laws regulating
Hazardous Material or otherwise applicable in connection with LICENSEE'S
use and operation of the PREMISES within ten (10) days after LICENSOR
shall give LICENSEE written notice of such non-compliance, or if such
compliance within such period is not possible, if LICENSEE shall not
commence curing and diligently proceed to completion (but in any event
LICENSEE shall complete such compliance when required by law), then
LICENSOR may comply with the same on behalf of LICENSEE and all costs
and expenses incurred by LICENSOR in complying with such laws shall be
deemed additional consideration under the Agreement and shall be payable
to LICENSEE to LICENSOR within ten (10) days after LICENSOR'S written
demand therefor.
As used herein, the term "Hazardous Material" means and hazardous or
toxic substance, material or waste which is or becomes regulated by any
local governmental authority, the State of California, or the United
States Government. The term "Hazardous Material" includes, without
limitation, any material or substance which in (i) defined as a
"hazardous waste", "extremely hazardous waste" or "restricted hazardous
waste" under Sections 25115, 25117 or 25122.7, or listed pursuant to
Section 25140, of the California Health and Safety Code, Division 20,
Chapter 6.5 (Hazardous Waste Control Law), (ii) defined as a "hazardous
substance" under Section 25316 of the California Health and Safety Code,
Division 20, Chapter 6.8 (Xxxxxxxxx-Xxxxxxx-Xxxxxx Hazardous Substance
Account Act), (iii) defined as "hazardous waste" under Section 25501 of
the California Health and Safety Code, Division 20 Chapter 6.95
(Hazardous Materials Release Response Plans and Inventory), (iv) defined
as a "hazardous substance" under Section 25281 of the California Health
and Safety Code, Division 20, Chapter 6.7 (Underground Storage of
Hazardous Substances), (v) petroleum, (vi) asbestos, (vii) listed under
Article 9 or defined as hazardous or extremely hazardous pursuant to
Article 11 of title 22 of the California Administrative Code, Division
4, Chapter 20, (viii) designated as a "hazardous substance" pursuant to
Section 1004 of the Federal Resource Conservation and Recovery Act, 42
U.S.C. Section 9601 et seq. (42 U.S.C. Section 9601)".
17. TITLE. LICENSOR covenants the LICENSOR now owns legal record title to,
and is in actual possession of the PREMISES free and clear from all
former grants, sales, liens, or encumbrances of any kind, and that there
are no delinquent taxes; all as more fully set forth in that certain
Policy of Title Insurance No. D602181, dated February 11, 1988, and
issued by Ticor Title Insurance Co., a copy of which is attached hereto
as EXHIBIT "B". LICENSEE may, with LICENSOR'S written consent, elect, at
its sole initial cost and expense to correct any defects it determines
exist in title to the PREMISES, within the period of this Agreement.
LICENSEE'S reasonable costs, including attorney's fees, shall be a
credit to production royalties payable pursuant to the Lease/Option to
Purchase Agreement if such Agreement is executed. LICENSOR further
covenants that it will not by action or inaction during the term of this
Agreement cause a material change to occur to its title as shown in
EXHIBIT "B".
18. COMPLETE AGREEMENT. This Agreement and all the terms and covenants
contained herein are deemed to be the complete and unequivocal written
Agreement of the parties and no other Agreements, either written or
oral, are contemplated with respect to said PREMISES.
19. RECORDATION. This Agreement shall not be recorded, however, the attached
Memorandum of Minerals Exploration Agreement with Option to Lease or
Purchase, attached hereto as EXHIBIT "C", shall be executed and recorded
promptly following the execution of this Agreement. In the event of
termination of this Agreement as herein provided, the quitclaim deed
attached as Exhibit "D', which has been duly executed by LICENSEE and is
to be held during the period of this Agreement by Mr. Xxxxxxx Xxxx, may
be recorded. Said quitclaim deed may also be recorded upon termination
of this Agreement by LICENSOR if LICENSEE is in default of the terms of
this Agreement as defined in Paragraph 13 hereinabove. If either option
granted by LICENSEE is exercised, the quitclaim deed shall be given to
LICENSEE if the option to lease is exercised or placed in escrow if the
option to purchase is exercised.
20. ATTORNEY FEES. If either party to this Agreement brings an action to
enforce the terms hereof or declare rights HEREUNDER, the prevailing
party in any such action, on trial or appeal, shall be entitle to his
reasonable attorneys' fees to be paid by the losing party as fixed by
the court, together with all costs and expenses paid or incurred by the
prevailing party in such litigation.
EXECUTED this 25th day of January, 1996, at Los Angeles, California.
LICENSOR: LICENSEE:
SOLEDAD-MOJAVE MINING SYNDICATE GOLDEN QUEEN MINING CO., INC.
a Nevada corporation a California Corporation
By: s/ Xxxxxxx X. Xxxx By: s/ Xxxx X. Xxxxxx
---------------------------- ----------------------------
Its: President Its: Chairman
State of CALIFORNIA
County of LOS ANGELES
On Jan. 25, 1996 before me, XXXXXX X. XXXXXXX, Notary Public personally
appeared XXXXXXX X. XXXX, personally known to me on the basis of satisfactory
evidence to be the person(s) whose name(s) is/are subscribed to the within
instrument and acknowledged to me that he/she/they executed the same in
his/her/their authorized capacity(ies), and that by his/her/their
signature(s) on the instrument the person(s), or the entity upon behalf of
which the person(s) acted, executed the instrument.
WITNESS my hand and official seal.
s/ Xxxxxx X. Xxxxxxx
------------------------------
SIGNATURE OF NOTARY
NOTARY ATTESTATION
THE STATE OF COLORADO )
) SS.
CITY AND COUNTY OF DENVER )
BEFORE ME, the undersigned authority, on this day personally appeared
Xxxx X. Xxxxxx, known to me to be the person whose name is subscribed to the
foregoing instrument, and acknowledged to me that he executed the same freely
and voluntarily and for the purposes and consideration therein expressed.
GIVEN UNDER MY HAND AND SEAL OF OFFICE, on this 23rd day of January,
1996.
s/ Xxxx X. Xxxxxxxx
------------------------------
Notary Public for the
State of Colorado
My commission expires:
August 28, 1996.
