AMENDMENT TO LEASE AGREEMENT
EXHIBIT
10.3
AMENDMENT
TO LEASE AGREEMENT
THIS
AMENDMENT TO LEASE AGREEMENT (“Amendment”)
is made effective November 20, 2007, between Mount Hope Mines, Inc., a Colorado
corporation, whose address is 0000 0xx
Xx.,
Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxxxx 00000 (hereinafter “Owner” or the “Company”)
and General Moly, Inc., a Delaware corporation (successor-by-merger to Idaho
General Mines, Inc., an Idaho corporation), whose address is 0000 Xxxx
Xxxxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (hereinafter referred to as
“GMO”).
RECITALS
A. The
Company and Idaho General Mines, Inc. entered into a Lease Agreement dated
effective October 19, 2005 (the “Lease”), pursuant to which the Company
granted to GMO an exclusive lease of certain Property (as defined in the Lease)
owned by the Company, together with the exclusive right to develop the Property
for the production of minerals and mineral substances.
B. The
parties now desire to clarify, revise and amend certain terms of the Lease,
as
set forth in this Amendment.
NOW,
THEREFORE, in consideration of the covenants and promises contained herein
and
other valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
1. The
parties agree to add a new Section 1.1(a)(iii) to the Lease which reads as
follows:
(iii) For
purposes of this Agreement, “Molybdenum” shall mean all molybdenum-bearing ores,
concentrates or materials (and any products derived therefrom) produced from
the
Property.
2. The
parties agree to modify Section 1.1(c) of the Lease to read as follows (and
the parties acknowledge that the payments described below that were due on
or
before January 31, 2006, April 19, 2006, October 19, 2006,
April 19, 2007 and October 19, 2007, respectively, were timely and properly
paid):
(c) Periodic
Payments and Advance Royalty.
Subject
to GMO’s right of termination contained in Article 5, GMO shall pay the
following to Owner (the payments described in Sections 1.1(c)(i)-(viii)
below being referred to hereinafter as “Periodic Payments”):
(i) Two
Hundred and Fifty Thousand Dollars ($250,000.00) shall be due to Owner as of
the
Effective Date, One Hundred and Twenty-Five Thousand Dollars ($125,000.00)
of
which shall be paid on or before January 31, 2006 and the remaining One
Hundred and Twenty-Five Thousand Dollars ($125,000.00) of which shall be paid
on
or before April 19, 2006.
(ii) Two
Hundred and Fifty Thousand Dollars ($250,000.00) shall be due to Owner on
October 19, 2006, One Hundred and Twenty-Five Thousand Dollars
($125,000.00) of which shall be paid on or before October 19, 2006 and the
remaining One Hundred and Twenty-Five Thousand Dollars ($125,000.00) of which
shall be paid on or before April 19, 2007.
(iii) Three
Hundred and Fifty Thousand Dollars ($350,000.00) shall be due to Owner on
October 19, 2007.
(iv) Subject
to GMO’s right to defer this payment as provided for in Section 1.1(c)(v),
and subject to GMO’s timely making any required Interim Financing Payments as
provided for in Section 1.1(c)(vi), GMO shall pay to Owner the greater of
Two Million Five Hundred Thousand Dollars ($2,500,000.00) or three percent
(3%)
of the Construction Capital Cost Estimate (the “Estimate”) on or before
October 19, 2008. Any payment made to Owner under this
Section 1.1(c)(iv) shall be subject to audit and adjustment in accordance
with the provisions of Section 1.8.
(v) Subject
to its timely making any required Interim Financing Payments as provided for
in
Section 1.1(c)(vi), GMO may defer the payment required by
Section 1.1(c)(iv) for up to two (2) years by paying to Owner on or before
October 19, 2008 and October 19, 2009, respectively, the sum of Three
Hundred and Fifty Thousand Dollars ($350,000.00). GMO may only elect to defer
the payment required by Section 1.1(c)(iv) if after using its best efforts
to secure Project Financing it is unable to secure such financing, and GMO
shall
provide written notice of such deferral to the Company not later than
October 4, 2008 and again not later than October 4, 2009. Not later
than thirty (30) days after the end of each calendar quarter after
October 19, 2008, and until it has secured Project Financing or through
October 19, 2009, GMO shall provide to the Company a written summary of its
efforts to secure Project Financing during that calendar quarter.
(vi) Although
the parties acknowledge and agree that GMO has no obligation to obtain any
interim financing, until Project Financing has been secured, if GMO obtains
any
interim financing, GMO shall pay to Owner as a partial payment towards the
Estimate three percent (3%) of all funds received by GMO after September 1,
2007 by way of public offerings, private placements, debt financings or
otherwise, but only to the extent such funds are earmarked by GMO for capital
expenditures at or for the benefit of the Property and will be included in
the
Estimate (each such payment as “Interim Financing Payment”). Each Interim
Financing Payment shall be accompanied with an accounting from GMO of those
funds earmarked for capital expenditures at or for the benefit of the Property
which will be included in the Estimate, on which the partial three percent
(3%)
payment was based, and any additional funds raised which GMO claims are not
so
earmarked. By providing written notice to GMO within ninety (90) days after
receipt of said accounting, Owner shall have the right to audit GMO’s books and
records which pertain to the funds identified, in accordance with the procedures
set forth in Section 1.1(d)(iv), except that all 180-day periods referenced
therein shall be reduced to 90 days for purposes of this Section
1.1(c)(vi). The costs of each such audit shall be borne by either Company or
GMO
depending upon the outcome of the audit, again in the same manner as described
in Section 1.1(d)(iv). Any payments made by GMO to Owner under this
Section 1.1(c)(vi) shall not relieve GMO of any obligation to make all of
the other required Periodic Payments pursuant to this
Section 1.1(c).
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(vii) If
GMO
has deferred the payment required by Section 1.1(c)(iv) and made each of
the payment(s) required by Sections 1.1(c)(v) and (vi), then not later than
October 19, 2010, but in any event immediately after the securing of
Project Financing, GMO must make the payment required by
Section 1.1(c)(iv), less any Interim Financing Payments made under
Section 1.1(c)(vi). If, however, by October 19, 2010, GMO has not
secured its Project Financing having used its best efforts to secure said
Project Financing, GMO may elect to pay Two Million Five Hundred Thousand
Dollars ($2,500,000.00), less any payments made to Owner under
Section 1.1(c)(vi), to Owner on or before that date and, if three percent
(3%) of the Estimate is greater than Two Million Five Hundred Thousand Dollars
($2,500,000.00), GMO shall make that payment and shall pay to Owner one-half
of
the difference between Two Million Five Hundred Thousand Dollars
($2,500,000.00), less any Interim Financing Payments paid to Owner under
Section 1.1(c)(vi), and three percent (3%) of the Estimate, on each of
October 19, 2011 and October 19, 2012, respectively.
(viii) On
or
before the earlier of (a) the first October 19th following GMO’s
payment of the required Periodic Payments under Section 1.1(c)(iv) or
Section 1.1(c)(vii), or (b) October 19, 2013, and on or before
October 19th of each year thereafter, GMO shall pay to Owner a minimum
advance royalty of Five Hundred Thousand Dollars ($500,000.00) (the “Advance
Royalty”).
3. The
parties agree to modify the first full paragraph of Section 1.1(d) of the
Lease, which begins on page 3 of the Lease and ends on page 4, to read
as follows (and agree that the remainder of Section 1.1(d) is amended only
as
set forth in paragraphs 4-8 of this Amendment):
(d) Production
Royalty.
Subject
to GMO’s right of termination contained in Article 5, following the
commencement of Commercial Production, GMO shall pay to Owner and to Exxon
a
production royalty on Molybdenum produced from the Property and sold (or deemed
sold) by GMO (the “Production Royalty”). The Production Royalty payable to Exxon
shall be paid as required under and in accordance with the terms of the Exxon
Agreement. The Production Royalty payable to Owner shall be the greater of
(i) Twenty-Five Cents ($0.25) per pound of molybdenum metal sold (or the
equivalent thereof if some other Product is sold) from the Property (although
the parties agree that in no event may any Production Royalty payment for any
Products exceed the amount of Net Returns received by GMO for those Products),
or (ii) three and one-half percent (3.5%) of the Net Returns (the “Base
Percentage”), as defined below in Section 1.1(d)(i), and shall be paid
according to the payment terms of Section 1.1(d)(iii). In addition,
whenever the average Gross Value (as defined below) of any Products sold (or
deemed sold) during any calendar quarter is equal to or greater than
$12.00 per pound of molybdenum metal (or the equivalent thereof if some
other Product is sold) but less than $15.00 per pound during that calendar
quarter, Owner’s Production Royalty shall be increased by a full percentage
point over and above the Base Percentage; and whenever the average Gross Value
of any Products sold (or deemed sold) during any calendar quarter is equal
to or
greater than $15.00 per pound of molybdenum metal (or the equivalent
thereof if some other Product is sold), Owner’s Production Royalty shall be
increased by one and one-half full percentage points over and above the Base
Percentage. For purposes of calculating the average Gross Value of Products
sold
(or deemed sold) during any calendar quarter, the total proceeds received (or
deemed received) by GMO pursuant to the provisions of Section 1.1(d)(ii)
for Products sold (or deemed sold) during that calendar quarter shall be divided
by the total number of pounds of molybdenum metal (or the equivalent thereof
if
some other Product is sold) sold (or deemed sold) during that calendar quarter.
In the event that during the term of this Agreement a gross proceeds or net
smelter returns production royalty upon the production of minerals and payable
to the United States government (a “Federal Royalty”) is imposed on Molybdenum
and other Minerals specifically extracted from the Property, then the Base
Percentage shall be reduced by the equivalent of fifteen percent (15%) of said
Federal Royalty (adjusting the Federal Royalty to approximate a percentage
of
Net Returns as necessary). However, in no circumstances shall the Base
Percentage be reduced by greater than one full percentage point (1%). Moreover,
if subsequent to the imposition of the Federal Royalty, said royalty is
eliminated as it applies to Molybdenum or other Minerals specifically extracted
from the Property, then adjustments to the Base Percentage to account for the
Federal Royalty shall no longer be made. If, subsequent to the imposition of
the
Federal Royalty, said royalty is reduced as it applies to Molybdenum or other
Minerals specifically extracted from the Property, then the reduction to the
Base Percentage shall be adjusted accordingly as of the date of said
modification (subject to the maximum reduction of one percent (1%)). For
Minerals other than Molybdenum, in the event GMO wishes to extract and sell
said
Minerals from the Property, then it shall notify Company in writing of its
intention to extract those other Minerals and the parties shall negotiate in
good faith a Net Returns Production Royalty on any other minerals consistent
with Sections 1.1(a) and 4.5 of this Agreement. In the event that the
parties are unable to reach agreement on a Net Returns Production Royalty on
those other Minerals, then the matter shall be decided by binding arbitration
pursuant to Section 12.17 of this Agreement. Without modifying the
provisions of Section 4.5(c), the term “Minerals” for purposes of this Agreement
shall include, without limitation, stone, sand, gravel and clay.
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4. The
parties agree that Section 1.1(d)(i)(c) is hereby deleted from the Lease,
so that any production royalty imposed by the United States government shall
not
be a deduction in calculating Net Returns.
5. The
parties agree to revise the second sentence of Section 1.1(d)(v) of the
Lease to read as follow:
(v) Except
as
otherwise set forth in Section 1.1(d)(vi) below, Owner shall have no right
to participate or obligation to share whatsoever in any price protection or
hedging activities of GMO, including any sales of Products derived from the
Property by GMO on the commodity market or otherwise, or in any profits received
or losses suffered by GMO as a result of such marketing or hedging
activities.
6. The
parties agree to add a new Section 1.1(d)(vi) to the Lease which reads as
follows:
(vi) If
during
the term of this Agreement, GMO enters into agreements with third parties for
the presale of any Molybdenum Products produced by GMO from the Property
(collectively, “Hedging Contracts”), then and in that event, Company agrees that
the “Net Returns” and the “Gross Value” from which the Production Royalty is
derived with respect to the Molybdenum Products sold under those Hedging
Contracts shall be based on the price paid by that third party to GMO for
Molybdenum Products, subject to the following:
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(a)
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The
minimum price from which the Production Royalty is calculated shall
be
Twelve Dollars ($12.00) per pound of molybdenum metal (or the equivalent
thereof), and if the actual price paid or credited to GMO by that
third
party is less than $12.00 per pound, those Molybdenum Products shall
be
deemed to have been sold for $12.00 per pound, and Gross Value shall
be
calculated based on that $12.00 per pound deemed sales
price.
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(b)
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If
any purchaser of Molybdenum Products under a Hedging Contract pays
less
than the Fair Market Value for those products, the maximum discount
(for
purposes of calculating Company’s Production Royalty) shall be twenty
percent (20%) of the differential between the floor price payable
by the
purchaser and the Fair Market Value at the time of payment to GMO
(the
“Differential”), subject to the price floor described in
Section 1.1(d)(vi)(a) above. In other words, regardless of the actual
amount paid or credited to GMO under any Hedging Contract, and regardless
of the actual discount (if any) from the Fair Market Value of Molybdenum
Products received by any purchaser under a Hedging Contract, the
deemed
sales price on which the Production Royalty is to be calculated and
paid
shall be based on a discount of not more than 20% of the Differential
at
the time of such deemed sale, and that deemed sales price shall never
be
less than $12.00 per pound of molybdenum metal (or the equivalent
thereof), even if a lower price is actually received by or credited
to
GMO. For purposes of this Section 1.1(d)(vi), “Fair Market Value”
shall mean the price of molybdenum metal as quoted by Metals
Week
or
some other reference source mutually agreeable to the
parties.
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(c)
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The
provisions of Sections 1.1(d)(vi)(a) and (b) above shall apply to
Hedging
Contracts which pertain to not more than fifty percent (50%) of the
annual
production of Molybdenum Products from the Property during any calendar
year. If more than fifty percent (50%) of the annual production of
Molybdenum Products from the Property during any calendar year is
sold
under Hedging Contracts, then, with respect to the production in
excess of
fifty percent (50%), GMO shall pay the Production Royalty based on
the
Fair Market Value of those Molybdenum Products at the time they are
deemed
sold. In other words, GMO may enter into Hedging Contracts which
cover
more than 50% of the annual production of Molybdenum Products from
the
Property, the Production Royalty with respect to 50% of the Molybdenum
Products produced from the Property during that calendar year would
be
calculated as set forth in Sections 1.1(d)(vi)(a) and (b) above, and
the Production Royalty on the remainder of the Molybdenum Products
sold
under Hedging Contracts during that calendar year would be calculated
based on their Fair Market Value as set forth in this
Section 1.1(d)(vi)(c). Not later than thirty (30) days prior to the
end of each calendar year beginning with the calendar year during
which
the commencement of Commercial Production occurs, GMO shall provide
to
Owner a good faith estimate of the percentage of Molybdenum Products
that
will be sold from the Property under Hedging Contracts during the
upcoming
calendar year (if known). Along with the Production Royalty payment
and
accompanying statement for the last quarter of each such calendar
year,
GMO shall provide an accounting of the percentage of Molybdenum Products
actually sold under Hedging Contracts during that calendar year,
and shall
include with that quarterly Production Royalty payment any additional
amounts owed to Owner to account for Production Royalty payments
that must
be adjusted to meet the fifty percent (50%) limit described
above.
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(d)
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By
way of example (but not limitation), the Production Royalty would
be
payable under a Hedging Contract as
follows:
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Example
I
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·
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Floor
price of Molybdenum is $12.00 per pound to the
purchaser.
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|
·
|
Fair
Market Value of Molybdenum at time of deemed sale is $30.00 per
pound.
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|
·
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GMO
agrees with purchaser to provide a 20% discount on the Differential.
Differential is $18.00 per pound (30-12), which results in $3.60
(20% of
$18.00) off of the Fair Market Value for purposes of calculating
the
Production Royalty. The deemed sales price (for purposes of calculating
Gross Value) is thus $26.40 per
pound.
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6
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·
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Under
this example “Gross Value” would be $26.40 per pound, and the applicable
percentage Production Royalty would be 5%. To the extent Molybdenum
Products sold under this Hedging Contract exceeded 50% of the annual
production of Molybdenum Products from the Property, then for the
excess
Molybdenum Products sold under this Hedging Contract during that
calendar
year, “Gross Value” would be $30.00 per pound, and the applicable
percentage Production Royalty would be 5%.
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Example
II
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·
|
Floor
price of Molybdenum is $10.00 per pound to the
purchaser.
|
|
·
|
Fair
Market Value of Molybdenum at time of deemed sale is $35.00 per
pound.
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|
·
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GMO
agrees with purchaser to provide a 30% discount on the Differential.
Differential is $25.00 per pound (35-10), but for purposes of calculating
Production Royalty, calculation is 20% (maximum discount) of $23.00
per
pound (35-12), which results in $4.60 off of the Fair Market Value.
The
deemed sales price (for purposes of calculating Gross Value) is thus
$30.40 per pound.
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·
|
Under
this example, “Gross Value” would be $30.40 per pound, and the applicable
percentage Production Royalty would be 5%. To the extent Molybdenum
Products sold under this Hedging Contract exceeded 50% of the annual
production of Molybdenum Products from the Property, then for the
excess
Molybdenum Products sold under this Hedging Contract during that
calendar
year, “Gross Value” would be $35.00 per pound, and the applicable
percentage Production Royalty would be 5%.
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Example
III
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·
|
Floor
price of Molybdenum is $10.00 per pound to the
purchaser.
|
|
·
|
Fair
Market Value of Molybdenum at that time is $15.50 per
pound.
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·
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GMO
agrees with purchaser to provide a 20% discount on the Differential.
Differential is $5.50 per pound (15.50 - 10), which results in $1.10
(20%
of $5.50) off of the Fair Market Value for purposes of calculating
the
Production Royalty. The deemed sales price (for purposes of calculating
Gross Value) is thus $14.40 per
pound.
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|
·
|
Under
this example, “Gross Value” would be $14.40 per pound, and the applicable
percentage Production Royalty would be 4.5%. To the extent Molybdenum
Products sold under this Hedging Contract exceeded 50% of the annual
production of Molybdenum Products from the Property, then for the
excess
Molybdenum Products sold under this Hedging Contract during that
calendar
year, “Gross Value” would be $15.50 per pound, and the applicable
percentage Production Royalty would be
5%.
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Example
IV
|
·
|
Floor
price of Molybdenum is $16.00 per pound to the
purchaser.
|
|
·
|
Fair
Market Value of Molybdenum at time of deemed sale is $14.00 per
pound.
|
|
·
|
The
deemed sales price (for purposes of calculating Gross Value) is $16.00
per
pound.
|
|
·
|
Under
this example, “Gross Value” would be $16.00 per pound, and the applicable
percentage Production Royalty would be 5%. To the extent Molybdenum
Products sold under this Hedging Contract exceeded 50% of the annual
production of Molybdenum Products from the Property, then for the
excess
Molybdenum Products sold under this Hedging Contract during that
calendar
year, “Gross Value” would be $14.00 per pound, and the applicable
percentage Production Royalty would be 4.5%.
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Example
V
|
·
|
Floor
price of Molybdenum is $11.00 per pound to the
purchaser.
|
|
·
|
Fair
Market Value of Molybdenum at time of deemed sale is $10.00 per
pound.
|
|
·
|
The
deemed sales price (for purposes of calculating Gross Value) is $12.00
per
pound.
|
|
·
|
Under
this example, “Gross Value” would be $12.00 per pound, and the applicable
percentage Production Royalty would be 4.5%. To the extent Molybdenum
Products sold under this Hedging Contract exceeded 50% of the annual
production of Molybdenum Products from the Property, then for the
excess
Molybdenum Products sold under this Hedging Contract during that
calendar
year, “Gross Value” would be $10.00 per pound, and the applicable
percentage Production Royalty would be 3.5%.
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(e)
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The
parties agree that quarterly Gross Value computations shall be made
separately for (1) Molybdenum Products sold under Hedging Contracts
during
each calendar quarter and (2) other Molybdenum Products sold during
that
same calendar quarter, and the percentage royalty payable shall be
calculated separately for each category of Molybdenum
Products.
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7. The
parties agree to add a new Section 1.1(d)(vii) to the Lease which reads as
follows:
(vii) If
GMO
builds a roasting facility which is intended by GMO to process Molybdenum
concentrates produced from the Property, then GMO may process Molybdenum from
properties other than the Property in that roasting facility (“Custom Roasting”)
without any Production Royalty payment obligations to Company with respect
to
that Molybdenum from properties other than the Property, if and only
if:
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(a)
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Any
“Custom Roasting” complies with all applicable federal, state and local
laws, rules, regulations, and is performed in accordance with all
governmental licenses, permits and approvals and the terms of this
Agreement; and
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(b)
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Such
“Custom Roasting” is conducted and is terminated prior to the commencement
of Commercial Production from the Property and the conduct of such
Custom
Roasting is not a reason for the delay of the commencement of Commercial
Production from the Property.
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(c)
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Notwithstanding
the provisions of Sections 1.1(d)(vii)(a) and (b), GMO may conduct
Custom
Roasting operations after the commencement of Commercial Production
from
the Property if and only if there is excess roasting capacity after
processing all the Molybdenum produced from the Property. Excess
roasting
capacity may exist as the result of an involuntary reduction by GMO
of
planned production levels at the Property as the direct result of
an event
which GMO could not have reasonably foreseen. Thus, in that situation,
Custom Roasting may occur. GMO may not, however, intentionally reduce
the
levels of production of Molybdenum from the Property to create excess
roasting capacity.
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(d)
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If
such “Custom Roasting” operations occur in accordance with
Section 1.1(d)(vi)(c) above, then GMO shall insure that any
commingling of Molybdenum Products from any other property with those
produced from the Property is conducted in accordance with the provisions
of Section 4.5(d).
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8. The
parties agree to add a new Section 1.1(d)(viii) to the Lease which reads as
follows:
(viii) If
at any
time during the term of this Agreement, GMO has not placed the Property into
Commercial Production for reasons other than GMO’s failure to secure Project
Financing or permitting for the project (GMO having used its best efforts to
obtain the same), but is conducting commercial mining and/or processing
operations from its “Hall-Tonopah” property (as defined on the attached
Schedule A), then in such event, Company has the right, in its sole
discretion, to demand that GMO pay to Company a production royalty of ten cents
($.10) per pound of Molybdenum Products produced from Hall-Tonopah. Such
production royalty payments shall be made in accordance with the provisions
of
Sections 1.1(d)(iii)-(v) of this Agreement. The obligation to pay the production
royalty from Hall-Tonopah as provided herein is absolute and failure to pay
said
royalty to Company, upon its request, shall be a material breach of this
Agreement and shall entitle Company to assert any remedies to which it is
entitled at law, in equity, or under this Agreement, including without
limitation termination of the Agreement. The amount of said royalty payments
shall be recoupable from the Production Royalty payable to Owner from the
Property in accordance with the provisions of Section 1.5. However, in no
event shall GMO be required to pay to Company in any calendar year a total
amount of production royalty from Hall-Tonopah greater than it is required
to
pay to Company during that calendar year pursuant to Section 1.1(c) of this
Agreement. The obligation to pay a production royalty to Company under this
Section 1.1(d)(viii), however, shall not relieve GMO of its obligation to
timely make all payments required under Section 1.1(c). GMO’s obligation
pursuant to this Section 1.1(d)(viii) shall terminate upon the termination
of this Agreement or upon the commencement of Commercial Production from the
Property. The parties agree to record in the official records of Xxx County,
Nevada, a memorandum form of GMO’s obligation to pay Company a production
royalty from the production of Molybdenum at Hall-Tonopah under certain
circumstances, as described in this Section 1.1(d)(viii).
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9. The
parties agree that Section 1.3 of the Lease is revised to read as
follows:
1.3 Project
Financing.
For
purposes of this Agreement, the term “Project Financing” shall mean the securing
of funds by GMO on terms and conditions satisfactory to it, such funds to be
dedicated to the development of the Property in accordance with the Estimate.
For purposes of this Agreement, GMO shall be deemed to have “secured” Project
Financing on the earlier of either (a) the receipt of funds which comprise
at least fifty percent (50%) of GMO’s projected costs (as set forth in a
preliminary Estimate which shall be delivered by GMO to Owner not later than
March 31, 2008) required for GMO to put the Property into Commercial Production
(as defined in Section 1.7) or (b) the Commencement of Construction of
the Project. The parties acknowledge and agree that the preliminary Estimate
shall be used only for the purpose of determining when Project Financing has
been secured, that the preliminary Estimate referred to in this Section 1.3
shall not constitute the Estimate that GMO is required to deliver pursuant
to
Section 1.2, and that the projected cost figures in the preliminary Estimate
may
be different than those set forth in the Estimate. The phrase “Commencement of
Construction of the Project” is hereby defined as the commencement of
construction of the mine, mill or related facilities at the Property in
accordance with the project plan, but only after issuance by the BLM of a Record
of Decision approving the Plan of Operations for development and mining at
the
Property. GMO shall notify Owner immediately after it has secured Project
Financing pursuant to the provisions of this Section 1.3.
10. The
parties agree that all references in Section 1.4 of the Lease to
Sections 1.1(c)(iii) and 1.1(c)(v) are revised to refer to
Sections 1.1(c)(iv), 1.1(c)(vi) and 1.1(c)(vii).
11. The
parties agree that the references in Sections 1.5(a), (b) and (c) of the
Lease to Sections 1.1(c)(iii), 1.1(c)(v) and 1.1(c)(vi) are revised to
refer to Sections 1.1(c)(iv), 1.1(c)(vi) and 1.1(c)(vii),
respectively.
12. The
parties agree to delete from the Lease the third to the last full sentence
of
Section 4.4(j).
11
13. The
parties agree that Section 6.1 of the Lease is revised to read as follows:
6.1 After-Acquired
Property.
During
the term of this Agreement, GMO may locate or acquire additional patented and
unpatented mining claims or fee lands in the vicinity of the Property (“After
Acquired Property”). In the event that GMO locates or acquires any such
interests in real property wholly or partially within two (2) miles from the
exterior boundaries of the Property (the “Area of Interest”), GMO shall promptly
notify the Company and provide the Company with a copy of any acquisition
documents and other data and information pertaining to such After Acquired
Property. The Company shall have thirty (30) days from and after it receives
such information to notify GMO whether or not the Company desires that such
After Acquired Property shall become part of the Property under this Agreement,
and if the Company timely provides such notice then such After Acquired Property
shall be burdened by the obligation to pay the Production Royalty to Owner
(and
Exxon if applicable) as provided herein. In addition, the Company may at any
time during the Term request that GMO convey any such After Acquired Property
to
Company. Upon such request, such After Acquired Property shall be immediately
conveyed to the Company by special warranty deed from GMO, but remain part
of
the Property under this Agreement. The parties agree that any interest in
unpatented mining claims or other real property (a) conveyed by GMO to the
Company during the Option Period (the “Conveyed Claims”) or (b) owned or
held by GMO as of the Effective Date and wholly or partially within the Area
of
Interest (the “GMO Claims”) shall be treated as part as of the Property under
this Agreement, burdened by the obligation to pay the Production Royalty to
Owner (and Exxon if applicable) as provided herein. Upon the execution of this
Agreement, GMO, at Company’s request, shall convey the GMO Claims to the Company
by special warranty deed. Thereafter, if during the term of this Agreement
GMO
desires to terminate this Agreement with respect to any of the GMO Claims or
the
Conveyed Claims, GMO shall provide written notice to the Company, including
in
such notice a written reminder to the Company of its right to request that
the
GMO Claims be conveyed to it, and Company shall have the right to request that
any or all of the GMO Claims be conveyed to Company. If no such request is
received by GMO prior to the termination of this Agreement, then such claims
shall no longer be subject to this Agreement, although the provisions of the
last sentence of Section 5.1 and all of Sections 5.2-5.6 of the Agreement shall
apply to those claims.
14. The
parties agree that the first sentence of Section 9.1 of the Agreement is
revised to read as follows:
GMO
agrees that, not later than October 31, 2007, it will submit to Owner and
to the appropriate governmental agencies a disposal and remediation plan
pursuant to which it commits to a timeline for taking such reasonable actions
as
are necessary under applicable Environmental Laws to satisfy certain existing
environmental conditions at the Property, as more specifically set forth on
Exhibit B attached hereto and incorporated herein by
reference.
15. The
parties agree that Section 12.3 of the Lease is revised to read as
follows:
12.3 Successors
and Assigns.
The
terms of this Agreement shall bind and inure to the benefit of the parties
and
their respective permitted successors, heirs and assigns, whether by merger,
consolidation, amalgamation, reorganization, sale of assets or otherwise. GMO
shall not assign or otherwise convey its rights or obligations under this
Agreement to any third party without the prior written consent of the Company,
which such consent the Company may withhold in its sole discretion; provided
however, that (a) if such an assignment takes the form of a pledge by GMO of
its
interest in this Agreement for purposes of obtaining Project Financing to raise
funds for the conduct of Operations on or for the benefit of the Property,
the
Company’s consent to such an assignment may not be unreasonably withheld; and
(b) no such consent shall be required for an assignment and delegation by
GMO of all of its rights and obligations under this Agreement to a wholly-owned
subsidiary of GMO (provided that such subsidiary simultaneously acquires all
of
GMO’s other assets on the Property). In the event of any such assignment, the
assignee shall agree in writing to be bound by all of the terms and conditions
of this Agreement. Any such assignment shall not relieve GMO of any of its
obligations or liabilities under this Agreement. The Company may convey the
Property or its interest in this Agreement to any third party as long as such
third party agrees in writing to be bound by all of the terms and conditions
of
this Agreement. GMO may enter into, and Company shall not withhold its consent
to, a joint venture or joint operating agreement between GMO and a third party
in order for GMO to obtain Project Financing for the conduct of Operations
on or
for the benefit of the Property if it is reasonably demonstrated that (a) the
proposed third party is financially sound and able to participate in the
financing or management and operation of the project upon the terms proposed
by
GMO and (b) the creation of the joint venture increases the likelihood of either
the commencement or acceleration of the commencement of Commercial Production
from the Property.
12
16. The
parties agree that all cross-references to other Sections in any Section of
the
Lease are revised as necessary to reflect the provisions of this
Amendment.
17. As
amended by this Amendment, the parties hereby confirm and agree that the Lease
is in full force and effect. Capitalized terms used but not defined in this
Amendment shall have the meaning ascribed to them in the Lease. This Amendment
may be executed in two or more counterparts which together shall constitute
a
single, original instrument.
13
In
witness whereof, the parties have executed this Amendment to Lease Agreement
effective as of the 20th day of November, 2007.
|
General
Moly, Inc., a Delaware corporation
|
||
| |
|
|
| By: | /s/ Xxxxx X. Xxxxxx | |
|
Name:
Xxxxx
X. Xxxxxx
Title:
Chief
Executive Officer
Date:
November
20, 2007
|
||
|
Mount
Hope Mines, Inc., a Colorado corporation
|
||
| |
|
|
| By: | /s/ Xxxxxxx Xxxxxxx | |
|
Name:
Xxxxxxx
Xxxxxxx
Title:
President
Date:
November
20, 2007
|
||
14
Schedule
A
The
Hall
- Tonopah Property
The
Hall
- Tonopah Property consists of 49 patented lode claims, 16 patented millsite
claims and approximately 5051 acres of fee owned land, all situated in Xxx
County, Nevada.
The
patented lode claims, which are described in the table set forth below, are
located in T5N, R42E, Sections 4, 5, 6, 7, 8 and T6N, R42E, Sections 32 and
33. The fee owned land is contained within:
T5N,
R41E, portions of Sections 1, 2, 11, 12, 13 and 14;
T5N,
R42E, portions of Sections 6, 7 and 18;
T5N,
R41E, portions of Sections 30, 31 and 32;
T6N,
R41E, portions of Sections 25, 26, 35 and 36.
The
total
area covered within the project boundary by claims and fee owned land is
approximately 6,057 acres.
Patented
Lode Claims
|
Claim
Name
|
Patent/Mineral
Survey #
|
|
|
Moly
5
|
4883
|
|
|
Moly
7
|
4883
|
|
|
Moly
9
|
4883
|
|
|
Moly
11
|
4883
|
|
|
Treasure
Hill No. 7
|
4883
|
|
|
Treasure
Hill Xx. 0
|
0000
|
|
|
Xxxxxxxx
Xxxx Xx. 0
|
0000
|
|
|
Xxxxxxxx
Xxxx No. 10
|
4883
|
|
|
Treasure
Hill No. 11
|
4914
|
|
|
Treasure
Hill No. 14
|
4913
|
|
|
Treasure
Hill No. 15
|
4913
|
|
|
Treasure
Hill No. 16
|
4913
|
|
|
Treasure
Hill No. 17
|
4883
|
|
|
Treasure
Hill No. 18
|
4883
|
|
|
Treasure
Hill No. 19
|
4883
|
|
|
Treasure
Hill No. 20
|
4914
|
|
|
Chicago
No. 1 Mine
|
4913
|
|
|
Chicago
No. 2 Mine
|
4913
|
|
|
Chicago
No. 3 Mine
|
4883
|
|
|
Chicago
Extension No. 1 Mine
|
4913
|
|
|
Chicago
Extension Xx. 0 Xxxx
|
0000
|
|
|
Xxxxxxx
Xxxxxxxxx Xx. 0 Xxxx
|
0000
|
|
|
Smuggler
|
2284
|
|
|
Sheridan
|
2285
|
|
|
Moley
Xxxxxx Mine
|
2118
|
|
|
Xxxxxxxx
Mine
|
2117
|
|
|
Xxxxx
Xx. 0
|
0000
|
|
|
Xxxxx
Xx. 0
|
0000
|
|
|
Xxxxx
No. 12
|
4913
|
|
|
Daisy
1
|
4919
|
|
|
Daisy
2
|
4913
|
|
|
Daisy
5
|
4913
|
|
|
Xxx
No. 1
|
4883
|
|
|
Xxx
No. 2
|
4883
|
|
|
Xxx
No. 3
|
4883
|
|
|
Xxx
No. 4
|
4883
|
|
|
Xxx
No. 5
|
4914
|
|
|
Xxx
No. 6
|
4914
|
|
|
Xxx
No. 7
|
4913
|
|
|
Xxx
No. 8
|
4913
|
|
|
Xxx
No. 9
|
4913
|
|
|
Xxx
Xx. 00
|
0000
|
|
|
Xxx
Xx. 00
|
0000
|
|
|
Xxxx
Xxxx
|
3481
|
|
|
Utica
|
3481
|
|
|
Burbank
1
|
2115
|
|
|
Xxxxxxx
0
|
0000
|
|
|
Xxxxxxx
4
|
0000
|
|
|
Xx.
Xxxxxx Xxxx
|
37A(1699B)
|
Patented
Millsite Claims
Consist
of ACC 17 through 31 and AAC 35
A-1
