EVANACHAN LIMITED AND: RIMFIRE MINERALS CORPORATION OPTION AGREEMENT GOODPASTER PROPERTY ALASKA FEBRUARY 22, 2007
EVANACHAN
LIMITED
AND:
RIMFIRE
MINERALS CORPORATION
XXXXXXXXXX
PROPERTY
ALASKA
FEBRUARY
22, 2007
Revised
528557-000001-943886v3
TABLE
OF CONTENTS
1.0
|
DEFINITIONS
|
2
|
|
2.0
|
REPRESENTATIONS,
WARRANTIES AND COVENANTS OF RIMFIRE
|
6
|
|
3.0
|
REPRESENTATIONS
AND WARRANTIES OF EVANACHAN
|
9
|
|
4.0
|
FIRST
OPTION
|
10
|
|
5.0
|
EXERCISE
OF FIRST OPTION
|
11
|
|
6.0
|
SECOND
OPTION
|
12
|
|
7.0
|
FORMATION
OF JOINT VENTURE
|
13
|
|
8.0
|
OPERATOR
|
15
|
|
9.0
|
RIGHT
OF ENTRY
|
16
|
|
10.0
|
TRANSFER
OF PROPERTY
|
17
|
|
11.0
|
OBLIGATIONS
OF THE OPERATOR DURING OPTION PERIOD
|
18
|
|
12.0
|
TERMINATION
OF FIRST OPTION
|
19
|
|
13.0
|
POWER
TO CHARGE PROPERTY
|
20
|
|
14.0
|
ASSIGNMENT
AND TRANSFERS
|
20
|
|
15.0
|
SURRENDER
AND ACQUISITION OF PROPERTY INTERESTS BEFORE TERMINATION OF
AGREEMENT
|
21
|
|
16.0
|
FORCE
MAJEURE
|
22
|
|
17.0
|
CONFIDENTIAL
INFORMATION
|
23
|
|
18.0
|
ARBITRATION
|
26
|
|
19.0
|
DEFAULT
AND TERMINATION
|
27
|
|
20.0
|
AREA
OF COMMON INTEREST
|
28
|
|
21.0
|
INDEMNITY
|
28
|
|
22.0
|
NOTICES
|
30
|
|
23.0
|
GENERAL
|
31
|
|
528557-000001-943886v3
ii
THIS
AGREEMENT is dated effective February 22, 2007.
BETWEEN:
EVANACHAN
LIMITED,
a
corporation duly incorporated under the laws of the Province of Ontario having
an office address at 00 Xxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxx, Xxxxxxx X0X 0X0
(“Evanachan”)
AND:
RIMFIRE
MINERALS CORPORATION,
a
company duly incorporated under the laws of the Province of British Columbia
having an office address at Suite 700 - 000 Xxxx Xxxxxx, Xxxxxxxxx,
Xxxxxxx Xxxxxxxx X0X 0X0
(“Rimfire”)
AND:
RIMFIRE
ALASKA LTD.,
a
company duly incorporated under the laws of the State of Alaska having an
office
address at Suite 700 - 000 Xxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx
X0X 0X0
(“Rimfire
Alaska”)
WHEREAS:
A. Rimfire
is the owner of the mineral claims comprising the Xxxxxxxxxx Property located
in
the State of Alaska, as more particularly described in Schedule A hereto
subject to underlying net smelter returns royalty interests on certain of
the
mineral claims that comprise the Property;
B. Rimfire
has
agreed to grant an exclusive option to Evanachan to acquire a 60% interest
in
and to the Property, subject to the Underlying Royalties, by performing work
upon the Property, as herein provided;
-1-
C. Rimfire
has agreed to grant an additional exclusive option to Evanachan to increase
its
interest from 60% to 70% by completing a Feasibility Study all as herein
provided; and
D. Rimfire
has agreed to grant an additional exclusive option to Evanachan to increase
its
interest from 70% to 75% by arranging project debt financing, all as herein
provided.
NOW
THEREFORE THIS AGREEMENT WITNESSES that in consideration of the sum of $10
now
paid by Evanachan to Rimfire and for other good and valuable consideration,
the
receipt and sufficiency whereof are by Rimfire hereby acknowledged, the parties
agree as follows:
1.0 DEFINITIONS
1.1 In
this
Agreement, except as otherwise expressly provided or as the context otherwise
requires:
“Abandoned
Areas”
has the meaning given to it in
Section 15.1.
|
“Affiliate”
has the meaning given to it in the Business
Corporations Act
British Columbia.
|
“Agreement”
means this Agreement, including the Schedules hereto, as amended
or
supplemented from time to time.
|
“Area
of Common Interest”
means that area as defined in
Section 20.1.
|
“Cash
Call”
has the meaning given to it in Section
8.5.
|
“Commercial
Production”
means the operation of the Property or any portion thereof as a
producing
mine and the production of mineral products therefrom (excluding
bulk
sampling, pilot plant or test
operations).
|
“Committed
Expenditures”
has the meaning given to it in
Section 4.2.
|
“Expenditures”
means, without limitation, all Maintenance Costs,
and all amounts incurred in doing geophysical, geochemical, land,
airborne, environmental and/or geological examinations, assessments,
assays, audits and/or surveys; in linecutting, mapping, trenching
and
staking; in searching for, digging, trucking, sampling, working,
developing, mining and/or extracting ores,
minerals
|
-2-
and
metals; in doing diamond and other drilling; in obtaining, providing, erecting,
mining and milling including, without limitation, installing and operating
mining plant, milling or other treatment plant, ancillary facilities, buildings,
machinery, tools, appliances and/or equipment; in construction of access
roads
and other facilities on or for the benefit of the Property or any part thereof;
in transporting personnel, supplies, mining, milling or other treatment plant,
buildings, machinery, tools, appliances or equipment in, to or from the Property
or any part thereof; in paying reasonable wages and salaries (including “fringe
benefits”) of personnel directly engaged in performing work on or with respect
to the Property; in payment of assessments or contributions under applicable
employment legislation relating to workers’ compensation, unemployment insurance
and other applicable legislation or ordinances relating to such personnel;
in
supplying food, lodging and other reasonable needs for such personnel; in
obtaining and maintaining any insurance, in the management of and accounting
for
work and providing supervisory, legal, accounting, consulting and other contract
or professional services or facilities relating to work performed or to be
performed hereunder; in paying any taxes, fees, charges, payments or rentals
(including payments made in lieu of assessment work) or otherwise incurred
to
transfer the Property or any part thereof or interest therein pursuant to
this
Agreement and to keep the Property or any part thereof in good standing,
in
acquiring access and surface rights to the Property; in carrying out any
negotiations and preparing, settling and executing any agreements or other
documents relating to environmental or indigenous peoples’ or local residents’
claims, requirements or matters; in carrying out any requirements or
prerequisites in order to obtain and obtaining all necessary or appropriate
approvals, permits, consents or permissions relating to the carrying out
of
work, including, without limitation, environmental permits, approvals or
consents; in carrying out reclamation or remediation; in improving, protecting,
or perfecting title in the Property or any part thereof; in carrying out
mineral, soil, water, air or other testing; in preparing engineering,
geological, or environmental studies and/or reports and test work related
thereto; in preparing a Feasibility Study and any related work or reports
preliminary or supplementary thereto.
“Exploration
Committee”
means the technical and financial committee constituted in accordance
with
Section 8.2.
|
“Feasibility
Study”
means a report or reports prepared by Evanachan or its affiliate
or a
third party consultant defined as that which the party preparing
the
feasibility study reasonably expects would be prepared in a manner
acceptable to senior lending institutions in support of project
financing
of work to develop a mine or mines on the Property to Commercial
Production in accordance with National Instrument 43-101 of the
Canadian
Securities Administrators and
|
-3-
generally
accepted industry principles, containing a description and analysis of the
methods and costs of bringing into production and operation a mine on the
Property (or any part thereof) and associated facilities related thereto,
which
report or reports shall include the confirmation of mineral resources or
reserves, as the case may be, by the conduct of detailed drilling works,
hydrological and geotechnical works, environmental studies, and, if deemed
necessary by the Exploration Committee, the mining of one or more bulk samples
of mineralization for metallurgical studies which may require the construction
of one or more shafts, the construction of an incline, or works associated
with
a trial mine. The Feasibility Study shall contain estimates of both capital
and
operating costs and shall analyze how to proceed with mining operations to
economically and commercially extract the target minerals, identify the optimum
structure for the mining venture, and include reference to relevant marketing
and financial aspects.
“Financing
Option”
has the meaning given to it in
Section 7.2.
|
“First
Option”
means the option to acquire a 60% interest of the right, title
and
interest of Rimfire
to
and in the Property as provided in
Section 4.0.
|
“First
Option Period”
means the period during the term of this Agreement from the date
hereof to
and including the date of exercise of the First
Option.
|
“Maintenance
Costs”
has the meaning given to it in Section
8.7.
|
“Mining
Work”
means every kind of work done on or in respect of the Property
or the
products therefrom by or under the direction of or on behalf of
or for the
benefit of a party and, without limiting the generality of the
foregoing,
includes assessment work, geophysical, geochemical and geological
surveying, studies and mapping, investigating, drilling, designing,
examining, equipping, improving, surveying, shaft sinking, raising,
crosscutting and drifting, searching for, digging, trucking, sampling,
including but not limited to surface, subsurface and drill core
sampling,
working and procuring minerals, ores, metals, and concentrates,
surveying
and bringing any mineral claims or other interests to lease, reporting
and
all other work usually considered to be prospecting, exploration,
development and mining work.
|
“Option”
means the First Option or the Second Option, as
applicable.
|
“Option
Period”
means the First Option Period or the Second Option Period, as
applicable.
|
-4-
“Property”
means the mineral claims described in Schedule A, and all mining
leases and other mining interests and all ancillary interests derived
from
or attached to any such claims, and a reference herein to a mineral
claim
comprised in the Property includes any mineral leases or other
interests
into which such mineral claim may have been converted. Property
also
includes any mineral interests that become part of the Property
by
operation of the Area of Common Interest provided in Section 20.0,
but excludes any Abandoned Areas provided in
Section 15.0.
|
“Property
Data”
means all information and data relating to the Property and acquired
by
either party pursuant to the exploration or development of the
Property.
|
“Property
Rights”
means all licences, permits, easements, rights-of-way, certificates
and
other approvals obtained by either of the parties either before
or after
the date of this Agreement and necessary for the development of
the
Property, or for the purpose of placing the Property into production
or
continuing production therefrom.
|
“Second
Option”
has the meaning given to it in
Section 6.1.
|
“Second
Option Period”
has the meaning given to it in
Section 6.2.
|
“Underlying Royalties”
means the net smelter returns royalty interests held by Anglo Gold
Xxxxxxx
(U.S.A.) Exploration Inc. and Western Keltic Mines Alaska Inc.,
as more
particularly described in Schedule A to this
Agreement.
|
“Work
Programs and Budgets”
has the meaning given to it in Section
8.2.
|
1.2 The
headings are for convenience only and are not intended as a guide to
interpretation of this Agreement or any portion thereof.
1.3 The
word
“including”,
when
following any general statement or term, is not to be construed as limiting
the
general statement or term to the specific items or matters set forth or to
similar items or matters, but rather as permitting the general statement
or term
to refer to all other items or matters that could reasonably fall within
its
broadest possible scope.
1.4 All
accounting terms not otherwise defined herein have the meanings assigned
to
them, and all calculations to be made hereunder are to be made, in accordance
with Canadian generally accepted accounting principles applied on a consistent
basis.
-5-
1.5 In
this
Agreement, except as otherwise specified, all references to currency mean
United
States dollars.
1.6 A
reference to a statute includes all regulations made thereunder, all amendments
to the statute or regulations in force from time to time, and any statute
or
regulation that supplements or supersedes such statute or
regulations.
1.7 A
reference to an entity includes any successor to that entity.
1.8 Words
importing the masculine gender include the feminine or neuter, words in the
singular include the plural, words importing a corporate entity include
individuals, and vice versa.
1.9 A
reference to “approval”,
“authorization”
or
“consent”
means
written approval, authorization or consent.
2.0 REPRESENTATIONS,
WARRANTIES AND COVENANTS OF RIMFIRE
2.1 Rimfire
represents and warrants to Evanachan that:
(a)
|
it
is a company duly incorporated, validly subsisting and in good
standing
with respect to filing of annual reports under the laws of the
Province of
British Columbia;
|
(b)
|
Rimfire
Alaska is a company duly incorporated, validly subsisting and in
good
standing with respect to filing of annual reports under the laws
of the
State of Alaska, and is qualified to do business in the jurisdiction
in
which is the Property is located and to hold an interest in the
Property;
|
(c)
|
Rimfire
Alaska, a wholly-owned subsidiary of Rimfire, is the registered
and
beneficial owner of a 100% interest in the Property, free and clear
of any
liens, charges, encumbrances or underlying agreements or interests
except
for the Underlying Royalties;
|
(d)
|
it
has the full power and authority to direct Rimfire Alaska to perform
all
tasks, take all actions and execute all documentation necessary
to
complete the transactions contemplated in this Agreement and shall
provide
Rimfire Alaska with such direction as and when required to complete
the
transactions contemplated in this
Agreement;
|
-6-
(e)
|
it
has full power and authority to carry on its business and to enter
into
this Agreement and any agreement or instrument referred to in or
contemplated by this Agreement and to carry out and perform all
of its
obligations and duties hereunder;
|
(f)
|
it
has duly obtained all authorizations for the execution, delivery,
and
performance of this Agreement, and such execution, delivery and
performance and the consummation of the transactions herein contemplated
will not conflict with, or accelerate the performance required
by or
result in any breach of any covenants or agreements contained in
or
constitute a default under, or result in the creation of any encumbrance,
lien or charge under the provisions of its constating or initiating
documents or any indenture, agreement or other instrument whatsoever
to
which it is a party or by which it is bound or to which it may
be subject
and will not contravene any applicable
laws;
|
(g)
|
the
Property is in good standing with respect to the performance of
all
obligations (including, without limitation, the payment of any
fees)
applicable under all laws of the State of Alaska and the federal
laws of
the United States of America applicable therein (including, without
limitation, applicable mining and environmental
laws);
|
(h)
|
except
as expressly set out herein, there are no adverse claims or challenges
to
Rimfire Alaska’s interest in the
Property;
|
(i)
|
neither
Rimfire nor Rimfire Alaska has assigned, encumbered or entered
into any
agreement to assign or encumber its rights to the Property or the
rights
which derive therefrom and has not acquired, with respect to third
parties, any obligation whatsoever which would prevent Rimfire
from
entering into this Agreement;
|
(j)
|
upon
exercise by Evanachan of the First Option, Rimfire Alaska shall
have the
legal right and authority to transfer title to an undivided 60%
interest
in the Property to Evanachan;
|
(k)
|
to
the best of the knowledge, information and belief of Rimfire, there
are no
actions, suits, investigations or proceedings before any court,
arbitrator, administrative agency or other tribunal or governmental
authority, whether current, pending or threatened, which directly
or
indirectly relate to or affect the Property or the lands comprising
the
Property nor is Rimfire aware of any facts which would lead it
to suspect
that the same might be initiated or
threatened;
|
-7-
(l)
|
to
the best of the knowledge, information and belief of Rimfire, neither
Rimfire nor any other person under the control of Rimfire has directly
or
indirectly caused, permitted or allowed any contaminants, pollutants,
wastes or toxic substances (collectively “Hazardous
Substances”)
to be released, discharged, placed, escaped, leached or disposed
of on,
into, under or through the lands (including watercourses, improvements
thereon and contents thereof) comprising the Property and, so far
as any
of them are aware after reasonable inquiry, no Hazardous Substances
or
underground storage tanks are contained, harboured or otherwise
present in
or upon such lands (including watercourses, improvements thereon
and
contents thereof);
|
(m)
|
to
the best of the knowledge, information and belief of Rimfire, there
are no
obligations or commitments for reclamation, closure or other environmental
corrective, clean up or remediation action directly or indirectly
relating
to the Property or the lands comprising the Property that have
not been
previously disclosed in writing to
Evanachan;
|
(n)
|
the
activities directly or indirectly relating to the Property and
the use of
the lands comprising the Property by Rimfire and by any other person
under
the control of Rimfire, have been in compliance with all laws of
the State
of Alaska and the federal laws of the United States of America
applicable
therein and Rimfire has not received any notice nor is Rimfire
aware after
reasonable inquiry of any such breach or violation having been
alleged;
|
(o)
|
no
environmental audit, assessment, study or test has been conducted
in
relation to the lands comprising the Property by or on behalf of
Rimfire
nor is Rimfire aware of any of the same having been conducted by
or on
behalf of any other person (including any governmental authority).
Notwithstanding the foregoing, Evanachan acknowledges that certain,
unrelated business operations and government organizations might
reasonably be expected to have been required to conduct tests or
studies
in connection with environmental activities, but that these are
not under
the control of or knowledge of Rimfire;
and
|
(p)
|
Rimfire
has disclosed and delivered to Evanachan all information and data,
including, without limitation, all historical documentation with
respect
to title, all geological, geophysical and assay results, maps,
environmental studies, tests and assessments and notifications
concerning
the Property and prior exploration, development, reclamation and
remediation work carried out thereon and within Rimfire’s
knowledge.
|
-8-
2.2 The
representations and warranties contained in Section 2.1 are provided for
the exclusive benefit of Evanachan, and a breach of any one or more thereof
may
be waived by Evanachan in whole or in part at any time without prejudice
to its
rights in respect of any other breach of the same or any other representation
or
warranty; and the representations and warranties contained in Section 2.1
will survive the execution hereof.
2.3 Rimfire
covenants that its obligation to pay cash or issue shares to Western Keltic
Mines Alaska Inc. (other than cash payments made pursuant to the Underlying
Royalties) pursuant to the terms of the Underlying Royalty payable to Western
Keltic Mines Alaska Inc., as more particularly described in Schedule A, is
solely Rimfire’s obligation and Rimfire specifically acknowledges that this
obligation is not a shared obligation with Evanachan.
3.0 REPRESENTATIONS
AND WARRANTIES OF EVANACHAN
3.1 Evanachan
represents and warrants to Rimfire that:
(a)
|
it
is a company duly incorporated, validly subsisting and in good
standing
with respect to filing of annual reports under the laws of Ontario
and
will within two years from the date of this Agreement, either directly
or
indirectly through a wholly-owned Alaska subsidiary, be qualified
to do
business in the jurisdiction in which the Property is located and
to hold
an interest in the Property;
|
(b)
|
has
full power and authority to carry on its business and to enter
into this
Agreement and any agreement or instrument referred to in or contemplated
by this Agreement and to carry out and perform all of its obligations
and
duties hereunder; and
|
(c)
|
it
has duly obtained all authorizations for the execution, delivery,
and
performance of this Agreement, and such execution, delivery and
performance and the consummation of the transactions herein contemplated
will not conflict with, or accelerate the performance required
by or
result in any breach of any covenants or agreements contained in
or
constitute a default under, or result in the creation of any encumbrance,
lien or charge under the provisions of its constating or initiating
documents or any indenture, agreement or other instrument whatsoever
to
which it is a party or by which it is bound or to which it may
be subject
and will not contravene any applicable
laws.
|
3.2 The
representations and warranties contained in Section 3.1 are provided for
the exclusive benefit of Rimfire and a breach of any one or more thereof
may be
waived by Rimfire
in whole
or in part at any time without prejudice to its right in respect of any other
breach of the
-9-
same
or
any other representation or warranty; and the representations and warranties
contained in Section 3.1 will survive the execution hereof.
4.0 FIRST
OPTION
4.1 Rimfire
hereby grants to Evanachan the sole and exclusive right and option, subject
to
the terms of this Agreement, to acquire a 60% undivided interest the Property
free and clear of all charges, encumbrances and claims, save and except for
the
Underlying Royalties.
4.2 This
Agreement and the First Option will terminate if Evanachan has failed to
incur a
total of US $4,800,000 on the Property in Expenditures in the following
amounts and by the times described (any Expenditures incurred in excess of
the
amount required to be incurred shall be carried forward into the subsequent
period or periods):
(a)
|
US $750,000
on or before November 27, 2007 (the “Committed
Expenditures”);
|
(b)
|
an
aggregate of US $1,500,000 on or before November 27,
2008;
|
(c)
|
an
aggregate of US $2,250,000 on or before November 27, 2009;
|
(d)
|
an
aggregate of US $3,000,000 on or before November 27,
2010;
|
(e)
|
an
aggregate of US $3,800,000 on or before November 27, 2011;
and
|
(f)
|
an
aggregate of US $4,800,000 on or before November 27,
2012.
|
4.3 During
each year of the First Option Period, Evanachan shall notify Rimfire in writing
whether or not it elects to continue with the First Option for the period
ending
November 27 in the ensuing year, such notice to be delivered to Rimfire by
February 1 in each such year.
4.4 The
Committed Expenditures are a firm and binding commitment by Evanachan to
incur
Expenditures of US $750,000 on or before November 27, 2007 and will be
incurred and distributed in accordance with Sections 4.5 and 4.6. With the
exception of the Committed Expenditures, all other Expenditures set out in
Section 4.2 may be incurred at the option of Evanachan. Evanachan must
incur the minimum aggregate amount of Expenditures in accordance with the
schedule set out in Section 4.2 in order to maintain the First Option,
subject to force majeure pursuant to Section 16.0
and the make-up right in Section 4.7.
-10-
4.5 The
total
work Expenditures in Section 4.2 above will include the following minimum
work Expenditures for each block of claims, to be incurred by November 27,
2012:
Claim
Block
|
Minimum
Total Expenditure
|
Cal-Surf
Xxxx
|
US $1,000,000
|
Eagle-Hawk
|
US $800,000
|
ER
|
US $800,000
|
Swede-Bou
|
US $400,000
|
4.6 50%
of
the Expenditures will be spent equally among the four claim blocks listed
in
Section 4.5 until the minimum total Expenditures for each listed claim block
has
been incurred. The remaining 50% of the annual Expenditures may be incurred
by
Evanachan on the Property at the discretion of Evanachan.
4.7 Expenditures
incurred by any date in excess of the amount of Expenditures required to
be
incurred by such date shall be carried forward to the succeeding period and
qualify as Expenditures. If Expenditures incurred by any date are less than
the
amount of the Expenditures required to be incurred by such date, Evanachan
may
pay the deficiency to or to the direction of Rimfire in cash within 45 days
after such date, in order to maintain the First Option. Such payments of
cash in
lieu shall be deemed to be Expenditures incurred on the Property on or before
such date, for the purpose of Section 4.0.
4.8 All
Expenditures incurred hereunder shall be for the account of Evanachan. Any
Expenditures which have been incurred by it will entitle it to claim all
tax
benefits, credits, write-offs and deductions with respect thereto. Any
Expenditures for services provided by affiliates of Evanachan will not exceed
the fair market value of such services.
4.9 Rimfire
hereby acknowledges receipt from Evanachan of US $230,000 of the
Committed Expenditures, which represents a reimbursement to Rimfire of Rimfire’s
2006 exploration program.
5.0 EXERCISE
OF FIRST OPTION
5.1 Evanachan
may at any time after it has satisfied its obligations under Section 4.0
exercise the First Option by delivering a notice to Rimfire confirming that
Evanachan has incurred Expenditures of at least US $4,800,000 in accordance
with Section 4.0,
provided always that nothing herein will at any time oblige Evanachan to
give
such notice.
-11-
5.2 If
and
when the First Option has been exercised, a 60% undivided right, title and
interest in and to the Property will vest in Evanachan free and clear of
all
charges, encumbrances and claims, save and except for the Underlying
Royalties.
6.0 SECOND
OPTION
6.1 Rimfire
hereby grants to Evanachan the sole and exclusive right and option, subject
to
the terms of this Agreement, to acquire an additional 10% undivided right,
title
and interest in the Property free and clear of all charges, encumbrances
and
claims, save and except for the Underlying Royalties (the “Second
Option”),
such
Second Option to be exercisable by Evanachan upon:
(a)
|
Evanachan
having exercised the First Option;
|
(b)
|
Evanachan
delivering written notice to Rimfire within 90 days of Evanachan
exercising the First Option stating that Evanachan has elected
to pursue
the Second Option;
|
(c)
|
Evanachan
completing and delivering to Rimfire a Feasibility Study on or
before the
10th anniversary
of Evanachan delivering the notice contemplated in Section 6.1(b)
above.
|
6.2 Upon
electing to pursue the Second Option, which election shall be in writing,
Evanachan shall diligently pursue the completion of and shall have 10 years
to complete the Feasibility Study (the “Second
Option Period”)
and
deliver the same to Rimfire. Upon Evanachan satisfying the obligations under
Section 6.1, it shall have exercised the Second Option and Evanachan shall
have a 70% undivided interest and Rimfire shall have a 30% undivided interest
in
the Property, subject to the Underlying Royalties. Should Evanachan not complete
the obligations set out in Section 6.1 within the Second Option Period, the
Second Option shall terminate. Upon terminating the Second Option without
exercise thereof, Evanachan shall have a 60% undivided interest and Rimfire
shall have a 40% undivided interest in the Property and the parties will
form a
joint venture in respect of the Property in accordance with
Section 7.1(a).
6.3 Notwithstanding
that Evanachan may elect to exercise the Second Option, Evanachan shall have
no
obligation to complete the Feasibility Study and subject to the terms and
conditions contained in this Agreement, Evanachan shall have the right at
any
time for so
-12-
long
as
the Second Option remains outstanding to terminate the Second Option on
30 days written notice to Rimfire.
6.4 During
the term of the Second Option, Evanachan shall incur sufficient Expenditures
to
keep the Property in good standing.
7.0 FORMATION
OF JOINT VENTURE
7.1 Upon
either the exercise of the First Option and the termination of the Second
Option, or the exercise of both the First Option and the Second Option, or
the
exercise of each of the First Option, the Second Option and the Financing
Option, the parties agree to enter into a joint venture agreement in the
form as
set out in Schedule B hereto, with such modifications as may be agreed upon
by the parties negotiating in good faith. At the commencement of the joint
venture the percentage undivided interest and deemed Expenditures by each
party
shall be one of the following:
(a)
|
if
the joint venture is formed following the exercise of the First
Option:
|
Percentage
Interest
|
Deemed
Expenditures
|
||
Evanachan
|
60%
|
US $4,800,000
|
|
Rimfire
|
40%
|
US $3,200,000
|
(b)
|
if
the joint venture is formed following the exercise of the Second
Option:
|
Percentage
Interest
|
Deemed
Expenditures
|
||
Evanachan
|
70%
|
US $4,800,000
plus
the amount of Expenditures incurred by Evanachan to complete the
Feasibility Study
|
|
Rimfire
|
30%
|
US $3,200,000
plus
3/7 x the amount of Expenditures incurred by Evanachan to
complete the Feasibility Study
|
-13-
(c)
|
if
the joint venture is formed following the exercise of the Financing
Option:
|
Percentage
Interest
|
Deemed
Expenditures
|
||
Evanachan
|
75%
|
US $4,800,000
plus
the amount of Expenditures incurred by Evanachan to complete the
Feasibility Study and any Maintenance Costs incurred following
the
completion of the Feasibility Study
|
|
Rimfire
|
25%
|
US $3,200,000
plus
1/3 x the amount of Expenditures incurred by Evanachan to
complete the Feasibility Study and any Maintenance Costs incurred
following the completion of the Feasibility Study
|
7.2. Financing
Option
7.2.1 Provided
that Evanachan has exercised the Second Option, and the joint venture has
not
yet been formed pursuant to Section 7.1, within 75 days of receiving a
Production Notice (as defined in the joint venture agreement attached as
Schedule B), Rimfire may request that Evanachan arrange project financing
required for mine costs (the “Financing
Option”),
in
return for an additional undivided 5% legal and beneficial interest in the
Property on the terms and conditions described in this
Section 7.2.
7.2.2 In
order
to exercise the Financing Option, Evanachan shall:
(a)
|
have
delivered the Production Notice to Rimfire;
and
|
(b)
|
arrange
project financing for the mine costs as set out in the Feasibility
Study,
with Rimfire’s portion of the project financing to be recovered solely
from 80% of Rimfire’s share of free cash flow from the mining operations
and which Evanachan will use best efforts to arrange (for both
Evanachan
and Rimfire based on prevailing market
conditions).
|
7.2.3 Upon
Evanachan having arranged project financing, Evanachan shall have exercised
the
Financing Option and Rimfire shall transfer to Evanachan an additional undivided
5% legal and beneficial Interest in the Property, free and clear of any liens,
charge, encumbrances or underlying agreements or interests, subject only
to the
applicable terms of the Underlying Royalties.
-14-
7.2.4 If
Evanachan fails to arrange project financing and does not exercise the Financing
Option, Evanachan will retain its then current interest in the
Property.
8.0 OPERATOR
8.1 Rimfire
shall act as Operator during the first year of the First Option and Evanachan
shall act as Operator for all subsequent periods for as long as any of the
First
Option or Second Option or remain in effect.
8.2 During
the First Option Period, the Exploration Committee consisting of one
representative of each of Evanachan and Rimfire shall review all Property
Data
and approve the proposed work programs and work program budgets (each a
“Work
Program and Budget”)
submitted by the Operator. If a decision by the Exploration Committee is
not
unanimous, Evanachan shall have a casting vote with respect to approval by
the
Exploration Committee of any proposed Work Program and Budget. The Exploration
Committee shall meet not less than once each calendar quarter unless otherwise
agreed by the parties.
8.3 The
Operator will prepare and submit proposed Work Programs and Budgets for review
and approval by the Exploration Committee not later than 30 days prior to
the
proposed start date of the proposed Work Program, unless otherwise agree
to in
writing.
8.4 The
Operator shall at all times use reasonable commercial efforts to comply with
Evanachan’s standards regarding safety, environmental matters, sustainability
and dealing with contractors. Evanachan will provide Rimfire with particulars
of
these standards and template contract language as required.
8.5 During
the period in which Rimfire is acting as Operator, Evanachan shall pay to
Rimfire on a monthly basis in advance Expenditures pursuant to approved Work
Programs and Budgets for the next 30 days including Maintenance Costs.
These monthly advances will be requested in writing by Rimfire (each a
“Cash
Call”)
and
Evanachan shall have 10 business days from receipt of such written request
to wire transfer the designated Expenditures to Rimfire’s designated bank
account. Rimfire will within 60 days after the conclusion of each calendar
quarter provide Evanachan with documentation confirming payment of Expenditures
during such calendar quarter. Should Rimfire fail to provide Evanachan with
such
confirmation within such 60 days, Evanachan shall not be required to
provide further monthly Cash Call advances until
-15-
such
confirmation is provided and all periods for incurring Expenditures shall
be
extended accordingly.
8.6 Rimfire,
while acting as Operator, shall be entitled to an administrative fee in respect
of its general overhead and administrative expenses in an amount equal to
10% of
all Expenditures incurred pursuant to Approved Work Programs and Budgets.
Such
fees will be deemed to be Expenditures for the purpose of Section 4.2.
8.7 The
Operator shall at all times maintain the Property in good standing and maintain
assessment work commitments, pay such taxes, fees, option payments and grants
on
the Property as may be required to keep the Property in good standing, and
file
the maximum assessment work allowable from the Expenditures made and maintain
the Property free of all liens, charges and encumbrances arising from its
activities as Operator (collectively, the “Maintenance
Costs”).
8.8 Rimfire
will during the first year of the First Option with funds supplied by Evanachan,
and Evanachan will during subsequent years of the First Option or Second
Option,
as applicable, maintain required work commitments and dues, fees and tax
payments on the Property and file the maximum required work allowable from
the
Expenditures made and maintain the Property, free of all liens arising from
Rimfire or Evanachan’s operations (except liens for taxes not yet due, other
inchoate liens or liens contested in good faith by the Operator). All such
required work and dues, fees, and taxes shall constitute Expenditures. Rimfire
shall forward promptly to Evanachan all notices and other communications
in
connection with the Property that Rimfire receives from governmental authorities
so that Evanachan may carry out its obligations in this regards.
9.0 RIGHT
OF ENTRY
9.1 Throughout
the Option Period the directors and officers of the Operator and its servants,
agents and independent contractors, will have the sole and exclusive right
in
respect of the Property to:
(a)
|
enter
thereon;
|
(b)
|
have
exclusive and quiet possession
thereof;
|
(c)
|
do
such prospecting, exploration, development and/or other mining
work
thereon and thereunder as the Operator in its sole discretion may
determine advisable;
|
-16-
(d)
|
bring
upon and erect upon the Property buildings, plant, machinery and
equipment
as the Operator may deem advisable;
and
|
(e)
|
remove
therefrom and dispose of reasonable quantities of ores, minerals
and
metals for the purpose of obtaining assays or making other
tests.
|
10.0 TRANSFER
OF PROPERTY
10.1 The
Property shall during the term of the First Option remain registered in the
name
of Rimfire Alaska or its nominee and Rimfire hereby covenants and agrees
with
Evanachan:
(a)
|
not
to do or to allow Rimfire Alaska to do any act or thing which would
adversely affect the rights of Evanachan
hereunder;
|
(b)
|
to
make available to Evanachan and its representatives all records
and files
in its possession relating to the Property and permit Evanachan
and its
representatives, at their own expense, to take abstracts therefrom
and
make copies thereof;
|
(c)
|
to
cooperate with Evanachan to assist Evanachan in obtaining any surface,
water or other rights related to the Property as Evanachan deems
desirable; and
|
(d)
|
to
promptly provide Evanachan with any and all notices and correspondence
received by Rimfire or Rimfire Alaska from governmental or regulatory
authorities with respect to the
Property.
|
10.2 Following
the exercise of the First Option or Second Option, as applicable, Rimfire
will
cause Rimfire Alaska to deliver to Evanachan duly executed transfer documents
recording an undivided 60% or 70% interest in the Property, as applicable,
free
and clear of any liens, charges or encumbrances other than the Underlying
Royalties.
10.3 A
memorandum of this Agreement, shall, upon the written request of any party,
be
recorded in the office of any governmental agency so requested, in order
to give
notice to third parties of the respective interests of the parties in the
Property and this Agreement. Each party hereby covenants and agrees with
the
requesting party to execute such documents as may be necessary to perfect
such
recording.
-17-
11.0 OBLIGATIONS
OF THE OPERATOR DURING OPTION PERIOD
11.1 During
the Option Period the Operator will:
(a)
|
provide
proof of compliance with assessment filings and any filing fees
or taxes
to the other party (in this section, the “Non-Operator”)
at least 15 days prior to the due date of any such filing or payment
requirement. The Operator shall also promptly provide the Non-Operator
with copies of any notices received by it from any party respecting
the
Property;
|
(b)
|
cooperate
with Non-Operator in the design and preparation of all mineral
exploration
programs on the Property during the Option
Period;
|
(c)
|
permit
the directors, officers, employees and designated consultants of
the
Non-Operator:
|
(i)
|
at
their own risk and cost access to the Property provided that the
Non-
Operator agrees to indemnify the Operator against and to save the
Operator
harmless from all costs, claims, liabilities and expenses that
the
Operator may incur or suffer as a result of any injury (including
injury
causing death) to any director, officer, employee or designated
consultant
of the Non-Operator while on the Property;
and
|
(ii)
|
access
to all Property Data which is in the possession of the Operator
at all
reasonable times subject always to
Section 17.0;
|
(d)
|
while
exploration and development is carried out, furnish the Non-Operator
with
monthly progress reports and with a final report within 60 days
following the conclusion of each Work Program. The final report
shall show
the exploration and development performed and the results obtained
and
shall be accompanied by a statement of Expenditures and copies
of
pertinent Property Data;
|
(e)
|
deliver
to the Non-Operator or on or before March 15 in each year a report
(including up-to-date maps if there are any) describing the results
of
work done in the last completed calendar year, together with reasonable
details of Expenditures made on the
Property;
|
(f)
|
do
all work on the Property in a good and workmanlike fashion and
in
accordance with all applicable laws, regulations, orders and ordinances
of
any governmental authority;
|
-18-
(g)
|
indemnify
and save the
Non-Operator harmless in respect of any and all costs, claims,
liabilities
and expenses arising out of the Operator’s activities on the Property and,
without limiting the generality of the foregoing will, during the
currency
of this Agreement, carry not less than $5,000,000 in third party
liability
insurance in respect of its operations on the Property for the
benefit of
the Operator and Non-Operator as their interests appear; provided
that the
Operator will incur no obligation thereunder in respect of claims
arising
or damages suffered after termination of the Option if upon termination
of
the Option any workings on or improvements to the Property made
by the
Operator are left in a safe condition;
and
|
(h)
|
deliver
to the Non-Operator, forthwith after receipt by the Operator all
Property
Data.
|
12.0 TERMINATION
OF FIRST OPTION
12.1 If
the
First Option is terminated otherwise than upon the exercise thereof pursuant
to
Section 5.0, Evanachan will:
(a)
|
leave
in good standing for a period of at least one year from the
termination of the First Option Period those mineral claims comprised
in
the Property on the date the First Option is
terminated;
|
(b)
|
deliver
at no cost to Rimfire within 60 days of such termination copies of
all reports, maps, assay results and other relevant technical data
compiled by or in the possession of Evanachan with respect to the
Property
and not theretofore furnished to Rimfire;
and
|
(c)
|
comply
with applicable laws and regulations regarding reclamation for
activities
carried out on the Property by or on behalf of
Evanachan.
|
12.2 Unless
otherwise agreed to by Rimfire, Evanachan will have the right, within a period
of one year following the termination of this Agreement to remove from the
Property all buildings, plant, equipment, machinery, tools, appliances and
supplies which have been brought upon the Property by or on behalf of
Evanachan,
and any
such property not so removed within such period will thereafter become the
property of Rimfire.
12.3 If
the
Second Option is terminated otherwise than upon the exercise thereof pursuant
to
Section 6.0, the parties shall associate themselves as a joint venture pursuant
to the applicable provisions of Section 7.0.
-19-
13.0 POWER
TO CHARGE PROPERTY
13.1 At
any
time after Evanachan has exercised the First Option, Evanachan may grant
mortgages, charges or liens (each a “mortgage”)
of and
upon the Property or any portion thereof, any mill or other fixed assets
located
thereon, and any or all of the tangible personal property located on or used
in
connection with the Property to secure financing of development of the Property,
provided that, unless otherwise agreed to by Rimfire it will be a term of
each
mortgage that the mortgagee or any person acquiring title to the Property
upon
enforcement of the mortgage will hold the same subject to the rights of Rimfire
hereunder as if the mortgagee or any such person had executed this Agreement
as
party of the first part.
13.2 Rimfire
may grant a mortgage, charge or lien against its interest in the Property
only
with the consent of Evanachan, such consent not to be unreasonably
withheld.
14.0 ASSIGNMENT
AND TRANSFERS
14.1 Neither
Rimfire nor Evanachan will sell or assign this Agreement or sell, assign,
transfer or otherwise dispose of any of its rights, benefits and privileges
hereunder or any part of its interest in the Property except upon the following
conditions:
(a)
|
if
a party (the “Transferring
Party”)
desires to sell, assign, transfer or otherwise dispose of all or
any part
of its interest in this Agreement or any of its rights, benefits
or
privileges hereunder or any part of its interest in the Property
(the
“Transferred
Interest”)
to a proposed purchaser (the “Purchaser”)
from whom the Transferring Party shall have received a bona fide
offer which it is prepared to accept, the Transferring Party shall
first
offer (the “Offer”)
the same in writing to the other party hereto (the “Non-Transferring
Party”),
and at the same price and on the same terms as are offered by the
Purchaser and shall therein identify such Purchaser. The Transferring
Party shall also provide the Non-Transferring Party with a copy
of the
bona fide written offer that it has received from the
Purchaser;
|
(b)
|
if
the Offer is accepted by the Non-Transferring Party, the Transferring
Party shall forthwith transfer to the Non-Transferring Party the
Transferred Interest, upon the Non-Transferring Party paying the
purchase
price. If the Offer is not accepted by the Non-Transferring Party
within
60 days following receipt of the Offer, then, at any time during the
further period of 60 days immediately thereafter, the Transferring
Party may sell, assign, transfer or otherwise dispose of the Transferred
Interest to the Purchaser at the same price and on the same terms
and
conditions as the original offer received from the Purchaser;
and
|
-20-
(c)
|
for
greater certainty, nothing contained in the provisions of this
Section 14.1 shall prevent any party
from:
|
(i)
|
entering
into any corporate reorganization, merger, amalgamation, takeover
bid,
plan of arrangement, or any other such corporate transaction which
has the
effect of, directly or indirectly, selling, assigning, transferring,
or
otherwise disposing of all or a part of the Transferred Interest
to a
Purchaser; or
|
(ii)
|
assigning
a Transferred Interest to an Affiliate of such party, provided
that the
Transferring Party delivers to the other party notice of such assignment
and provided that before such Affiliate ceases to be an Affiliate
of the
Transferring Party, the Transferred Interest must be assigned back
to the
Transferring Party.
|
14.2 Notwithstanding
Section 14.1, Evanachan may at any time for a period of three years from
the
date of this Agreement sell, transfer or otherwise dispose of all of its
interest in and to the Property and this Agreement to an Affiliate of Evanachan
or another entity in which Xxx XxXxxx or his family or close business associates
has a substantial involvement either through equity ownership (it being
understood that Xxx XxXxxx will be the single largest shareholder of such
entity) or managerial control or which is otherwise acceptable to Rimfire
provided that any purchaser, grantee or transferee of any such interest will
have first delivered to Rimfire its agreement related to this Agreement and
to
the Property, containing:
(a)
|
a
covenant by such transferee to perform all the obligations of Evanachan
to
be performed under this Agreement in respect of the interest to
be
acquired by it from Evanachan to the same extent as if this Agreement
had
been originally executed by Evanachan and such transferee as joint
and
several obligors making joint and several covenants;
and
|
(b)
|
a
provision subjecting any further sale, transfer or other disposition
of
such interest in the Property and this Agreement or any portion
thereof to
the restrictions contained in this
Section 14.0.
|
15.0 SURRENDER
AND ACQUISITION OF PROPERTY
INTERESTS
BEFORE TERMINATION OF AGREEMENT
15.1 Evanachan
may at any time during the Option Period, elect to have any one or more of
the
mineral claims comprised in the Property excluded from the Property (an
“Abandoned
Area”)
by
giving notice to Rimfire of such intention.
-21-
15.2 For
greater certainty, the aggregate Expenditures of US$4,800,000 as set out
in
Section 4.2 shall not be reduced as a result of any one or more Abandoned
Areas being excluded from the Property pursuant to Section 15.1.
15.3 In
the
event Evanachan does not incur the minimum amount of Expenditures set out
in
Section 4.5 for any one or more of the four claim blocks that comprise the
Property, those claims upon which minimum Expenditures have not been incurred
shall be deemed to be Abandoned Areas upon the expiration of the First Option
Period.
15.4 The
mineral claims comprising any one or more Abandoned Areas pursuant to Sections
15.1 or 15.3 will, for all purposes of this Agreement, cease to form part
of the
Property.
15.5 Any
claims comprising one or more Abandoned Areas shall be in good standing under
the applicable laws of Alaska for at least 90 days from the earlier of the
date of:
(a)
|
delivery
to Rimfire of the notice contemplated in Section 15.1;
or
|
(b)
|
actual
delivery to Rimfire of notice confirming a deemed abandonment pursuant
to
Section 15.3.
|
15.6 Where
any
or all mineral claims comprising an Abandoned Area are held by Evanachan,
Rimfire may at any time during the 90 day notice period set out in Section
15.5,
deliver notice to Evanachan requesting the transfer of said mineral claims
to
Rimfire. Upon receipt of such notice, Evanachan will
deliver to Rimfire a xxxx of sale or other appropriate deed or assurance
in
registerable form transferring such mineral claims to Rimfire.
15.7 If
Rimfire fails to make request for the transfer of any mineral claims as set
out
in Section 15.5 within such 90 day period, Evanachan may then abandon such
mineral claim without further notice to Rimfire.
16.0 FORCE
MAJEURE
16.1 No
party
shall be liable to any other party hereto and no party shall be deemed in
default hereunder for any failure to perform or delay in performing any of
its
covenants and agreements or in incurring Expenditures caused by or arising
out
of any event (a “force majeure event”) beyond the reasonable control of such
party, excluding lack of funds but including, without limitation, lack of
rights
or permission by indigenous peoples’ groups to enter upon the
-22-
Property
to conduct exploration, development and mining operations thereon, or war
conditions, actual or potential, earthquake, fire, storm, flood, explosion,
strike, labour trouble, accident, riot, unavoidable casualty, act of restraint,
present or future, of any lawful authority, act of God, protest or
demonstrations by environmental lobbyists or indigenous peoples’ groups, act of
the public enemy, delays in transportation, breakdown of machinery, inability
to
obtain necessary materials in the open market or unavailability of equipment.
No
right of a party shall be affected for failure or delay of a party to perform
any of its covenants and agreements hereunder or to incur Expenditures if
the
failure or delay is caused by one of the events referred to above. All times
provided for in this Agreement shall be extended for the period commensurate
with the period of delay and, so far as possible, the party affected shall
take
all reasonable steps to remedy the cause of the delay attributable to the
events
referred to above; provided, however, that nothing contained in this section
shall require any party to settle any labour dispute, protest or demonstration,
or to question or test the validity of any governmental order, regulation,
or
law or claim of right by indigenous peoples’ groups. Notwithstanding the
foregoing, a force majeure event will not discharge Evanachan from its
obligations under Section 11.1(a).
16.2 The
party
affected by a force majeure event will within five days give notice to the
other party of each force majeure event under Section 16.1 and upon
cessation of such event will furnish to the other party with notice to that
effect together with particulars of the number of days by which the obligations
of the affected party hereunder have been extended by virtue of such event
of
force majeure and all preceding events of force majeure.
17.0 CONFIDENTIAL
INFORMATION
17.1 Confidentiality
Except
as
otherwise provided in this Agreement, each party agrees that unless it has
the
prior written consent of the other party, it will treat as confidential and
prevent disclosure to any third parties of all Property Data and all other
data
and information relating to any other mineral property in which one of the
parties has an interest that is provided to the other party with Property
Data.
This obligation shall be a continuing obligation of each party throughout
the
term of this Agreement and for a period of three years following
termination of this Agreement. Except as expressly provided herein, each
of the
parties shall be entitled to all Property Data which can be reproduced and
which
have not previously been furnished to the party.
17.2 Public
Announcements
No
party
shall make any announcement, press release or public statement relating in
any
manner to this Agreement, the Property or activities related to the Property
without first furnishing the proposed text thereof to the other party and
obtaining the other party’s prior
-23-
approval
in writing, at least three business days prior to the proposed date of such
disclosure (unless otherwise agreed by the parties), which approval shall
not be
unreasonably withheld or delayed. Whenever practicable and appropriate, the
parties hereby agree that any announcements, press releases or public statements
shall be issued jointly by the parties.
17.3 Exceptions
17.3.1 The
approval required by Sections 17.1 and 17.2 shall not apply to a
disclosure:
(a)
|
to
an affiliate, consultant, contractor, or subcontractor that has
a
bona fide
need to be informed;
|
(b)
|
reasonably
required by a third party or parties in connection with negotiations
for a
permitted transfer of an interest under this Agreement, an interest
in the
Property, or the acquisition of an equity or other interest in
a party to
such third party or parties;
|
(c)
|
to
a governmental agency or to the public which the disclosing party
believes
in good faith is required by pertinent law or regulation or the
rules or
policies of any stock exchange or securities regulatory
authority;
|
(d)
|
reasonably
required by a party in the prosecution or defense of a lawsuit
or other
proceeding;
|
(e)
|
as
reasonably required by a financial institution or other similar
entity in
connection with any financing being undertaken by a party hereto
for
purposes of this Agreement;
|
(f)
|
information
which is or becomes part of the public domain other than through
a breach
of this Agreement;
|
(g)
|
information
already in the possession of a party or its affiliate prior to
receipt
thereof from any other party or its affiliates or development of
such
information under this Agreement;
|
(h)
|
information
lawfully received by a party or an affiliate from a third party
not under
an obligation of secrecy to the other party;
or
|
(i)
|
following
termination of this Agreement, confidential information reasonably
required by a third party or parties in connection with negotiating
for a
transfer of an interest in the
Property.
|
-24-
17.3.2 In
any
case to which this Section 17.3 is applicable, the disclosing party shall
provide the proposed text to the other party prior to making such disclosure.
As
to any disclosure pursuant to Section 17.3.1(a), (b) or (e) only such
confidential information as such third party shall have a legitimate business
need to know shall be disclosed and such third party shall first agree in
writing to protect the confidential information from further disclosure to
the
same extent as the parties are obligated under this
Section 17.0.
17.4 Ordinary
Course of Business
For
purposes of Section 11.2 of National Instrument 51-102 - Continuous
Disclosure Obligations:
(a)
|
each
party represents and warrants that this Agreement is entered into
in the
ordinary course of business; and
|
(b)
|
should
a party subsequently determine that this Agreement is or has become
a
material contract, such party
covenants;
|
(i)
|
to
file a redacted version of this Agreement in order not to prejudicially
affect the interest of the parties;
|
(ii)
|
to
consult with the other party on the preparation of such redacted
Agreement; and
|
(iii)
|
that
any such disclosure shall be in accordance with
Section 16.3.
|
17.5 Privacy
Legislation
Each
party to this Agreement acknowledges and consents to the fact that the other
party is collecting the personal information (as that term is defined under
applicable privacy legislation, including the Personal
Information and Protections and Electronic Documents Act
(Canada)
and any other applicable similar, replacement or supplemental provincial
or
federal legislation or laws in effect in Canada from time to time) of the
other
party for the purposes of completing this Agreement. Each party acknowledges
and
consents to the other party retaining such personal information for as long
as
permitted or required by law or business practice. Each party further
acknowledges and consents to the fact that the other party may be required
by
applicable securities legislation or the rules and policies of any stock
exchange to provide regulatory authorities with any personal information
provided by the other party in this Agreement.
-25-
18.0 ARBITRATION
18.1 Any
party
may submit to arbitration pursuant to the terms of this Section 18.0 any
questions or matters in dispute with respect to the accounting of monies
expended by Evanachan as provided herein, or with respect to the calculation
of
or amounts taken into account in the determination of Expenditures.
18.2 It
will
be a condition precedent to the right of any party to submit any matter to
arbitration pursuant to the provisions hereof, that any party intending to
refer
any matter to arbitration will have given not less than 15 days’ prior
written notice of its intention to do so to the other party together with
particulars of the matter in dispute.
18.3 On
the
expiration of such 15 days, the party who gave such notice may proceed to
refer the dispute to arbitration as provided in Section 18.4.
18.4 The
party
desiring arbitration will appoint one arbitrator, and will notify the other
party of such appointment, and the other party will, within 30 days after
receiving such notice, appoint an arbitrator, and the two arbitrators so
named,
before proceeding to act, will, within 15 days of the appointment of the
last appointed arbitrator, unanimously agree on the appointment of a third
arbitrator to act with them and be chairman of the arbitration herein provided
for.
18.5 If
the
other party fails to appoint an arbitrator within 30 days after receiving
notice of the appointment of the first arbitrator, and if the two arbitrators
appointed by the parties fail to agree on the appointment of the chairman,
the
chairman will be appointed under the provision of the Commercial
Arbitration Act
(British
Columbia).
18.6 Except
as
specifically otherwise provided in Section 18.4 the arbitration herein
provided for will be conducted in accordance with such Act.
18.7 The
chairman, or in the case where only one arbitrator is appointed, the single
arbitrator, will fix a time and place in Vancouver, British Columbia or Xxxxxxx,
Xxxxxxx, for the purpose of hearing the evidence and representations of the
parties, and he will preside over the arbitration and determine all questions
of
procedure not provided for under such Act or this Section 18.0.
-26-
18.8 After
hearing any evidence and representations that the parties may submit, the
single
arbitrator, or the arbitrators, as the case may be, will make an award and
reduce the same to writing, and deliver one copy thereof to each of the
parties.
18.9 The
expense of the arbitration will be paid as specified in the award.
18.10 The
parties hereby agree that the award of a majority of the arbitrators, or
in the
case of a single arbitrator, of such arbitrator, will be final and binding
upon
each of them.
19.0 DEFAULT
AND TERMINATION
19.1 Notwithstanding
Sections 4.0, 5.0 and 6.0, if at any time during the Option Period
Evanachan fails to perform any obligation required to be performed hereunder
or
is in breach of a warranty given herein, which failure or breach materially
interferes with the implementation of this Agreement, Rimfire may terminate
this
Agreement but only if:
(a)
|
it
first gives to Evanachan a notice of default containing particulars
of the
obligation which Evanachan has not performed, or the warranty breached;
and
|
(b)
|
Evanachan
does not, within 30 days after delivery of such notice of default,
cured such default or begun proceedings to cure such default by
appropriate payment or performance (Evanachan hereby agreeing that
should
it so begin to cure any default it will prosecute the same to completion
without undue delay).
|
19.2 If
during
the First Option Period Evanachan fails to comply with the provisions of
Section 19.1(b) Rimfire may thereafter terminate this Agreement, and the
provisions of Section 12.0 will then be applicable.
19.3 If
during
the Second Option Period Evanachan fails to comply with the provisions of
Section 19.1(b) Rimfire may thereafter terminate this Agreement, and the
provisions of Section 12.0 will then be applicable.
19.4 Subject
to the terms and conditions contained in this Agreement, provided Evanachan
is
not in default of its obligations, Evanachan may terminate the First Option
and
this Agreement upon 30 days’ advance written notice to Rimfire.
-27-
20.0 AREA
OF
COMMON INTEREST
20.1 The
area
of common interest (“Area
of Common Interest”)
shall
be deemed to comprise that area which is included within one mile of the
outermost boundary of the Property as at the date of execution of this Agreement
as shown on the map attached as part of Schedule A to this Agreement.
Nothing in this Agreement shall cause the Area of Common Interest to be
expanded.
20.2 If
at any
time during the subsistence of this Agreement any party or an affiliate of
any
party (in this Section only called in each case the “Acquiring
Party”)
stakes
any mining claim located wholly or partly within the Area of Common Interest
referred to in Section 20.1, the Acquiring Party shall forthwith give
notice to the other party of that staking the total cost thereof and all
details
in the possession of that party with respect to the details of the staking,
the
nature of the property and the known mineralization.
20.3 The
other
party may, within 30 days of receipt of the Acquiring Party’s notice,
elect, by notice to the Acquiring Party, to require that the mineral properties
and the right or interest acquired be included in and thereafter from part
of
the Property for all purposes of this Agreement.
20.4 If
the
election aforesaid is made, Evanachan shall reimburse the Acquiring Party
(if
the Acquiring Party is Rimfire) for the cost of staking. If the Acquiring
Party
is Evanachan it shall not be entitled to reimbursement of its costs of staking.
In any event, all costs of staking shall be deemed to be part of the
Expenditures to be incurred by Evanachan to earn an interest in the
Property.
20.5 If
the
other party does not make the election aforesaid within that period of
30 days, the right or interest acquired shall not form part of the Property
and the Acquiring Party shall be solely entitled thereto.
20.6 For
greater certainty, any part of the Property abandoned by Evanachan and acquired
by Rimfire pursuant to Section 15.0 shall not be subject to Section 20.2.
Any part of the Property which has not been so acquired by Rimfire shall
remain
subject to Section 20.2.
21.0 INDEMNITY
21.1 Rimfire
shall indemnify and save harmless Evanachan and its affiliates and their
respective directors, officers, employees, agents, representatives,
shareholders, contractors and
-28-
subcontractors
(collectively the “Evanachan Indemnified Parties”) from and against any claims,
losses, demands, judgments, liabilities, expenses, damages, fines, charges
and
costs (including legal costs incurred on a solicitor and own client basis)
and
losses of every kind whatsoever, whether direct or indirect, which at any
time
or from time to time are directly or indirectly incurred or suffered by any
of
the Evanachan Indemnified Parties in connection with, as a result of or arising
out of:
(a)
|
any
misrepresentation or untrue warranty of Rimfire in this
Agreement;
|
(b)
|
any
breach of this Agreement by Rimfire;
or
|
(c)
|
the
performance by Evanachan and/or its affiliates of any obligations
required
to be performed by Rimfire under this
Agreement,
|
but,
in
the case of (a) such indemnities shall survive for only a period of three
years
from the date of this Agreement.
21.2 Notwithstanding
anything to the contrary expressed or implied in this Agreement, no
indemnification shall be sought from Rimfire for any breach of this Agreement
by
Rimfire unless and until Evanachan has first given written notice to Rimfire
specifying the particulars of such breach, and such breach has not been remedied
by Rimfire within 30 days from the date of delivery of such notice.
21.3 Evanachan
shall indemnify and save harmless Rimfire and its affiliates and their
respective directors, officers, employees, agents, representatives,
shareholders, contractors and subcontractors (collectively the “Rimfire
Indemnified Parties”) from and against any claims, losses, demands, judgments,
liabilities, expenses, damages, fines, charges and costs (including legal
costs
incurred on a solicitor and own client basis) and losses of every kind
whatsoever, whether direct or indirect, which at any time or from time to
time
are directly or indirectly incurred or suffered by any of the Rimfire
Indemnified Parties in connection with, as a result of or arising out
of:
(a)
|
any
misrepresentation or untrue warranty of Evanachan in this
Agreement;
|
(b)
|
any
breach of this Agreement by Evanachan;
or
|
(c)
|
the
performance by Rimfire and/or its affiliates of any obligations
required
to be performed by Evanachan under this Agreement,
|
-29-
but,
in
the case of (a) such indemnities shall survive for only a period of three
years
from the date of this Agreement.
21.4 Notwithstanding
anything to the contrary expressed or implied in this Agreement, no
indemnification shall be sought from Evanachan for any breach of this Agreement
by Evanachan unless and until Rimfire first gives Evanachan written notice
specifying the particulars of such breach, and such breach has not been remedied
by Evanachan within 30 days from the date of delivery of such
notice.
22.0 NOTICES
22.1 Each
notice, demand or other communication required or permitted to be given under
this Agreement will be in writing and will be sent by prepaid registered
mail
deposited in a post office in Canada addressed to the party entitled to receive
the same, or delivered to such party, at the address for such party specified
or
by facsimile, in each case addressed as applicable as follows:
(a)
|
If
to Evanachan at:
|
00
Xxxxxx
Xxxxxx, 0xx Xxxxx
Xxxxxxx,
Xxxxxxx
X0X 0X0
Attention: President
Facsimile: (000)
000-0000
(b)
|
If
to Rimfire at:
|
Suite
700
- 000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx,
Xxxxxxx Xxxxxxxx
X0X
0X0
Attention: President
Facsimile: (000)
000-0000
or
to
such other address as is specified by the particular party by notice to the
others.
22.2 The
date
of receipt of such notice, demand or other communication will be the date
of
delivery thereof if delivered or the date of sending it by facsimile, or,
if
given by registered mail as aforesaid, will be deemed conclusively to be
the
third day after the same will
-30-
have
been
so mailed except in the case of interruption of postal services for any reason
whatever, in which case the date of receipt will be the date on which the
notice, demand or other communication is actually received by the
addressee.
22.3 Either
party may at any time and from time to time notify the other party in writing
of
a change of address and the new address to which notice will be given to
it
thereafter until further change.
23.0 GENERAL
23.1 This
Agreement will supersede and replace any other agreement or arrangement,
whether
oral or written, heretofore existing between the parties in respect of the
subject matter of this Agreement.
23.2 No
consent or waiver expressed or implied by either party in respect of any
breach
or default by the other in the performance of such other of its obligations
hereunder will be deemed or construed to be a consent to or a waiver of any
other breach or default.
23.3 The
parties will promptly execute or cause to be executed all documents, deeds,
conveyances and other instruments of further assurance which may be reasonably
necessary or advisable to carry out fully the intent of this Agreement or
to
record wherever appropriate the respective interests from time to time of
the
parties in the Property.
23.4 This
Agreement and any other writing delivered pursuant hereto may be executed
in any
number of counterparts with the same effect as if all parties to this Agreement
or such other writing had signed the same document and all counterparts will
be
construed together and will constitute one and the same instrument.
23.5 This
Agreement will be governed and construed according to the laws of the Province
of British Columbia and the laws of Canada applicable therein and the parties
hereby attorn to the jurisdiction of the Courts of British Columbia in respect
of all matters arising hereunder.
-31-
23.6 This
Agreement will enure to the benefit of and be binding upon the parties and
their
respective successors and permitted assigns.
IN
WITNESS WHEREOF the corporate seals of Rimfire and Evanachan have been hereunto
affixed in the presence of their duly authorized officers in that
behalf.
EVANACHAN
LIMITED
Per: "X.
XxXxxx"
Authorized
Signatory
RIMFIRE
MINERALS CORPORATION
Per:
"X.
Xxxxxxxxx"
Authorized
Signatory
RIMFIRE
ALASKA LTD.
Per:
"X.
Xxxxxxxxx"
Authorized
Signatory
528557-000001-943886v3
-32-
SCHEDULE
A
DESCRIPTION
OF THE PROPERTY
528557-000001-943886v3
A1SCHEDULE
B
ACCOUNITNG
PROCEDURE
528557-000001-943886v3
B1SCHEDULE
C
NET
SMELTER RETURNS ROYALTY
528557-000001-943886v3
C1SCHEDULE
D
UNDERLYING
ROYALTIES
528557-000001-943886v3
D1