Exhibit 4.3
TOURNIGAN VENTURES CORPORATION
480 - 000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxx, XX Xxxxxx X0X 0X0
Telephone: (000) 000-0000, Fax; (000) 000-0000
Xxxxx Resources Inc.
000 - 000 Xxxx Xx.
Xxxxxxxxx, XX August 24, 2002
Attention: Xxxx Xxxxxx, President
Dear Sirs:
Re: El Potosi Concession, and Pedernal Concession El Salvador
This Memorandum of Understanding ("MOU") sets forth the terms of an agreement
whereby Tournigan Ventures Corporation ("Tournigan") can acquire a 100% interest
in the El Potosi Concession, El Salvador ("Potosi Project") and a 60% interest
in the Pedernal Project, El Salvador (the "Pedernal Project") from Xxxxx
Resources Inc. ("Xxxxx"), not mutually exclusive. This MOU will be legally
binding on both parties.
1. El Potosi Concession El Salvador
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In order to exercise its option to purchase a 100% interest in the Potosi
Project Tournigan must pay to Xxxxx a minimum total of US$1,450,000, subject to
clause 7 below. The minimum payment schedule to maintain the option to purchase
is as follows:
1. Tournigan to pay Xxxxx US$25,000 within 30 days of signing this binding
MOU..
2. Tournigan to pay Xxxxx US$25,000 on the first anniversary of the agreement.
3. Tournigan to pay Xxxxx US$50,000 on the second anniversary of the
agreement.
4. Tournigan to pay Xxxxx US$100,000 on the third anniversary of the
agreement.
5. Tournigan to pay Xxxxx US$1,250,000 on the forth anniversary of the
agreement.
6. When Tournigan has paid Xxxxx a minimum total of US$1,450,000 Tournigan
will own 100% interest in the Potosi Project.
7. Tournigan can delay payment of the final $1,250,000 payment up until the
fifth anniversary of the Letter Agreement by paying Xxxxx US$150,000 on the
fourth anniversary date.
8. No mining operation will commence until such time as Tournigan has acquired
its 100% interest in the Potosi Project. Once a future mining operation on
the Project has produced in excess of 200,000 ounces of gold Xxxxx will be
paid a 1% net smelter royalty interest on further gold and silver
production from the Potosi Project.
9. Tournigan will be responsible, during the option period, for the payment of
all taxes and any other activities related to keeping the Potosi Project in
good standing.
10. It is recognised that as part of the underlying concession the government
of El Salvador retains a royalty interest in the Potosi Project.
2. Pedernal Concession, El Salvador
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1. Tournigan will have the right to earn a 60% interest in the "metallic
mineral rights of the Pedernal Project by expending a total of US$500,000
on the project over a 4-year period. Minimum annual expenditures will be as
follows: Year 1:US$35,000, Year 2:US$90,000, Year 3:US$125,000 and Year 4:
balance of the US$500,000. The year 1 work requirement is a committed
expenditure.
2. At the time that Tournigan has spent US$500,000 on the Pedernal Project and
earned its 60% interest a joint-venture will be formed between Tournigan
and Xxxxx whereby Tournigan is the operator and all further expense will be
pro-rated 60% Tournigan and 40% Xxxxx.
3. Failure by either party to fund their pro-rata portion of expenditure will
result in dilution of that party's interest on a straight line formula
using US$500,000 as a 60% basis.
4. Tournigan and Xxxxx agree to form an area of mutual interest ("AMI") which
will encompass an area 5 kilometers from the boundaries of the existing
Pedernal concession. Any concessions or interests acquired by either party
within the AMI will become a part of this agreement.
5. Prior to the formation of the joint-venture Tournigan will be responsible
for the payment of all taxes and any other activities related to keeping
the Pedernal Project in good standing. On the formation of the
joint-venture these costs will be split pro-rata.
6. It is recognised that as part of the underlying concession the government
of El Salvador retains a royalty interest in the Pedernal Project.
For the 30 day period following the signing of this MOU, Tournigan will have the
exclusive right to conduct legal and technical due diligence on both the Potosi
Project and the Pedernal Project with full access to the property as well as all
data in the possession of Xxxxx regarding the properties.
If the foregoing terms are acceptable, please so indicate by signing and
returning the enclosed copy of this letter. We will then initiate the drafting
of a formal option agreement while we are conducting our due diligence.
Yours truly,
TOURNIGAN VENTURES CORPORATION
Per: /s/ X. Xxxxxx
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The foregoing terms are accepted and agreed to this _______ day of August, 2002.
XXXXX RESOURCES INC.
Per: /s/ Xxxx Xxxxxx
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