Letter of Intent March 5,2010
Exhibit
10.1
March
5,2010
Gentlemen:
This
letter confirms our agreement on the principal terms and conditions of Yale
Resources Ltd. ("Yale") proposing to grant an option to Silver America Inc.
("SILVER AMERICA") to acquire a property interest in the Xxxxxxxxx property in
Zacatcas State, Mexico, more particularly described in Schedule "B" attached
hereto (the "Property"). Each party understands and agrees that preparation and
execution of a definitive agreement is required and that it will contain the
Gems set forth in Schedule "A" and may include additional terms as Yale and
SILVER AMERICA might agree to after good faith negotiation. This Letter of
Intent is intended to be binding with respect to the matters discussed in
Schedule "A". This Letter of Intent may be executed in one or more counterparts,
each of which shall be deemed an original for all purposes.
| YALE RESOURCES LTD. | |||
|
|
By:
|
/s/ Xxx Xxxxxxx | |
| Name : Xxx Xxxxxxx | |||
| Title : President | |||
| SILVER AMERICA INC. | |||
|
By:
|
/s/ Xxxxxxxx Xxxxxxxx | ||
| Name : Xxxxxxxx Xxxxxxxx | |||
| Title : CFO, Director | |||
1
Schedule
"A"
Yale
Resources Ltd. / SILVER AMERICA Inc.
TERM SHEET
March
5,2010
This term
sheet of the Letter of Intent sets forth the proposed terms and structure of a
transaction in which Yale will
grant an option to SILVER AMERICA to acquire a 90% interest in the Property.
This Letter of Intent is a binding
agreement. Any transaction will be subject in all respects to a fully negotiated
and executed definitive option
agreement (the "Definitive Agreement") and approval, if required, of the
appropriate regulatory bodies.
| 1. Option Agreement | THE PARTIES AGREE to negotiate in good faith a Definitive Agreement to include the following terms and conditions; | ||
|
(a)
|
Yale grants to SILVER AMERICA an Option for SILVER AMERICA to acquire a 90% undivided interest in the Property. | ||
| To exercise the Option, SILVER AMERICA shall pay cash to Yale, issue common shares of SILVER AMERICA and fund exploration and development expenditures (the "Expenditures") on the Property (all amounts in US$) in the following manner: | |||
|
(i)
|
pay
the refundable amount of $10,000 to Yale upon the signing of
this Letter of Intent;
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|
(ii)
|
Pay
an additional $10,000 and issue 100,000 common shares in the
capital of SILVER AMERICA on signing of a Definitive Agreemsnt;
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|
(iii)
|
on
or before the 30th
of June 2010 SILVER AMERICA will pay Yale
$20,000 and issue an additional 100,000 common shares in the
capital of SILVER AMERICA to Yale.
|
||
|
(iv)
|
on
or before the 30th of
December 2010 SILVER AMERICA will
pay Yale $30,000 and issue an additional 100,000 common shares
in the capital of SILVER AMERICA to Yale.
|
||
|
(v)
|
on
or before the 30th of June
2011 SILVER AMERICA will pay Yale
$50,000, issue an additional 100,000 common shares in the capital
of SILVER AMERICA to Yale and have minimum expenditures
of $400,000 (with a minimum of 2,000 metres of ,
drilling).
|
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|
(vi)
|
on
or before the 30th of
December 2011 SILVER AMERICA will
pay Yale $50,000 and issue an additional 100,000 common shares
in the capital of SILVER AMERICA to Yafe.
|
||
|
(vii)
|
on
or before the 30th of June
2012 SILVER AMERICA will pay Yale
$75,000 and issue an additional 100,000 common shares in the
capital of SILVER AMERICA to Yale.
|
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|
(viii)
|
on
or before the 30th of
December 2012 SILVER AMERICA will
pay Yale $100,000, issue an additional 100,000 common shares
in the capital of SILVER AMERICA to Yale and have minimum
expenditures of an additional
$700,000.
|
||
2
|
(ix)
|
on
or before the 30th of
June 2013 SILVER AMERICA will pay Yale
$200,000 and issue an additional 100.000 common shares in
the capital of SILVER AMERICA to Yale.
|
||
|
(x)
|
on
or before the 30th of
December 2013 SILVER AMERICA will
pay Yale $355,000, issue an additional 200,000 common minimum
expenditures of an additional $900,000. shares
in the capital of SILVER AMERICA to Yale and
have
|
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| Any Expenditures greater than the minimum amount will be credited towards the next year.The common shares issued by SILVER AMERICA will be restricted as per the minimum requirements set by the appropriate regulatory body.If drilling has not started by die ln of June 2011 Yale will give 3 months notice to have a drill program started and if drilling has not started by the lsl of August 2011 the Agreement will be cancelled. | |||
| (b) | Upon the execution and exercise of the Option, Yale agrees to transfer a 90% undivided interest in the Property to the Mexican subsidiary of SILVER AMERICA. | ||
| Yale will retain a 2% NSR (a total of 3% for the property) that can be bought out in entirety for US $2,000,000.Yale agrees to maintain all filings and payments on all claims within the Property in accordance with the laws of Mexico until such time as the Property is transferred to SILVER AMERICA- All such costs are to be reimbursed by SILVER AMERICA. | |||
| (c) | Until the execution and exercise of the Option, the parties agree to the following: | ||
|
(i)
|
Yale
will be the operator of the Property and will charge a standard
15% management fee on all Expenditures incurred on the
Property;
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|
(ii)
|
On
an ongoing basis, Yale will budget for die project for each phase
and receive 50% before starting each phase. The allocation of
(he funds will be determined by mutual consent of both
parties.
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|
(iii)
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That
SILVER AMERICA will fund a minimum of $15,000 of exploration
work (not just Expenditures) every quarter (e.g. Apr/May/Jun,).
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(iv)
|
Yale
will deliver to SILVER AMERICA a detailed account of work
expenditures upon request, but not more often than
every three
(3) months;
|
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|
(v)
|
Regardless
of the amount of expenditures that have been committed,
SILVER AMERICA will be responsible for paying the
property taxes that are due
bi-annualty.
|
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3
| 2. Due Diligence Investigation | Yale agrees to make available and grant access to SILVER AMERICA and their representatives, any corporate, financial, geological or other information as is reasonably necessary to conduct a due diligence review of the Property- Yale shall take reasonable good faith efforts promptly to provide SILVER AMERICA or its representatives such documents as may reasonably be requested in writing. Yale will grant to SILVER AMERICA and ils consultants the right of entry to the Properly for the purpose of carrying out its due diligence review of the Property and to perform such investigations, surveys and tests as SILVER AMERICA deems desirable. The Closing of the Definitive Agreement is subject to SILVER AMERICA's satisfactory due diligence review of the Property. | ||
| 3. Budgets and payments |
While
Yale is Operator, Yale will provide SILVER AMERICA a budget for
each successive phase of exploration and SILVER AMERICA agrees
to:
|
||
|
(a)
|
approve and/or provide comments on the budget within fourteen (14) days; | ||
| (b) | give to Yale an advance of at least 50% of each budget within 30 days of its approval and that Yale will not start that next phase of exploration until the advance has been received; | ||
| Payment to Yale for each completed phase of exploration will be due within thirry (30) days of receipt of request from Yale and will be accompanied by a detailed breakdown of cosls. | |||
| If the complete funds are not received within thirty (30) days, Yale will have (he right to issue a letter of default for the amount owed and that if the funds have not been received within an additional thirty (30) days, Yale will have the right to terminate the Option. For greater clarity, if expenditures have not been refunded/paid to Yale within sixty (60) days from the date of the original request the agreement will be terminated. | |||
| 4. Closing Conditions | Conditions to Closing shall include, without limitation: | ||
| (i) | receipt of any necessary regulatory approvals; | ||
| (ii) | SILVER AMERICA completing a due diligence review of the Property and SILVER AMERICA being satisfied, in its sole and absolute discretion, with the results of such a review and verification; | ||
| The parties agree to close the Definitive Agreement within sixty (60) days after the execution of this Letter of Intent and agree to extend the closing date for an additional thirty (30) days if there is a delay. | |||
| 5. Disclosure |
The
parties are permitted to make any public announcement regarding this
Letter of Intent or any transaction contemplated hereby as required by
applicable securities law.
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|
6.
No-Shop and Exclusive Provisions
|
Until sixty (60)
days after the date of this Letter of Intent and in consideration for
SILVER AMERICA's
commitment of time and resources to perform due diligence, Yale
will not, directly or indirectly, through any officer, director, employee,
affiliate or agent or otherwise, take any action to solicit, initiate,
seek, encourage or support any inquiry, proposal or offen from,
furnish any information to, or participate in any negotiations with, any
third party regarding the sale of the Property, or any plans to develop
the Property. Yale agrees that my such negotiations
(other than negotiations with SILVER AMERICA) in progress as of the date
of this letter will be suspended during such period, and that Yale will
not accept or enter into any agreement, arrangement or understanding for
sale or option of the Properly or for the development of the Property
during such period.
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4
| If Yale or any of its officers, directors, employees, affiliates or agents receives any proposal for, or inquiry respecting, any third party acquisition of or development for the Property, Yale will promptly notify SILVER AMERICA, describing in detail the identity of the person making such proposal or inquiry and the terms and conditions of such proposal or inquiry. | |||
| 7. (a) Expenses | Otherwise stated herein. Yale and SILVER AMERICA shall each be liable for their own costs, including legal, accounting, and other such costs. incurred by each of them in the negotiation and closing of this transaction. SILVER AMERICA shall be responsible for all costs relating to its due diligence review of the Property. | ||
| (b) Break-up Fee |
If within thirty
(30) days from the date of this Letter of Intent or anytime
prior
to the Closing of the Definitive Agreement, Yale fails to complete
the terms
outlined within this Letter of Intent, Yale will reimburse to SILVER
AMERICA ail the expenses that have been incurred including the legal fees,
due diligence expenses, taxes and disbursements incurred by SILVER AMERICA
in relation to the review of the Property and drafting of the Definitive
Agreement (and Joint Venture Agreement) and such reimbursement costs will
not exceed $25,000.
|
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| 8. Area of Interest | There will be no Area of Interest surrounding the Property. | ||
| If Yale were to acquire a property or properties adjoining the Property, such property(ies) would be offered to SILVER AMERICA on a first right of refusal basis under terms similar to those within the Definitive Agreement. | |||
| This Letter of Intent represents only the current thinking of the parties relating to the proposed transaction. All rights and obligations of the parties will be subject to negotiation and execution of a definitive agreement among the parties, completion of the due diligence, other matters set forth above, and the approval, if required, of the appropriate regulatory bodies. | |||
5
Schedule
"B"- List of mineral concessions comprising the Property
| Concession name | Title number | Approx. Area (ha) | ||
| XXXXXXXXX | 233872 | 127.4100 | ||
| XXXXXXXXX 2 | 233873 | 155.4200 | ||
| Total: | 282.83 |
6
