EXPLORATION PERMIT WITH OPTION TO PURCHASE
EXHIBIT 4.10
THIS EXPLORATION PERMIT WITH OPTION TO PURCHASE is made and entered into as of the effective date, by and between XXXXXXX RESOURCE CORPORATION, a Nevada corporation, whose address is 00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (“Optionor” or “Xxxxxxx”) and JKR GOLD REOURCES, INC., a corporation incorporated under the laws of British Columbia, whose address is Suite 000-000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, X.X. Xxxxxx X0X 0X0, and NEWCO, a Nevada corporation to be formed, whose address is 0000 Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx, Xxxxxx, 00000 (hereinafter jointly referred to as “Optionee”).
A. Optionor is the Lessee under four Mining Leases covering 395 unpatented mining claims, situated in Elko County, Nevada, more particularly described as:
A.1 That Mining Lease and Agreement dated August 25, 2008, by and between KM Exploration, Ltd., (“KM”) as Lessor and SY Resources Acquisition, Inc. (“SY”) as Lessee, (the “Xxxxxxxxx Lease”). The Lessor’s interest was subsequently assigned by KM to Xxxxx Xxxxxxxxx (“Xxxxxxxxx”) by Assignment Agreement dated February 4, 2009. The Lessee’s interest was subsequently assigned by SY to C3 Resources, Inc. (“C3”) by Assignment of Mining Leases dated September 19, 2008, and from C3 to Xxxxxxx by Assignment of Mining Leases dated June 15, 2009. The Xxxxxxxxx Lease covers 172 CVN unpatented lode mining claims (collectively the “CVN Claims”) situated in Sections 4 and 5, Township 30 North, Range 51 East, and Sections 28, 29, 31, 32 and 33, Township 31 North, Range 51 East, in the County of Eureka, State of Nevada as more particularly set out in Schedule “A” hereto;
A.2 That Mining Lease dated November 30, 2006 between WFW Resources, LLC (“WFW”), as Lessor, and C3, as Lessee (the “WFW Lease”). The Lessee’s interest in the Lease was assigned by Assignment of Mining Leases to Xxxxxxx on June 15, 2009. The WFW Lease covers to 44 WFW unpatented lode mining claims (collectively the “WFW Claims”) situated in Sections 8, 19, 20, 29 and 30, Township 31 North, Range 51 East, MDM, in the County of Eureka, State of Nevada as more particularly set out in Schedule “B” hereto;
A.3 That Mining Lease dated August 25, 2008, by and between KM as Lessor and SY as Lessee (the “KM/IC Lease”). The Lessee’s interest was transferred by Assignment of Mining Leases to Xxxxxxx on June 15, 2009. The KM/IC Lease covers 88 IC unpatented lode mining claims (collectively the “IC Claims”) situated in Sections 5 and 6, Township 27 North, Range 54 East, and Sections 2832, Township 28 North, Range 54 East, MDM, in the County of Elko, State of Nevada as more particularly set out in Schedule “C” hereto; and
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A.4 That Mining Lease dated August 25, 2008, between KM as Lessor, and SY as Lessee (the “KM/RC Lease”). The Lessor’s interest in this Lease was assigned by KM to Xxxxx X. Xxxxxxxxx by Quitclaim Deed and Assignment on January 5, 2009. The Lessee’s interest in the KM/RC Lease was subsequently assigned by SY to C3 by Assignment of Mining Leases dated September 10, 2008, and then transferred by Assignment of Mining Leases by C3 to Xxxxxxx on June 15, 2009). The KM/RC Lease covers 91 RC unpatented lode mining claims (collectively the “RC Claims”) situated in Sections 24 and 25, Township 29 North, Range 54 East, MDM, in the County of Elko, State of Nevada as more particularly set out in Schedule “D” hereto.
The above leases are collectively referred to as “Leases” hereunder. The underlying claims covered by the Leases are referred to as the “Claims”. The Leases and Claims are hereinafter collectively referred to as the “Property.”
B. Optionee desires to obtain a right to explore the Property and an Option to Purchase the Property, and Optionor wishes to grant such an exploration right and purchase option, on the terms and conditions set forth herein.
THEREFORE, the parties agree as follows:
SECTION ONE
1.1 TERM. Optionor hereby grants to Optionee the exclusive right to explore the Property, together with the exclusive right to purchase all of the Optionor’s right, title and interest to the Property for a three year period from the effective date of August 31, 2009, ending on midnight on August 31, 2012.
1.2 WORK COMMITMENT. Optionee shall expend US$1,500,000 Exploration Expenditures as defined in Paragraph 1.2.1 below on or before August 31, 2012 (the “Deadline”). If Optionee has not expended this amount by the Deadline, a payment for the amount not expended may be made to the Optionor in lieu thereof.
1.2.1 EXPLORATION EXPENDITURES. “Exploration Expenditures” as used herein shall mean a program designed and directed toward discovery and delineation of deep-seated gold deposits and other precious minerals on the Property. Permissible expenditures shall include:
1.2.1.1. Actual field salaries and wages (or the allocable portion thereof), including benefit costs and payroll taxes, of employees or contractors of Optionee actually performing on site exploration and related activities.
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1.2.1.2. Costs and expenses for the use of machinery, facilities, equipment and supplies required for exploration, reclamation, and related activities.
1.2.1.3. Travel expenses and transportation of employees and contractors, materials, equipment and supplies necessary or convenient for the conduct of on site exploration.
1.2.1.4. All payments to contractors for exploration, reclamation, and related activities.
1.2.1.5. Costs of assays and other costs incurred to determine the quality and quantity of minerals.
1.2.1.6. Costs incurred to obtain permits, rights-of-way and other similar rights as may be incurred in connection with exploration.
1.2.1.7. Costs incurred in preparation and acquisition of environmental permits necessary to commence, carry out or complete on site exploration.
1.2.1.8. Costs and expenses of performing feasibility and other studies to evaluate the economic feasibility of mining.
1.2.1.9. All costs of insurance incurred by Optionee pursuant to Section 1.9.
1.2.1.10. All personal and real property taxes assessed against the Property by the Elko County Assessor or other government entity and paid by Optionee pursuant to Section 1.15.
1.2.1.11. All federal claim maintenance fees and county recording fees paid by Optionee pursuant to Section 1.16.
1.2.1.12 Optionee shall be entitled to charge a management fee on all exploration expenditures, which fee shall be included in the calculation of Exploration Expenditures.
1.2.1.13 Copies of all data generated for the Property, including, but not limited to, drill hole logs, exploration information, including interpretive information, maps, metallurgical studies, geophysical studies, all assay data, drill hole check assays, survey records, down hole surveys and other information of any sort (the “Data”) shall be provided to Optionor on an annual basis. To the extent practical all Data shall be provided in electronic format as well as hard copy. All colored maps shall be furnished in color. Optionee makes no representation or warranty, express or implied, of any kind or nature whatsoever with respect to the accuracy or reliability of the Data.
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1.2.1.14 In the event that Optionee does not exercise the Purchase Option, upon termination of this Agreement all core and drill sample pulps not consumed in assaying or metallurgical tests shall be delivered to Optionor at an address in Elko, Nevada specified by Optionor. Duplicates of all sample cuttings shall be saved in a building or in tightly closed barrels on the Property, or at such other location as may be mutually acceptable to the parties.
1.8 Conduct of Work. Optionee shall perform its exploration activities under this Agreement and any mining activities on the Property after exercise of the Purchase Option in accordance with all applicable laws and regulations relating to the performance of exploration and mining operations on the Property, including those relating to environmental reclamation and clean-up, and in compliance with applicable workers’ compensation laws of the State of Nevada.
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Optionee, in good faith, disputes the validity of the claim, in which case the existence of the lien shall constitute a default thirty (30) days after the validity of the lien has been adjudicated adversely to Optionee.
1.12.1 Optionee shall simultaneously deliver to Optionor copies of all permit applications filed with regulatory agencies pertaining to the Property or its operations hereunder. Optionee shall, promptly upon their receipt, deliver to Optionor copies of all permits, amendments, and modifications issued for the Property or its operations hereunder.
1.12.2 In the event Optionee does not exercise the Purchase Option, Optionee shall be responsible solely for that reclamation and clean-up liability on the Property associated with Optionee’s activities under this Agreement. Optionee shall reclaim any disturbance, including drilling, created by its activities under this Agreement in accordance with applicable rules and regulations of the appropriate state and federal agencies.
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SECTION TWO
2.1 Grant of Option. In consideration of the mutual promises and covenants set forth herein, and for and in consideration of the following payments and other consideration, OPTIONOR grants to OPTIONEE the exclusive and irrevocable option to purchase all of its right, title and interest in and to the Leases and the Claims free and clear of all mortgages, liens, charges, encumbrances, leases, licenses, third party interests or other claims of any nature or kind whatsoever, save and except for those royalties more particularity described in Paragraph 2.4 and 2.8 below.
2.2 Term. Pursuant to the payment schedule set forth in Paragraph 1.3 below, Optionee shall have the right to obtain an undivided 100% interest in the properties at anytime prior to August 31, 2012.
2.3 Purchase Price and Payment Schedule. The option price shall be TWO HUNDRED SIXTEEN THOUSAND, SIX HUNDRED FIFTY SEVEN DOLLARS (US$216,657.00) to be paid as set forth below, plus 600,000 common shares in the capital stock of JKR, plus a work commitment for exploration expenditures in the amount of US$1,500,000, plus a royalty as set forth in 2.4 below.
2.3.1 Optionee shall pay a total of US$216,657 as follows:
2.3.1.1 US$100,000 on or before September ______, 2009;
2.3.1.2 Reimburse Optionor US$16,567 on August 31, 2009 for claim maintenance fees incurred by Optionor;
2.3.1.3 US$100,000 on or before August 31, 2010;
2.3.1.4 Issue to Optionor 600,000 common shares of capital stock of JKR Gold Resources Inc., (the “JKR shares”) on or before August 31, 2009;
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2.3.1.5 Expend a total of US$1,500,000 in exploration expenditures (“Exploration Expenditures”) on the Properties on or before August 31, 2012, as set forth in Paragraph 1.2 above.
2.4 Reserved Royalty. Optionor reserves a 1% Net Smelter Return (“NSR”) royalty in the Properties in the event that the option is exercised (the “Xxxxxxx Royalties”). In each case the NSR royalty shall be calculated and paid on the same basis as set forth in the underlying Lease affecting the claims on which production is taking place.
2.5 Outstanding Royalties. Optionee acknowledges that the Leases are subject to the following Royalties:
2.5.1 The Xxxxxxxxx Royalty. The Xxxxxxxxx Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of Xxxxxxxxx (the “Xxxxxxxxx Royalty”) as more particularly described in Schedule “A”;
2.5.1.1 Royalty Buy Down on the Xxxxxxxxx Lease. In the event Optionor exercises the Option in the aforesaid manner, Xxxxxxxxx covenants and agrees that, from and after the date of exercise of the Option (the “Exercise Date”) and notwithstanding section 5 of the Xxxxxxxxx Lease, Optionor, as tenant, shall have the sole, exclusive and irrevocable right and option (the “Xxxxxxxxx Buy Down Option”) to buy down the Production Royalty (as such term is defined in the Xxxxxxxxx Lease) on gold in favor of Xxxxxxxxx, as owner, from 4% net smelter returns to 2% net smelter returns on the following terms and conditions:
2.5.1.1.1 One royalty “point” or 1% net smelter returns (the “First Point”) for US$1,000,000 cash payable on or before the fifth anniversary of the Exercise Date or US$5,000,000 cash payable after the fifth anniversary of the Exercise Date but on or before the tenth anniversary of the Exercise Date; and
2.5.1.1.2 An additional one royalty “point” or 1% net smelter returns (the “Second Point”) for an additional US$5,000,000 payable on or before the tenth anniversary of the Exercise Date,
2.5.1.2 Failure to Exercise the Xxxxxxxxx Royalty Buy Down. If Optionee fails to exercise the Xxxxxxxxx Buy Down Option in regards to purchasing either the First Point or the Second Point, the Xxxxxxxxx Buy Down Option shall thereafter lapse and terminate and the original terms of the Xxxxxxxxx Lease with respect the tenant’s right to buy down the owner’s Production Royalty as set out in section 5 thereof shall again apply to the Xxxxxxxxx Lease.
2.5.2 The WFW Royalty. The WFW Lease is subject to annual lease payments and an underlying production royalty of 3% net smelter returns in favor of WFW (the “WFW Royalty”) as more particularly described in Schedule “B”;
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2.5.3 The KM/IC Royalty. The KM/IC Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of KM or its assignees (the “KM/IC Royalty”) as more particularly described in Schedule “C”; and
2.5.4 The KM/RC Royalty. The KM/RC Lease is subject to annual lease payments and an underlying production royalty of 4% net smelter returns in favor of KM or its assignees (the “KM/RC Royalty”) as more particularly described in Schedule “D”.
2.6 Transfer of Shares. Optionor further acknowledges that:
2.6.1 JKR is a private (non-reporting) issuer, incorporated in the Province of British Columbia, Canada and that the JKR Shares will be issued to Optionee pursuant to an exemption (the "Exemption") from the registration and prospectus requirements of the applicable securities laws and regulations in Canada (collectively, the "Canadian Legislation") and, as a consequence:
2.6.1.1.1 Optionor is restricted from using certain of the civil remedies available under the Canadian Legislation;
2.6.1.1.2 Optionor may not receive information that might otherwise be required to be provided to Optionee under the Canadian Legislation if the Exemption was not being used;
2.6.1.1.3 Optionee is relieved from certain obligations that would otherwise apply under the Canadian Legislation if the Exemption was not being used;
2.6.1.1.4 No securities commission or similar regulatory authority has reviewed or passed on the merits of the JKR Shares;
2.6.1.1.5 There is no government or other insurance covering the JKR Shares;
2.6.1.1.6 There are risks associated with the purchase of the JKR Shares; and
2.6.1.1.7 There are restrictions on Optionor’s ability to resell the JKR Shares and it is the responsibility of Xxxxxxx to find out what those restrictions are and to comply with them before selling the JKR Shares;
2.6.1.1.8 JKR is not a reporting issuer in any province or territory of Canada and, accordingly, any applicable hold periods under the Canadian Legislation may never expire, and the JKR Shares may be subject to restrictions on resale for an indefinite period of time; and
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2.6.1.1.9 The JKR Shares have not been registered under the United States Securities Act of 1933 (the “U.S. Securities Act”) or the securities laws of any state in the United States, Optionee has no obligation or present intention of filing a registration statement under the U.S. Securities Act or any state securities laws in respect of the JKR Shares and that the certificate representing the JRK Shares to be issued to Optionor will bear restrictive legends in accordance with applicable United States federal and state securities laws.
2.7 Exercise of Option. In the event Optionee exercises the Option in accordance with this Agreement after and having met the obligations set forth in Paragraph 2.3 above, Optionee shall have earned a 100% undivided legal and beneficial interest in the Properties and Optionor shall forthwith execute and deliver to Optionee such transfers and assignments as shall be effective to transfer and convey to Optionee a 100% undivided legal and beneficial interest in the Properties free and clear of all Encumbrances save and except for the Tone Royalties as defined in Paragraph 2.4 above, the KM Royalty, the WFW Royalty, the KM/IC Royalty, the KM/RC Royalty as defined in Paragraphs 2.5.1 through 2.5.4 below, (collectively the “Royalties”). All such transfers and assignments shall be in recordable form.
2.8 Option Termination. If Optionee fails to make the cash payments, issue the JKR Shares or incur the Exploration Expenditures by the Deadline (or pay the amount equivalent to the amount not expended to Optionor) or within 15 business days following receipt of a written notice of default from Optionor, the Option shall terminate and be of no further force or effect. In the event of any lapse, termination or surrender of the Option, Optionee shall:
2.8.1 Ensure that the Leases and underlying claims are in good standing for a period of not less than six months from the lapse, termination or surrender of the Option;
2.8.2 Ensure that the Leases and underlying claims are in at least the same state concerning environmental and hazardous conditions as they were on the date of this Agreement and that they are free and clear of all Encumbrances that may have been created by Optionee; and
2.8.3 Deliver to Optionor any and all reports, maps, assessment reports and maps, samples, assay results, drill cores, data and other information of any kind whatsoever pertaining to the leases or underlying claims or Optionee’s work thereon which have not been previously delivered to Optionor.
Notwithstanding the foregoing, Optionee may, at any time during the Option Period in its discretion, elect to release one or more claims from the provisions of this Agreement and the Leases upon written notice to Optionor and the underlying lessor provided that such released claims or leases are in good standing for a period of not less than six months from the date of the notice.
2.9 Representations and Warranties.
2.9.1 Of Optionor. Optionor represents and warrants to Optionee as follows and acknowledges that Optionee is relying upon such representations and warranties in connection with this Agreement:
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2.9.1.1 Optionor is the legal and beneficial owner of a 100% undivided interest and has good and marketable title to the leasehold interest in the Leases, free and clear of all Encumbrances of whatsoever nature or kind, save and except for the Royalties;
2.9.1.2 Optionor acknowledges that any of the claims from the CVN, RC and IC group whose 2010 claim fee payments were not paid prior to July 1, 2009 as per the underlying Lease, will be reinstated and become part of this Agreement if the claim fees are paid by Optionor prior to August 15, 2009.
2.9.1.3 The Xxxxxxxxx Lease, the WFW Lease and the IC Lease are in full force and effect and in good standing in accordance with their respective terms, all lease payments, fees, royalties and taxes payable thereunder are current and up to date and there have been no changes, amendments, alterations or modifications to the Xxxxxxxxx Lease the WFW Lease, the IC Lease or the RC Lease whatsoever save and except as set out in Schedules “A,”“B”,” “C,” and “D,” respectively, and save and except as modified by the Claim Reduction Notice;
2.9.1.4 Optionor has the full right and power to sell, assign and transfer the Properties to Optionor as contemplated herein without the prior consent or approval of any third party;
2.9.1.5 Schedules “A”, “B”, “C”, and “D” hereto set out a true, accurate and complete description of the CVN Claims, the WFW Claims, the IC Claims, and the RC Claims, respectively, which claims have been validly located, tagged, staked, filed and recorded in compliance with all applicable federal, state and local laws and regulations including, but not limited to, the laws of the State of Nevada and federal laws administered by the United States Bureau of Land Management (collectively “Applicable Mining Laws”) as they relate to the location and recording of such mineral claims and are valid and subsisting mineral claims;
2.9.1.6 Optionor has paid all taxes, fees, charges and other monies and performed all acts and things required to be paid and done under the Leases and Applicable Mining Laws to maintain the CVN Claims, the WFW Claims, the IC Claims, and the RC Claims in good standing in accordance with such Leases and laws, as applicable, until the dates shown in Schedules “A”, “B” ,“C”, and ”D,” respectively, subject to the modifications described in the Claim Reduction Notice;
2.9.1.7 All activities and operations that have been carried out on the Properties to date have been and are in compliance in all material respects with all Applicable Mining Laws and directives of all governmental authorities, agencies and tribunals having jurisdiction, and Optionor has not received notice of non-compliance from any such authorities, agencies or tribunals;
2.9.1.8 To the knowledge of Optionor, the Properties are free and
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clear of any hazardous or toxic material, pollution, or other adverse environmental conditions which may give rise to any environmental liability under any local, state, or federal law, rule or regulation and there is no judicial or administrative proceeding pending and no environmental order has been issued or, to the best of Optionor’s knowledge, information and belief, threatened, concerning possible violation of any environmental laws or environmental orders in respect of the Properties and Optionor has not received notice of non-compliance from any such authorities, agencies or tribunals and is not aware of any circumstances that could give rise to a notice of non-compliance;
2.9.1.9 To the knowledge of Optionor, all environmental approvals required with respect to activities carried out by Optionor on any part of the lands covered by the Properties have been obtained, are valid and in full force and effect, have been complied with, and there have been and are no proceedings commenced or threatened to revoke or amend any such environmental approvals;
2.9.1.10 Optionor has not entered into any arrangement or agreement and has not made any commitment in respect of the Leases or the Properties and Optionor is not subject to, nor a party to, any agreement, contract, order, judgment or decree, or any other restriction of any kind or character, which materially adversely affects the Leases or the Properties or which would prevent the consummation of the transactions contemplated by this Agreement;
2.9.1.11 To the knowledge of Optionor, there is no litigation, proceeding or investigation pending or threatened, against or involving Optionor and affecting the Leases or the Properies before or by any court, governmental department, commission, or agency, which, if adversely determined, would prohibit or frustrate the transactions and covenants contemplated in this Agreement;
2.9.1.12 Optionor is unaware of any material facts or circumstances which have not been disclosed in this Agreement and which should be disclosed to Optionee in order to prevent the representations and warranties set forth herein from being materially misleading;
2.9.1.13 Optionor is a corporation duly incorporated, validly subsisting and in good standing under the laws of Nevada and has full corporate power, capacity and authority to enter into and perform its obligations under this Agreement and any agreement or instrument referred to or contemplated by this Agreement;
2.9.1.14 The entering into this Agreement and the performance by Optionor of its obligations hereunder have been duly authorized by all necessary corporate or other action and this Agreement constitutes a legal, valid and binding obligation of Optionor enforceable against it in accordance with its terms and conditions; and
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2.9.1.15 Neither the execution and delivery of this Agreement, nor the performance of the transactions contemplated hereunder, conflict with, result in the breach of or accelerate the performance required by any agreement to which it is a party.
2.9.2 Of Optionee. Optionee represents and warrants as follows and acknowledges that Optionor is relying upon such representations and warranties in connection with this Agreement:
2.9.2.1 JKR is a corporation duly incorporated, validly subsisting and in good standing under the laws of the Province of British Columbia;
2.9.2.2 Newco is a Nevada corporation duly incorporated, validly subsisting and in good standing.
2.9.2.3 It has full corporate power, capacity and authority to enter into and perform its obligations under this Agreement and any agreement or instrument referred to or contemplated by this Agreement;
2.9.2.4 Neither the execution and delivery of this Agreement nor the performance of the transactions contemplated hereunder, conflict with, result in the breach of or accelerate the performance required by any agreement to which it is a party; and
2.9.2.5 The entering into this Agreement and the performance by Optionee of its obligations hereunder have been duly authorized by all necessary corporate action and this Agreement constitutes a legal, valid and binding obligation of Optionee enforceable against it in accordance with its terms and conditions.
2.9.2.6 As of the date hereof, Optionee has unlimited authorized shares with 11,000,000 shares issued and outstanding, and has allocated 1,000,000 shares subject to options and warrants outstanding as of the date hereof.
3.1 Transfer of Option. Optionor may, in its discretion, at any time prior to the exercise of the Option, assign all or any portion of the Option to a publicly traded company without the consent or approval of Optionee. In such event, the JKR Shares acquired by Optionee will be exchanged for an equivalent value of shares in such public entity.
3.2 Governed By The Laws Of Nevada. This Agreement shall be governed by the laws of Nevada and the federal laws of the United States applicable therein.
3.3 Time of the Essence. Time is of the essence in this Agreement and the transactions contemplated herein.
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3.4 Counterparts. This Agreement may be executed in two or more counterparts and delivered by facsimile or PDF email attachment, each of which will be deemed to be an original and all of which will constitute one agreement, effective as of the date given above.
3.5 Notice. Any notice required or permitted hereunder shall be considered effectively given when mailed. All notices or payments to be made hereunder to either party shall be made to such party at its address for notices below:
Optionor:
Xxxxxxx Resource Corporation
00000 Xxxx Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Optionee:
JKR Gold Resources Inc.
Suite 000-000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, X.X. Xxxxxx X0X 0X0
Newco
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxx, XX 00000
3.7 Conflict with Leases. If the terms of this Exploration Permit with Option to Purchase should conflict with the terms of the Leases, the terms of the Leases shall prevail.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day and year first above written.
Optionor:
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Xxxxxxx Resource Corporation
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| /s/ Xxxx X. Warhaars | ||
| By: |
Xxxx X. Warhaars
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| Its: |
Executive Chairman
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Optionee:
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JKR Gold Resources
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| /s/ Xxxxxxxx Xxxxxxx Xxxxxxx Xxxx | ||
| By: |
Xxxxxxxx Xxxxxxx Xxxxxxx Xxxx
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| Its: |
President
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Optionee:
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Newco, a Nevada Corporation
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State of Colorado
County of Jefferson
I HEREBY CERTIFY that before me the undersigned authority personally appeared Xxxx X. Warhaars, Exec. Chairman of Xxxxxxx Resource Corporation, to me known to be the person described in and who executed the foregoing instrument, and severally acknowledge the execution thereof to be their free act and deed as such officer for the uses and purposes therein mentioned, and said instrument is the act and deed of said corporation.
| /s/ Xxxxxxxx Xxxxxx |  |
| Notary Public | |
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My commission expires: 3-18-2011
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| (Seal) | |
| State of ________________ | |
| County of ______________ |
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I HEREBY CERTIFY that before me the undersigned authority personally appeared Xxxxxxxx Xxxxxxx Xxxxxxx Xxxx,President of JKR Gold Resources Inc., to me known to be the person described in and who executed the foregoing instrument, and severally acknowledge the execution thereof to be their free act and deed as such officer for the uses and purposes therein mentioned, and said instrument is the act and deed of said corporation.
WITNESS my hand and official seal in the State and County above mentioned this 1st day of September, 2009.
| /s/ Xxxxx Xxxxx |  |
| Notary Public | |
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My commission expires: Does not expire
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| State of _______________________ | |
| County of _____________________ |
I HEREBY CERTIFY that before me the undersigned authority personally appeared ________________, ______of Newco, a Nevada corporation, to me known to be the person described in and who executed the foregoing instrument, and severally acknowledge the execution thereof to be their free act and deed as such officer for the uses and purposes therein mentioned, and said instrument is the act and deed of said corporation.
WITNESS my hand and official seal in the State and County above mentioned this ____ day of ______ 2009
| Notary Public | |
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My commission expires:___________
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Acknowledged and Agreed
this 14th day of Sept, 2009
By: /s/ Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx
The parties acknowledge and agree that Xxxxxxxxx is being made a party to this Purchase Option Agreement for the sole purpose of providing the covenants and agreements set out in section ____ hereof. The parties further acknowledge that with respect to the Xxxxxxxxx Lease, the KM/RC Lease and the KM/IC Lease, lessee in each case has conveyed notice (dated June 30, 2009) (“Claim Reduction Notice”) to the respective owners of a reduction in the claims to be included in said leases, reference to said notice being hereby made for all purposes.
State of Nevada
County of Lyon
I HEREBY CERTIFY that before me the undersigned authority personally appeared Xxxxx Xxxxxxxxx, an individual, to me known to the person described in and who executed the foregoing instrument, and severally acknowledge the execution thereof to be their free act and deed for the uses and purposes therein mentioned.
WITNESS my hand and official seal in the State and County above mentioned this 14 day of Sept, 2009.
| /s/ Xxxxxxx Xxxx |
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| Notary Public | |
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My commission expires: 03/29/11
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Schedule “A”
Description of Xxxxxxxxx Lease
Mining lease and agreement dated August 25, 2008 (the “Xxxxxxxxx Lease”) between Xxxxx Xxxxxxxxx, as owner (as assigned from KM Exploration, Ltd. by assignment agreement dated February 4, 2009), and C3, as tenant (as assigned from SY Resources Acquisition, Inc. by assignment of mining leases dated September 19, 2008 and ultimately assigned to Xxxxxxx on June 15, 2009), with respect to 172 unpatented lode mining claims (collectively the “CVN Claims”) situated in Sections 4 and 5, Township 30 North, Range 51 East, and Sections 28, 29, 31, 32 and 33, Township 31 North, Range 51 East, in the County of Eureka, State of Nevada as follows:
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Claim Name
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County Book/Page
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BLM Number
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Expiry Date
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CVN 1 – 14
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356 – PO14 – 027
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836897 – 836910
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●
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CVN 19 – 32
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356 – PO28 – 041
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836911 – 836924
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CVN 15 – 18
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375 – P123 – 126
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862055 – 862058
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●
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CVN 33 – 76
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375 – P127 – 170
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862059 – 862102
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●
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CVN 77 – 112, 140 – 151
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439 / 217 – 264
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931052 – 931099
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●
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CVN 113 – 139
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439 / 265 – 291
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931117 – 931143
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●
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CVN 151 – 172
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484 / 261 - 281
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1003113 – 1003133
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●
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(a) The Xxxxxxxxx Lease contains an area of interest clause under which any claims located
by either Xxxxxxxxx or C3 within the following area of interest shall become subject to
the terms and conditions of the Xxxxxxxxx Lease:
Township 30 North, Range 51 East, MDM
Sections 3 – 5, 8 – 10, 15 (SW ¼ of SW 3 only), 16 and 21 (E ½ only)
Township 13 North, Range 15 East, MDM
Sections 27 – 33 and 34 (W ½ only)
(b) The Xxxxxxxxx Lease contains the following material terms and conditions:
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|
(i)
|
the lessee is entitled to the exclusive lease to prospect and explore for, mine, process, sell and dispose of all metallic ores and minerals of every kind, except oil and gas, in, on or under the CVN Claims, together with all rights of way, easements, water and water rights, geothermal water and geothermal resources appertaining to the CVN Claims for a term of 25 years, and so long thereafter as minerals are mined, produced, explored or sold from the CVN Claims, but subject to earlier termination as provided for in the Xxxxxxxxx Lease;
|
|
(ii)
|
the lessee is required to make annual rental payments on each anniversary of theMathewson Lease starting at US$30,000 upon signing (paid) and increasing to US$60,000 on the sixth anniversary of the Xxxxxxxxx Lease and annually thereafter, provided however that every five years the payments shall be increased in proportion to any increase in the consumer price index (all cities) over the prior five year period;
|
|
(iii)
|
the CVN Claims are subject to a production royalty of four (4%) percent of net smelter returns in favour of Xxxxxxxxx (the “Xxxxxxxxx Royalty”), provided that the lessee has the sole and exclusive option to buy down the KM Royalty on gold only from 4% to 2% by paying Xxxxxxxxx a lump sum payment per royalty point (i.e. 1% net smelter returns) of between US$2,000,000 and US$8,000,000 or more depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the Xxxxxxxxx Lease;
|
|
(iv)
|
the lessee is required to pay all claim maintenance fees and file all required filingswith the United States Bureau of Land Management and the county or counties in which the CVN Claims are located to maintain the CVN Claims in good standing; and
|
|
(v)
|
the lessee may terminate the Xxxxxxxxx Lease at any time by written notice toMathewson.
|
The claims to be included under the Xxxxxxxxx Lease have been reduced pursuant to the terms of the Claim Reduction Notice.
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Schedule “B”
Description of WFW Lease
Mining Lease dated November 30, 2006 (the “WFW Lease”) between WFW Resources, LLC (“WFW”), as owner, and C3, as lessee, (ultimately assigned to Xxxxxxx on June 15, 2009) with respect to 44 unpatented lode mining claims (collectively the “WFW Claims”) situated in Sections 8, 19, 20, 29 and 30, Township 31 North, Range 51 East, MDM, in the County of Eureka, State of Nevada as follows:
|
Claim Name
|
County Index Numbers
|
BLM Serial Numbers
|
Expiry Date
|
|
WFW 1
|
Eureka doc #: 207772
Book 452, Pg 000
|
XXX 000000
|
●
|
|
WFW 2
|
Eureka doc #: 204740
Book 436, Pg 000
|
XXX 000000
|
●
|
|
WFW 3 – 5
|
Eureka doc #: 207773 – 207775 Book 452, Pg 137 – 139
|
NMC 945954 – 945956
|
●
|
|
WFW 6
|
Eureka doc #: 204741
Book 436, Pg 000
|
XXX 000000
|
●
|
|
WFW 7 – 23
|
Eureka doc #: 207776 -207792 Book 452, Pg 140 – 156
|
NMC 945957 – 945973
|
●
|
|
WFW 24
|
Eureka doc #: 204742
Book 436, Pg 000
|
XXX 000000
|
●
|
|
WFW 25 – 44
|
Eureka doc #: 207793 -207812 Book 452, Pg 157 – 176
|
NMC 945974 - 945993
|
●
|
together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and remove the same, and all.
(a) The WFW Lease contains the following material terms and conditions:
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|
(i)
|
the lessee has the right to make geological investigations and surveys, drill, mine, remove, sell and dispose of ores, concentrates, mineral bearing earth and rock and other products from the WFW Claims, together with all surface and water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto, for an initial term of 10 years, provided that the term may be extended in five (5) year increments thereafter for a total term of 40 years upon 60 days advance notice for each 5 year renewal term, and for as long as mining operations are conducted on the WFW Claims, but subject to earlier termination as provided for in the WFW Lease;
|
|
(ii)
|
until production is achieved from the WFW Claims, the lessee shall make annual lease payments of $6,000 upon signing (paid), US$12,500 in years 2 through 6, US$17,500 in years 7 through 11 and US$17,500 plus adjustments for the cost of living/inflation for year 11 and all years thereafter;
|
|
(iii)
|
upon commencing production of valuable minerals from the WFW Claims, the lessee shall pay WFW a royalty on production equal to three (3%) percent of net smelter returns, provided that the lessee shall have the right at any time during the term of the WFW Lease to purchase two (2) “points” of WFW’s gold production royalty, each one (1) “points” being equivalent to one (1%) percent of net smelter returns by paying WFW a lump sum payment per “point” of between US$1,500,000 and US$7,000,000 or more depending upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the WFW Lease;
|
|
(iv)
|
the lessee has the option to purchase all claims covered by the WFW Lease for US$20,000 per claim at any time during the lease period, except that the lessee shall remain obligated to pay WFW the production royalties set out in paragraph (iii) above;
|
|
(v)
|
the lessee shall pay all federal claim maintenance fees and filing costs required to maintain the WFW Claims in good standing; and
|
|
(vi)
|
the lessee shall have the right to terminate the WFW Lease at its sole discretion at any time upon 60 days advance notice in writing to WFW.
|
- 21 -
Schedule “C”
Description of KM/IC Lease
Mining Lease dated August 25, 2008 (the “KM/IC Lease”) between KM Exploration, Ltd.(“KM”), as owner, and its assignees and SY Resources Acquisition, Inc., as lessee (ultimately assigned to Xxxxxxx on June 15, 2009) with respect to 88 unpatented lode mining claims (collectively the “IC Claims”) situated in Sections 5 and 6, Township 27 North, Range 54 East, and Sections 28-32, Township 28 North, Range 54 East, MDM, in the County of Elko, State of Nevada as follows:
|
Claim Name
|
Elko County Document Numbers
|
BLM Serial Numbers
|
Expiry Date
|
|
IC 1-6
|
572104-572109
|
NMC 952373-8952378
|
●
|
|
IC 7-18
|
570349-570360
|
NMC 949632-948643
|
●
|
|
IC 19-26
|
585241-585248
|
NMC 972634-972641
|
●
|
|
IC 27-50
|
572110-572133
|
NMC 952379-952402
|
●
|
|
IC 51-54
|
570361-570364
|
NMC 948644-948647
|
●
|
|
IC 55-70
|
585249-585264
|
NMC 972642-972657
|
●
|
|
IC 71-88
|
572134-572151
|
NMC 952403-952420
|
●
|
together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and remove the same, and all.
(a) The KM/IC Lease contains the following material terms and conditions:
|
|
(i)
|
the lessee has the right to make geological investigations and surveys, drill, mine, remove, sell and dispose of ores, concentrates, mineral bearing earth and rock and other products from the IC Claims, together with all surface and water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto;
|
|
|
(ii)
|
until production is achieved from the IC Claims, the lessee shall make annual lease payments of $20,000 upon signing (paid), US $25,000 on the first anniversary and escalating US$5000 annually thereafter until US$50,000 is required on the sixth anniversary, after which the annual payment remains constant subject to CPI adjustments every 5 years thereafter;
|
- 22 -
|
|
(iii)
|
upon commencing production of valuable minerals from the IC Claims, the lessee shall pay KM a royalty on production equal to four (4%) percent of net smelter returns, provided that the lessee shall have the right at any time during the term of the KM/IC Lease to purchase two (2) “points” of KM’s gold production royalty, each one (1) “points” being equivalent to one (1%) percent of net smelter returns by paying KM a lump sum payment per “point” of between US$2,000,000 and US$8,000,000 upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the KM/IC Lease; and
|
|
|
(iv)
|
the lessee shall pay all federal claim maintenance fees and filing costs required to maintain the IC Claims in good standing.
|
The claims to be included under the KM/IC Lease have been reduced pursuant to the terms of the Claim Reduction Notice.
- 23 -
Schedule “D”
Description of KM/RC Lease
Mining Lease dated August 25, 2008 (the “KM/RC Lease”) between KM Exploration, Ltd. and assignees(“KM”), as owner, and its assignees, and SY Resources Acquisition, Inc., as lessee (ultimately assigned to Xxxxxxx on June 15, 2009) with respect to 91 unpatented lode mining claims (collectively the “RC Claims”) situated in Sections 24 and 25, Township 29 North, Range 54 East, MDM, in the County of Elko, State of Nevada as follows;
|
Claim Name
|
Elko County Document Numbers
|
BLM Serial Numbers
|
Expiry Date
|
|
RC 1-20
|
483537-483556
|
NMC 829209-829228
|
●
|
|
RC 21-61
|
491095-491135
|
NMC 838626-838666
|
●
|
|
RC 62-91
|
542251-542280
|
NMC 909132-909161
|
●
|
together with all ores, minerals, surface and mineral rights, and the right to explore for, mine, and remove the same, and all.
(a) The KM/IC Lease contains the following material terms and conditions:
|
|
(i)
|
the lessee has the right to make geological investigations and surveys, drill, mine, remove, sell and dispose of ores, concentrates, mineral bearing earth and rock and other products from the IC Claims, together with all surface and water rights and improvements, easements, licenses, rights-of-way and other interests appurtenant thereto;
|
|
|
(ii)
|
until production is achieved from the IC Claims, the lessee shall make annual lease payments of $20,000 upon signing (paid), US $25,000 on the first anniversary and escalating US$5000 annually thereafter until US$50,000 is required on the sixth anniversary, after which the annual payment remains constant subject to CPI adjustments every 5 years thereafter;
|
|
|
(iii)
|
upon commencing production of valuable minerals from the IC Claims, the lessee shall pay KM a royalty on production equal to four (4%) percent of net smelter returns, provided that the lessee shall have the right at any time during the term of the KM/IC Lease to purchase two (2) “points” of KM’s gold production royalty, each one (1) “points” being equivalent to one (1%) percent of net smelter returns by paying KM a lump sum payment per “point” of between US$2,000,000 and US$8,000,000 upon the average price of gold for the 30 days preceding the exercise of the option as more particularly set out in the KM/IC Lease; and
|
- 24 -
|
|
(iv)
|
the lessee shall pay all federal claim maintenance fees and filing costs required to maintain the IC Claims in good standing.
|
The claims to be included under the KM/RC Lease have been reduced pursuant to the terms of the Claim Reduction Notice.
- 25 -