THIS PURCHASE AGREEMENT BETWEEN:
THIS
PURCHASE AGREEMENT BETWEEN:
#220
-
0000 - 0xx Xxxxxx
Xxxxxxx,
Xxxxxxxxxx
00000
Attention:
Xxxxx Xxxxxx
and
XXXXXXX
XXXXXXX
0000
-
0000 Xxxxxx Xxxxxx
Xxxxxxxxx,
XX
X0X
0X0
RE:
SALE AND ACQUISITION OF MINERAL CLAIMS,
NORTH-CENTRAL
BRITISH COLUMBIA, CANADA
The
following terms and conditions are applicable for the sale of one mineral claim
160 km northeast of Smithers, British Columbia, Canada by Xxxxxxx Xxxxxxx
(herein after referred to as “RS”) to Sustut Exploration Inc. (herein after
referred to as “SEI”). Both RS and SEI agree to the following:
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a)
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RS
will transfer title to the mineral claim listed in Exhibit “A” and
outlined in Exhibit “B” to SEI within 30 days of this agreement. This
claim will be a contiguous hard rock mineral claim totaling 445.70
hectares.
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b)
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RS
will provide to SEI within 30 days of this agreement a geological
report
summarizing the mineral claims, particulars of recent sampling and
geological investigation, copies of all records, a budget for further
work
and recommendations, and all other information and material relevant
to a
geological report requisite for filing with the regulatory
bodies.
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Page
2 of
7
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c)
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RS
will ensure that the claims shall be maintained in good standing
for up to
24 months from the date of claim recording and can provide geological
consulting services for the claims.
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d)
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RS
shall sell 100% (one hundred percent) interest in the claims
to SEI
subject to a 2½% Net Smelter Royalty (NSR) a total of $25,000.00. 1½% of
the NSR can be acquired for $1.0 million within 12 months from
commencement of commercial production. Advance royalties of $20,000
shall
be paid annually commencing January 17,
2010.
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e)
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If
SEI fails to make the advance royalty payments on the 5 year
anniversary
of the claims, as described in (d) above, then SEI agrees
to transfer
ownership of the subject mining claims to RS within no less
than a 10 day
period.
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SEI
shall:
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i)
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Pay
$55,000 to RS on or before May 15, 2006 and a further $20,000 on
or before
May 15, 2008.
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ii)
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Provide
the name and number of an individual or corporate Free Miner Certificate
to transfer the claims into.
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By
signature witnessed below, the undersigned hereby acknowledge that they have
read and understood and agree to the aforementioned terms.
Dated
at
Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx this 5th
day of
May, 2006.
_______________________________ _____________________________
Xxxxx
Xxxxxx, Sustut Exploration Inc. Xxxxxxx
Xxxxxxx
Witness
Witness
_____________________________ _____________________________
_____________________________ _____________________________
Print
name Print
Name
Page
3of 7
Footnotes
to Agreement
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1)
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All
dollar figures are denoted in the currency of the United States of
America.
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2)
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The
total to be paid by SEI to RS or third parties for the claims is
$70,000
inclusive of assessment.
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3)
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To
maintain claims in British Columbia annual assessment work is required
of
$0.40 per hectare in year 1-3 per claim, followed by $0.80 per hectare
thereafter. There is a filing fee of $10 per $100 expended per claim.
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4)
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Attached
are definitions of NSR.
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Page
4of 7
Advance
Royalty Payments
means
from time to time payments to the Optionor by the Optionee before Commencement
of Commercial Production of Minerals.
Commencement
of Commercial Production,
with
respect to Minerals or Rock, as the case may be, means:
| (a) |
if
a mill is located on the subject property, the last day of a period
of
forty (40) consecutive days in which, for not less than thirty (30)
days,
the mill processed Mineral or Rock from the Property at 60% of its
rated
capacity; or
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| (b) |
if
no Mill is located on the Property, the last day of the first period
of
thirty (30) consecutive days during which Mineral or Rock has been
shipped
from the Property on a reasonably regular basis for the purpose of
earning
revenues; or
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| (c) |
with
respect to Rock, following the 30th day of extraction for commercial
use.
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No
period
of time during which ore or concentrate is shipped from the Property for testing
purposes or during which milling operations are undertaken as initial tune-up
will be taken into account in determining the date of Commencement of Commercial
Production.
Gross
Rock Revenue
means,
for any period, the gross proceeds received by the Optionee in that period
from
the sale of Rock produced from the Property less any treatment, beneficiation
or
other changes or penalties deducted by the purchase to whom such Rock is
shipped, less:
| (a) |
all
costs of the Optionee associated with such sales involving handling,
weighing, sampling, determination of water content, insuring, packaging
and transporting Rock;
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| (b) |
the
costs of marketing, including rebates or allowances made or given;
and
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| (c) |
any
sales, severance, gross production, privilege or similar taxes (other
than
income taxes or mining taxes based on
income).
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Minerals
means
the
ores or concentrates of minerals, as that term is defined in the Mineral Tenure
Act (British Columbia), and the rock that is part of such ores and concentrates
sold by the Optionee.
Page
5of 7
Net
Smelter Return means,
for any period the difference between:
(a) the
sum
of:
| (i) |
the
gross proceeds received by the Optionee in that period from the sale
of
Minerals produced from the property to a party that is arm’s length to the
Optionee, or that would have been received by the Optionee if the purchase
of the Minerals were at arm’s length to the Optionee;
and
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| (ii) |
in
the case of the sale of Minerals that are ores that have not been
processed in a Mill, the estimated cost that would have been incurred
in
crushing and beneficiating such Minerals in a Mill as agreed by the
parties or otherwise determined by a competent mining or metallurgical
engineer;
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and
(b) the
sum
of:
| (i) |
all
amounts paid on account of Advance Royalty
Payments;
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| (ii) |
any
insurance costs in connection with shipping such
Minerals;
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| (iii) |
any
costs of transport;
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| (iv) |
all
costs of the Optionee associated with such sales involving handling,
weighing, sampling, determination of water content, insuring and
packaging;
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| (v) |
the
costs of marketing, adjusted for rebates or allowance made or
given;
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| (vi) |
any
sales, severance, gross production, privilege or similar taxes (other
than
income taxes or mining taxes based on income) assessed on or in connection
with the Minerals or the value thereof;
and
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| (vii) |
any
treatment, beneficiation or other charges or penalties deducted by
any
smelter or refinery to which such Minerals are shipped that have not
been
previously deducted in the computation of gross
proceeds.
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Net
Smelter Royalty means
the
percentage of Net Smelter Return from time to time payable to the Optionor
after
Commencement of Commercial Production from the sale of Minerals.
Rock
means
all substances that are mined from the Property and sold by the Optionee that
are not Minerals.
Rock
Royalty
means
the amount of royalty from time to time payable to the Optionor after
Commencement of Commercial Production from the sale of Rock pursuant to Section
11.06.
Page
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EXHIBIT
A:
Mineral
Claims
EXHIBIT
B:
Claim
Map
