PROPERTY ACQUISITION AGREEMENT
CORUMEL MINERALS CORP.
("CORUMEL")
AND
XXXXXXX X. XXXXXX
("XXXXXX")
THE THOR MINERAL CLAIMS
PROVINCE OF BRITISH COLUMBIA
TABLE OF CONTENTS
-----------------
DEFINITIONS 3
REPRESENTATIONS AND WARRANTIES OF XXXXXX 4
REPRESENTATIONS AND WARRANTIES OF CORUMEL 5
PROPERTY ACQUISITION 6
RIGHT OF ENTRY 7
OBLIGATIONS OF XXXXXX DURING PROPERTY ACQUISITION PERIOD 7
TERMINATION OF PROPERTY ACQUISITION 7
TRANSFERS 8
FORCE MAJEURE 9
CONFIDENTIAL INFORMATION 9
ARBITRATION 9
DEFAULT AND TERMINATION 10
NOTICES 10
GENERAL 10
SCHEDULE "A"
DESCRIPTION OF PROPERTY RIGHTS AND PROPERTY
SCHEDULE "B"
JOINT VENTURE AGREEMENT
2
PROPERTY AQUISITON AGREEMENT
THIS AGREEMENT made effective as of the 28 day of March, 2003
-- -----
BETWEEN:
CORUMEL MINERALS CORP. a body corporate, incorporated under the laws of
Nevada and having an office at 503 - 0000 Xxxxxx Xxxxxx in the City of
Vancouver, in the Province of British Columbia;
- and -
XXXXXXX X. XXXXXX, having a residence at 15294, 96A Avenue, in the city of
Surrey, in the Province of British Columbia;
WHEREAS:
X. Xxxxxx is the holder of all Mineral Property Rights related to the
Property; and
X. Xxxxxx has agreed to sell to Corumel to an interest in and to the
Mineral Property Rights and the Property, on the terms and conditions
hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the sum of
$1.00 now paid by Corumel to Xxxxxx (the receipt and sufficiency of which is
hereby acknowledged), the parties agree as follows:
DEFINITIONS
------------
1.1 For the purposes of this Agreement the following words and phrases
shall have the following meanings, namely:
a) "Agreement" means this agreement and any amendments thereto from time to
time;
b) "Commencement Date" means the date of this Agreement;
c) "Completion Date" means the date on which Xxxxxx fulfills all of its
obligations with respect to the grant of an interest in the Property as
contemplated in Article 4 hereof;
d) "Corumel" means Corumel Minerals Corp.;
e) "Exploration Expenditures" means the sum of;
(i) all costs of acquisition and maintenance of the Property, all
exploration and development expenditures and all other costs and
expenses of whatsoever kind or nature including those of a capital
nature, incurred or chargeable by Corumel with respect to the
exploration and development of the Property and the placing of the
Property into Commercial Production and
(ii) any compensation for general overhead expenses which Xxxxxx, as
Operator, will charge to Corumel, an amount equal to 5% of all amounts
included in subparagraph (i) involving aggregate payments by it in
excess of $10,000, and 7.5% of all other amounts included in
subparagraph (i) involving aggregate payments by it less than $10,000.
f) "Feasibility Report" means a detailed written report of the results of a
comprehensive study on the economic feasibility of placing the Property or
a portion thereof into Commercial Production and shall include a reasonable
assessment of the mineral ore reserves and their amenability to
metallurgical treatment, a description of the work, equipment and supplies
required to bring the Property or a portion
3
thereof into Commercial Production and the estimated cost thereof, a
description of the mining methods to be employed and a financial appraisal
of the proposed operations supported by an explanation of the data used
therein;
g) "Xxxxxx" means Xxxxxxx X. Xxxxxx;
h) "Joint Venture Agreement" means the agreement substantially in the form as
attached hereto as Schedule "B";
i) "Mine" means the workings established and assets acquired, including,
without limiting the generality of the foregoing, development holdings,
plant and concentrator installations, infrastructure, housing, airport and
other facilities in order to bring the Property into Commercial Production;
j) "Mineral Products" means the end products derived from operating the
Property as a Mine;
k) "Mining Operations" means every kind of work done:
i) on or in respect of the Property in accordance with a Feasibility
Report; or
ii) if not provided for in a Feasibility Report, unilaterally and in good
faith to maintain the Property in good standing, to prevent waste or
to otherwise discharge any obligation which is imposed upon it
pursuant to this Agreement;
including, without limiting the generality of the foregoing, investigating,
prospecting, exploring, developing, property maintenance, preparing
reports, estimates and studies, designing, equipping, improving, surveying,
construction and mining, milling, concentrating, rehabilitation,
reclamation, and environmental protection;
l) "Property" means the exploration properties and lands located in the
Province of British Columbia, all as more particularly described in
Schedule "A" hereto;
m) "Property Rights" means all applications for permits for general
reconnaissance, permit for general reconnaissance, interim approvals,
applications for contracts of work, contracts of work, licenses, permits,
easements, rights-of-way, certificates and other approvals obtained by
either of the parties either before or after the date of this Agreement and
necessary for the exploration and development of the Property, or for the
purpose of placing the Property into production or continuing production
therefrom;
REPRESENTATIONS AND WARRANTIES OF XXXXXX
--------------------------------------------
2.1 Xxxxxx hereby acknowledges and confirms that it holds the Property
Rights related to an undivided one hundred (100%) percent interest in the
Property as at the date hereof.
2.2 Xxxxxx represents and warrants to Corumel that:
a) Xxxxxx is lawfully authorized to hold his interest in the Property and will
remain so entitled until 75% of the interests of Xxxxxx in the Property
have been duly transferred to Corumel as contemplated by the terms hereof;
b) Xxxxxx is an individual, has attained the age of majority and is legally
competent to execute this agreement and to take all actions required
pursuant thereto and that upon the execution and delivery, this agreement,
will constitute a legal, valid and binding contract of Xxxxxx enforceable
against Xxxxxx in accordance with its terms;
c) as at the date hereof and at the time of transfer to Corumel of an interest
in the mineral claims and/or exploration licenses comprising the Property
Xxxxxx is and will be the beneficial owner of its interest in the
4
Property free and clear of all liens, charges, claims, royalties or net
profit interests of whatsoever nature, and no taxes or rentals will be due
in respect of any thereof;
d) Xxxxxx has the right and capacity to deal with the Property and the right
to enter into this Agreement and to dispose of his right, title and
interest in the Property as herein contemplated;
e) there is no adverse claim or challenge against or to Xxxxxx'x interest in
the Property, nor to the knowledge of Xxxxxx is there any basis therefor,
and there are no outstanding agreements or options to acquire or purchase
such interest in the Property or any portion thereof other than this
Agreement;
f) no person has any royalty, net profit interests or other interest
whatsoever in the Property;
g) Xxxxxx is duly authorized to execute this Agreement and for the performance
of this Agreement by him, and the consummation of the transactions herein
contemplated will not conflict with or result in any breach of any
covenants or agreements contained in, or constitute a default under, or
result in the creation of any encumbrance under the provisions of its
articles or constating documents or any indenture, agreement or other
instrument whatsoever to which Xxxxxx is a party or by which he is bound or
to which he or the Property may be subject;
h) no proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, the placing of Xxxxxx in
bankruptcy or subject to any other laws governing the affairs of and
insolvent person;
i) there are no claims, proceedings, actions or lawsuits in existence and to
the best of Xxxxxx'x information and belief none are contemplated or
threatened against or with respect to the right, title, estate and interest
of Xxxxxx in the Property;
j) to the best of his information and belief, all laws, regulations and orders
of all governmental agencies having jurisdiction over the Property have
been complied with by Xxxxxx;
k) to the best of his information and belief Xxxxxx is in good standing under
all agreements and instruments affecting the Property to which he is a
party or is bound.
2.3 The representations and warranties contained in this section are provided
for the exclusive benefit of Corumel, and a breach of any one or more thereof
may be waived by Corumel in whole or in part at any time without prejudice to
its rights in respect of any other breach of the same or any other
representation or warranty, and the representations and warranties contained in
this section shall survive the execution hereof.
2.4 The representations and warranties contained in this section shall be deemed
to apply to all assignments, transfers, conveyances or other documents
transferring to Corumel the interest to be acquired hereunder and there shall
not be any merger of any covenant, representation or warranty in such
assignments, transfers, conveyance or documents, any rule or law, in equity or
statute to the contrary notwithstanding.
REPRESENTATIONS AND WARRANTIES OF CORUMEL
3.1 Corumel represents and warrants to Xxxxxx that:
a) it has been duly incorporated and validly exists as a corporation in good
standing under the laws of its jurisdiction of incorporation;
b) it is or will be prior to acquiring any undivided interest in the Property
hereunder, lawfully authorized to hold mineral claims and real property
under the laws of the jurisdiction in which the Property is situate;
c) it has duly obtained all corporate authorizations for the execution of this
Agreement and for the performance of this Agreement by it, and the
consummation of the transaction herein contemplated by it will not conflict
with or result in any breach of any covenants or agreements contained in,
or constitute a default under, or result in the creation of any encumbrance
under the provisions of the articles or the constating documents of it or
any shareholders' or directors' resolution, indenture, agreement or other
instrument whatsoever to which it is a party or by which they are bound or
to which it or the Property may be subject; and,
d) no proceedings are pending for, and it is unaware of any basis for the
institution of any proceedings leading to, the dissolution or winding up of
Corumel or the placing of Corumel in bankruptcy or subject to any other
laws governing the affairs of insolvent corporations.
3.2 The representations and warranties contained in this section are provided
for the exclusive benefit of Xxxxxx and a breach of any one or more thereof may
be waived by Xxxxxx in whole or in part at any time without prejudice to its
rights in respect of any other breach of the same or any other representation or
warranty, and the representations and warranties contained in this section shall
survive the execution hereof.
5
3.3 The representations and warranties contained in this section shall be deemed
to apply to all assignments, transfers, conveyances or other documents
transferring to Xxxxxx the interest to be acquired hereunder and there shall not
be any merger of any covenant, representation or warranty in such assignments,
transfers, conveyance or documents, any rule or law, in equity or statute to the
contrary notwithstanding.
PROPERTY ACQUISITION
4.1 Xxxxxx hereby irrevocably agrees to sell to Corumel and Corumel irrevocably
agrees to purchase from Xxxxxx a one hundred percent (100%) right, title, estate
and interest in and to the Property, free and clear of all charges,
encumbrances, claims, royalties and net profit interests of whatsoever nature in
consideration of an amount equivalent to the out-of-pocket costs incurred by
Xxxxxx in staking and registering the Property in Xxxxxx'x name, that amount
being nine hundred and seventy eight dollars and nineteen cents ($978.19).
4.2 Within 30 days after the Commencement Date, Xxxxxx shall deliver to Corumel
such number of duly executed transfers which in the aggregate convey Xxxxxx'x
100% interest acquired by Corumel hereunder in the Property in favour of
Corumel. Corumel shall be entitled to receive and to record such of the
transfers contemplated hereby at its own cost with the appropriate governmental
office to effect legal transfer of such interest in the Property into the name
of Corumel.
4.3 Concurrent with the execution of this agreement, Xxxxxx is hereby
irrevocably appointed as the operator of the Property and shall carry out
exploration and development programs on the Property on the following terms:
a) Xxxxxx shall have the same powers, duties and obligations in carrying out
such programs as set out in paragraph 7 of the Joint Venture Agreement
attached hereto as Schedule "B", excepting thereout Sections 7.2( m), 7.5
and 7.6 thereof;
b) For income tax purposes, all Exploration Expenditures incurred by Xxxxxx
pursuant to such programs shall be incurred for the benefit of Corumel; and
c) In consideration of Xxxxxx accepting the appointment as Operator in
accordance with the terms hereof, and of Xxxxxx remaining as Operator at
all times prior to the Completion Date, Corumel shall grant to Xxxxxx a 15%
right, title, estate and interest in and to the Property, free and clear of
all charges, encumbrances, claims, royalties and net profit interests of
whatsoever nature.
4.4 Intentionally blank
4.5 Subject to paragraph 4.3(c), within 30 days after the Completion Date,
Corumel shall deliver to Xxxxxx such number of duly executed transfers which in
the aggregate convey Corumel's 15% interest acquired by Xxxxxx hereunder in the
Property in favour of Xxxxxx. Xxxxxx shall be entitled to receive and to record
such of the transfers contemplated hereby at its own cost with the appropriate
governmental office to effect legal transfer of such interest in the Property
into the name of Xxxxxx.
4.6 Prior to the Completion Date, Corumel shall incur Exploration Expenditures
on the Property as follows:
i) aggregate Exploration Expenditures of not less than Six Thousand
dollars ($6,000) on or before December 31, 2003, and;
ii) aggregate Exploration Expenditures (including Exploration Expenditures
as described in paragraph 4.3(i) above) of not less than Twelve
Thousand dollars ($12,000) on or before December 31, 2004.
4.7 Commencing on the Completion Date:
a) The undivided right, title and interest of the parties in the Property
shall be as follows:
Before Completion Date (net) After Completion Date (net)
Xxxxxx 0% Xxxxxx 15%
Corumel 100% Corumel 85%
Total 100% Total 100%
b) the undivided right, title and interest in and to the Property Rights and
the Property acquired by Xxxxxx upon the Completion Date shall vest in
Xxxxxx free and clear of all charges, encumbrances, claims, royalties or
net profit interests of whatsoever nature;
c) the parties shall, upon the Completion Date or as they may sooner agree,
enter into the Joint Venture Agreement substantially in the form attached
hereto as Schedule "B";
d) for the purposes of the Joint Venture Agreement:
i) Contemporaneously with the earlier of the Completion Date or the date
contemplated in para. 4.7 c), Xxxxxx shall cause a corporation to be
formed (thereafter "Howellco") for the sole purpose of being the
Operator
6
pursuant to the Joint Venture Agreement. Xxxxxx will be the sole
control person of Howellco and Xxxxxx shall transfer his 15% interest
in the property to Howellco free and clear of all liens, charges,
claims, royalties or net profit interests of whatsoever nature, and no
taxes or rentals will be due in respect of any thereof;
ii) Howellco and Corumel shall be deemed to have contributed Two Thousand
One Humdred and Eighteen dollars ($2,118) and Twelve Thousand
dollars($12,000) respectively of Costs to the Joint Venture for
purposes thereof;
iii) Howellco will be the initial operator of the Joint Venture and will
have the option to remain as operator of the Joint Venture for so long
as Howellco holds a participating interest of twenty five (15%)
percent or greater in the Joint Venture;
4.8 If, prior to the Completion Date, Corumel:
a) makes a voluntary or involuntary assignment into bankruptcy or takes
advantage of any legislation for the winding-up or liquidation of the
affairs of insolvent or bankrupt companies or has a bankruptcy petition
filed against it; or
b) fails to perform in a manner that is consistent with good mining practice
or fails to perform in a manner consistent with its duties and
responsibilities under this Agreement and does not remedy such default
within 30 days of receipt of notice from Xxxxxx specifying such default;
Xxxxxx shall have the right, upon fifteen (15) days written notice to Corumel,
to resign as Operator in which event Corumel, its affiliates, agents, heirs,
beneficiaries, successors and assigns hereby releases, acquits and forever
discharges Xxxxxx, and its respective affiliates, employees, agents,
beneficiaries, successors and assigns from any and all demands, claims, causes
of action, suits, damages, and obligations of any kind whatsoever, at common
law, by statute, contract, or otherwise, which Corumel has, had, might have or
might have had against Xxxxxx.
RIGHT OF ENTRY
5.1 During the term of this Agreement, the directors and officers of Xxxxxx and
Corumel and their servants, agents and independent contractors, shall have the
sole and exclusive right in respect of the Property to:
a) enter thereon at their sole risk and expense;
b) do such prospecting, exploration, development and other mining work thereon
and thereunder as Xxxxxx, as operator, in its sole discretion may determine
advisable;
c) bring upon and erect upon the Property such buildings, plant, machinery and
equipment as Xxxxxx and Corumel may deem advisable and for a period of six
months following the termination of this Agreement, to remove such
buildings, plant, machinery and equipment; and
d) remove therefrom and dispose of reasonable quantities of ores, minerals and
metals for the purposes of obtaining assays or making other tests.
OBLIGATIONS OF XXXXXX DURING THIS AGREEMENT
6.1 During the term of this Agreement, Xxxxxx shall:
a.) maintain in good standing those mineral claims and/or exploration licenses
comprised in the Property by the doing and filing of assessment work or the
making of payments in lieu thereof, and the performance of all other
actions which may be necessary in that regard and in order to keep such
mineral claims free and clear of all liens and other charges arising from
Xxxxxx'x activities thereon except those at the time contested in good
faith by Xxxxxx;
b.) permit the directors, officers, employees and designated consultants of
Corumel, at their own risk and expense, access to the Property at all
reasonable times, and Corumel agrees to indemnify Xxxxxx against and to
save it harmless from all costs, claims, liabilities and expenses that
Corumel may incur or suffer as a result of any injury (including injury
causing death) to any director, officer, employee or designated consultant
of Corumel while on the Property;
c.) permit Corumel, at its own expense, reasonable access to the results of the
work done on the Property during the last completed calendar year;
d.) do all work on the Property in a good and workmanlike fashion and in
accordance with all applicable laws, regulations, orders and ordinances of
any governmental authority;
e.) indemnify and save Corumel harmless in respect of any and all costs,
claims, liabilities and expenses arising out of Xxxxxx'x activities on the
Property;
TERMINATION OF AGREEMENT
7.1 Provided that Corumel is not in default pursuant to the provisions hereof,
Corumel shall have the right at any time during the term of this Agreement to
terminate this Agreement by providing not less than thirty (30) days written
notice to Xxxxxx.
7
7.2 Notwithstanding the termination of this Agreement, Corumel shall have the
right, within a period of one hundred and eighty (180) days following the end of
this Agreement, to remove from the Property all buildings, plant, equipment,
machinery, tools, appliances and supplies which have been brought upon the
Property by or on behalf of Corumel, and any such property not removed within
such 180 day period shall thereafter become the property of Xxxxxx.
TRANSFERS
8.1 If Xxxxxx (the "Proposed Seller") should receive a bona fide offer from an
independent third party (the "Proposed Purchaser") dealing at arm's length with
the Proposed Seller to purchase all or a part of its interest in the Property,
which offer the Proposed Seller desires to accept, or if the Proposed Seller
intends to sell all or a part of its interest in the Property:
a) The Proposed Seller shall first offer (the "Offer") such interest in
writing to Corumel upon terms no less favourable than those offered by the
Proposed Purchaser or intended to be offered by the Proposed Seller, as the
case may be;
b) The Offer shall specify the price, terms and conditions of such sale, the
name of the Proposed Purchaser and shall, in the case of an intended offer
by the Proposed Seller, disclose the person or persons to whom Xxxxxx
intends to offer its interest and, if the offer received by the Proposed
Seller from the Proposed Purchaser provides for any consideration payable
to the Proposed Seller otherwise than in cash, the Offer shall include the
Proposed Seller's good faith estimate of the cash equivalent of the
non-cash consideration;
c) If within a period of sixty (60) days of the receipt of the Offer and
Corumel notifies the Proposed Seller in writing that it will accept the
Offer, the Proposed Seller shall be bound to sell such interest to Corumel
on the terms and conditions of the Offer. If the Offer so accepted by
Corumel contains the Proposed Seller's good faith estimate of the cash
equivalent of the non-cash consideration as aforesaid, and if Corumel
disagrees with the Proposed Seller's best estimate, Corumel shall so notify
Xxxxxx at the time of acceptance and Corumel shall, in such notice, specify
what it considers, in good faith, the fair cash equivalent to be and the
resulting total purchase price. If Corumel so notifies the Proposed Seller,
the acceptance by Corumel shall be effective and binding upon Corumel, and
the cash equivalent of any such non-cash consideration shall be determined
by binding arbitration and shall be payable by Corumel, subject to
prepayment as hereinafter provided, within 60 days following its
determination by arbitration. Corumel shall in such case pay to the
Proposed Seller, against receipt of an absolute transfer of clear and
unencumbered title to the interest of the Proposed Seller being sold, the
total purchase price which is specified in its notice to the Proposed
Seller and such amount shall be credited to the amount determined following
arbitration of the cash equivalent of any non-cash consideration;
d) If Corumel fails to notify the Proposed Seller before the expiration of the
time limited therefor that it will purchase the interest offered, the
Proposed Seller may sell and transfer such interest to the Proposed
Purchaser at the price and on the terms and conditions specified in the
Offer for a period of sixty (60) days, but the terms of this paragraph
shall again apply to such interest if the sale to the Proposed Purchaser is
not completed within such sixty (60) days;
e) Any sale hereunder shall be conditional upon the Proposed Purchaser
delivering to the non-selling party, its agreement related to this
Agreement and to the Property, containing:
i) a covenant by the Proposed Purchaser to perform all the obligations of
the Proposed Seller to be performed under this Agreement in respect of
the interest to be acquired by it from the Proposed Seller to the same
extent as if this Agreement had been originally executed by the
Proposed Purchaser; and
ii) a provision subjecting any further sale, transfer or other disposition
of such interest in the Property and this Agreement or any portion
thereof to the restrictions contained in this paragraph (e).
8.2 The provision of Section 8.1 shall apply to a proposed sale by Corumel of
its interest in the Property mutatis mutandis such that Xxxxxx shall have a
right of first refusal to acquire such interest in proportion to the then
current interest.
8.3 No assignment by a party of any interest less than its entire interest in
this Agreement and in the Property shall discharge it from any of its
obligations hereunder, but upon the transfer by a party of the entire interest
at the time held by it in this Agreement, whether to one or more transferees and
whether in one or in a number of successive transfers, the party shall be deemed
to be discharged from all obligations hereunder save and except for fulfillment
of contractual commitments accrued due prior to the date on which the party
shall have no further interest in this Agreement.
8
FORCE MAJEURE
9.1 If Xxxxxx is at any time either during the term of this Agreement or
thereafter prevented or delayed in complying with any provisions of this
Agreement by reason of strikes, lock-outs, labour shortages, power shortages,
fuel shortages, fires, wars, acts of God, governmental regulations restricting
normal operations, shipping delays or any other reason or reasons, other than
lack of funds, beyond the control of Xxxxxx, the time limits for the performance
by Xxxxxx of its obligations hereunder shall be extended by a period of time
equal in length to the period of each such prevention or delay, but nothing
herein shall discharge Xxxxxx from its obligations hereunder to maintain the
Property in good standing.
9.2 Xxxxxx shall give prompt notice to Corumel of each event of force majeure
under Section 9.1 and upon cessation of such event shall furnish to Corumel with
notice to that effect together with particulars of the number of days by which
the obligations of Xxxxxx hereunder have been extended by virtue of such event
of force majeure and all preceding events of force majeure.
CONFIDENTIAL INFORMATION
10.1 The parties to this Agreement shall keep confidential all books, records,
files and other information supplied by any party to one of the other parties or
to their employees, agents or representative in connection with this Agreement
or in respect of the activities carried out on the Property by a party, or
related to the sale of minerals, or other products derived from the Property,
including all analyses, reports, studies or other documents prepared by a party
or its employees, agents or representatives, which contain information from, or
otherwise reflects such books, records, files or other information. The parties
shall not and shall ensure that their employees, agents or representatives do
not disclose, divulge, publish, transcribe, or transfer such information, all or
in part, without the prior written consent of the other parties, which may not
be arbitrarily withheld and which shall not apply to such information or any
part thereof to the extent that:
a) prior to its receipt by a party such information was already in the
possession of such party or its employees, agents or representatives; or
b) in respect of such information required to be publicly disclosed pursuant
to applicable securities or corporate laws.
ARBITRATION
11.1 The parties agree that all questions or matters in dispute with respect to
any dispute shall be settled by arbitration and shall be submitted to
arbitration pursuant to the terms hereof.
11.2 It shall be a condition precedent to the right of any parties, to submit
any matter to arbitration pursuant to the provisions hereof, that any party
intending to refer any matter to arbitration shall have given not less than ten
(10) days' prior notice of its intention to do so to the other party, together
with particulars of the matter in dispute. On the expiration of such ten (10)
days, the party who gave such notice may proceed to refer the dispute to
arbitration as provided in 11.3.
11.3 The party desiring arbitration shall appoint one arbitrator, and shall
notify the other party of such appointment, and such other party shall, within
fifteen (15) days after receiving such notice, either consent to the appointment
of such arbitrator which shall then carry out the arbitration or appoint an
arbitrator, and the two arbitrators so named, before proceeding to act, shall,
within thirty (30) days of the appointment of the last appointed arbitrator,
unanimously agree on the appointment of a third arbitrator to act with them and
be chairman of the arbitration herein provided for. If the other parties shall
fail to appoint an arbitrator within fifteen (15) days after receiving notice of
the appointment of the first arbitrator, the first arbitrator shall be the only
arbitrator, and if the two arbitrators appointed by the party shall be unable to
agree on the appointment of the chairman, the chairman shall be appointed under
the provisions of the Arbitration Act of British Columbia. Except as
specifically otherwise provided in this section, the arbitration herein provided
for shall be conducted in accordance with such Act. The chairman, or in the case
where only one arbitrator is appointed, the single arbitrator, shall fix a time
and place in Vancouver, British Columbia, for the purpose of hearing the
evidence and representations of the parties, and he shall preside over the
arbitration and determine all questions of procedure not provided for under such
Act or this section. After hearing any evidence and representations that the
parties may submit, the single arbitrator, or the arbitrators, as the case may
9
be, shall make an award and reduce the same to writing, and deliver one copy
thereof to each of the parties. The expense of the arbitration shall be paid as
specified in the award.
11.4 The parties agree that the award of a majority of the arbitrators, or in
the case of a single arbitrator, of such arbitrator, shall be final and binding
upon each of them.
DEFAULT AND TERMINATION
12.1 If at any time during the term of this Agreement Corumel fails to perform
any obligation required to be performed by it hereunder or is in breach of a
warranty given by it hereunder, which failure or breach materially interferes
with the implementation of this Agreement, Xxxxxx may terminate this Agreement
but only if:
a) it shall have first given to the defaulting Corumel a notice of default
containing particulars of the obligation which the defaulting Corumel has
not performed, or the warranty breached; and b) the defaulting Corumel has
not, within forty-five (45) days following delivery of such notice of
default, cured such default or commenced proceedings to cure such default
by appropriate payment or performance, the defaulting Corumel hereby
agreeing that should it so commence to cure any default it will prosecute
the same to completion without undue delay, provided however, that this
paragraph shall not be extended to a default by Corumel to complete the
Property Acquisition pursuant to Article 4 thereof.
b) Notwithstanding Section 12.1 hereof, if at any time Corumel fails to
perform a condition precedent to the exercise of the Property Acquisition,
Xxxxxx shall be entitled to forthwith terminate this Agreement.
NOTICES
13.1 Each notice, demand or other communication required or permitted to be
given under this Agreement shall be in writing and shall be sent by prepaid
registered mail deposited in a Post Office in Canada addressed to the party
entitled to receive the same, or delivered, telexed, telegraphed or telecopied
to such party at the address for such party specified on the face page hereof.
The date of receipt of such notice, demand or other communication shall be the
date of delivery thereof if delivered, telexed, telegraphed or telecopied, or,
if given by registered mail as aforesaid, shall be deemed conclusively to be the
third business day after the same shall have been so mailed except in the case
of interruption of postal services for any reason whatever, in which case the
date of receipt shall be the date on which the notice, demand or other
communication is actually received by the addressee.
13.2 Either party may at any time and from time to time notify the other party
in writing of a change or address and the new address to which notice shall be
given to it thereafter until further change.
14.1 Intentionally blank
GENERAL
15.1 This Agreement shall supersede and replace any other agreement or
arrangement, whether oral or written, heretofore existing between the parties in
respect of the subject matter of this Agreement.
15.2 No consent or waiver expressed or implied by any party in respect of any
breach or default by any other party in the performance by such other of its
obligations hereunder shall be deemed or construed to be a consent to or a
waiver of any other breach of default.
15.3 The parties shall promptly execute or cause to be executed all documents,
deeds, conveyances and
other instruments of further assurance and do such further and other acts which
may be reasonably necessary or advisable to carry out fully and effectively the
intent and purpose of this Agreement or to record wherever appropriate the
respective interest from time to time of the parties in the Property.
15.4 This Agreement shall inure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.
15.5 This Agreement shall be governed by and construed in accordance with the
laws of British Columbia and the parties hereby irrevocably attorn to the
jurisdiction of the said province
15.6 Time shall be of the essence in this Agreement.
10
15.7 Wherever the neuter and singular is used in this Agreement it shall be
deemed to include the plural, masculine and feminine, as the case may be.
15.8 The rights and obligations of each party shall be in every case several and
not joint or joint and several.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day
and year
first above written.
XXXXXXX X. XXXXXX
Witness
/s/ XXXXXXX X. XXXXXX /s/ Xxxxx Xxxxx
______________________________ _____________________________
Name of Witness
Xxxxx Xxxxx
_____________________________
CORUMEL MINERAL CORP.
Per
/s/ Xxxxx Xxxxx
_____________________________
Xxxxx Xxxxx, pres
Per
/s/ Xxxxxxx Xxxxx
______________________________
Xxxxxxx Xxxxx, sec.-treas.
11
SCHEDULE "A"
TO
THE PROPERTY ACQUISITION AGREEMENT
DESCRIPTION OF PROPERTY RIGHTS AND PROPERTY
The Thor property consists of six two-post mineral claims within the New
Westminster Mining Division of British Columbia
Tenure Claim Name Owner Expiry Area Tag Number
------ ----------- ------ ---------- ------ ----------
400276 Thor 1 112364 2004.02.09 1 unit 617465M
400277 Thor 2 112364 2004.02.09 1 unit 617466M
400278 Thor 3 112364 2004.02.09 1 unit 617467M
400279 Thor 4 112364 2004.02.09 1 unit 617468M
400280 Thor 5 112364 2004.02.09 1 unit 617997M
400281 Thor 6 112364 2004.02.09 1 unit 617998M
The claims are 000 xxxxxx xxxxxx each (1 unit) and cover a total of about 150
hectares (363 acres or about 0.60 square miles). Exploration work to the extent
of $100.00 per unit will be required prior to the expiry date or equivalent cash
paid in lieu of work. Precise claim surveying by Global Positioning Satellite
(GPS) Survey instrument may be filed for 1 year of work per unit
SCHEDULE "B"
TO
THE PROPERTY ACQUISITION AGREEMENT
JOINT VENTURE AGREEMENT
TABLE OF CONTENTS
-----------------
DEFINITIONS 4
REPRESENTATIONS AND WARRANTIES 5
PURPOSE AND CREATION OF THE JOINT VENTURE 6
DILUTION 7
MANAGEMENT COMMITTEE 8
OPERATOR 9
POWER, DUTIES AND OBLIGATIONS OF OPERATOR 9
PROGRAMS 11
MINE FINANCING 12
CONSTRUCTION OF MINE 12
OPERATION OF MINE 12
PAYMENT OF CONSTRUCTION AND OPERATING COSTS 13
DISTRIBUTION IN KIND 13
SURRENDER OF INTEREST 14
TERMINATION OR SUSPENSION OF MINING OPERATIONS 14
INFORMATION AND DATA 15
PARTITION 15
TAXATION 15
RIGHT OF FIRST REFUSAL 15
FORCE MAJEURE 16
NOTICE 17
WAIVER 17
FURTHER ASSURANCES 17
USE OF NAME 17
ENTIRE AGREEMENT 17
AMENDMENT 17
ARBITRATION 17
RIGHT TO AUDIT 18
2
TIME 18
RULE AGAINST PERPETUITIES 18
DOCUMENT RETENTION ON TERMINATION 18
ENUREMENT 18
GOVERNING LAW 18
NMBER AND GENDER 18
HEADINGS 19
TIME OF THE ESSENCE 19
SCHEDULE "A"
DESCRIPTION OF PROPERTY RIGHTS AND PROPERTY
SCHEDULE "B"
DEFINITION OF NET PROFITS
SCHEDULE "C"
ACCOUNTING PROCEDURES
3
JOINT VENTURE AGREEMENT
THIS AGREEMENT made as of the ___________day of ________________, 20__.
BETWEEN:
HOWELLCO, a corporation to be formed having offices at 15294, 96A Avenue, in the
City of Surrey, in the Province of British Columbia, (hereinafter referred to as
"Howellco");
OF THE FIRST PART
- and -
-
CORUMEL MINERALS CORP., a body corporate, incorporated under the laws of State
of Nevada and having an office at 503 - 0000 Xxxxxx Xxxxxx, in the City of
Vancouver, in the Province of British Columbia, (hereinafter referred to as
"Corumel");
OF THE SECOND PART
WHEREAS:
A. Howellco owns a 15% and Corumel owns a 85% undivided right, title and
interest in and to the Property;
B. The parties wish to create a joint venture to carry out the continued
operation of the Property on the terms and subject to the conditions hereinafter
set forth.
NOW THEREFORE THIS AGREEMENT WITNESSETH that in consideration of the premises,
and of the mutual covenants and agreements herein contained, the parties hereto
have agreed and do hereby agree as follows:
DEFINITIONS
1.1 In this Agreement, including the Recitals and Schedules hereto the following
words and expressions shall have the following meanings:
a) "Accounting Procedure" means the accounting procedure attached to this
Agreement as Schedule "C";
b) "Affiliate" shall have the same meaning as under the Companies Act (British
Columbia) as at the date hereof;
c) "Agreement" means this Joint Venture Agreement as amended from time to
time;
d) "Commercial Production" means the operation of the Property as a producing
mine and the production of Mineral Products therefrom (excluding bulk
sampling, pilot plant or test operations);
e) "Completion Date" means the date on which it is demonstrated to the
satisfaction of the Management Committee that the preparing and equipping
of a Mine for Commercial Production is complete;
f) "Construction" means every kind of work carried out during the Construction
Period by the Operator in accordance with a Feasibility Report approved by
the Management Committee;
g) "Construction Period" means the period beginning on the date of a
Feasibility Report and ending on the Completion Date;
h) "Costs" means all items of outlay and expense whatsoever, direct or
indirect, with respect to Mining Operations in accordance with this
Agreement, without limiting the generality of the foregoing, the following
categories of Costs shall have the following meanings:
i) "Mine Construction Costs" means those Costs incurred during the
Construction Period;
j) i) "Mine Costs" means Mine Construction Costs and Operating Costs; and
k) ii) "Operating Costs" means those Costs incurred subsequent to the
Completion Date;
l) "Feasibility Report" means a detailed written report of the results of a
comprehensive study on the economic feasibility of placing the Property or
a portion thereof into Commercial Production and shall include a reasonable
assessment of the mineral ore reserves and their amenability to
metallurgical treatment, a description of the work, equipment and supplies
required to bring the Property or a portion thereof into Commercial
Production and the estimated cost thereof, a description of the mining
methods to be employed and a financial appraisal of the proposed operations
supported by an explanation of the data used therein;
4
m) "Interest" means the undivided beneficial percentage interest from time to
time of a party in the Joint Venture and the Property, and Mineral
Products, as set out hereunder;
n) "Joint Venture" means the joint venture created pursuant to this Agreement;
l) "Management Committee" means the management committee constituted in
accordance with the provisions of Article 5 hereof to manage or supervise
the management of the business and affairs of the Joint Venture;
o) "Mine" means the workings established and assets acquired, including,
without limiting the generality of the foregoing, development headings,
plant and concentrator installations, infrastructure, housing, airport and
other facilities in order to bring the Property into Commercial Production;
p) "Mineral Products" means the end products derived from operating the
Property as a Mine;
q) "Mining Operations" means every kind of work done by the Operator:
i) on or in respect of the Property in accordance with a Feasibility
Report; or
ii) if not provided for in a Feasibility Report, unilaterally and in good
faith to maintain the Property in good standing, to prevent waste or
to otherwise discharge any obligation which is imposed upon it
pursuant to this Agreement and in respect of which the Management
Committee has not given it directions; including, without limiting the
generality of the foregoing, investigating, prospecting, exploring,
developing, property maintenance, preparing reports, estimates and
studies, designing, equipping, improving, surveying, Construction and
mining, milling, concentrating, rehabilitation, reclamation, and
environmental protection.
r) "Net Profits" shall mean net profits calculated in accordance with Schedule
"B" hereto;
s) "Operating Year" shall mean a twelve-month period, the first Operating Year
to commence on the Completion Date and each succeeding Operating Year
commencing at the expiration of the preceding Operating Year.
t) "Operating Plan" shall mean a plan in accordance with Section 11.2.
u) "Operator" means the operator appointed pursuant to Article 6;
v) "Other Tenements" means all surface rights of and to any lands within or
outside the Property including surface held in fee or under lease, license,
easement, right of way or other rights of any kind (and all renewals,
extensions and amendments thereof or
w) substitutions therefor) acquired by or on behalf of the parties with
respect to the Property,
(i) all information obtained from Mining Operations, and
(ii) those rights and benefits appurtenant to the Property that are
acquired for the purpose of conducting Mining Operations;
x) "party" or "parties" means the parties to this Agreement and their
respective successors and permitted assigns which become parties to this
Agreement;
y) "Program" means a plan, including budgets, for the Project or any part
thereof as approved by the Management Committee pursuant to this Agreement;
z) "Project" means the exploration and development of the Property,
preparation and delivery of a Feasibility Report and the Construction and
operation of facilities to put the Property
aa) into Commercial Production;
bb) "Property" means those certain mining claims and related rights and
interests set out and more particularly described in Schedule "A" hereto
and Other Tenements and shall include any renewal thereof and any form of
substitute or successor title thereto; t)
cc) "Property Acquisition Agreement" means the property acquisition agreement,
made as of the 28 day of March, 2003, between Xxxxxxx X. Xxxxxx and
-- -----
Corumel;
dd) "Royalty" means a royalty on the Net Profits calculated in accordance with
Schedule "B"hereto;
ee) "Simple Majority" means a decision made by the parties hereof or the
Management Committee by greater than 50% of the votes entitled to be cast.
REPRESENTATIONS AND WARRANTIES
2.1 Each of the parties represents each to the other that:
a) it is the legal and beneficial owner of the Interest as set forth and
described in the recitals hereto free and clear of all liens, charges and
encumbrances except as set forth in Schedule "A" attached hereto and the
Property Acquisition Agreement; and
b) save and except as set out herein, there is no adverse claim or challenge
against or to the ownership of or title to its Interest or any portion
thereof, nor is there any basis therefor, and there are no outstanding
agreements or options to acquire or purchase its Interest or any portion
thereof.
2.2 Each of the parties represents each to the other that:
a) it is a company duly incorporated, organized and validly subsisting under
the laws of its incorporating jurisdiction;
5
b) it has full power and authority to carry on its business and enter into
this Agreement and any agreement or instrument referred to or contemplated
by this Agreement and to carryout and perform all of its obligations
hereunder; and
c) it has duly obtained all corporate authorizations for the execution,
delivery and performance of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result in any
breach of any covenants or agreements contained in, or constitute a default
under, or result in the creation of any encumbrance, lien or charge under
the provisions of its constating documents or any indenture, agreement or
other instrument whatsoever to which it is a party or by which it is bound
or to which it may be subject and will not contravene any applicable laws.
2.3 The representations and warranties herein before set out are conditions on
which the parties have relied in entering into this Agreement, are to be
construed as both conditions and warranties and shall, regardless of any
investigation which may have been made by or on behalf of any party as to the
accuracy of such representations and warranties, survive the closing of the
transactions contemplated hereby and each of the parties will indemnify and save
the other harmless from all loss, damage, costs, actions and suits arising out
of or in connection with any breach of any representation or warranty contained
in this Agreement and each party shall be entitled, in addition to any other
remedy to which it may be entitled, to set off any such loss, damage or costs
suffered by it as a result of any such breach against any payment required to be
made by it to the other party hereunder.
PURPOSE AND CREATION OF THE JOINT VENTURE
3.1 The parties agree each with the other to use their best efforts to develop
and operate the Property with the goal of eventually putting the Property into
Commercial Production should a Feasibility Report recommending Commercial
Production be obtained and a decision to commence Commercial Production be made,
and for this purpose the parties hereby agree to associate and participate in a
single purpose joint venture to carry out all such acts which are necessary or
appropriate, directly or indirectly, to carry out the Project.
3.2 The parties have not created a partnership and nothing contained in this
Agreement shall in any manner whatsoever constitute a party the partner, agent
or legal representative of any other party or create any fiduciary relationship
between them for any purpose whatsoever. No party shall have any authority to
act for or to assume any obligations or responsibility on behalf of any other
party except as may be, from time to time, agreed upon in writing between the
parties or as otherwise expressly provided.
3.3 The rights and obligations of each party shall be in every case several and
not joint or joint and several.
3.4 Beneficial ownership of the Property shall remain in each party in
proportion to its respective Interest and any legal title to the Property held
by any party shall be subject to this Agreement. All property held, acquired or
contributed by or on behalf of the parties under or pursuant to this Agreement
shall be beneficially owned by the parties as tenants in common in proportion to
their respective Interests.
3.5 Each party shall make available its Interest for the purposes of the Project
and, in particular, each party agrees to grant a mortgage, charge, lien,
encumbrance on, or a security Interest in, its Interest to and in favour of any
lender or party hereto to facilitate financing of the Project or any portion
thereof.
3.6 The rights and obligations of the parties created under this Agreement shall
be strictly limited to the Property and shall not be extended by implication or
otherwise, except with the unanimous written consent of the parties.
3.7 Except as may be otherwise expressly provided in this Agreement, nothing
herein shall restrict in any way the freedom of any party, except with respect
to its Interest, to conduct as it sees fit any business or activity whatsoever,
including the development or application of any process, and the exploration
for, development, mining, extraction, production, handling, processing or any
treatment, transportation or marketing of any ore, mineral or other product for
any other purpose, without any accountability to any other party.
3.8 Each party shall do all things and execute all documents necessary in order
to maintain the Property and the Property Rights in good standing.
3.9 Except as may be otherwise expressly specified in this Agreement, each
party, in proportion to its Interest, shall indemnify and hold harmless each
other party and each director, officer, employee, agent and representative of
each other party, from and against any claim of or liability to any third person
asserted on the ground that action taken
6
under this Agreement has resulted in or will result in any loss or damage to
such third person to the extent, but only to the extent that such claim or
liability is paid by such other party in the amount in excess of that amount
payable by reason of such other party's Interest, but the foregoing shall not
prejudice any claim of any party against the Operator.
3.10 Each party covenants and agrees with the others:
(a) to perform or cause to be performed its obligations and commitments under
this Agreement and, without limiting the generality of the foregoing, to
pay Costs in proportion to its Interest except as may be otherwise provided
in Article 4 and Article 9 hereof; and
(b) not to engage either alone or in association with others in any activity in
respect of the Property or the Project except as provided or authorized by
this Agreement.
3.11 For administrative convenience, and without, altering or affecting the
rights, titles and interests created hereby, the parties agree that the Operator
may hold the Property, in trust, for the use and benefit of the parties in
accordance with the terms and provisions of this Agreement and in proportion to
their respective Interests as adjusted from time to time, until such times as
the Management Committee shall determine that it is appropriate or advisable for
the Property to be held or registered in the name of the parties, another
trustee or nominee which the Management Committee may select. Such holding of
the Property in trust shall not prevent the vesting of the legal and beneficial
title hereto in the parties in the manner and at the times as otherwise herein
provided.
DILUTION
4.1 Upon formation of the Joint Venture, Howellco shall be deemed to have paid
Costs of two thousand one hundred and eighteen($2,118) dollars and Corumel shall
be deemed to have paid Costs of twelve thousand ($12,000) dollars.
4.2 The respective Interests of the parties shall be subject to variation from
time to time in the event: a) of failure by a party to pay its proportionate
share of Costs;
a) subject to Section 4.5 and Section 8.7 hereof, of the election by a party
not to participate in a Program, or;
b) subject to Section 4.5 and Section 8.7 hereof, of the election by a party
to pay less than its proportionate share of Costs in respect of a Program
adopted by the Management Committee.
4.3 Upon the happening of any of the events set forth in subsection 4.2(a)-(b),
inclusive hereof, each party's Interest shall be varied to equal the product
obtained by multiplying 100% by a fraction of which the numerator shall be the
amount of Costs paid by such party and of which and the denominator shall be the
total amount of Costs paid by all parties. For the purposes of this section, the
amount of Costs paid by a party shall include the amount of Costs deemed to have
been paid by that party as set forth in Section 4.1.
4.4 In the event that a party's Interest is reduced to five (5%) percent or less
by the operation of Section 4.3 hereof, such party shall forthwith relinquish
its Interest and shall transfer such Interest to the other parties hereto in
proportionate shares and shall receive as consideration therefor a Royalty equal
to two and one-half (2.5%) percent of Net Profits. In the event of such
relinquishment, such party shall have no further right to participate in any
Programs and shall have no further Interest in the Property, except the Royalty.
4.5 A party which forfeits or reduces its Interest in the Property pursuant to
Section 4.2 shall have the rights to redeem its position if the actual Costs
expended is less costly by at least 25% than the budget as set out in the
Program to which the party had not agreed, otherwise the forfeiture is final.
The Operator shall not later than thirty (30) days after completion of a
Program, provide a complete statement of expenditures incurred to date and an
estimate of expenditures to be incurred to completion of the Operating Year
(such expenditures to be verified by audit within six (6) months if the
forfeiting party request and agrees to pay for same) to all parties including
the forfeiting party. Within twenty (20) days of receipt of the foregoing
statement, the forfeiting party shall inform the Operator of its wish to redeem
its Interest or to require an audit. A party redeeming its Interest shall pay
the Costs it would have paid had it participated in the Program, plus interest
thereon at a rate per annum of prime plus one percent thereon from the date of
the Operator's invoices to the date of payment to the Operator. Payment shall be
made by the redeeming party to the Operator within thirty (30) days of providing
notice of such redemption. The Operator shall pay the proceeds to the other
parties in proportion to the manner in which their Interests related to the
participation in the subject Program.
7
MANAGEMENT COMMITTEE
5.1 A Management Committee, consisting of one representative of each party, and
one or more alternate representatives, shall be constituted and appointed within
fourteen (14) days after the formation of the Joint Venture. The Management
Committee shall manage, or supervise the management of, the business and affairs
of the Joint Venture and shall exercise all such powers and do all such acts as
the Joint Venture may exercise and do. The Management Committee shall meet
within fifteen (15) days of its constitution (at which time a chairman shall be
elected from among their number) and may otherwise meet at such places as it
thinks fit for the dispatch of business, adjourn and otherwise regulate its
meetings and proceedings as the members thereof deem fit. Unless otherwise
provided herein, questions arising at any meeting of the Management Committee
shall be decided by a Simple Majority of votes with each party's representatives
being entitled to cast that number of votes which is equal to that party's
Interest. Unless agreed to in writing by the parties hereto, all meetings of the
Management Committee shall be held in Vancouver, British Columbia or such other
place as the parties may agree. Any meetings may, if the parties so consent, be
held by conference telephone.
5.2 Management Committee Quorum:
a) A quorum for any meeting of the Management Committee shall consist of a
representative or representatives of a party or parties whose Interests
aggregate one hundred (100%) percent. No business other than the election
of a chairman, if any, and the adjournment or termination of the meeting
shall be dealt with if a quorum is not present at the commencement of the
meeting but the quorum need not be present throughout the meeting;
b) If a quorum is not present at the opening of a meeting, the parties present
or represented shall adjourn the meeting for a period of seven (7) days
from the date of the adjourned meeting, but shall not transact any other
business. A quorum for any such adjourned meeting shall consist of a
representative or representatives of a party or parties who attend such
reconvened meeting.
5.3 A meeting of the Management Committee at which a quorum is present shall be
competent to exercise all or any of the authorities, powers and discretion
bestowed upon the Management Committee in this Agreement.
5.4 No questions submitted to the Management Committee need be seconded and the
chairman, if any, of the meeting shall be entitled to submit the questions to a
vote during the meeting.
5.5 The decision on any question by consent in writing of the representatives of
all parties shall be as valid as if it had been decided at a duly called and
held meeting of the Management Committee. Each decision may be in counterparts
each consented to in writing by one or more representatives which together shall
be deemed to constitute one decision.
5.6 At the time of any decision by the Management Committee to adopt a Program,
the parties shall pay, subject to the provisions of Article 8 hereof, their
proportionate share of the estimated Costs of such Program by depositing the
same into the interest bearing bank account opened and maintained pursuant to
Section 5.7 hereof.
5.7 The Management Committee shall open and maintain an interest bearing bank
account with a Canadian Chartered bank in the name of the Joint Venture and
shall use the funds on deposit therein for the purposes of the Joint Venture.
The Management Committee shall appoint signing officers on the said account as
shall be required and shall advise the parties of the particulars of the said
account.
5.8 Each of the parties hereby agrees that:
a) any interest earned on any sums deposited in the bank account opened and
maintained pursuant to Section 5.7 hereof shall be shared in proportion to
their respective Interests; and
(c) each shall, following formation of the Joint Venture, deposit in such
account in proportion to their Interests any of the actual Costs in excess
of the estimated Costs when requested to do so by the Management Committee.
5.9 Any party (the "Paying Party") may pay any reasonable Costs due to maintain
the Property or the Project in good standing and the other parties shall, in
proportion to their Interest and within fifteen (15) days of being given notice
of such payment, reimburse the Paying Party for such payment, failing such
reimbursement the parties not paying shall, for purposes of Section 4.2 hereof,
be deemed to have elected not to participate in a Program in accordance with
Section 8.3 hereof, and the provisions of Article 4 hereof shall apply.
8
5.10 In the event that the Operator or the consultant appointed pursuant to
Section 7.4 recommends that further work be conducted on the Property, then the
Management Committee shall prepare or cause to be prepared a Program.
5.11 At any time during the currency of this Agreement the Management Committee
may cause a Feasibility Report to be prepared by a substantial and well
recognized engineering firm in such form as the Management Committee may
require. The Management Committee shall, forthwith upon receipt of a Feasibility
Report, provide each of the parties with a copy thereof. Upon request of any
party and at reasonable intervals and times the parties shall meet in order to
discuss such a report.
OPERATOR
6.1 The initial Operator shall be Howellco. An Operator shall continue as
Operator until changed pursuant to the terms hereof or by a decision of the
Management Committee with parties representing a Simple Majority voting in
favour if the Operator has failed to perform in a manner that is consistent with
good mining practice or has failed to perform in a manner consistent with its
duties and responsibilities under this Agreement, and the Management Committee
has given to the Operator written notice setting forth particulars of the
Operator's default and the Operator has not within 30 days of receipt of such
notice commenced to remedy the default and thereafter to proceed continuously
and diligently to complete all required remedial action.
6.2 The Operator may at any time on sixty (60) days notice to the Management
Committee resign as Operator, in which event the Management Committee shall
select another party or person to be Operator (hereinafter called the "new
Operator") upon the thirtieth (30th) day after receipt of the Operator's notice
of resignation or such sooner date as the Management Committee may establish and
give notice of to the resigning Operator. The resigning Operator shall thereupon
be released and discharged from all its duties and obligations as Operator upon
the appointment of the new Operator except those duties and obligations that it
theretofore should have performed.
6.3 Upon the Operator making a voluntary or involuntary assignment into
bankruptcy or taking advantage of any legislation for the winding-up or
liquidation of the affairs of insolvent or bankrupt companies the Operator shall
automatically be terminated as operator and the other party or its nominee
appointed as Operator.
6.4 The new Operator shall assume all of the rights, duties, obligations and
status of the Operator as provided in this Agreement, other than the previous
Operator's Interest, if any, without obligation to retain or hire any of the
employees of the former Operator or to indemnify the former Operator for any
costs or expenses which the previous Operator will incur as a result of the
termination of employment of any of its employees resulting from this change of
Operator, and shall continue to act as Operator until its replacement or
resignation.
6.5 Upon the effective time of a resignation, removal or cessation, the
departing Operator shall within sixty (60) days of such resignation, removal or
cessation, turn over to its successor, or if no successor has been designated,
to the Management Committee, control and possession of the Property together
with (i) all documents, books, records and accounts (or copies thereof)
pertaining to the performance of its functions as Operator and (ii) all monies
held by it in its capacity as the Operator. Upon transfer and delivery thereof,
the departing Operator shall be released and discharged from, and the successor
Operator shall assume, all duties and obligations of Operator except the
unsatisfied duties and obligations of the departing Operator accrued prior to
the effective date of the change of Operator and for which the departing
Operator shall, notwithstanding its release or discharge, continue to remain
liable, it being understood and agreed that the departing and successor
Operators respectively shall co-operate in finalizing all outstanding matters
and completing the transition. If the title to any real or personal property
included in the Property is held in the name of the departing Operator, it shall
transfer such property to the successor Operator in trust for the parties hereto
unless otherwise directed by the Management Committee.
6.6 Within sixty (60) days of the effective time of an Operator's resignation,
removal or cessation as Operator, the Management Committee may cause an audit to
be made of the records maintained by the departing Operator and the cost of such
audit shall be for the joint account of the parties hereto. 6.7 Except as
authorized by the Management Committee or as otherwise herein provided, the
Operator shall not assign its operating rights or obligations under this
Agreement.
POWER, DUTIES AND OBLIGATIONS OF OPERATOR
7.1 Subject to the control and direction of the Management Committee, the
Operator shall have full right, power and authority to do everything necessary
or desirable to carry out a Program and the Project and to determine the manner
9
of exploration and development of the Property and, without limiting the
generality of the foregoing, the right, power and authority to:
a) regulate access to the Property subject only to the right of
representatives of the parties to have access to the Property at all
reasonable times for the purpose of inspecting work being done thereon but
at their own risk and expense;
b) employ and engage such employees, agents and independent contractors as it
may consider necessary or advisable to carry out its duties and obligations
hereunder and in this connection to delegate any of its powers and rights
to perform its duties and obligations hereunder, but the Operator shall not
enter into contractual relationships with another person except on terms
which are commercially competitive;
c) execute all documents, deeds and instruments, do or cause to be done all
such acts and
d) things and give all such assurances as may be necessary to maintain good
and valid title to the Property. Each party hereby irrevocably constitutes
the Operator its true and lawful attorney to give effect to the foregoing
and hereby agrees to indemnify and save the Operator harmless from any and
all costs, loss or damage sustained or incurred without gross negligence or
bad faith by the Operator directly or indirectly as a result of its
exercise of its powers pursuant to this subsection; and
e) conduct such title examination and cure such title defects as may be
advisable in the reasonable judgment of the Operator.
7.2 The Operator shall have the following duties and obligations during the term
hereof:
a) to diligently manage, direct and control all exploration, development and
producing operations in and under the Property in a prudent and workmanlike
manner and in compliance with all applicable laws, rules, orders and
regulations;
b) a)to prepare and deliver to each of the parties during the periods of
active field work, monthly progress and expense reports of the work in
progress, on or before the day which is forty-five (45) days following each
calendar month with respect to work done in such month and on or before the
first day of every calendar year, comprehensive annual reports covering the
activities and expenses hereunder and such report shall include the results
obtained during the twelve (12) month period ending on ! immediately
preceding;
c) to provide and deliver to each of the parties, together with the reports
referred to in subparagraph (b), copies of all assays, maps and drill logs;
d) subject to the terms and conditions of this Agreement, to keep the Property
in good standing, free and clear of all liens, charges and encumbrances of
every character arising from operations (except for those which are in
effect on the date of this Agreement or are created pursuant to this
Agreement, liens for taxes not yet due, other inchoate liens and liens
contested in good faith by the Operator) and to proceed with all diligence
to contest or discharge any lien that is filed by reason of the Operator's
failure to perform its obligations hereunder;
e) to maintain true and correct books, accounts and records of operations
hereunder in accordance with the Accounting Procedure, separate and apart
from any other books, accounts and records maintained by the Operator,
provided that the judgment of the Operator as to matters related to
accounting, for which provision is not made in the Accounting Procedure
shall govern if the Operator's accounting practices are in accordance with
accounting principles generally accepted in the mining industry in Canada;
f) to permit one representative of the parties appointed in writing at all
reasonable times and at their expense to inspect, audit and copy the
Operator's accounts and records relating to the accounting for production
or to the determination of the proceeds from the sale thereof for any
fiscal year of the Operator within 9 months following the end of such
fiscal year. The Operator shall maintain its accounts and records for a
period of at least two (2) years or such longer period as required by the
laws of Canada or its Provinces. The parties shall be entitled to inspect,
audit and copy the accounts and records upon giving the Operator ten (10)
days notice of their intention to do so;
g) to obtain and maintain or cause any contractor engaged hereunder to obtain
and maintain during any period in which active work is carried out
hereunder such insurance coverage as the Management Committee deems
advisable;
h) to permit the parties or their representatives appointed in writing, at all
reasonable times, at their own expense and risk, reasonable access to the
Property and all data derived from carrying out work thereon;
i) to open and maintain on behalf of the Joint Venture such bank account or
bank accounts as the Management Committee may direct with a Canadian
chartered bank;
j) to prosecute and defend, but not to initiate without the consent of the
Management Committee, all litigation or administrative proceedings arising
out of the Property, or Project;
k) to transact, undertake and perform all transactions, contracts,
employments, purchases, operations, negotiations with third parties and any
other matter or thing undertaken by or on behalf of the Joint Venture
hereunder in the Operator's name and to pay all expenditures incurred in
connection therewith promptly when due;
10
l) to transact, undertake and perform all transactions, contracts,
employments, purchases, operations, negotiations with third parties and any
other matter or thing undertaken on behalf of the parties in the Operators
name;
m) to maintain comprehensive general liability insurance in respect of all
operations on the Property with limits of not less than three million
($3,000,000) dollars inclusive of any one occurrence; and
n) to take all proper and reasonable steps for the protection of rights of
surface owners against damage occasioned by operations to be conducted
hereunder and pay such damages as may lawfully be determined as resulting
from such operations.
7.3 Subject to any specific provisions of this Agreement, the Operator, in
carrying out its duties and obligations hereunder, shall at all times be subject
to the direction and control of the Management Committee and shall perform its
duties hereunder in accordance with the instructions and directions as from time
to time communicated to it by the Management Committee and shall make all
reports to the Management Committee except where otherwise specifically provided
herein.
7.4 The Operator shall commence and diligently complete the Project and without
limiting the generality of the foregoing, may retain an independent consulting
geologist acceptable to the Management Committee to prepare a report in respect
of the Project, the results thereof, the conclusions derived therefrom and the
recommendation as to whether or not further work should be conducted on the
Property.
7.5 Subject to Section 7.3, the Operator may charge the following sums in return
for its head office overhead functions which are not charged directly as
provided in the Accounting Procedure: a) with respect to Mine Construction, an
amount equal to 5.0% of all Construction Costs; and b) subsequent to the
Completion Date, an amount equal to 2.5% of all Operating Costs.
7.6 Notwithstanding Section 7.5, if a party gives notice in writing to the
Management Committee that the party holds a bona fide belief that the sums
charged under Section 7.5 are either excessive or insufficient then the
Management Committee shall call a meeting to be held within ninety (90) days of
receipt of such notice for the purpose of amending or ratifying the amounts
charged under Section 7.5 hereof.
PROGRAMS
8.1 Expenditures shall only be incurred under and pursuant to Programs prepared
by the Operator and approved by the Management Committee. Any Feasibility Report
shall be prepared pursuant to a separate Program.
8.2 The Operator shall prepare and submit to the Management Committee a Program
within 90 days of the completion of the previous Program. If the Operator does
not prepare a Program within the time limited, then the other parties shall have
the right to prepare a Program for submission to the Management Committee at
which time the party submitting the Program shall become the Operator.
8.3 Within sixty (60) days of the approval by the Management Committee of a
Program, each party shall give written notice to the Operator stating whether or
not it elects to contribute its respective Costs of such Program or requesting
the Operator to revise this Program provided that each party may only make such
requests once in respect of each Program. Subject to Section 8.7, failure by any
of the parties to give notice pursuant to this subsection within such sixty (60)
day period shall be deemed an election by that party not to contribute to such
Program.
8.4 If the party elects or is deemed to have elected not to contribute its Costs
of a Program, the other parties may give notice in writing to the Operator
stating that it or they will contribute all expenditures under or pursuant to
such Program and the Operator will proceed with such Program and thereafter the
interests of the parties shall be adjusted in accordance with Article 4. The
Operator will not proceed with any Program which is not fully subscribed.
8.5 If the parties elect or contribute their respective Costs of a Program, the
Operator will proceed with the Program.
8.6 If any party requests the Operator to revise a Program in accordance with
Section 8.3, the Operator will revise such Program at once and resubmit the
revised Program to the parties on the same terms and conditions as any other
Program, except that the parties shall not have the right to request any further
revisions.
8.7 If any party elects or is deemed to have elected not to contribute to a
Program its Interest will not be subject to adjustment if, within sixty (60)
days of such election or deemed election it elects to pay to the contributing
party or
11
parties one hundred and fifty (150%) percent of what would otherwise have been
its contribution to such Program, but any amount so paid in excess of what would
otherwise have been its contribution to such Program shall be deemed not to be a
contribution to Costs by the party making it.
8.8 An election by a party to contribute to a Program shall make that party
liable to pay its proportionate share of Costs actually incurred under or
pursuant to the Program including Program Overruns, as herein after defined, of
up to but not exceeding ten (10%) percent.
8.9 After having elected to contribute to a Program which is proceeded with, a
party shall, within 30 days after being invoiced therefor by the Operator, pay
such portion of its share of Costs as the Operator may require but the Operator
shall not require payment of any funds more than one month in advance.
8.10 If it appears that Costs will exceed by greater than ten (10%) percent
those estimated under a program the Operator shall immediately give written
notice to the party or parties contributing to that program outlining the nature
and extent of the additional costs and expenses (hereinafter called "Program
overruns"). If Program Overruns are approved by the party or parties
contributing to that Program, then within thirty (30) days after the receipt of
a written request from the Operator, the party or parties contributing to that
Program shall provide the Operator with their respective shares of such Program
overruns. If Program Overruns are not approved by the party or parties
contributing to that Program, the Operator shall have a right to curtail or
abandon such Program. Any costs incurred by the Operator due to a curtailment or
abandonment of the Program shall be paid by the parties pursuant to their
respective Interests in the Program.
8.11 If any party at any time fails to pay its share of Costs in accordance with
Sections 8.9 or 8.10, the Operator may give written notice to that party
demanding payment, and if the party has not paid such amount within fifteen (15)
days of the receipt of such notice, that party shall be deemed to:
(a) be in default under Section 8.9 or 8.10 as applicable; and
(b) have elected not to contribute to that Program for the purpose of Article 4
and the Interest of the parties shall be adjusted in accordance with
Article 4 and the Operator shall have the right to curtail or abandon the
Program and that party shall not be entitled to contribute to any
subsequent Programs.
MINE FINANCING
9.1 The parties hereto shall be responsible for providing or arranging the
financing of a Mine. In providing or arranging the financing for a Mine, the
Property and Mine may be pledged, hypothecated, mortgaged, charged, or otherwise
encumbered in order to secure monies borrowed and used for the sole purpose of
enabling the Mine to be financed. Subject to this Article any party may pledge,
mortgage, hypothecate, charge or otherwise encumber its interest in order to
secure by way of floating charge as a part of the general corporate assets of
that party's money borrowed for its general corporate purposes, provided that
the pledgee, mortgagee, holder of the charge or encumbrance (in this paragraph
referred to as a "Chargee") shall hold the same subject to the provisions of
this Agreement and that if the Chargee realizes upon any of its security it will
comply with this Agreement. The agreement between the party, as borrower, and
the Chargee shall contain specific provisions to the same effect as the
provisions of this Article.
CONSTRUCTION OF MINE
10.1 Upon approval by the Management Committee of the Feasibility Report
recommending the Construction of a Mine, the Management Committee shall cause
the Operator to, and the Operator shall, proceed with Construction with all
reasonable dispatch. Construction shall be substantially in accordance with the
Feasibility Report subject to any variations agreed upon by the parties and
subject also to the right of the Management Committee to cause such other
reasonable variations in Construction to be made as the Management Committee
deems advisable.
OPERATION OF MINE
11.1 Commencing with the Completion Date, all Mining Operations shall be planned
and conducted and all estimates, reports and statements shall be prepared and
made on the basis of an Operating Year.
11.2 With the exception of the first Operating Year, an Operating Plan for each
Operating Year shall be submitted by the Operator to the parties not later than
ninety (90) days prior to the end of the year immediately preceding the
Operating Year to which the Operating Plan relates. Each Operating Plan shall
contain the following:
a) a plan for the proposed Mining Operations;
b) a detailed estimate of all Mine Costs plus a reasonable allowance for
contingencies;
12
c) an estimate of the quantity and quality of the ore to be mined and the
concentrates or metals to be produced; and such other facts as may be
necessary to reasonably illustrate the results intended to be achieved by
the Operating Plan; and upon request of any party the Operator shall meet
with that party to discuss the Operating Plan and shall provide such
additional or supplemental information as that party may reasonably require
with respect thereto.
11.3 The Management Committee shall adopt each Operating Plan, with such changes
as it deems necessary, on or prior to ninety (90) days prior to the end of the
year immediately preceding the Operating Year to which the Operating Plan
relates; provided, however, that the Management Committee may from time to time
and at any time amend any Operating Plan.
11.4 The Operator shall be entitled to include in the estimate of Mine Costs
referred to in Section 11.2 hereof the reasonably estimated costs of satisfying
continuing obligations that may remain after this Agreement terminates, in
excess of amounts actually expended. Such continuing obligations are or will be
incurred as a result of the Joint Venture and shall include such things as
monitoring, stabilization, reclamation or restoration obligations, severance and
other employee benefit costs and all other obligations incurred or imposed as a
result of the Joint Venture which continue or arise after termination of this
Agreement and settlement of all accounts. The amount accrued from time to time
for the satisfaction of such continuing obligations shall be classified as Costs
hereunder but shall be segregated into a separate account.
PAYMENT OF CONSTRUCTION AND OPERATING COSTS
12.1 The parties hereto shall, from time to time, pay for all Mine Construction
Costs incurred to the date of invoice, or at the beginning of each month for an
advance equal to the estimated cash disbursements to be made during the month.
Each partyl shall pay the Mine Construction Costs or the estimated cash
disbursements within thirty (30) days after receipt of the invoice.
12.2 The Operator may invoice the parties, from time to time, for Operating
Costs incurred to the date of the invoice, or at the beginning of each month for
an advance equal to the estimated cash disbursements to be made during the
month. The parties shall pay the Operating Costs or the estimated cash
disbursements aforesaid to the Operator within thirty (30) days after receipt of
the invoice. If the payment or advance requested is not so made, the amount of
the payment or advance shall bear interest calculated monthly not in advance
from the 30th day after the date of receipt of the invoice thereof by the
parties at a rate equivalent to the weighted average prime rate for the month
plus two percent until paid. The Operator shall have a lien on a party or
parties' aggregate Interest in order to secure any payment or advance required
hereunder together with interest which has accrued thereon. 12.4 If a party or
parties fail (i) to pay an invoice contemplated in Section 9.3 within the time
period herein provided, or (ii) to pay an invoice contemplated in Section 12.3
within the thirty (30) day period aforesaid, the Operator may, by notice, demand
payment. If no payment is made within fifteen (15) days of the Operator's demand
notice, the Operator may, without limiting its other rights at law, enforce the
lien created by Section 12.3 by taking possession of all or any part of the
parties' aggregate Interest. The Operator may sell and dispose of the Interest
which it has so taken into its possession by:
a) first offering that Interest to the other parties, if more than one then in
proportion to the respective Interests of the parties which wish to accept
that offer, for that price which is the fair market value stated in the
lower of two appraisals obtained by the Operator from independent, well
recognized appraisers competent in the appraisal of mining properties; and
b) if the parties have not purchased all or part of that Interest as
aforesaid, then by selling the balance, if any, either in whole or in part
or in separate parcels at public auction or by private tender (the parties
being entitled to bid) at a time and on whatever terms the Operator shall
arrange, having first given notice to the parties of the time and place of
the sale. As a condition of the sale as contemplated in Article 12.4(b),
the purchaser shall agree to be bound by this Agreement and, prior to
acquiring the Interest, shall deliver notice to that effect to the parties,
in form acceptable to the Operator. The proceeds of the sale shall be
applied by the Operator in payment of the amount due from the parties and
interest as aforesaid, and the balance remaining, if any, shall be paid to
the parties after deducting reasonable costs of the sale. Any sale or
disposal made as aforesaid shall be a perpetual bar both at law and in
equity by the parties and its successors and assigns against all other
parties and the Operator.
DISTRIBUTION IN KIND
13.1 It is expressly intended that, upon approval of a Feasibility Report
recommending the Construction of a Mine, the association of the parties shall be
limited to the efficient production of Mineral Products from the Property and
13
that each of the parties shall be entitled to use, dispose of or otherwise deal
with its proportionate share of Mineral Products as it sees fit. Each party
shall take in kind the Mineral Products produced from the Mine, f.o.b. truck or
railcar on the Property, and separately dispose of its proportionate share of
the Mineral Product. Extra costs and expenses incurred by reason of the parties
taking in kind and making separate dispositions shall be paid by each party
directly and not through the Operator or Management Committee.
13.2 Each party shall construct, operate and maintain, all at its own cost and
expense, any and all facilities which may be necessary to receive and store and
dispose of its proportionate share of the Mineral Product at the rate the same
are produced.
13.3 If a party has not made the necessary arrangements to take in kind and
store its share of production as aforesaid the Operator shall, at the sole cost
and risk of that party store, in any location where it will not interfere with
Mining Operations, the production owned by that party. The Operator and the
other parties shall be under no responsibility with respect thereto. All of the
Costs involved in arranging and providing storage shall be billed directly to,
and be the sole responsibility of the party whose share of production is so
stored. The Operator's charges for such assistance and any other related matters
shall be billed directly to and be the sole responsibility of the party. All
such xxxxxxxx shall be subject mutatis mutandis to the provisions of Paragraphs
12.3.
SURRENDER OF INTEREST
14.1 Any party may, at any time upon notice, surrender its entire Interest to
the other parties by giving those parties notice of surrender. The notice of
surrender shall:
a) indicate a date for surrender not less than three months after the date on
which the notice is given; and
b) contain an undertaking that the surrendering party will:
i) satisfy its proportionate share, based on its then Interest, of all
obligations and liabilities which arose at any time prior to the date
of surrender;
ii) if the Operator has not included in Mine Costs the costs of continuing
obligations as set out in Section 11.4 hereof, pay its reasonably
estimated proportionate share, based on the surrendering party's then
Interest, of the Costs of rehabilitating the Mine site and of
reclamation as at the date of surrender; and
iii) will hold in confidence, for a period of two years from the date of
surrender, all information and data which it acquired pursuant to this
Agreement.
14.2 Upon the surrender of its entire Interest as contemplated herein and upon
delivery of a release in writing, in form acceptable to counsel for the
Operator, releasing the other parties from all claims and demands hereunder, the
surrendering party shall be relieved of all obligations or liabilities hereunder
except for those which arose or accrued or were accruing due on or before the
date of the surrender.
14.3 A party to whom a notice of surrender has been given as contemplated herein
may elect, by notice within ninety (90) days to the party which first gave the
notice, to accept the surrender, in which case Article 11.4 and 14.2 shall
apply, or to join in the surrender.
TERMINATION OR SUSPENSION OF MINING OPERATIONS
15.1 The Operator may, at any time subsequent to the Completion Date, on at
least thirty (30) days notice to all parties, recommend that the Management
Committee approve the suspension of Mining Operations. The Operator's
recommendation shall include a plan and budget (in this Article 15 called the
"Mine Maintenance Plan") in reasonable detail of the activities to be performed
to maintain the Property during the period of suspension and the Costs to be
incurred. The Management Committee may, at any time subsequent to the Completion
Date, cause the Operator to suspend Mining Operations in accordance with the
Operator's recommendation with such changes to the Mine Maintenance Plan as the
Management Committee deems necessary. The parties shall be committed to
contribute their proportionate share of the Costs incurred in connection with
the Mine Maintenance Plan. The Management Committee may cause Mining Operations
to be resumed at any time.
15.2 The Operator may, at any time following a period of at least ninety (90)
days during which Mining Operations have been suspended, upon at least thirty
(30) days notice to all parties, or in the events described herein, recommend
that the Management Committee approve the permanent termination of Mining
Operations. The Operator's recommendation shall include a plan and budget (in
this Article 15 called the "Mine Closure Plan") in reasonable detail of the
activities to be performed to close the Mine and reclaim the Property. The
Management Committee may, by unanimous approval of the representatives of all
parties, approve the Operator's recommendation with such changes to the Mine
Closure Plan as the Management Committee deems necessary.
14
15.3 If the Management Committee approves the Operator's recommendation as
aforesaid, it shall cause the Operator to:
a) implement the Mine Closure Plan whereupon the parties shall be committed to
pay, in proportion to their respective Interests, such Costs as may be
required to implement that Mine Closure Plan;
b) remove, sell and dispose of such assets as may reasonably be removed and
disposed of profitably and such other assets as the Operator may be
required to remove pursuant to applicable environmental and mining laws;
and sell, abandon or otherwise dispose of the Property. The disposal price
for the Property shall be the best price obtainable and the net revenues,
if any, from the removal and sale shall be credited to the parties in
proportion to their respective Interests.
15.4 If the Management Committee does not approve the Operator's recommendation
contemplated herein, the Operator shall maintain Mining Operations in accordance
with the Mine Maintenance Plan pursuant to this Article 1
INFORMATION AND DATA
16.1 At all times during the subsistence of this Agreement the duly authorized
representatives of each party shall have access to the Property and the Project
at its and their sole risk and expense and at reasonable intervals and times,
and shall further have access at all reasonable time to all technical records
and other factual engineering data and information relating to the Property and
the Project in the possession of the Management Committee or the Operator. In
exercising the right of access to the Property or the Project the
representatives of a party shall abide by the rules and regulations laid down by
the Management Committee and by the Operator relating to matters of safety and
efficiency. If any representative of a party is not an employee, the party shall
so advise the Operator so that the Operator may require the representative,
before giving him access to the Property or the Project or to data or
information relating thereto, to sign and undertaking in favour of the Joint
Venture, in form and substance satisfactory to the Operator, to maintain
confidentiality to the same extent as each party is required to do under Section
16.2 hereof.
16.2 All records, reports, accounts and other documents referred to herein with
respect to the Property and the Project and all information and data concerning
or derived from the Property and the Project shall be kept confidential and each
party shall take or cause to be taken such reasonable precautions as may be
necessary to prevent the disclosure thereof to any person other than each party,
the Operator, an Affiliate and any financial institution or other person having
made, making or negotiating loans to one or more of the foregoing or any trustee
for any such person, or as may be required by laws, by regulation or policy of
any governmental agency, securities commission or stock exchange, or in
connection with the filing of a prospectus or statement of material facts by a
party, an Affiliate or the Operator or to a prospective assignee as permitted
hereunder, or as may be required in the performance of obligations under this
Agreement without prior consent of all parties, which consent shall not be
unreasonably withheld.
PARTITION
17.1 No party shall, during the term of this Agreement, exercise any right to
apply for any partition of the Property or for sale thereof in lieu of
partition.
TAXATION
18.1 Each party on whose behalf any Costs have been incurred shall be entitled
to claim all tax benefits, write-offs and deductions with respect thereto.
RIGHT OF FIRST REFUSAL
19.1 Save and except as provided in Section 3.5 and Article 4 hereof, the
parties shall not transfer, convey, assign, mortgage or grant an option in
respect of or grant a right to purchase or in any manner transfer or alienate
all or any portion of its Interest or rights under this Agreement otherwise in
accordance with this Article.
19.2 Nothing in this Article shall prevent a sale by a party of all of its
Interest or an assignment of all its rights under this Agreement to an Affiliate
provided that such Affiliate first complies with the provisions of Section.
19.10 and agrees with the other party in writing to retransfer such interest to
the originally assigning party before ceasing to be an Affiliate of such party;
a) a variation pursuant to Section 4.3; or
15
b) a disposition pursuant to an amalgamation or corporate reorganization
which will have the effect in law of the amalgamating or surviving company
possessing all the property, rights and interests and being subject to all the
debts, liabilities and obligations of each amalgamating or predecessor company.
19.3 Should a party (the "transferring party") intend to dispose of all or any
portion of its Interest or rights under this Agreement it shall first give
notice in writing to the parties (the "other parties") of such intention
together with the terms and conditions on which the transferring party intends
to dispose of its Interest or a portion thereof or rights under this Agreement.
19.4 If a party (the "transferring party") receives any offer to dispose of all
or any portion of its Interest or rights under this Agreement which it intends
to accept, the transferring party shall not accept the same unless and until it
has first offered to sell such Interest or rights to the parties (the "other
parties") on the same terms and conditions as in the offer received and the same
has not been accepted by the other parties in accordance with Section 19.6.
19.5 Any communication of an intention to sell pursuant to Section 19.3 and 19.4
(the "Offer") for the purpose of this Article only shall be in writing delivered
in accordance with Article 21 and shall:
a) set out in reasonable detail all of the terms and conditions of any
intended sale;
b) if it is made pursuant to Section 19.3, include a photocopy of the Offer;
and
c) if it is made pursuant to Section 19.4, clearly identify the offering party
and include such information as is known by the transferring party about
such offering party; and such communication will be deemed to constitute an
Offer by the transferring party to the other parties to sell the
transferring party's Interest or its rights (or a portion thereof as the
case may be) under this Agreement to the other parties on the terms and
conditions set out in such Offer. For greater certainty it is agreed and
understood that any Offer hereunder shall deal only with the disposition of
the Interest or rights of the transferring party hereunder and not with any
other interest, right or property of the transferring party and such
disposition shall be made solely for a monetary consideration.
19.6 Any Offer made as contemplated in Section 19.5 shall be open for acceptance
by the other parties in accordance with their respective Interests for a period
of sixty (60) days from the date of receipt of the Offer by the transferring
party.
19.7 If the other parties accept the Offer within the period provided for in
Section 19.6, such acceptance shall constitute a binding agreement of purchase
and sale between the transferring party and the other parties for the Interest
or its rights (or a portion thereof as the case may be) under this Agreement on
the terms and conditions set out in such Offer.
19.8 If the other parties do not accept the Offer within the period provided for
in Section 19.6 or do accept but fail to close the transaction contemplated
thereby within ninety (90) days following receipt of such Offer, the
transferring party may complete a sale and purchase of its Interest or a portion
thereof on terms and conditions not less favourable to the transferring party
than those set out in the Offer and, in the case of an Offer under Section 19.4,
only to the party making the original offer to the transferring party and in any
event such sale and purchase shall be completed within nine months from the
expiration of the right of the other party to accept such Offer of the
transferring party must again comply with the provisions of this Article.
19.9 While any Offer is outstanding no other Offer may be made until the first
mentioned Offer is disposed of and any sale resulting therefrom completed or
abandoned in accordance with the provisions of this Article.
19.10 Before the completion of any sale by the transferring party of its
Interest or rights or any portion thereof under this Agreement, the purchasing
party shall enter into an agreement with the parties agreeing not to sell except
on the same terms and conditions as set out in this Agreement.
FORCE MAJEURE
20.1 No party will be liable for its failure to perform any of its obligations
under this Agreement due to a cause beyond its reasonable control (except those
caused by its own lack of funds) including, but not limited to acts of God,
fire, flood, explosion, strikes, lockouts or other industrial disturbances,
laws, rules and regulations or orders of any duly constituted governmental
authority or non-availability of materials or transportation (each an
"Intervening Event").
16
20.2 All time limits imposed by this Agreement, excepting those set out in
Article 15, will be extended by a period equivalent to the period of delay
resulting from an Intervening Event. 20.3 A party relying on the provisions of
Section 20.1 will take all reasonable steps to eliminate any Intervening Event
and, if possible, will perform its obligations under this Agreement as far as
practical, but nothing herein will require such party to settle or adjust any
labour dispute or to question or to test the validity of any law, rule,
regulation or order of any duly constituted governmental authority or to
complete its obligations under this Agreement if an Intervening Event renders
completion impossible.
NOTICE
21.1 Any notice, direction, cheque or other instrument required or permitted to
be given under this Agreement shall be in writing and may be given by the
delivery of the same or by mailing the same by prepaid registered or certified
mail or by sending the same by telegram, telex, telecommunication or other
similar form of communication, in each case addressed to the intended recipient
at the address of the respective party set out on the front page hereof.
21.2 Any notice, direction, cheque or other instrument aforesaid will, if
delivered, be deemed to have been given and received on the day it was
delivered, and if mailed, be deemed to have been given and received on the third
business day following the day of mailing, except in the event of disruption of
the postal service in which event notice will be deemed to be received only when
actually received and, if sent by telegram, telex, telecommunication or other
similar form of communication, be deemed to have been given or received on the
day it was so sent.
21.3 Any party may at any time give to the other notice in writing of any change
of address of the party giving such notice and from and after the giving of such
notice the address or addresses therein specified will be deemed to be the
address of such party for the purposes of giving notice hereunder.
WAIVER
22.1 If any provision of this Agreement shall fail to be strictly enforced or
any party shall consent to any action by any other party or shall waive any
provision as set out herein, such action by such party shall not be construed as
a waiver thereof other than at the specific time that such waiver or failure to
enforce takes place and shall at no time be construed as a consent, waiver or
excuse for any failure to perform and act in accordance with this Agreement at
any past or future occasion.
FURTHER ASSURANCES
23.1 Each of the parties hereto shall form time to time and at all times do all
such further acts and execute and deliver all further deeds and documents as
shall be reasonably required in order to fully perform and carry out the terms
of this Agreement. For greater certainty, this section shall not be construed as
imposing any obligation on any party to provide guarantees.
USE OF NAME
24.1 No party shall, except when required by this Agreement or by any law,
by-law, ordinance, rule, order or regulation, use, suffer or permit to be used,
directly or indirectly, the name of any other party for any purpose related to
the Property or the Project.
ENTIRE AGREEMENT
25.1 This Agreement embodies the entire agreement and understanding among the
parties hereto and supersedes all prior agreements and undertakings, whether
oral or written, relative to the subject matter hereof.
AMENDMENT
26.1 This Agreement may not be changed orally but only by an agreement in
writing, by the party or parties against which enforcement, waiver, change,
modification or discharge is sought.
ARBITRATION
27.1 If any question, difference or dispute shall arise between the parties or
any of them in respect of any matter arising under this Agreement or in relation
to the construction hereof the same shall be determined by the award of three
arbitrators to be named as follows:
a) the party or parties sharing one side of this dispute shall name an
arbitrator and give notice thereof to the party or parties sharing the
other side of the dispute;
b) the party or parties sharing the other side of the dispute shall, within 14
days of receipt of the notice, name an arbitrator; and
17
c) the two arbitrators so named shall, within 15 days of the naming of the
latter of them, select a third arbitrator. The decision of the majority of
these arbitrators shall be made within 30 days after the selection of the
latter of them. The expense of the arbitration shall be borne equally by
the parties to the dispute. If the parties on either side of the dispute
fail to name their arbitrator within the time limited or proceed with the
arbitration, the arbitrator named may decide the question. The arbitration
shall be conducted in accordance with the provisions of the Arbitration Act
of British Columbia and the decision of the arbitrator or amajority of the
arbitrators, as the case may be, shall be conclusive and binding upon all
the parties.
RIGHT TO AUDIT
28.1 Any party acquiring a Royalty pursuant to this Agreement shall have the
right to audit at its expense the books and records in respect of such Royalty
of the Operator or the other parties, if it is not the Operator in respect of
such Royalty.
TIME
29.1 Unless earlier terminated by agreement of all parties or as a result of one
party acquiring a 100% Interest, the Joint Venture and this Agreement shall
remain in full force and effect for so long as any part of the Property or
Project is held in accordance with this Agreement. Termination of the Agreement
shall not, however, relieve any party from any obligations theretofore accrued
but unsatisfied.
RULE AGAINST PERPETUITIES
30.1 If any right, power or interest of any party in any Property under this
Agreement would violate the rule against perpetuities, then such right, power or
interest shall terminate at the expiration of 20 years after the death of the
survivor of all the lineal descendants of her late Majesty, Queen Xxxxxxxxx XX
of the United Kingdom, living on the date of execution of this Agreement.
DOCUMENT RETENTION ON TERMINATION
31.1 Prior to the distribution of the Property or the Project or the net
revenues received on the disposal thereof on termination of this Agreement, the
Management Committee shall meet any may approve a procedure for the retention,
maintenance and disposal of documents maintained by the Management Committee
(the "Documents") and shall appoint such party as may consent thereto to ensure
that all proper steps are taken to implement and maintain that procedure. If a
quorum is not present at the meeting or if he Management Committee fails to
approve a procedure as aforesaid, the Operator, if a party, otherwise the party
holding the largest Interest as at the day immediately preceding the date the
Management Committee was called to meet, shall retain, maintain and dispose of
the Documents according to such procedure, in compliance with all applicable
laws, as it deems fit. The party entrusted with the retention, and expenses
incidental thereto and shall be entitled to receive payment of those costs and
expenses prior to any distribution being made of the Property and Project or the
net revenues received on the disposal thereof.
ENUREMENT
32.1 This Agreement shall enure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
GOVERNING LAW
33.1 This Agreement shall be governed by and interpreted in accordance with the
laws of the Province of British Columbia and the parties irrevocably attorn to
the jurisdiction of the said province.
SEVERABILITY
34.1 If any one or more of the provisions contained herein should be invalid,
illegal or unenforceable in any respect in any jurisdiction, the validity,
legality and enforceability of such provision shall not in any way be affected
or impaired thereby in any other jurisdiction and the validity, legality and
enforceability of the remaining provisions contained herein shall not in any way
be affected or impaired thereby.
NUMBER AND GENDER
35.1 Words used herein importing the singular number only shall include the
plural, and vice versa, and words importing the masculine gender shall include
the feminine and neuter genders, and vice versa, and words importing persons
shall include firms and corporations.
18
HEADINGS
36.1 The division of this Agreement into articles and sections and the insertion
of headings are for convenience of reference only and shall not affect the
construction or interpretation of this Agreement.
TIME OF THE ESSENCE
37.1 Time shall be of the essence in the performance of this Agreement.
IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the
day,month and year first above written.
HOWELLCO
per
___________________________
Xxxxxxx X. Xxxxxx
CORUMEL MINERALS CORP.
Per
____________________________
Xxxxx Xxxxx, pres.
_______________________________
Xxxxxxx Xxxxx, Sec.-treas.
19
SCHEDULE "A"
TO
THE JOINT VENTURE AGREEMENT
DESCRIPTION OF PROPERTY RIGHTS AND PROPERTY
The Thor property consists of six two-post mineral claims within the New
Westminster Mining Division of British Columbia
Tenure Claim Name Owner Expiry Area Tag Number
--------------------------------------------------------------------------------
400276 Thor 1 112364 2004.02.09 1 unit 617465M
400277 Thor 2 112364 2004.02.09 1 unit 617466M
400278 Thor 3 112364 2004.02.09 1 unit 617467M
400279 Thor 4 112364 2004.02.09 1 unit 617468M
400280 Thor 5 112364 2004.02.09 1 unit 617997M
400281 Thor 6 112364 2004.02.09 1 unit 617998M
The claims are 000 xxxxxx xxxxxx each (1 unit) and cover a total of about 150
hectares (363 acres or about 0.60 square miles). Exploration work to the extent
of $100.00 per unit will be required prior to the expiry date or equivalent cash
paid in liew of work. Precise claim surveying by Global Positioning Satellite
(GPS) Survey instrument may be filed for 1 year of work per unit
SCHEDULE "B"
TO
THE JOINT VENTURE AGREEMENT
DEFINITION OF NET PROFITS
1. "Net Profits" means the aggregate of:
(a) all revenues from the sale or other disposition of ores, metals or minerals
mined or extracted from the Property or any portion thereof and any
concentrates produced therefrom; and
b) all revenues from the operation, sale or other disposition of any
Facilities the cost of which is included in the definition of "Operating
Expenses", "Capital Expenses" or "Exploration Expenses", less (without
duplication) Working Capital, Operating Expenses, Capital Expenses and
Exploration Expenses.
2. "Working Capital" means the amount reasonably necessary to provide for the
operation of the mining operation on the Property and for the operation and
maintenance of the Facilities for a period of six months.
3. "Operating Expenses" means all costs, expenses, obligations, liabilities and
charges of whatsoever nature or kind incurred or chargeable directly or
indirectly in connection with Commercial Production from the Property and in
connection with the maintenance and operation of the Facilities, all in
accordance with generally accepted accounting principles, consistently applied,
including, without limiting the generality of the foregoing, all amounts payable
in connection with mining, handling, processing, refining, transporting and
marketing of ore, concentrates, metals, minerals and other products produced
from the Property, all amounts payable for the operation and maintenance of the
Facilities including the replacement of items which by their nature require
periodic replacement, all taxes (other than income taxes), royalties and other
imposts and all amounts payable or chargeable in respect of reasonable overhead
and administrative services.
4. "Capital Expenses" means all expenses, obligations and liabilities of
whatsoever kind (being of a capital nature in accordance with generally accepted
accounting principles) incurred or chargeable, directly or indirectly, with
respect to the development, acquisition, redevelopment, modernization and
expansion of the Property and the Facilities, including, without limiting the
generality of the foregoing, interest thereon from the time so incurred or
chargeable at a rate per annum from time to time equal to "prime rate" of the
Royal Bank of Canada plus two (2%) percent per annum, but does not include
Operating Expenses nor Exploration Expenses.
5. "Exploration Expenses" means all costs, expenses, obligations, liabilities
and charges of whatsoever nature or kind incurred or chargeable, directly or
indirectly, in connection with the exploration and development of the Property
including, without limiting the generality of the foregoing, all costs
reasonably attributable, in accordance with generally accepted accounting
principles, to the design, planning, testing, financing, administration,
marketing, engineering, legal, accounting, transportation and other incidental
functions associated with the exploration and mining operation contemplated by
this Agreement and with the Facilities, but does not include Operating Expenses
nor Capital Expenses.
6. "Facilities" means all plant, equipment, structures, roads, rail lines,
storage and transport facilities, housing and service structures, real property
or interest therein, whether on the Property or not, acquired or constructed
exclusively for the mining operation on the Property contemplated by this
Agreement (all commonly referred to as "infrastructure").
SCHEDULE "C"
TO
THE JOINT VENTURE AGREEMENT
ACCOUNTING PROCEDURES
TABLE OF CONTENTS
1. Interpretation 1
2. Statements and Xxxxxxxx 2
3. Direct Charges 2
4. Purchase of Material 3
5. Disposal of Material 4
6. Inventories 4
7. Adjustments 4
1. INTERPRETATION
In this Schedule the following words, phrases and expressions shall have the
following meanings:
a) "Agreement" means the Agreement to which this Accounting Procedure is
attached as Schedule "C".
b) "Count" means a physical inventory count.
c) "Employee" means those employees of the Operator who are assigned to and
directly engaged in the conduct of Mining Operations, whether on a
full-time or part-time basis.
d) "Employee Benefits" means the Operator's cost of holiday, vacation,
sickness, disability benefits, field bonuses, paid to Employees and the
Operator's costs of established plans for employee's group life insurance,
hospitalization, pension, retirement and other customary plans maintained
for the benefit of Employees and Personnel, as the case may be, which costs
may be charged as a percentage assessment on the salaries and wages of
Employees or Personnel, as the case may be, on a basis consistent with the
Operator's cost experience.
e) "Field Offices" means the necessary sub-office or suboffices in each place
where a Program or Construction is being conducted or a Mine is being
operated.
f) "Government Contributions" means the cost or contributions made by the
Operator pursuant to assessments imposed by governmental authority which
are applicable to the salaries or wages of Employees or Personnel, as the
case may be.
g) "Joint Account" means the books of account maintained by the Operator to
record all costs, expenses, credits and other transactions arising out of
or in connection with the Mining Operations.
h) "Material" means the personal property, equipment and supplies acquired or
held, at the direction or with the approval of the Management Committee,
for use in the Mining Operations and, without limiting the generality, more
particularly "Controllable Material" means such Material which is
ordinarily classified as Controllable Material, as that classification is
determined or approved by the Management Committee, and controlled in
mining operations.
i) "Personnel" means those management, supervisory, administrative, clerical
or other personnel of the Operator normally associated with the Supervision
Offices whose salaries and wages are charged directly to the Supervision
Office in question.
j) "Reasonable Expenses" means the reasonable expenses of Employee or
Personnel, as the case may be, for which those Employees or Personnel may
be reimbursed under the Operator's usual expense account practice;
including without limiting the generality of the foregoing, any relocation
expenses necessarily incurred in order to properly staff the Mining
Operations if the relocation is approved by the Management Committee.
1
k) "Supervision Office" means the Operator's offices or department within the
Operator's offices from which the Mining Operations are generally
supervised.
2. STATEMENTS AND XXXXXXXX
2.1 The Operator shall, by invoice, charge each party with its proportionate
share of Exploration Costs and Mine Costs in the manner provided in the
Agreement.
2.2 The Operator shall deliver, with each invoice rendered for Costs incurred a
statement indicating:
a) all charges or credits to the Joint Account relating to Controllable
Material in detail; and
b) all other charges and credits to the Joint Account summarized by
appropriate classification indicative of the nature of the charges and
credits.
2.3 The Operator shall deliver with each invoice for an advance of Costs a
statement indicating:
a) the estimated Exploration Costs or, in the case of Mine Costs, the
estimated cash disbursements, to be made during the next succeeding month;
b) the addition thereto or subtraction therefrom, as the case may be, made in
respect of Exploration Costs or Mine Costs actually having been incurred in
an amount greater or lesser than the advance which was made by each party
for the penultimate month preceding the month of the invoice; and
c) the advances made by each party to date and are Exploration Costs or Mine
Costs incurred to the end of the penultimate month preceding the month of
the invoice.
3. DIRECT CHARGES
3.1 The Operator shall charge the Joint Account with the following items:
a) Contractor's Charges: All proper costs relative to the Mining Operations
incurred under contracts entered into by the Operator with third parties.
b) Labour Charges:
i) The salaries and wages of Employees in an amount calculated by taking
the full salary or wage of each Employee multiplied by that fraction
which has as its numerator the total time for the month that the
Employees were directly engaged in the conduct of Mining Operations
and as its denominator the total normal working time for the month of
the Employee;
ii) The Reasonable Expenses of the Employees; and
iii) Employee Benefits and Government Contributions in respect of the
Employees in an amount proportionate to the charge made to the Joint
Account in respect to their salaries and wages.
c) Office Maintenance:
i) The cost or a pro rata portion of the costs, as the case may be, of
maintaining and operating the Offices. The basis for charging the
Joint Account for Office maintenance costs shall be as follows: the
expense of maintaining and operating Field Offices, less any revenue
therefrom; and that portion of maintaining and operating the
Supervision Offices which is equal to the anticipated total operating
expenses of the Supervision Offices divided by the anticipated total
staff man days for the Employees whether in connection with the Mining
Operations or not; multiplied by the actual total time spent on the
Mining Operations by the Employee expressed in man days.
ii) Without limiting generality of the foregoing, the anticipated total
operating expenses of the Supervision Offices shall include:
A. the salaries and wages of the Operator's Personnel which have
been directly charged to those Offices;
B. the Reasonable Expenses of the Personnel; and
C. Employee Benefits
iii) The Operator shall make an adjustment in respect of the Office
Maintenance cost forthwith after the end of each Operating Year upon
having determined the actual operating expenses and actual total staff
man days referred to in Clause 3.1(c)(2)(b) of this Schedule "C".
d) Material:
Material purchased or furnished by the Operator for use on the Property as
provided under Section 4 of this Schedule "C".
2
e) Transportation Charges:
The cost of transporting Employees and Material necessary for the Mining
Operations.
f) Service Charges:
i) The cost of services and utilities procured from outside sources other
than services covered by Paragraph 3.1 h). The cost of consultant
services shall not be charged to the Joint Account unless the
retaining of the consultant is approved in advance by the Management
Committee but if not so charged the cost of such services shall be
included as Costs of the party retaining such consultant; and
ii) Use and service of equipment and facilities furnished by the Operator
as provided in Subsection 4.5 of this Schedule "C".
g) Damages and Losses to Joint Property:
All costs necessary for the repair or replacement of Assets made necessary
because of damages or losses by fire, flood, storms, theft, accident or other
cause. The Operator shall furnish each party with written particulars of the
damages or losses incurred as soon as practicable after the damage or loss has
been discovered. The proceeds, if any, received on claims against any policies
of insurance in respect of those damages or losses shall be credited to the
Joint Account.
h) Legal Expense:
All costs of handling, investigating and settling litigation or recovering the
assets, including, without limiting generality, attorney's fees, court costs,
costs of investigation or procuring evidence and amounts paid in settlement or
satisfaction of any litigation or claims; provided, however, that, unless
otherwise approved in advance by the Management Committee, no charge shall be
made for the services of the Operator's legal staff or the fees and expenses of
outside solicitors.
i) Taxes:
All taxes, duties or assessments of every kind and nature (except income taxes)
assessed or levied upon or in connection with a Property, the Mining Operations
thereon, or the production therefrom, which have been paid by the Operator for
the benefit of the parties.
j) Insurance:
Net premiums paid for
i) such policies of insurance on or in Operations as may be required to
be carried by law; and
ii) such other policies of insurance as the Operator may carry in
accordance with the Agreement; and
iii) the applicable deductibles in event of an insured loss.
k) Rentals:
Fees, rentals and other similar charges required to be paid for acquiring,
recording and maintaining permits, mineral claims and mining leases and rentals
and of the Mining Operations.
l) Permits:
Permit costs, fees and other similar charges which are assessed by various
governmental agencies.
m) Other Expenditures:
Such other costs and expenses which are not covered or dealt with in the
foregoing provisions of this Subsection 3.1 of this Schedule "C" as are incurred
with the approval of the Management Committee for Mining Operations or as may be
contemplated in the Agreement.
4. PURCHASE OF MATERIAL
4.1 Subject to Subsection 4.4 of this Schedule "C" the Operator shall purchase
all Materials for Mining Operations.
4.2 Materials purchased and services procured by the Operator directly for the
Mining Operations shall be charged to the Joint Account at the price paid by the
Operator less all discounts actually received.
4.3 So far as it is reasonably practical and consistent with efficient and
economical operations, the Operator shall purchase, furnish or otherwise acquire
only such Material and the Operator shall attempt to minimize the accumulation
of surplus stocks of Material.
4.4 Any party may sell Material or services required in the Mining Operations to
the Operator for such price and upon such terms and conditions as the Management
Committee may approve.
3
4.5 Notwithstanding the foregoing provisions of this Section 4, the Operator
shall be entitled to supply for use in connection with the Mining Operations
equipment and facilities which are owned by the Operator and to charge the Joint
Account with such reasonable costs as are commensurate with the ownership and
use thereof.
5. DISPOSAL OF MATERIAL
5.1 The Operator, with the approval of the Management Committee may, from time
to time, sell any Material which has become surplus to the reasonably
foreseeable needs of the Mining Operations for such price and upon such terms
and conditions as are available.
5.2 Any party may purchase from the Operator any Material which may from time to
time become surplus to the reasonably foreseeable need of the Mining Operations
for such price and upon such terms and conditions as the Management Committee
may approve.
5.3 Upon termination of the Agreement, the Management Committee may approve the
division of any Material held by the Operator at that date may be taken by the
parties in kind or be taken by a party in lieu of a portion of its Proportionate
Share of the net revenues received from the disposal of the Property. If such a
division to a party be in lieu of a portion of its proportionate share, it shall
be for such price and on such terms and conditions as the Management Committee
may approve.
5.4 The net revenues received from the sale of any Material to third parties or
to a party shall be credited to the Joint Account.
6. INVENTORIES
6.1 The Operator shall maintain records of Material in reasonable detail and
records of Controllable Material in detail.
6.2 The Operator shall perform Counts from time to time at reasonable intervals
and in connection therewith shall give notice of its intention to perform a
Count to each party at least 30 days in advance of the date set for performing
of the Count. Each party shall be entitled to be represented at the performing
of a Count upon giving notice thereof to the Operator within 20 days of the
Operator's notice. A party who is not represented at the performing of the Count
shall be deemed to have approved the Count as taken.
6.3 Forthwith after performing a Count, the Operator shall reconcile the
inventory with the Joint Account and provide each party with a statement listing
the overages and shortages of inventory except such shortages as may have arisen
due to a lack of diligence on the part of the Operator.
7. ADJUSTMENTS
7.1 Payment of any invoice by a party shall not prejudice the right of that
party to protest the correctness of the statement supporting the payment;
provided, however, that all invoices and statements presented to each party by
the Operator during any Operating Year shall conclusively be presumed to be true
and correct upon the expiration of 12 months following the end of the Operating
Year to which the invoice or statement relates, unless within that 12 month
period that party gives notice to the Operator making claim on the Operator for
an adjustment to the invoice or statement.
7.2 The Operator shall not adjust any invoice or statement in favour of itself
after the expiration of 12 months following the end of the Operating Year to
which the invoice or statement relates.
7.3 Notwithstanding Subsections 7.1 and 7.2 of this Schedule "C", the Operator
may make adjustments to an invoice or statement which arise out of a physical
inventory of Material or Assets.
7.4 A party shall be entitled upon notice to the Operator to request that the
independent external auditor of the Operator provide that party with its opinion
that any invoice or statement delivered pursuant to the
4
Agreement in respect of the period referred to in Subsection 7.1 of this
Schedule "C" has been prepared in accordance with this Agreement.
7.5 The time for giving the audit opinion contemplated in Subsection 7.4 of this
Schedule "C" shall not extend the time for the taking of exception to and making
claims on the Operator for adjustment as provided in Subsection 7.1 of this
Schedule "C".
7.6 The cost of the auditor's opinion referred to in Subsection 7.4 of this
Schedule "C" shall be solely for the account of the party requesting the
auditor's opinion, unless the audit disclosed a material error adverse to that
party, in which case the cost shall be solely for the account of the Operator.
