Exhibit 10.7
MINING LEASE AGREEMENT
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This Mining Lease Agreement ("Agreement") is made and entered into by
Xxxxxx Xxxxxx Ranches, Inc., Battle Mountain Division, a Nevada corporation
("Owner"), and Pediment Gold, LLC, a Nevada limited liability company
("Lessee").
RECITALS
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WHEREFORE, Owner owns the surface of certain fee lands situated in Humboldt
County, Nevada, more particularly described in Exhibit A attached to this
Agreement; and, Owner, to the best of its knowledge, owns the mineral interests
in the said lands; and,
WHEREFORE, Owner desires to lease to Lessee and Lessee desires to lease
from Owner the property rights and interests hereafter described, which include
Owner's said mineral estate; and,
NOW, THEREFORE, in consideration of their mutual promises, the parties
agree as follows:
1. DEFINITIONS. The following defined terms, wherever used in this
Agreement, shall have the meanings described below:
1.A. "Effective Date" means the date this Agreement has been executed
by the last party to sign the Agreement.
1.B. "Lease Year" means each one (1) year period following the
Effective Date and each anniversary of the Effective Date.
1.C. "Minerals" means gold, silver, platinum, antimony, mercury,
copper, lead, zinc, and all other metals, mineral elements, mineral compounds
and mineral materials which are contemplated to exist on the Property or which
are after the Effective Date discovered on the Property and which can be
extracted, mined or processed by any method presently known or developed or
invented after the Effective Date.
1.D. "Minimum Payments" means the minimum payments payable by Lessee
to Owner in accordance with Section 4 (a).
1.E. "Ore" means material from the Property, the nature and
composition of which, in the sole judgment of Lessee, justifies either: (1)
mining or removing from the Property during the term of this Agreement, and
shipping and selling the same, or delivering the same, to a processing plant for
physical or chemical treatment; or (2) treatment, including leaching, on the
Property during the term of this Agreement.
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1.F. "Owner" means Xxxxxx Xxxxxx Ranches, Inc., Battle Mountain
Division, its successors and assigns.
1.G. "Net Smelter Returns" means the returns from production of
Minerals, Ores and Product from the Property as defined and calculated in
accordance with the provisions of this Agreement.
1.H. "Lessee" means Pediment Gold, LLC, its successors and assigns.
1.I. "Product" means the following:
1.I.A. All Minerals and Ores mined or removed from the Property
during the term of this Agreement and shipped and sold by Lessee before
treatment; and,
1.I.B. All concentrates, precipitates and mill products produced
by or for Lessee from Minerals and Ores mined from the Property and sold by
Lessee or from Minerals and Ores leached or treated on the Property and sold by
Lessee during the term of this Agreement.
1.J. "Property" means the mineral estate and ownership of the
Minerals on, in and under the lands described in Exhibit A attached to and by
this reference incorporated in this Agreement, including all of Owner's right,
title, and interest in and to the Minerals and mineral rights on, in and under
such lands.
1.K. "Royalty" means the Net Smelter Returns or other production
royalty payable to Owner under this Agreement.
1.L. "Waste" means earth, rock or material mined or removed from
the Property during the term of this Agreement, but which is not Ore.
2. GRANT OF LEASE AND RIGHTS.
2.X. XXXXX OF EXPLORATION PRIVILEGE. Owner grants to Lessee the
exclusive right and privilege to enter on the Property for the purposes of
exploration and prospecting for any and all Minerals, mineral substances,
metals, ore-bearing materials, including the right of ingress and egress for
personnel, machinery, equipment, supplies and products and the right to use so
much of the surface and to use all easements and rights-of-way associated
therewith as may be reasonably needed for such purposes.
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2.B. LEASE. Owner leases exclusively to Lessee the Property for
the purposes of development, mining, production, removal and sale of all
Minerals, mineral substances, metals, Ores, ore-bearing materials. The rights
granted under this Agreement apply to all of the Owner's right and interest in
the Property described in this Agreement, including, but not limited to, the
surface and subsurface, all Ores, Minerals, mineral elements and compounds, and
mineral rights, together with any and all veins, lodes and mineral deposits now
owned by Owner. Subject to the provisions of Section 13, during the term of this
Agreement, should Owner acquire an additional or greater interest in the mineral
estate, tenements, hereditaments or appurtenances, Owner agrees to lease the
additional or greater interest to Lessee pursuant to this Agreement, at no
additional cost to Lessee.
2.C. EXCLUSIONS FROM LEASE.
2.C.1. SUBSTANCES EXCLUDED. This Lease does not include any
hydrocarbon or geothermal substances, resources or by-products. This Lease does
not include any surface soils, sand, gravel, building stone or non-Ore rock.
Lessee may, without payment to Owner, remove, stockpile, use or disturb surface
soils, sand or gravel only as reasonably necessary to Lessee's exploration
activities pursuant to this Agreement. Lessee may, without payment to Owner,
use surface soils, sand or gravel for mine development, mining, milling or
processing activities pursuant to this Agreement, provided such activities are
on the Property and will generate a Royalty for Owner. Otherwise use of such
surface materials is excluded.
2.C.2. SURFACE WATERS. Any diminishment, destruction or diversion
of surface water rights by Lessee shall only be to the extent reasonably
necessary to Lessee's permitted uses of the Property under this Agreement; and,
prior to such activity by Lessee, any diminishment, destruction or diversion of
surface water rights shall be subject to: (a) a commitment from Lessee to
provide a reasonably adequate replacement for such surface water rights or, (b)
prior discussion and agreement with Owner as to the best means to mitigate loss
of Owner's use of said surface water rights.
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2.D. USES. During the life of this Agreement, and subject to all
applicable reclamation laws and regulations, Lessee shall have the right to
conduct all exploration activities upon the Property that Lessee deems
appropriate. Provided that Lessee is or will pay a Royalty to Owner, Lessee is
granted the right to the following uses of the Property including, but without
being limited to, the full right, authority and privilege of placing and using
excavations, open pit mines, injection and production xxxxx, openings, shafts,
ditches and drains, and of constructing, erecting, maintaining, using and, at
its election, removing any and all buildings, structures, plants, roadways,
pumps, pipelines, electrical power lines and facilities, stockpiles, waste
piles, heap xxxxx pads, tailings ponds and facilities, settling ponds, and all
other improvements, property and fixtures for mining, removing, beneficiating,
concentrating, smelting, extracting, leaching (in place or otherwise), refining
and shipping of Ores, Minerals or Product, or for any incidental activities,
whether presently contemplated, known or developed in the future to be used in
the exploration, mine development, mining, extraction, production or processing
of Minerals, underground water or to any of the rights or privileges of Lessee
under this Agreement. During the life of this Agreement Lessee will work with
Owner to avoid depriving Owner of presently existing access to Owner's grazing
areas, and where necessary Lessee will provide reasonable alternative access.
2.E. SURFACE PURCHASE OPTION. Prior to opening a pit, making a
stockpile (whether waste or other material), constructing a xxxxx pad or any
beneficiation, extraction, or processing site, Lessee shall notify Owner of the
amount of surface in Lessee's sole discretion is determined as reasonably
required to the planned use. At Owner's election, Owner will convey all Owner's
right, title estate or interest in the agreed upon portion of the Property, but
excluding all subsurface and mineral rights, to Lessee, and Lessee will pay to
Owner the following price per acre (or fraction thereof): $250.00 per acre
during the first five years of this Lease, $350.00 per acre during the second
five years of this Lease and $350.00 per acre, increased by five percent (5%)
per year, during the remainder of the life of this Lease. Nothing herein shall
delay Lessee's right under this Agreement to conduct its operations as in its
sole discretion it sees fit and upon its time table for such operations.
2.F. UNDERGROUND WATER RIGHTS. Subject to the laws and regulations of
the State of Nevada concerning the appropriation and taking of water, Lessee
shall have the right to appropriate and use underground water, to drill xxxxx
for the water on the Property and to lay and maintain all necessary water lines
as may be required by Lessee in its operations on the Property. On Lessee's
final completion of exploration, development, mining, restoration and
reclamation activities on the Property such that Lessee no longer has need for
water resources acquired under permits issued to Lessee in accordance with the
laws and regulations of the State of Nevada, Lessee shall notify Owner. On
Owner's request, Lessee shall execute and deliver to Owner a quitclaim
conveyance of all Lessee's right, title, estate or interest in or to the water
rights acquired by Lessee for the conduct of its activities on the Property.
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2.G. RIGHT OF FIRST REFUSAL. In the event that Lessee should purchase
some or all of Owner's surface estate in the Property pursuant to the terms of
this Agreement, such purchase shall be subject to Owner's right of first
refusal, as set forth below. In the event that Lessee desires to sell all or
part of such surface estate upon completion of mining and reclamation activities
to a third party to this Agreement, Lessee shall, in writing, first offer the
property for sale to Owner upon the same terms as Lessee is willing to offer to,
or accept from, a third party. Owner shall have thirty (30) days in which to
accept said terms by notice, in writing, to Lessee. Owner's failure to give
notice of acceptance shall be deemed an irrevocable waiver of the right of first
refusal as to the land described in Lessee's notice, and Lessee shall be free
thereafter to sell that particular land to a third party upon the same or better
terms as offered to Owner. Owner's exercise or Owner's failure to exercise its
right of first refusal shall not be deemed a waiver by Owner of this right with
respect to subsequent sales by Lessee of other portions of the surface estate of
the Property acquired by Lessee under this Agreement. Nothing herein shall be
construed as a restraint on Lessee's rights of assignment contained in Section
21 below.
2.H. EXCEPTIONS TO RIGHT OF FIRST REFUSAL. Owner's preemptive rights
shall not apply in the event of a transfer of any portion of the surface estate
within the property by Lessee (i) to any affiliate or subsidiary, (ii) for
purposes of granting a security interest in connection with financing or
fund-raising, (iii) in connection with a corporate merger, reorganization or
amalgamation, or similar transaction where the surviving entity holds
substantially all of the assets and obligations of Lessee. However, such a
transfer will not extinguish Owner's preemptive rights.
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3. TERM. The term of this Agreement shall be from the Effective Date
for ten (10) years unless terminated or canceled as provided in this Agreement.
The term shall be extended provided that: (1) Lessee is in good standing in
performing its obligations under this Agreement; and, (2) Lessee has commenced
or will imminently commence extraction of Minerals for production purposes; and,
(3) Lessee continues to pay, at least, the applicable Minimum Payments set forth
below.
4. PAYMENTS. Lessee shall make the following payments to Owner:
4.A. MINIMUM PAYMENTS. Lessee shall make the following Minimum
Payments to Owner:
DATE OF PAYMENT PAYMENT
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Effective Date $25,000.00
1st, 2nd and 3rd anniversaries of Effective
Date $15,000.00
4th and subsequent anniversaries of
Effective Date $20,000.00
4.B. PRODUCTION ROYALTY. Lessee shall pay to Owner the Royalty
described in this Section. The Royalty shall be determined monthly on the basis
such that payments will be payable within thirty (30) days after the last day of
each calendar month during which Lessee receives any final settlement from a
smelter or refiner or revenue from the disposition or sale of any Minerals or
waste taken from the property regardless of the source of such revenue. Lessee
shall have no obligation to account to Owner, and Owner shall have no interest
or right of participation in, any profits or proceeds of futures contracts,
forward sales, hedging or other similar marketing mechanisms used by Lessee or
any of its affiliates concerning any Minerals, Ores or Product. Lessee shall
have no obligation to Owner to complete or perform any futures contracts,
forward sales, hedging or any other marketing agreement which Lessee or any of
its affiliates may enter into concerning Minerals, Ores or Product. Royalty
payments will be provisional and subject to adjustment at the end of each
accounting year.
4.C. NET SMELTER RETURNS. Lessee shall pay to Owner a Royalty of three
(3%) percent of Net Smelter Returns. The term Net Smelter Returns as used herein
shall mean the end proceeds received by Lessee from the sale of minerals from
the Property after deductions for all of the following:
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(I) Custom smelting costs, treatment charges and penalties including, but
without being limited to, metal losses, penalties for impurities and
charges or deductions for refining, selling, and transportation from
smelter to refinery and from refinery to market; provided, however, in
the case of leaching operations, all processing and recovery costs
incurred by Lessee beyond the point at which the metal being treated
is in solution shall be considered as treatment charges (it being
agreed and understood, however, that such processing and recovery
costs shall not include the cost of mining, crushing, dump
preparation, distribution of xxxxx solutions or other mining and
preparation costs up to the point at which the metal goes into
solution);
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(II) Cost of transporting mineral product from the concentrator to a
smelter or other place of treatment; and
(III) Actual sales taxes and brokerage costs, on Minerals for which the net
Smelter Returns Royalty is payable.
4.D. METHOD OF PAYMENT. Lessee shall make Minimum Payments to the
Owner's address for notice purposes. Lessee shall have no responsibility for
disbursement or distribution of any payment after receipt by the described
payee. At the time Lessee pays the Royalty, Lessee shall deliver to Owner a
statement which shows the amount of the Royalty due and the manner in which it
was determined and shall submit to Owner data reasonably necessary to enable
Owner to verify the determination.
4.E. PAYMENT CREDITS. The Minimum Payments paid by Lessee to Owner
shall be credited cumulatively to Lessee's account and against Lessee's Royalty
payment obligations to Owner, whether Royalty payment obligations accrue in the
same or subsequent years during the term of the Agreement as payment of the
Minimum Payments. No Royalty payment obligation shall accrue until all Minimum
Payments previously paid to Owner are credited in full. The right to credit
Minimum Payments shall expire upon termination of this Agreement.
5. COMPLIANCE WITH THE LAW. All exploration and development work
performed by Lessee during the term of this Agreement shall conform with the
applicable laws and regulations of the state in which the Property is situated
and the United States of America. Lessee shall be fully responsible for
compliance with all applicable Federal, state and local reclamation statutes,
regulations and ordinances relating to such work, all at Lessee's cost, and
Lessee shall save, defend, indemnify and hold harmless Owner from any and all
claims, assessments, fines and actions arising from Lessee's failure to perform
the foregoing obligations, including reimbursement to Owner of reasonable
attorney fees expended by Owner arising from such claims or liabilities. Owner
agrees to cooperate with Lessee in Lessee's application for governmental
licenses, permits and approvals, the costs of which shall be borne by Lessee.
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6. MINING PRACTICES; INSPECTION OF DATA.
6.A. MINING PRACTICES. Lessee shall conduct all
activities on the Property in a good and miner-like fashion.
6.B. INSPECTION OF DATA. During the term of this Agreement and at
Owner's expense, Owner shall have the right to examine noninterpretive factual
data regarding the Property in Lessee's possession during reasonable business
hours and upon prior notice, provided, however, that Owner's rights to examine
such data shall be exercised in a manner such that such inspection does not
unduly interfere with the operations of Lessee.
6.C. MEASUREMENTS; ANALYSIS. Lessee shall measure Ore and grade and
take and analyze samples in accordance with mining industry practices, and shall
keep accurate records as a basis for computing the production royalty payments.
These records shall be available for inspection by Owner, at Owner's expense, at
reasonable times subject to the provisions of this Agreement regarding accounts,
inspection, records and payments.
6.D. PRODUCTION RECORDS. Lessee shall keep accurate records of the
sale or shipment of Product from the Property, and these records shall be
available for inspection by Owner, at Owner's expense, at reasonable times
subject to the provisions of this Agreement regarding accounts, inspection,
records and payments.
6.E. LESSEE'S PROPRIETARY INTERPRETATION. Owner acknowledges that,
based upon information made available by Owner or third parties to Lessee and
Lessee's examination of the Property with the permission of Owner, and data from
work on property Lessee controls in the vicinity of the Property, Lessee has
conducted its own evaluation of the Property and has developed its own theories
and interpretations regarding the Property that are regarded by Lessee as
confidential and/or proprietary to Lessee and which have not been disclosed to
Owner. Owner agrees that in entering into this Agreement, It is not relying on
Lessee to disclose any such theories, interpretations, evaluations or data.
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7. CONSOLIDATION OF OPERATIONS.
7.A. CROSS MINING. Lessee is granted the right to mine and remove Ore,
Minerals, Product and materials from the Property through or by means of shafts,
openings or pits which may be in or upon adjoining or nearby lands owned or
controlled by Lessee. Lessee may use the Property and any shafts, openings and
pits on the Property for the exploration for or development of, mining, removal,
treatment and transportation of ores and materials from adjoining or nearby
lands, or for any purpose connected with such activities. Lessee shall have the
right to treat or process, in any manner allowed by this Lease, any Ore,
Minerals, material and products mined or produced from the Property and from
other lands. Such treatment may be conducted wholly or in part at facilities
established or maintained on the Property or on other lands. The tailings and
residue from such treatment shall be deemed Waste and may be deposited on the
Property or on other lands, and Lessee shall have no obligation to remove such
Waste from the Property nor to return to the Property Waste resulting from the
processing of Ores or materials from the Property, unless reclamation in
accordance with applicable laws and regulations requires removal or return of
such waste.
7.B. UNITIZATION. Lessee's operations on the Property and its
operations on other lands may be conducted upon the Property and upon any and
all such other lands as a single exploration or mine development operation, to
the same extent as if all such properties constituted a single tract of land.
7.C. BOUNDARY AREAS. Subject to Lessee's reclamation obligations,
Owner waives all rights, statutory and otherwise, to require Lessee to maintain
adjacent support for the Property and any contiguous property owned, leased, or
controlled by Lessee or any other party. Owner waives any right which Owner may
have to restrict or to prohibit Lessee from mining within any minimum distance
of any boundary line of the Property and contiguous lands and grants to Lessee
the authority to act as Owner's agent and representative to enter into
agreements with the owners of contiguous properties so as to allow mining of all
Ores located on, near or under the boundary of the Property. Owner agrees that
Lessee's obligations to account for and to pay the Royalty shall apply and
extend only to Minerals and Ores produced from within the vertical planes of the
exterior boundaries of the Property extended downward to the center of the
earth.
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7.D. STOCKPILING PRODUCT. Where possible, Lessee shall stockpile
product or low grade-ore on the Property and shall only stockpile such materials
off the Property with adequate prior arrangements with Owner to safeguard
Owner's Royalty interest in the severed materials. Such safeguards shall
include an accurate inventory and accounting of all materials stockpiled off
Owners's property, the location of the stockpiles, and protection of Owner's
rights to access the stockpiles and inspect same and protection of Owner's
rights to receive its Royalty from any sale of the stockpiled material whether
such be Net Smelter Returns and whether same occur after termination of this
Agreement or before.
7.E. COMMINGLING. Lessee shall have the right to commingle Ore from
the Property with ore from other properties. Before commingling, the Ore from
the Property and other ore shall be measured and sampled by Lessee in accordance
with sound mining and metallurgical practices. Representative samples of Ore
and other ores shall be retained by Lessee, and assays of these samples shall be
made before commingling to determine the metal content of each ore. Lessee
shall keep records of the measurements, samples and assays of metal content of
the Ore and other ore.
7.F. TREATMENT. Lessee shall have the right, but shall not be
required, to beneficiate, concentrate, smelt, refine, xxxxx and otherwise treat,
in any manner, any Ore, Product and materials mined or produced from the
Property and from other lands. Such treatment may be conducted wholly or in
part at a plant or plants established or maintained on the Property or on other
lands.
8. LIENS AND NOTICES OF NON-RESPONSIBILITY. Except for mechanics' and
materialmen's liens discharged in the ordinary course of business, Lessee agrees
to keep the Property at all times free and clear of all liens, charges and
encumbrances of any and every nature and description done, made or caused by
Lessee, and to pay all indebtedness and liabilities incurred by or for Lessee
which may or might become a lien, charge or encumbrance against the Property
before such indebtedness and liabilities shall become a lien, charge or
encumbrance. If Lessee, in good faith disputes or contests a mechanic's lien,
Lessee shall post an applicable bond to substitute for the lien as provided in
NRS Ch. 108, and Lessee shall save, defend, with counsel of Lessee's choice,
and hold harmless Owner against all liability arising therefrom. The parties
agree that Owner shall be informed immediately of the execution of this
Agreement by Lessee in order that Owner can properly and timely record a notice
of non-responsibility in the office of the county recorder of the county in
which the Property is located.
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9. TAXES.
9.A. PROPERTY TAXES. During the life of this Lease, the parties shall
apportion the real property taxes as follows:
Owner shall be responsible to pay ad valorem property taxes or the amount
thereof as they accrue to the property in its present use, condition and rate of
assessment. Lessee shall pay the increased amount of ad valorem taxes arising
from any and all improvements to the Property caused by Lessee, including any
deferred taxes due upon conversion of all or part of the Property from
Agricultural to a higher use, as provided in NRS Chapter 361A.
Each party shall pay all taxes assessed against such party's personal
property, improvements or structures placed or used on the Property.
9.B. INCOME TAXES. Neither party shall be liable for any taxes levied
on or measured by income or proceeds, or other taxes applicable to the other
party, based upon payments under this Agreement or based upon the production of
Minerals, Ore or Product from the Property. Each of Owner and Lessee shall pay
net proceeds of mines taxes assessed against such party's respective share of
production of Minerals, Ores or Product from the Property as provided by
applicable law.
9.C. PROTEST OF TAX. Lessee shall have the right to protest in the
courts or otherwise the validity or amount of any taxes or assessments levied or
assessed upon or against Lessee, the Property or Minerals, Ore or Product if
Lessee deems the same to be unlawful, unjust unequal or excessive, or to take
such other steps or proceedings as it may deem necessary to secure a
cancellation, reduction, readjustment, or equalization before Lessee shall be
required to pay the same. Notwithstanding the foregoing, neither Owner nor
Lessee shall permit or suffer the Property or any part thereof, or any Minerals,
Ore or Product mined or produced therefrom, to be liened or sold at any time for
such taxes or assessments.
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10. INDEMNITY. Lessee shall defend, indemnify and save harmless Owner,
its affiliates, officers, directors, employees, successors and assigns, from any
and all liability whatsoever for any claims, actions or damages, including court
costs and reasonable attorney's fees, in any way arising from or relating to
Lessee's occupation, ownership and use of the Property, or its operations on or
in the Property. Owner shall defend, indemnify and save harmless Lessee, it's
affiliates, officers, directors, employees, successors and assigns, from any and
all liability whatsoever for any claims, actions or damages, including court
costs and reasonable attorney's fees, in any way arising from or relating to
Owner's occupation, use of the Property, or its operations on or in the
Property. The parties' defense, indemnification and hold harmless obligations
shall extend to and include, but not be limited to, any and all claims, actions
or damages arising from or relating to federal, state or local laws, regulations
or ordinances concerning the preservation of the environment or reclamation of
the Property, including the Comprehensive Environmental Response, Compensation
and Liability Act and the Resource Conservation and Recovery Act and the Nevada
Mined Land Reclamation Act, and shall survive termination of this Agreement.
11. INSPECTION. If active mining activities are taking place on the
Property, at Owner's expense and on Owner's reasonable advance request and
notice to Lessee, Owner or Owner's duly authorized representatives shall be
permitted to inspect Lessee's workings at reasonable times, but shall do so at
their own risk and in such a manner as not to unreasonably delay, hinder, or
interfere with the operations of Lessee. Owner shall defend, indemnify and hold
Lessee harmless from any and all liability whatsoever, including court costs and
reasonable attorney fees, for damages, claims or demands arising from injury to
Owner, Owner's agents or representatives or any third party, on the Property or
on any access to the Property arising from or relating to Owner's entry and
inspection. Nothing herein shall be construed to abridge Owner's use and
enjoyment of the Property to the extent that Owner does not interfere with
Lessee's activities or operations under this Agreement.
12. REPRESENTATION OF TITLE. Owner represents to the best of Owner's
knowledge that: (a) Owner has good and marketable title to an undivided one
hundred percent (100%) legal and equitable interest in the mineral estate and
one hundred percent (100%) of the surface estate of the fee lands comprising
part or all of the Property; (b) Owner has good right and full title to lease
the effective interest described in this Agreement; and (c) the title to the
surface and mineral estate of the fee lands is free and clear of all liens,
claims and encumbrances created by, through or under Owner, except to the extent
of such lien, if any, arising from loans, if any, which Owner may have in
connection with Owner's ranching operations. Lessee understands that Owner has
not caused or conducted any mineral title research of Owner's mineral estate
ownership in the Property.
13. REMEDIES FOR DEFECTS IN TITLE.
13.A. LESSER INTEREST. If Owner owns an interest in the mineral estate
of the fee lands which constitute the Property which is less than the one
hundred percent (100%) undivided interest in the mineral estate of the fee lands
which constitute the Property, the Minimum Payments and Royalty payments shall
be reduced proportionately in accordance with the nature and extent of Owner's
interest so that the Minimum Payments and Royalty payments shall be paid to
Owner only in the proportion that Owner's interest bears to the entire and
undivided interest in the mineral estate of the fee lands which constitute the
Property. Owner shall not be obligated to reimburse Lessee for any payments
proportionately in excess of Owner's actual undivided interest; provided
however, that Lessee shall be entitled to credit any such excess payments
against future Minimum Payments or Royalty Payments obligations.
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13.B. LESSER INTEREST BROUGHT TO 100%. It is the understanding of the
parties that Lessee is leasing from Owner an undivided one hundred (100%)
percent mineral interest. Therefore, if Owner is determined to own less than an
undivided one hundred percent mineral interest, and if Owner subsequently
acquires additional interest, bringing Owner's undivided interest to one hundred
percent, then that additional, subsequently-acquired interest shall be part of
this Agreement with no requirement that Lessee pay greater Minimum or Royalty
payments therefor.
13.C. ESCROW OF PAYMENTS PENDING DISPUTE. If at any time a third party
asserts a claim of ownership in the Property or the Minerals which is adverse to
the interest of Owner or Lessee, or if Lessee is advised by legal counsel for
Lessee that it appears that a third party may have such a claim, Lessee may
deposit any payments which would otherwise be due to Owner into escrow and give
notice of such deposit to Owner. The escrow will be mutually determined by
Owner and Lessee and jointly instructed by them in a manner consistent with this
section. Such deposits shall remain in escrow until Lessee is furnished
reasonably satisfactory evidence that such dispute has been finally settled and
all provisions as to keeping this Agreement in force shall relate to such
extended time for payment.
14. COVENANTS, WARRANTIES AND REPRESENTATIONS. Each of the parties
covenants, warrants and represents for itself as follows:
14.A. COMPLIANCE WITH LAWS. That it has complied and will comply with
all applicable laws and regulations of any governmental body, federal, state or
local, regarding the terms and performance of its obligations under this
Agreement.
14.B. NO PENDING PROCEEDINGS. That there are no lawsuits or
proceedings pending or threatened which affect its ability to perform the terms
of this Agreement.
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14.C. AUTHORITY. That it has the full right, title and authority to
enter into this Agreement and to perform its obligations, and neither this
Agreement, nor its performance, violates or constitutes a default under the
provisions of any other agreement to which it is a party or to which it is
bound.
14.D. COMMISSIONS; FINDER'S FEES. That it has not utilized the
services of a broker or a finder in the negotiation and/or execution of this
Agreement, and that it has not incurred any obligation to pay a broker's
commission or finder's fee upon the execution and consummation of this
Agreement.
14.E. COSTS. That it shall pay all costs and expenses incurred or to
be incurred by it in negotiating and preparing this Agreement and in closing and
carrying out the transactions contemplated by this Agreement.
15. OWNER'S COVENANTS; REPRESENTATIONS. Owner covenants, represents
and warrants as follows:
15.A. NONINTERFERENCE. Owner covenants that Owner will not do or
permit to be done any act which would hinder or impair the rights of Lessee to
exercise any right granted to Lessee under this Agreement or to acquire all
right, title and interest in and to the Property. Owner acknowledges that the
rights granted to Lessee under this Agreement are exclusive to Lessee, and Owner
covenants that Owner will not enter into any agreement, contract, lease, option
or other instrument for the grant to any other party of any rights to explore
for, develop or mine any Minerals on the Property.
15.B ESTOPPEL CERTIFICATE. Provided that Lessee is in full compliance
with its obligations under this Lease, on Lessee's written request, Owner will
execute and deliver to Lessee an estoppel certificate, in form acceptable to
Lessee, whereby Owner confirms that this Agreement is in full force and effect
and that there are no defaults by Owner or Lessee under this Agreement.
Page -14 of 21-
15.C. ENVIRONMENTAL CONDITIONS. Owner is not aware of nor has it
received notice from any governmental agency of any condition existing on the
Property or created by Owner which is or might be a violation of any applicable
federal, state or local law, regulation or ordinance relating to environmental
protection.
15.D. NON-FOREIGN STATUS. Owner is not a "foreign person" as defined
under Sec.1445(f) of the Internal Revenue Code. At Lessee's request Owner shall
furnish Lessee an affidavit confirming its non-foreign status in such form as is
reasonably required by Lessee.
16. SURRENDER AND TERMINATION.
16.A. TERMINATION BY OWNER. In the event of any material default or
failure by Lessee to comply with any of the covenants, terms or conditions of
this Agreement, including without limitation, the timely payment of Minimum
Payments and Royalty Payments, Owner shall be entitled to give Lessee written
notice of the default which specifies details of the alleged default. If such
default is not remedied within thirty (30) days after receipt of the notice,
provided the same can reasonably be done within that time, or, if not, if Lessee
has not within that time commenced action to cure the same or does not after
such commencement diligently prosecute such action to completion, Owner may
terminate this Agreement by delivering notice to Lessee of Owner's termination
of this Agreement. Termination shall not be based on a default or on a failure
to remedy the same which results from any cause beyond the reasonable control of
Lessee, including, without limitation, the force majeure provisions of this
Agreement. If Lessee contests in good faith any alleged default, Lessee may
give written notice of such contest to Owner during the period allowed for
Lessee's cure of any alleged default.
16.B. TERMINATION BY LESSEE. Lessee may at any time prior to one (1)
month in advance of the anniversary of the Effective Date terminate this
Agreement by giving written notice to Owner. On delivery of the notice of
termination, Lessee shall execute and deliver to Owner a written release of this
Agreement in proper form for recording. No termination notice shall be
effective unless notice is timely and a proper, recordable, release document is
tendered with the termination notice. If Lessee properly terminates this
Agreement, Lessee shall not be required to pay the Minimum Payments which accrue
or come due after the termination date.
16.C. PARTIAL SURRENDER OF PROPERTY. During the term of this
Agreement, Lessee may at any time prior to one (1) month in advance of the
anniversary of the Effective Date, surrender any part of the Property. If
during the term of this Agreement, Lessee intends to surrender any part of the
Property, it shall give written notice to Owner. On such surrender, the Minimum
Payments will be adjusted to reflect the decrease in the number of Mineral Acres
which constitute the Property, and such adjusted Minimum Payments shall be
effective in the Lease Year following the Lease Year during which Lessee
surrenders part of the Property. Notice of partial surrender shall be
ineffective unless it is timely given and is accompanied by a recordable partial
release of Lessee's interest for recording in the appropriate recorder's office.
Page -15 of 21-
16.D. ENTRY AFTER TERMINATION. Lessee shall have one hundred and
twenty (120) days after termination of this Agreement, to remove from the
Property all buildings, structures and equipment. Failure by Lessee to remove
all equipment and structures except those expressly waived by Owner, shall
result in presumed damage to Owner calculated on the basis of the actual cost
incurred by Owner to remove such equipment or structures. After termination of
this Agreement, Lessee shall have the right to enter on the Property, without
obligation to pay any payments to Owner or to perform any other obligations
under this Agreement for the purpose of reclamation, remediation or restoration
of the Property as required under any applicable federal, state or local laws,
regulations or ordinances. The parties' obligations and liabilities under this
Paragraph shall survive termination of the Lease.
16.E. DATA FROM LESSEE. Owner shall have the right to request copies
of all noninterpretive factual data regarding the Property in Lessee's
possession at the time of termination which have before termination not been
delivered to Owner. Owner shall have the right to request copies of such
non-interpretive factual data once during each calendar year during the term of
this Agreement.
16.F. DATA FROM OWNER. During the term of this Agreement, at Lessee's
request, Owner agrees to make available to Lessee all data in Owner's possession
relating to title to the Property or to any aspect of subsurface or mineral
information pertaining to the Property. At Lessee's request, Owner will assign
to Lessee Owner's rights to inspect or obtain such data from third parties.
Page -16 of 21-
17. FORCE MAJEURE. The respective obligations of either party, except
Lessee's obligation to pay the Minimum Payments, shall be suspended during the
time and to the extent that such party is prevented from compliance, in whole or
in part, by war or war conditions, actual or potential, earthquake, fire, flood,
strike, labor stoppage, accident, riot, unavoidable casualty, act or restraint,
present or future, of any lawful authority, statute, governmental regulation or
ordinance, environmental restrictions or conditions, permit or license
approvals, act of God, act of public enemy, delays in transportation, or other
cause of the same or other character beyond the reasonable control of such
party.
18. MEMORANDUM OF AGREEMENT. At Lessee's expense, upon execution of
this Agreement, the parties shall execute and deliver a short form of this
Agreement which shall be recorded in the office of the recorder of each county
in which all or part of the Property is located. The execution and recording of
the Memorandum of Agreement shall not limit, increase or in any manner affect
any of the terms of this Agreement, or any rights, interest or obligations of
the parties, nor shall it disclose the business terms of this Agreement. This
Agreement in its entirety shall not be recorded.
19. RELATIONSHIP OF THE PARTIES.
19.A. LIMITATION. Lessee's performance of its duties and obligations
under this Agreement shall not obligate Lessee to perform any additional
services to Owner nor to invest any funds in the exploration for, development or
production of minerals on or under the Property, except as expressly provided in
this Agreement. Lessee may explore, conduct geological, geochemical and
geophysical investigations, sample, drill or otherwise explore for minerals, in
the manner and to the extent that Lessee, in its sole discretion, deems
advisable. Only the express duties and obligations described in this Agreement
are binding upon Lessee, and, except as expressly provided in this Agreement,
Lessee shall have no duties or obligations, implied or otherwise, to explore
for, develop or mine Minerals or Ores from the Property, it being agreed that
Lessee's minimum payments are in lieu of any implied duties or obligations.
19.B. NO PARTNERSHIP. This Agreement shall not be deemed to constitute
any party, in its capacity as such, the partner, agent or legal representative
of any other party, or to create any joint venture, partnership, mining
partnership or other partnership relationship, or fiduciary relationship between
them, for any purpose.
19.C. COMPETITION. Except as expressly provided in this Agreement,
each party shall have the free and unrestricted right independently to engage in
and receive the full benefits of any and all business endeavors of any sort
whatsoever outside the Property or outside the scope of this Agreement whether
or not competitive with the endeavors contemplated under this Agreement without
consultation with or participation of the other party. In particular, without
limiting the foregoing, neither party to this Agreement shall have any
obligation to the other as to any opportunity to acquire any interest, money,
property or right offered to it outside the scope of this Agreement.
Page -17 of 21-
20. ASSIGNMENT BY LESSEE. Lessee shall be at liberty at any time and
from time to time, to assign, dispose of or transfer this Agreement or any part
of its interest herein to an assignee with market capitalization (shares
outstanding times share price) of $75 million or greater. If Lessee assigns its
interest under this Agreement, it shall be relieved of any obligations or
liabilities under this Agreement which accrue after the effective date of the
assignment, provided that the instrument of assignment obligates the assignee to
assume all of Lessee's obligations or liabilities under this Agreement and the
assignee executes and delivers the instrument of assignment which contains such
terms. For proposed assignees with a market capitalization of less than $75
million, no assignment will be effective unless thirty (30) days written notice
is first provided to Owner, and Owner consents in writing to the Assignment.
Owner's consent will not be unreasonably withheld, but it may be based upon the
financial stability of the proposed assignee, and the ability of the assignee to
perform all Lessee's obligations under this Agreement.
21. ASSIGNMENT BY OWNER. Owner may transfer its interest in the
Property. No change in ownership of Owner's interest in the Royalty shall
affect Lessee's obligations under this Agreement unless and until Owner delivers
and Lessee receives copies of instruments recorded or other documents necessary
to demonstrate the change in ownership of Owner's interest. No other type of
notice, whether actual or constructive, shall be binding on Lessee. Until
Lessee receives Owner's notice and a copy of the instrument of transfer, Lessee
may continue to make all payments payable under this Agreement to Owner as if
the transfer of Owner's ownership interest had not occurred. No division of
Owner's ownership as to all or any part of the Property shall enlarge Lessee's
obligations or diminish Lessee's rights under this Agreement.
22. NOTICES. Any notices required or authorized to be given by this
Agreement shall be in written form. Any notices required or authorized to be
given by this Agreement may be sent by certified delivery, postage prepaid and
return receipt requested, addressed to the proper party at the following address
or such address as the party shall have designated to the other parties in
accordance with this Section. Any notice required or authorized to be delivered
by this Agreement shall be deemed to have been sufficiently delivered or served
in written form if: (a) mailed in accordance with this Section; (b) personally
delivered to the proper party; or (c) facsimile or other electronic
transmission and actually received by such party. In the case of mailing,
delivery of notice shall be effective on the third business day after the party
deposits the notice for mailing with the United States Postal Service.
Page -18 of 21-
If to Owner: Mr. and Xxx. Xxxx Xxxxxx
Xxxxxx Xxxxxx Ranches, Inc., Battle Mountain Division
P. X. Xxx 000, Xxxxxx Xxxxxxxx, Xxxxxx 00000
If to Lessee: Xx. Xxxxxxx X. Xxxxxx, Manager
Pediment Gold, LLC
Sixth Floor, Ste. 9
Xxx Xxxx Xxxxxxx Xx.
Xxxx, Xxxxxx 00000
23. BINDING EFFECT OF OBLIGATIONS. This Agreement shall be binding
upon and inure to the benefit of the respective parties and their successors and
assigns.
24. WHOLE AGREEMENT. This Agreement supersedes all prior agreements
between the parties. The whole agreement between the parties is written in this
Agreement and in a memorandum of agreement of even date which is intended to be
recorded. There are no terms or conditions, express or implied, other than
those expressly stated in this Agreement. This Agreement may be amended or
modified only by an instrument in writing, signed by the parties with the same
formality as this Agreement.
25. GOVERNING LAW AND FORUM SELECTION. This Agreement shall be
construed and enforced in accordance with the laws of the State of Nevada. The
parties submit to the jurisdiction of the Nevada District Court for the District
in which the Property is situated and hereby agree that such court is the sole
forum and venue for actions arising under this Agreement.
26. SEVERABILITY. If any part, term or provision of this Agreement is
held by a court of competent jurisdiction to be illegal or in conflict with any
law of the United States or any state, the validity of the remaining portions or
provisions shall not be affected, and the rights and obligations of the parties
shall be construed and enforced as if the Agreement did not contain the
particular part, term or provision held to be invalid.
27. ATTORNEY'S FEES AND COSTS. If any action or proceeding, including
an action for declaratory relief, is commenced by one party against any other
party to this Agreement, the party prevailing in such proceeding or action, as
determined by final judgment in any such proceeding or action, shall be entitled
to such party's costs incurred, including reasonable attorney's fees and court
costs.
Page -19 of 21-
OWNER:
XXXXXX XXXXXX RANCHES, INC., BATTLE MOUNTAIN DIVISION
By: /s/ Xxxxx X. Xxxxxx Dated 9-16-04
--------------------------------- -----------------------
XXXXX X. XXXXXX, President
By: /s/ Xxxx Xxxxxx Dated 9-16-04
--------------------------------- -----------------------
XXXX XXXXXX, Secretary
LESSEE:
PEDIMENT GOLD LLC
Nevada Gold Exploration Solutions, LLC
Operator of Pediment Gold LLC
By: /s/ Xxxx X. Xxxxxx Dated 9-16-04
--------------------------------- -----------------------
Xxxx X. Xxxxxx, Director
AND
Battle Mountain Gold Exploration LLC
Member of Pediment Gold LLC
By: /s/ Xxx X. XxXxx Dated 16 Sep 2004
--------------------------------- -----------------------
Xxx X. XxXxx, President
Battle Mountain Gold Exploration LLC
Page -20 of 21-
EXHIBIT A
PROPERTY
--------
The following described lands located in Humboldt County, Nevada:
Township 34 North, Range 43 East, MDM
-------------------------------------------
Section 2: SW1/4; S1/2NW1/4; S1/2SE1/4; NW1/4/SE1/4.
Section 10: All, excepting SW1/4SW1/4.
Section 11: All.
Section 14: All, excepting SW1/4SW1/4.
Approximately 2,224.80 Acres
Page -21 of 21-
