Exhibit 10.1
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EXPLORATION AND EXPLOITATION AGREEMENT EXECUTED ON THE ONE PART BY XXXX XXXXX
XXXXXXX (HEREINAFTER CALLED "THE CONCESSIONAIRE") AND, ON THE OTHER PART BY DON
XXXXX XXXX, S. A. DE C. V. (HEREINAFTER CALLED "THE COMPANY"), REPRESENTED BY
MR. XXXXXX XXXXXX XXXXXXX, IN ACCORDANCE WITH FOLLOWING STATEMENTS AND CLAUSES
STATEMENTS
I. THE CONCESSIONAIRE states:
a) To be Mexican citizen, of legal age, single and to be legally qualified to
be owner of mining concessions and to execute this agreement;
b) That he is the legal owner of the rights derived from the following mining
concessions existing over the following lots ("THE LOTS"):
NAME OF THE LOT TITLE NO. HS. TYPE OF CONCESSION
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XX XXXXXXXX 000000 925 Exploration
EL XXXXXX 206772 899.6 Exploration
EL AIRE 158272 72 Exploitation
THE LOTS are located in the Municipality of San Xxxxx Totolapam, State of
Oaxaca, within the circumscription of the Mining Agency of Oaxaca, Oaxaca.
d) That as owner of the rights derived from the mining concessions existing
over THE LOTS, up to date, he have fulfilled with all the obligations
imposed upon him by the Mining Law, its Regulations and all other
applicable legal dispositions, specially as to the filing of assessment
works reports and the payment of taxes on mining concessions;
e) That the rights derived from the mining concessions existing over THE LOTS
are free and clear from any lien, encumberance or limitation of dominion;
and
f) That he is willing to enter into this agreement to grant THE COMPANY the
right to explore and, in its case, exploit THE LOTS, in accordance with the
terms and conditions stipulated in this agreement
II. THE COMPANY states:
a) To be a mining corporation legally incorporated according to the laws of
the Mexican Republic, legally qualified to execute agreements and to be
owner of mining concessions;
b) That its attorney Mr. Xxxxxx Xxxxxx-Xxxxxxx is xxxxx empowered to represent
it and to execute this agreement; and
c) That it is willing to be granted with the right to explore and, in its
case, exploit THE LOTS, on the terms and conditions stipulated in this
agreement.
In accordance with the former statements, the parties grant the following
CLAUSES
FIRST. Right to explore and exploit THE LOTS. THE CONCESSIONAIRE hereby grant
THE COMPANY the exclusive right to explore an exploit THE LOTS during the all
the term there will exist a mining concession over the claims, being entitled
THE COMPANY to execute during said term all exploration and exploitation works
it may deem necessary, convenient or advisable and will be permitted according
to the existing mining concessions.
THE COMPANY may assign or sublease its interest in this Agreement or enter into
joint operating agreements with any other person or entity without the need of
the consent of THE CONCESSIONAIRE, provided, such an assignment, sublease or
joint operating agreement shall provide such parties to be bound by all the
terms and conditions of this Agreement.
SECOND. Right to terminate this agreement in advance. The term of this agreement
xxxx be compulsory for THE CONCESSIONAIRE and optional for THE COMPANY, who
consequently will be able to terminate it at any moment by means of a simple
written notice to be sent to THE CONCESSIONAIRE to inform them the date of
termination.
Nevertheless, THE CONCESSIONAIRE will have also the right to terminate this
agreement at any moment, in accordance with provisions of Clauses Nineth and
Tenth, in case THE COMPANY does not fulfil with the obligations it undertakes in
this agreement.
Upon such termination by THE COMPANY, any remaining obligation to pay Advance
Minimum Royalty or Production Royalty due after the date of termination shall
also terminate.
THIRD. Advance Minimum Royalty Payments. As retribution for the granting of this
Exploration and Exploitation Agreement and, in its case, as advance minimum
royalty ("Advance Minimum Royalty") on the dates hereinbelow mentioned, for so
long as this Agreement remains in effect and there will not be production or it
will not be sufficient to pay royalties, THE COMPANY will pay THE CONCESSIONAIRE
the following amounts in dollars of the United States of America or its
equivalent in national currency, plus the 15 % Aggregate Value Tax (TVA)
a) At the execution of this agreement by THE CONCESSIONAIRE US$ 5,000
b) Three months after the execution of the agreement US$ 5,000
c) Twelve months after the execution of the agreement US$ 25,000
d) Twenty four months after the execution of the agreement US$ 50,000
e) Thirty six months after the execution of the agreement US$ 75,000
f) Forty eight months after the execution of the agreement US $ 100,000
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Total: US $ 260,000
Once the above-mentioned amounts have been paid THE COMPANY'S obligation to make
the Advance Minimum Royalty payments will terminate. All of said Advance Minimum
Royalty payments shall be deemed a prepayment of Production Royalty payable
under the following Clause Fourth, and from and after the Production Date, THE
COMPANY may recover all sums paid to THE CONCESSIONAIRE, as Advance Minimum
Royalty, by crediting and applying said Advance Minimum Royalty against and in
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reduction of the Production Royalty payments accruing and becoming due at any
time hereafter, until by such application all Advance Minimum Royalty previously
paid by THE COMPANY has been exhausted. If within the term of forty-eight months
to which this Clause refers production starts and it is not be sufficient to pay
the "Production Royalty", THE COMPANY shall pay to THE CONCESSIONAIRE the
Advance Minimum Royalty to which this clause refers.
FOURTH. Royalties. THE COMPANY shall pay THE CONCESSIONAIRE a net smelter return
royalty (hereinafter "Production Royalty") on net smelter returns or invoices
for first hand sales of minerals paid to THE COMPANY from minerals, ore or other
valuable products obtained and sold from THE LOTS. Production Royalty shall be
calculated as follow:
a) in case of use of smelting services by THE COMPANY: A Production Royalty of
five percent (5%) of the net smelter returns from all substances obtained
and sold from THE LOTS.
b) In the case of sale of dore bullion or other sales of substances obtained
and sold from THE LOTS by THE COMPANY: A Production Royalty of five percent
5 o/o of the actual sales price of all minerals, ore or valuable
products as shown on the purchaser's settlement sheet, after first
deducting all treatment charges, penalties and all other costs and
deductions from the net sales price of the product shown on the smelter
settlement sheet or other bona fide document for each separate sale thereof
and after deducting the actual cost of transportation of the above
mentioned substances to the smelter or other bona fide document for each
separate sale of the above mentioned substances.
The Production Royalty to be paid to THE CONCESSIONAIRE hereunder shall be paid
after first deducting and exhausting all Advance Minimum Royalty payments
provided under Clause THIRD above.
THE COMPANY, shall make the payment of Production Royalty to THE CONCESSIONAIRE
by wire transfer to a xxxx account against receipt of the corresponding invoice
or invoices (IVA added and mentioned separately), on a monthly basis within
thirty (30) days after the end of each month during which THE COMPANY receives
final payments for the sale of minerals, ore or other valuable products.
FIFTH. Commingling. THE COMPANY shall have the right to commingle minerals, ore
or other valuable products obtained from THE LOTS with ores, concentrates or
other products produced from other properties provided that prior to such
commingling, THE COMPANY shall adopt and employ reasonable practices and
procedures for weighing, determination of moisture content, sampling and
assaying, as well as utilizing reasonable accurate recovery factors in order to
determine the amounts of products derived from, or attributed to minerals, ores
or other valuable products obtained from THE LOTS. THE COMPANY shall maintain
accounts and records of the results of such sampling, weighing and analysis as
pertaining to ore mined, concentrates or other products obtained from THE LOTS,
and shall notify THE CONCESSIONAIRE at any time that such commingling is taking
place, and shall provide to TH CONCESSIONAIRE on request complete copies of all
the records maintained as required hereby, and an accounting of the results
thereof.
SIXTH. Fees, Duties, Taxes and Expenses. All fees, duties, taxes and expenses
incurred on the granting and execution of this agreement will be paid by THE
COMPANY, except for those taxes imposed on the income obtained by TIIE
CONCESSIONAIRE, which will be paid by him. Consequently, THE CONCESSIONAIRE will
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have to issue invoices to THE COMPANY, including the IVA but mentioned
separately from the amount of the Production Royalty to be received by him.
SEVENTH. Labor responsibility. Since it will not exist any labor relation
between the workers and contractors of each party and the other party, each
party expressly agree that with respect to its workers and contractors, it or
its contractors, as to their workers, will assume all labor responsibility and
therefore, it compromise with the other party to maintain it free and clear from
any reclamation, claim, accusation or complaint which may be filed against the
first party by its workers or employees, or those of its contractors, or by the
labor or administrative authorities.
EIGHTH. Additional obligations of THE CONCESSIONAIRE. In addition to the
obligations assumed by THE CONCESSIONAIRE at the preceding clauses, during all
the term this agreement will be in force, he will have also the following:
a) Maintain valid and in force the rights derived from the mining concessions
existing over THE LOTS and, likewise, to maintain them free and clear from
any lien, encumberance or limitation of dominion. Committing herself,
specially, to make that the Direction of Mines recognize his title to the
mining concessions existing over THE LOTS and to register it at the Public
Registry of Mining;
b) Not to transfer the rights derived from the mining concessions existing
over THE LOTS, without the previous authorization of THE COMPANY and in
case he will be willing to transfer the rights to grant preferential right
to THE COMPANY to acquire them in the same terms and conditions that any
third Party;
c) Maintain THE COMPANY free and clear from any claim or responsibility that
may be addressed against it due to acts directly imputable to THE
CONCESSIONAIRE or which will be of their exclusive responsibility.
Committing herself to indemnify and pay THE. COMPANY for all losses and
damages it may suffer in case it will be deprived of the right to explore
and exploit THE LOTS granted in this Agreement; and
d) In case this Agreement will be terminated, to grant THE COMPANY a term of
ninety (90) days to take away all its equipment and machinery from THE
LOTS.
NINETH. Additional obligations of THE COMPANY. In addition to the obligations
assumed by THE COMPANY at the preceding clauses, during all the term this
agreement will be in force, it also will have the following:
a) To carry out the exploration and exploitation at THE LOTS in the best
possible manner, according to the most appropriate and rational mining
practices and in accordance with all legal dispositions, executing enough
exploration works in order to fulfil with the provisions of the Mining Law
and its Regulations and not to stop the exploration and exploitation works
without a justified cause;
b) To undertake and fulfil with the obligations to prepare and file the
exploration assessment works and to pay the duties on mining concessions;
c) To permit THE CONCESSIONAIRE or his representatives to inspect the works
that will be carried out in THE LOTS, on the dates and hours mutually
agreed not to interfere with the activities that would be being carried out
and for safety reasons. Likewise, it will permit THE CONCESSIONAIRE or his
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representatives, the access to all information related to said works,
specially, when existing, to metallurgical balances on the production
obtained in THE LOTS;
d) To undertake and fulfil with the obligations of Police and Security of the
mine works and those of environmental control; and
e) To maintain THE LOTS in good shape as to their exploration and exploitation
conditions.
If at any moment during the term of this agreement THE COMPANY would not fulfil
with the obligations assumed by it and specially with those mentioned in this
Clause, THE CONCESSIONAIRE will have the right to terminate this agreement under
the terms of Clause Tenth hereinbelow, independently of their right to ask an
indemnification for damages.
TENTH. Unfulfilment. The unfulfilment of any of the parties with the
obligations they assume in this agreement , will grant the other party the right
to ask the immediate fulfillment of the non fulfilled obligations. For said
purpose, it will have to ask by written to the party in default to fulfil said
obligations and if after a ninety days period from the date of delivering said
petition, the unfulfilment still exist and no reasonable effort to remedy it has
been made, then the affected party will have the right, at its option, to ask in
court the fulfillment of the unfulfilled obligations or to terminate this
agreement, being entitled in both cases to ask for indemnification for damages,
ELEVENTH. Force majeur. It will not be considered that the parties have incurred
in unfulfilment when due to force majeur they will be unable to fulfil with the
obligations they assume under this agreement.
It will be considered as force majeur, in an enunciative but not in a limitative
way: earthquakes, fires, floods, collapses, riots, rebellions, wars, strikes,
revolutions, acts of authority, and, in general, any other fact or act totally
out of the will of the parties and of their control and which prevent them to
fulfil, totally or partially, with their obligations.
When any of the parties will be affected by force majeur and therefore unable to
fulfil with its obligations, it shall notify so to the other party, informing
about the estimated time said force majeur will prevent said party to fulfil
with its obligations.
If after twelve months from the date in which such force majeur have occurred it
prevails, then the other party will have the right to terminate this agreement.
TWELVETH. Total agreement of the parties. This agreement reflects the total
agreement between the parties with respect to its purpose, therefore, it cancels
and left without effects any other agreements, contracts or letters of intent,
executed previously between them with respect to the same purpose.
This agreement will oblige under its terms and conditions to the heirs,
assignees or beneficiaries of the parties.
The parties agree to ratify this agreement before a Notary Public and to
register it with the Public Registry of Mining in accordance with the provisions
of the Mining Law and its Regulations
THIRTEENTH. Notices and notifications. All notices and notifications to be made
between the parties in accordance with this agreement, shall be made, by one
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part to the other, either verbally or written, being understood that when it be
desired that a notice or notification be on record, it shall be made before a
Notary Public.
For the purposes of this agreement the parties hereby set the following
addresses:
THE CONCESSIONAIRE THE COMPANY
Xx. Xxxx Xxxxx Xxxxxxx XXX XXXXX XXXX, S. A. DE C. V.
Cerro del Chiquihuite N(degree)22 San Francisco N(degree)656 - 601
Col. Xxxxxxxxx Xxxxxxxxxx Xxx. Xxx Xxxxx, X.X. 00000
Mexico, D. X.X. 00000 Xxxxxx, X. F.
Tel.: (00) 00 00 00 00 Tel/Fax: (0) 000-0000
Atn: Mr. Xxxxxx Xxxxxx-Xxxxxxx
Any change in the above mentioned addresses shall be notified by one part to the
other when it occurs.
FOURTEENTH. Applicable Laws and Courts. For every thing not expressly stipulated
in this agreement the parties submit themselves to the applicable laws in
Mexico, Federal District, specially to those of the Mining Law, its Regulations,
the Federal Duties Law, the Commerce Code and the Civil Code for the Federal
District, and they agree to also to submit to the jurisdiction of the competent
courts in Mexico City, Federal District, waiving to the jurisdiction of any
other courts to which they may be entitled by reason of their present or future
domiciles.
This agreement is signed by quadruplicate the 14th day of October, 2002.
THE CONCESSIONAIRE THE COMPANY
DON XXXXX XXXX, S.A. DE C.V.
/s/ Xxxx Xxxxx Xxxxxxx /s/ Xxxxxx Xxxxxx Xxxxxxx
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Xx. Xxxx Xxxxx Xxxxxxx Per: Xxxxxx Xxxxxx Xxxxxxx
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