PROPERTY OPTION AGREEMENT
BETWEEN
LOUVICOURT GOLD MINES INC.
AND
XXXXXX RESOURCES INC.
PROPERTY OPTION AGREEMENT
THIS AGREEMENT is made and dated for reference the 8th day of July, 2004.
BETWEEN:
LOUVICOURT GOLD MINES INC., a Quebec corporation,
(hereinafter called "OWNER")
and
XXXXXX RESOURCES INC., a Delaware corporation,
(hereinafter called "XXXXXX")
RECITALS:
A. Pursuant to the Underlying Agreement, Owner holds an option to acquire
certain Mineral Claims;
X. Xxxxxx wishes to acquire up to an undivided seventy five (75%) per
cent interest in the Mineral Claims, upon the terms and subject to the
conditions as are hereinafter set forth; and
C. Owner is prepared to xxxxx Xxxxxx an option to acquire up to an undivided
seventy five (75%) per cent interest in the Mineral Claims, upon the terms and
subject to the conditions are hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
obligations hereinafter set forth, and intending to be legally bound, the
parties agree as follows:
ARTICLE I
INTERPRETATION AND DEFINITIONS
Section 1.01 DEFINITIONS
As used in this Agreement, the following words and phrases have the following
meanings:
(a) "Affiliate" means any person, partnership, limited liability company,
joint venture, corporation, or other form of enterprise which controls,
is controlled by, or is under common control with a party to this
Agreement;
(b) "Agreement" means this agreement as the term is defined in Section 1.03
hereof;
(c) "Exploration Funds" means the exploration funding that Xxxxxx has agreed
to contribute pursuant to Section 2.04hereof to fund Work Programs
(d) "Force Majeure" means any event beyond a party's reasonable control
including laws which prohibit a party's ability to comply with its
obligations; action or inaction of civil or military authority; mining
casualty; damage to or destruction of mine, plant or facility; fire;
explosion; flood; insurrection; riot; labour disputes; and acts of God,
but does not include a party's inability to make any payments required
under this Agreement;
(e) "Mineral Claims" means the mineral claims described in Schedule "A" of
the Underlying Agreement;
(f) "Net Smelter Return" or "NSR" has the meaning given it in the Underlying
Agreement.;
(g) "Operator" means the Owner, in relation to its duty as the operator of
any Work Programs on the Mineral Claims performed using Exploration
Funds. The Operator shall operate shall retain personnel, supervise and
otherwise administer Work Programs;
(h) "Option" has the meaning given that term by Section 2.01;
(i) "Option Exercise Date" means the date that the Option exercised, as to
at least a 75% interest in the Mineral Claims, in accordance with the
terms hereof;
(j) "Option Payments" has the meaning given that term by Section 2.01;
(k) "Option Period" means the period from and after the full execution of
this Agreement to the date of its termination;
(l) "Underlying Agreement" means the Agreement dated October 31, 2003
pursuant to which the Owner acquired rights to the Mineral Claims, a
copy of which is attached hereto as Schedule "A";
(m) "Underlying Owners" means the underlying owners of the Mineral Claims,
as noted in the Underlying Agreement; and
(n) "Work Programs" means exploration programs on the Mineral Claims which
are agreed to between the Owner and Xxxxxx, acting on a commercially
reasonable basis, which may include bulk sampling, line-cutting,
geological mapping and sampling, geophysical surveys, back-hoe trenching
and water stripping of trenches; humus sampling; or any forms of surface
or subsurface exploration or drilling.
Section 1.02 SCHEDULES
The following schedule is attached to and forms part of this Agreement:
(a) Schedule "A" - Underlying Agreement
Section 1.03 ENTIRE AGREEMENT
This Agreement, the attached schedules and all properly executed amendments are
hereinafter collectively referred to as this Agreement. This Agreement
constitutes the entire agreement between the parties and supersedes all previous
agreements and undertakings relating to the subject matter. The parties
acknowledge that there are no agreements, undertakings, representations,
warranties or conditions collateral to this Agreement except as specifically
stated otherwise in this Agreement.
Section 1.04 CAPTION AND HEADINGS
The division of this Agreement into articles and sections and the insertion of
headings is for convenience of reference only and shall not affect the
interpretation of this Agreement. Any reference to a section or article shall be
a reference to a section or article of this Agreement unless specifically stated
otherwise.
Section 1.05 EXTENDED MEANINGS
In this Agreement, where the context so requires or permits, the masculine
gender shall include the feminine and neuter genders, the plural shall include
the singular and vice versa, and the words "person" and "persons" shall include
corporations, partnerships, and all other entities of whatever description.
Section 1.06 CURRENCY
In this Agreement all statements of and references to dollar amounts shall mean
United States dollars, unless stated otherwise.
Section 1.07 GOVERNING LAW
This Agreement shall be interpreted in accordance with the laws of the Province
of Ontario and the federal laws of Canada as applicable therein.
Section 1.08 SEVERABILITY
If any provision of this Agreement is found invalid, illegal, or incapable of
enforcement by any Court of competent jurisdiction, such provision and the
remaining provisions of the Agreement shall continue to be enforceable to the
extent permitted by such Court against any person(s) and in any circumstance(s)
other than those to whom it has been found invalid, illegal or incapable of
enforcement.
Section 1.09 AMENDMENTS
No amendments to this Agreement shall be of any force and effect unless executed
in writing by all the parties to this Agreement.
ARTICLE II
Section 2.01 OPTION
The Owner hereby grants Xxxxxx an exclusive and irrevocable option (the
"Option") to acquire up to an undivided seventy-five (75%) per cent interest in
the Mineral Claims by advancing certain Exploration Funds, performing certain
Work Programs and making certain share issuances and cash payments to the Owner:
Section 2.02 CASH AND SHARE OPTION PAYMENTS
As partial consideration for the granting of the Option, Xxxxxx agrees to pay to
the Owner (collectively the "Option Payments"):
i) $55,000 upon the full execution of this Agreement;
ii) $55,000 on or before one year from the date of full execution of this
Agreement;
iii) 100,000 shares upon the full execution of this Agreement; and
iv) 200,000 shares on or before one year from the date of full execution of
this Agreement.
Section 2.03 UNDERLYING AGREEMENT
It is agreed that the Owner will keep the Underlying Agreement in good standing
during the time that this Agreement remains in effect. If for any reason the
Owner fails to perform any action required by the Underlying Agreement that, in
the reasonably held opinion of Xxxxxx, could result in a default by the Owner
under the Underlying Agreement, Xxxxxx may perform such action as the authorized
agent of the Owner, and offset any expense incurred against all amounts
otherwise due or payable by Xxxxxx hereunder.
Section 2.03 (a) ACCELERATION OF PERFORMANCE FOR UNDERLYING AGREEMENT
As noted in section 2.05 hereinbelow, in the event that Xxxxxx has made the
Option Payments and has advanced Exploration Funds totalling a minimum of
$750,000 hereunder, at such time (the "Option Exercise Date") it shall have
earned a minimum vested fifty (50%) percent interest in the Mineral Claims and
shall have the right to register its interest within the time contemplated by
Section 2.10. In the event that, at such time, there remain unsatisfied
obligations of the Owner pursuant to the Underlying Agreement, Xxxxxx shall have
the right to advance funds for these obligations to the Owner and the Owner will
forthwith satisfy such obligations with the result that it will be entitled to
register its and Xxxxxx'x respective interests in the Mineral Claims.
Section 2.04 EXPLORATION FUND ADVANCES
a) As partial consideration for the granting of the Option, Xxxxxx agrees to
fund Work Programs on the Mineral Claims by advancing Exploration Funds to the
Owner, acting as the Operator, on the following basis:
i) by no later than July 31, 2004, Xxxxxx will advance Exploration Funds
of $150,000
ii) by no later than one year from the signing of this Agreement, Xxxxxx
will advance additional Exploration Funds of $350,000;
iii) by no later than two years from the signing of this Agreement, Xxxxxx
will advance additional Exploration Funds of $250,000; and
iv) by no later than 4 years from the signing of this Agreement, Xxxxxx
advance additional Exploration Funds of $1,250,000.
It is agreed that Xxxxxx will advance the required Exploration Funds not later
than thirty (30) days after the parties have agreed on the implementation of a
Work Program.
b) After each advance of Exploration Funds for a Work Program by Xxxxxx, the
Owner, as Operator, shall not more than thirty (30) days thereafter arrange for
the Work Program that is the subject of those Exploration Funds to be
undertaken. The Owner, as Operator, shall ensure that the Work Program is
completed efficiently in accordance with good mining practice. It its agreed
that upon the completion of each significant Work Program, the Operator will
arrange to have prepared a geological report in compliance with National
Instrument 43-101 recommending additional Work Programs, or alternatively
recommending the cessation of work on the Mineral Claims. The cost of such
report will be paid from advanced Exploration Funds.
Section 2.05 EXERCISE OF OPTION
Provided Xxxxxx has made the Option Payments and advanced the Exploration Funds
required for Work Programs costing a total of $750,000, Xxxxxx shall have earned
an immediately vested fifty (50%) percent interest in the Mineral Claims and
shall have the right to have register its interest within the time contemplated
by Section 2.10. Provided Xxxxxx has made the Option Payments and advanced the
Exploration Funds required for Work Programs costing a total of $1,250,000,
Xxxxxx shall have earned an immediately vested further twenty-five (25%) percent
interest in the Mineral Claims (bringing Xxxxxx' interest in the Mineral Claims
at such time up to seventy-five (75%) percent) and shall have the right to have
register its interest within the time contemplated by Section 2.10.
Section 2.06 NSR
Any interest in the Mineral Claims earned by Xxxxxx hereunder shall be earned
free and clear of any mortgages, liens, charges, pledges, security interests,
encumbrances and any other claims of any description, but shall remain subject
to a three (3%) percent NSR in favour of the Owner (who is responsible for
remitting up to two (2%) percent of this to the Underlying Owners, as described
in Schedule A, determined and paid in accordance therewith. It is agreed that up
to two-thirds (2/3) of the three (3%) percent NSR reserved unto the Owner herein
may be purchased at any time by Xxxxxx paying to Owner $1,000,000 per one-third
(1/3) portion ($1,000,000 per one (1%) percent NSR).
Section 2.07 JOINT VENTURE
On or prior to the Option Exercise Date, Xxxxxx and the Owner shall enter into a
joint venture agreement to govern the future exploration and development of the
Mineral Claims.
Section 2.08 RESULTS OF PRIOR EXPLORATION WORK
Immediately following the full execution of this Agreement, Owner shall deliver
to Xxxxxx all technical data for the Mineral Claims in its possession including,
but without limitation, drilling, geophysics and geological information held by
Owner.
Should this Agreement be terminated, for whatever reason, prior to Xxxxxx
exercising the Option, in whole or in part, then Xxxxxx shall return to Owner
copies of data and information received from Owner, as well the exploration and
technical data resulting from any exploration program and activities undertaken
by Xxxxxx, to the extent that the Owner does not already possess such
information.
Section 2.09 TITLE
Within sixty (60) days following the exercise of the Option pursuant to Section
2.04, Owner will provide Xxxxxx with executed transfers in proper form of an
undivided fifty (50%) percent or seventy five (75%) percent interest, as the
case may be, in the Mineral Claims.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 REPRESENTATIONS AND WARRANTIES BY OWNER
Owner represents and warrants that:
(a) it has been duly incorporated and is a validly subsisting corporation
under the laws of Quebec , is properly registered to carry on business
and own property in the province of Ontario, and has all corporate power
and authority to perform its obligations under this Agreement;
(b) all necessary corporate action has been taken by Owner to authorize the
execution, delivery and performance of this Agreement, and this
Agreement constitutes a valid and binding obligation of Owner
enforceable in accordance with its terms; and
(c) to the best of Owner's knowledge the location of the Mineral Claims
conforms to the description appearing on records in the appropriate
records office, and the Mineral Claims were properly located according
to the laws of Ontario and will be in good standing for at least Ninety
(90) days after the execution of this Agreement;
(d) it has not received notice of any violation of or investigation relating
to any federal, provincial or local environmental or pollution law,
regulation or ordinance with respect to the Mineral Claims;
(e) to the best of Owner's knowledge there are no reclamation liabilities in
connection with the Mineral Claims and, in particular, there are no
obligations to monitor or clean up any preexisting mine sites or mine
waste dumps or tailings;
(f) its interest in the Mineral Claims is free and clear of any mortgages,
liens, charges, pledges, security interests, encumbrances or other
claims of any description and, upon exercise of the Option by Rincon,
Rincon will acquire an undivided interest (either fifty (50%) percent or
one hundred (75%) percent) in the Mineral Claims free and clear of any
mortgages, liens, charges, pledges, security interests, encumbrances or
other claims of any description, except for the NSR reserved in Section
2.06 and in the Underlying Agreement;
(g) no person has any right or agreement, option, understanding, prior
commitment or privilege capable of becoming an agreement for the
purchase or acquisition from Owner of any interest in the Mineral
Claims;
(h) all assessment work required to maintain the Mineral Claims in full
force and effect has been performed as of the execution of this
Agreement; and
(i) there are no royalties or other latent interests in the Mineral Claims
owing to any other parties, except as outlined in Section 2.06 and in
the Underlying Agreement.
Section 3.02 SURVIVAL
Owner acknowledges that Xxxxxx is relying on the representations and warranties
contained in Section 3.01 in entering into this Agreement and that such
representations and warranties are continuing and survive the execution of this
Agreement.
Section 3.03 REPRESENTATIONS AND WARRANTIES BY RINCON
Rincon represents and warrants that:
(a) it has been duly incorporated and is a validly subsisting corporation
under the laws of Delaware, has all corporate power and authority to
perform its obligations under this Agreement and, prior to commencing
any direct operations on the Mineral Claims, it will be properly
registered to carry on business and own property in the province of
Ontario; and
(b) all necessary corporate action has been taken by Xxxxxx to authorize the
execution, delivery and performance of this Agreement, and this
Agreement constitutes a valid and binding obligation of Xxxxxx
enforceable in accordance with its terms.
Section 3.04 SURVIVAL
Xxxxxx acknowledges that the Owner is relying on the representations and
warranties contained in Section 3.04 in entering into this Agreement and that
such representations and warranties are continuing and survive the execution of
this Agreement.
Section 3.06 INDEMNITY
Each party will indemnify and save the other party and its directors, officers,
employees, agents, representatives, subcontractors and Affiliates harmless from
all losses, damages, costs, actions, and suits arising out of or in connection
with any breach by that party of any representation, warranty, covenant or
agreement contained in this Agreement. This indemnity shall survive the
termination of this Agreement.
ARTICLE IV
Section 4.01 RIGHT TO MONITOR EXPLORATION AND DEVELOPMENT
Owner grants to Xxxxxx' employees, directors, officers, agents, representatives
and contractors the right to enter upon the property comprising the Mineral
Claims for the purpose of monitoring exploration, development, mining and such
other operations as Xxxxxx considers necessary, upon prior notification to the
Owner and at Xxxxxx'x sold discretion, risk and expense.
Section 4.02 CONDUCT OF EXPLORATION AND DEVELOPMENT WORK
As Operator, the Owner will act as manager of any exploration program under the
direction of an operating committee comprised of one member appointed by Xxxxxx
and one member appointed by the Owner. The Owner, in its role as Operator, shall
perform its exploration and development work on the property comprising the
Mineral Claims in accordance with good mining practice and shall comply with all
applicable laws and regulations.
ARTICLE V
Section 5.01 DRILL LOGS ASSAYS AND MAPS
The Owner agrees to act as the Operator. As the Operator, the Owner shall
maintain all customary drill logs, exploration information, assays, maps,
metallurgical studies and other information relating to its exploration and
development activities on the Mineral Claims and provide copies to Xxxxxx in
accordance with this Agreement.
Section 5.02 REPORTING
By no later than 60 days after the completion of each Work Program, Owner shall
provide to Xxxxxx a copy of the any geological reports prepared in relation to
that Work Program. These items shall be kept confidential by the parties,
subject to the terms of this Agreement.
Section 5.03 ENVIRONMENTAL MATTERS
During the Option Period, the Operator shall at all times occupy, manage and use
the Mineral Claims in full compliance with all Environmental Laws. In this
Agreement, "Environmental Laws" means all applicable federal, provincial,
municipal, regional or foreign laws, statutes or rules, regulations, bylaw or
orders (having the force of law) or environmental permits relating to the
environment, including, without limitation, those pertaining to reporting,
licensing, permitting, investigation, remediation and clean up in connection
with any presence, release, discharge, escape or disposal of contaminants (being
any substance or material that is prohibited, controlled or regulated pursuant
to any applicable Environmental Laws) or relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of contaminants.
The Operator promptly perform any reclamation, remediation or pollution control,
which is required and arises from all operations on the Mineral Claims during
the Option Period, such performance to include, without limitation, the
provision of all financial assurances required by applicable Laws with respect
to the costs of such reclamation, remediation or pollution control. This
provision shall survive the termination of this Agreement.
Section 5.04 FILING OF ASSESSMENT WORK
The Owner will submit all assessment eligible work that is completed on the
Mineral Claims during the currency hereof for assessment credits and the credits
will be applied to the Mineral Claims in order to maintain the Mineral Claims in
good standing.
ARTICLE VI
Section 6.01 ASSIGNMENTS
Xxxxxx shall be entitled to assign its rights and obligations under this
Agreement with the prior written consent of Owner.
ARTICLE VII
Section 7.01 XXXXXX'X RIGHT TO TERMINATE
Xxxxxx shall have the right to terminate this Agreement and its interest in the
Mineral Claims at any time during the Option Period upon written notice to the
Owner thirty (30) days prior to the contemplated termination date.
Except for termination after the time that Xxxxxx has earned an interest in the
Mineral Claims, upon termination of this Agreement, Owner shall be entitled to
retain all payments made by Xxxxxx to date and Xxxxxx shall return to Owner all
copies of all data, maps, assays and reports pertaining to the Mineral Claims,
including digital generated data, maps, assays and reports pertaining to the
Mineral Claims.
Section 7.02 TERMINATION FOR DEFAULT
If at any time during the Option Period, Xxxxxx fails to duly pay or cure any
default in the performance of any obligation of this Agreement within a period
of thirty (30) days after receipt of a default notice from Owner, Owner may
terminate the Option. Exercise of such right by Owner shall be without prejudice
to any other rights or remedies Owner may have at law or in equity as a result
of such default of this Agreement by Xxxxxx.
ARTICLE VIII
Section 8.01 FORCE MAJEURE
If Xxxxxx is prevented by Force Majeure from timely performance of any of its
obligations under this Agreement (other than the payments made pursuant to
Section 2.02), such failure shall be excused and the period for performance and
the Option Period shall be extended for an additional period of time equal to
the duration of such Force Majeure. Upon the occurrence and upon the termination
of a Force Majeure, Xxxxxx shall promptly notify Owner in writing. Xxxxxx shall
use reasonable efforts to remedy any Force Majeure, but shall not hereunder be
obligated to contest the validity of any law or regulation, nor any action or
inaction of any civil or military authority.
ARTICLE IX
MISCELLANEOUS
Section 9.01 NOTICES
Any notice under this Agreement will be given in writing, and delivered by
registered mail to each party. A notice given will be deemed given only when
received by the party to whom such notice is directed. Each party's address will
be the following until such party specifies another address by written notice:
To Owner at: LOUVICOURT GOLD MINES INC.
000-000 xxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Tel.: (000) 000-0000
Facsimile: (000) 000-0000
Attention: Xxxxxx Xxxxx, president
To Rincon: XXXXXX RESOURCES INC.
0000 X. Xxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Tel: (000) 000-0000
with a copy to:
XXXXXX RESOURCES INC.
00 Xxxxxxxx Xxxxxxxx
Xxxxxxx, Xxxxxxx
X0X 0X0
Tel: (000) 000-0000
Facsimile: (000) 000-0000
Section 9.02 AREA OF INFLUENCE
The parties agree that they shall be bound by the area of influence provisions
set forth in paragraph 5. of the Underlying Agreement and any such property will
be subject to the terms of this Agreement and the Underlying Agreement.
Section 9.03 OTHER INTERESTS
The rights and obligations of the parties under this Agreement are strictly
limited to the subject matter of this Agreement. Each of the parties shall have
the free and unrestricted right to enter into, conduct and benefit from any and
all other business ventures of any kind whatsoever, whether or not competitive
with the activities undertaken under this Agreement, without disclosing such
activities to the other party or inviting or allowing the other party to
participate therein.
Section 9.04 RELATIONSHIP OF PARTIES
This Agreement is not intended to create any partnership or agency relationship
between the parties or fiduciary obligations of any description, and this
Agreement shall not be construed so as to render the parties liable as partners
or as creating a partnership, and no party shall be or shall be deemed to be, or
shall hold itself out to be an agent of any other party.
Section 9.05 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the respective
successors and permitted assigns of the parties.
Section 9.06 CONFIDENTIALITY
During the term of this Agreement, neither Owner nor Xxxxxx shall make any
public disclosures of any technical data, reports, records or other information
generated by either Owner or Xxxxxx, without the prior written approval of the
other party, which approval shall not be unreasonably withheld. The party
desiring to disclose certain information will deliver the content of such
intended disclosure to the other party for approval at least one (1) full
business days prior to releasing this data or information and the other party
will then respond in writing within that time period, and should they fail to
respond in that time, such lack of communication will deemed to be consent to
the public disclosure. For greater certainly "public disclosures" shall not
include disclosures made to brokers, analysts, venture capitalists or industry
partners or public disclosures required to comply with Canadian or US securities
law.
Section 9.08 PRIOR AGREEMENTS
The Agreement contains the entire agreement and understanding of the parties and
replaces all prior agreements bearing on the subject matter hereof.
Section 9.09 ARBITRATION
The parties hereto agree that any disputes arising hereunder will be submitted
to arbitration and finally resolved by a single arbitrator in accordance with
the provisions of the Arbitration Act (ONTARIO) S.O. 0000 Xx. 17.
Section 9.10 COUNTERPARTS
This Agreement may be executed in counterparts, all of which taken together
shall constitute one and the same instrument and any of the parties hereto may
execute this Agreement by signing any such counterpart.
IN WITNESS WHEREOF the parties make this Agreement effective
as of the date first above written.
LOUVICOURT GOLD MINES INC. XXXXXX RESOURCES, INC.
-------------------------------- -----------------------------------
Name: Name:
Title: Title:
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Name: Name:
Title: Title:
SCHEDULE A
UNDERLYING AGREEMENT
(a copy of the Underlying Agreement is attached hereto)
