OPTION AND ROYALTY AGREEMENT (Swordfish Property) DATED for reference the 3rd day of December, 2004
OPTION AND ROYALTY AGREEMENT
(Swordfish Property)
DATED for reference the 3rd day of December, 2004
BETWEEN:
GOLDEN SANDS EXPLORATION INC., a corporation duly incorporated pursuant to the laws of British Columbia and having an office at 000-0000 Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the “Optionor”)
AND:
AHL HOLDINGS LTD., a corporation duly incorporated pursuant to the laws of Nevada and having an office at 000-0000 Xxxx Xxxxxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the “Optionor Sub”)
AND:
EVOLVING GOLD CORPORATON, a corporation duly incorporated pursuant to the laws of British Columbia and having an office at Suite 1200, 0000 Xxxx Xxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx X0X 0X0
(the "Optionee”)
WHEREAS:
| A. | The Optionor is the sole owner of all of the issued
shares in AHL Holdings Ltd., a Nevada corporation (the “Optionor
Sub”); |
| B. | The Optionor Sub entered into an option agreement
dated March 22, 2004 (the “Underlying Option Agreement”
– a copy of which forms Schedule “C” to this Agreement)
with Golden Arc Mining and Refining Inc. (“Golden Arc”)
regarding the unpatented mining claims listed in Schedule “A”
to this Agreement and any other unpatented mining claims that become subject
to the option in the Underlying Option Agreement (together the “Golden
Arc Claims”), all of which are located in the County of Humboldt,
State of Nevada, USA, as more particularly described in Schedule “A”;
|
| C. | The names of the registered owners of the Golden
Arc Claims are as set out in Schedule “A”; |
| D. | The beneficial owner of the Golden Arc Claims is
Golden Arc; |
| E. | The Optionor Sub had located on the ground by the
construction of the monument of discovery, posting of the notices of location
and construction of the corner monuments, but has not had recorded the
certificates of location and mining claim map in the office of the county
recorder or filed with the Bureau of Land Management, certain unpatented
mining claims nearby the Golden Arc claims (the “Underlying Additional
Claims”); |
- 2 -
| F. | Under the terms of the Underlying Option Agreement,
Golden Arc has the option to have any mineral claims acquired by the Optionor
Sub and located within one mile of the Golden Arc Claims listed in Schedule
“A” become subject to the terms of the option granted by Golden
Arc to the Optionor Sub (the “Underlying Area of Influence Option”);
|
| G. | As of the date of this Agreement, it is not known
whether Golden Arc will exercise the Underlying Area of Influence Option;
|
| H. | The Optionor Sub has exclusive possession of and
the right to explore and mine the Claims free and clear of all claims,
liens or encumbrances; and |
| I. | The parties now wish to enter into an agreement
whereby the Optionor will grant an option to the Optionee to purchase
100% of the right, title and interest in and to the Claims on the terms
and conditions as hereinafter set forth; |
THE PARTIES AGREE AS FOLLOWS:
| 1. | INTERPRETATION |
||
| 1.1 | In this Agreement: |
||
| (a)
|
“Advance Royalty Payments”
has that meaning set out in Subsection 11.5 of this Agreement; |
||
| (b) |
“Claims” means the Golden
Arc Claims and the Underlying Additional Claims; |
||
| (c) |
"Dollars ($)" means legal currency
of the United States; |
||
| (d) |
"Effective Date" means the date that both
parties have signed this Agreement; |
||
| (e) |
“exploration expense” shall
include any development expenses incurred by the Optionee; |
||
| (f) |
“Golden Arc” means Golden
Arc Mining & Refining Inc, a Nevada company; |
||
| (g) |
"Golden Arc Claims" means those mineral
claims set out in Schedule “A” of this Agreement and any other
unpatented mining claims that become subject to the option in the Underlying
Option Agreement and includes any mineral claims covering any portion
of the ground currently covered by the Golden Arc Claims which may have
been re- acquired by the Optionee or its successors, assigns or associates
as a result of any of the Golden Arc Claims having been previously abandoned;
|
||
| (h) |
"Net Smelter Returns" means the proceeds
received by the Optionee from any smelter or other purchaser from the
sale of any ores, concentrates or minerals produced from the Golden Arc
Claims after deducting from such proceeds the following charges only to
the extent that they are not deducted by the smelter or other purchaser
in computing the proceeds: |
||
| (i)
|
the cost of transportation of the ores, concentrates
or minerals from the Golden Arc Claims to such smelter or other purchaser,
including related transport; |
||
| (ii) |
smelting and refining charges including penalties;
|
||
- 3 -
(iii) |
marketing costs; |
||
| (i) | "NSR Royalty" means
a net smelter returns royalty, to be paid by the Optionee to the Optionor
pursuant to Subsection 11.1; |
||
| (j) | “Optionor Sub”
has that meaning as set out in Recital A; |
||
| (k) | "Shares" means the 1,800,000
(One Million, Eight Hundred Thousand) common shares in the capital of
the public company referred to in Subsection 3.1 to be allotted and issued
pursuant to Subsection 3.1; |
||
| (l) | “Underlying Additional
Claims” has that meaning as set out in Recital E of this Agreement
and includes any mining claims covering any portion of the ground currently
covered by the Underlying Additional Claims which may have been re-acquired
by the Optionee or its successors, assigns or associates as a result of
any of the Underlying Additional Claims having been previously abandoned;
|
||
| (m) | “Underlying Area of
Influence Option” has that meaning as set out in Recital F; and
|
||
| (n) | “Underlying Option
Agreement” has that meaning set out in Recital B. |
||
| 2. | REPRESENTATIONS AND WARRANTIES AND ACKNOWLEDGEMENTS | ||
| 2.1 | The Optionee represents and warrants to the Optionor and the Optionor Sub that: | ||
| (a) | the Optionee is a corporation
duly incorporated pursuant to the laws of British Columbia; |
||
| (b) | the Optionee currently has
its shares quoted for trading on the Canadian Trading & Quotation
System, commonly known as the “CNQ”; |
||
| (c) | the Optionee is currently
in the process of becoming a reporting issuer under the United States
Securities and Exchange Act of 1934 by January 1, 2005 and if the Optionee
is not a reporting issuer by that date, then the Optionee will continue
to use its best efforts thereafter to become a reporting issuer as soon
as possible thereafter, and immediately following the Optionee becoming
such a reporting issuer, the Optionee will use its best efforts to cause
the shares of the Optionee to be quoted for trading on the United States
Over the Counter Bulletin Board, commonly known as “OTCBB”,
as soon as possible thereafter and will continue to use its best efforts
to have such shares so quoted as soon as possible thereafter and, in no
event, later than July 31, 2005; and |
||
| (d) | it has full power and authority
to carry on its business and to enter into this Agreement and any agreement
or instrument referred to or contemplated by this Agreement. |
||
| 2.2 | The Optionee expressly acknowledges and agrees that the map forming Schedule “C” is attached for simply illustrative purposes and is not to be relied upon by any party to this Agreement and will not be a term, representation or warranty of this Agreement as the Claims have not been surveyed. | ||
| 2.3 | The Optionor and the Optionor Sub represent and warrant to the Optionee: | ||
| (a) | the Optionor is a corporation
duly incorporated pursuant to the laws of British Columbia and is in good
standing with respect to filing of its Annual Reports; |
||
- 4 -
| (b) | the Optionor Sub is a corporation duly incorporated
pursuant to the laws of Nevada and is in good standing with respect to
filing of its Annual List of Directors, Officers and Resident Agent with
the Secretary of State of Nevada; |
|
| (c) | the Underlying Option Agreement is in good standing
and enforceable in accordance with its terms; |
|
| (d) | the Golden Arc Claims have been duly and validly
located, staked and recorded, are accurately described in Schedule "A",
are presently in good standing under the laws of the jurisdiction in which
they are located and, except as set forth herein, are free and clear of
all liens, charges and encumbrances; |
|
| (e) | the Underlying Additional Claims have been located
on the ground by the construction of the monument of discovery, posting
of the notices of location and construction of the corner monuments. The
certificates of location and mining claim map have not been recorded in
the office of the county recorder or filed with the Bureau of Land Management,
but it is the company's intent to complete these actions within 90 days
after the dates of location in accordance with applicable law; |
|
| (f) | the names of the registered owners of the Golden
Arc Claims are as set out in Schedule “A”; |
|
| (g) | subject to the terms of the Underlying Option Agreement,
the Optionor Sub is the sole beneficial owner of a 100% interest in and
to the Golden Arc Claims and has the exclusive right to enter into this
Agreement and all necessary authority to dispose of a 100% interest in
and to the Golden Arc Claims in accordance with the terms of this Agreement;
|
|
| (h) | the name of the registered owner of the Underlying
Additional Claims will be, upon due recordation of such claims, the Optionor
Sub; |
|
| (i) | provided that the Underlying Area of Influence Option
is not exercised, the Optionor Sub will remain the sole beneficial owner
of a 100% interest in and to the Underlying Additional Claims and will,
in any case, have the exclusive right and all necessary authority to dispose
of a 100% interest in and to the Underlying Additional Claims in accordance
with the terms of this Agreement; |
|
| (j) | the Optionor Sub has the right to cause the registered
owners of the Golden Arc Claims to transfer the Golden Arc Claims to the
Optionor Sub, free and clear of all claims, liens and other encumbrances;
|
|
| (k) | once all of the Golden Arc Claims have been transferred
to and recorded in the name of the Optionor Sub and the Underlying Option
has been exercised, the Optionor Sub then will have the right to transfer
the Golden Arc Claims to the Optionee, free and clear of all claims, liens
and other encumbrances, but subject to the terms of the Underlying Option
Agreement; |
|
| (l) | no person, firm or corporation, other than Golden
Arc, has any proprietary or possessory interest in the Golden Arc Claims
other than the Optionor Sub and Golden Arc and no person is entitled to
any royalty or other payment in the nature of rent or royalty on any diamonds,
minerals, ores, metals or concentrates or any other such products removed
|
|
- 5 -
| from the Golden Arc Claims, except for Golden Arc
under the terms of the Underlying Option Agreement; |
||
(m) |
once all of the Additional Underlying Claims have
been recorded in the name of the Optionor Sub and the Underlying Option
has been exercised, the Optionor Sub then will have the right to transfer
the Additional Underlying Claims to the Optionee, free and clear of all
claims, liens and other encumbrances, but subject to the terms of the
Underlying Option Agreement, if the Underlying Area of Influence Option
has been exercised; |
|
(n) |
no person, firm or corporation, has any proprietary
or possessory interest in the Underlying Additional Claims other than
the Optionor Sub and Golden Arc if the Underlying Area of Influence Option
has been exercised and no person is entitled to any royalty or other payment
in the nature of rent or royalty on any diamonds, minerals, ores, metals
or concentrates or any other such products removed from the Underlying
Additional Claims, except for Golden Arc if the Underlying Area of Influence
Option has been exercised; |
|
(o) |
neither the execution and delivery of this Agreement
nor any of the agreements referred to herein or contemplated hereby, nor
the consummation of the transactions hereby contemplated will conflict
with, result in the breach of or accelerate the performance required by
any agreement to which the Optionor or the Optionor Sub is a party or
by which it is bound; |
|
(p) |
the execution and delivery of this Agreement and
the agreements contemplated hereby will not violate or result in the breach
of the laws of any jurisdiction applicable or pertaining thereto; |
|
(q) |
with respect to Schedule “A” to this
Agreement, those claims registered in the name of Arctic Precious Metals
Inc. are beneficially owned by Golden Arc and the Optionor Sub is in the
process of seeking a court order from the applicable courts of Nevada,
for the transfer of such claims to Golden Arc and, immediately thereafter,
the Optionor Sub will cause those claims to be registered in the name
of the Optionor Sub; and |
|
(r) |
the map forming Schedule “C” is attached
for simply illustrative purposes and is not to be relied upon by any party
to this Agreement and will not be a term, representation or warranty of
this Agreement as the Claims have not been surveyed. |
|
| 2.4 | The representations, warranties and
acknowledgements hereinbefore set have been relied on by the parties in
entering into this Agreement and will survive the acquisition of any interest
in the Golden Arc Claims by the Optionee and each party will indemnify
and save the other party harmless from all loss, damage, costs, actions
and suits arising out of or in connection with any breach or any representation,
warranty, covenant, agreement or condition made by the other party and
contained in this Agreement. |
|
- 6 -
| 3. | GRANT OF OPTION TO PURCHASE |
|
| 3.1 | The Optionor hereby grants to the Optionee
the exclusive and irrevocable option (the “Option”)
to acquire, free of all liens, charges, encumbrances, claims or rights
of others, an undivided 100% right, title and interest in and to the Claims,
exercisable by the Optionee paying $70,000, issuing and delivering
1,800,000 shares, incurring at least $4,000,000 of exploration expense
and having prepared and paid for a pre-feasibility study, as follows:
|
|
| (a)
|
issuing in the name of Golden Arc and delivering
to the lawyer for the Optionor 100,000 shares in the capital of the Optionee
within five business days of the date of this Agreement; |
|
| (b) |
paying to the Optionor $30,000 by December 15,
2004, payable by delivering to the lawyer for the Optionor a certified
cheque or bank draft made payable to the lawyer for the Optionor in Trust;
|
|
| (c) |
issuing and delivering to the Optionor 200,000 shares
in the capital of the Optionee by December 15, 2004; |
|
| (d) |
paying to the Optionor $40,000 by January 31,
2005, payable by delivering to the lawyer for the Optionor a certified
cheque or bank draft made payable to the lawyer for the Optionor in Trust;
|
|
| (e) |
issuing and delivering to the Optionor a further
200,000 shares in the capital of the Optionee by January 31, 2005; |
|
| (f) |
issuing and delivering to the Optionor a further
400,000 shares in the capital of the Optionee by August 31, 2005; |
|
| (g) |
incurring exploration expense on the Golden Arc
Claims by December 31, 2005 of not less than 70% of the funds raised by
the Optionee from the date of this Agreement to and including October
31, 2005; |
|
| (h) |
issuing and delivering to the Optionor 400,000 shares
in the capital of the Optionee by August 31, 2006; |
|
| (i) |
incurring cumulative exploration expense of not
less than $1,000,000 on the Golden Arc Claims by December 31, 2006;
|
|
| (j) |
incurring cumulative exploration expense of not
less than $2,000,000 on the Golden Arc Claims by December 31, 2007;
|
|
| (k) |
issuing and delivering to the Optionor 500,000 shares
in the capital of the Optionee by December 31, 2007; |
|
| (l) |
incurring cumulative exploration expense of not
less than $4,000,000 on the Golden Arc Claims by December 31, 2008;
and |
|
| (m) |
having had prepared and having paid for a pre-feasibility
study on the Claims and having delivered that study to the Optionor by
June 30, 2009. |
|
- 7 -
| 3.2 | If and whenever the shares at any time
outstanding are subdivided into a greater or consolidated into a lesser
number of shares of the Optionee the number of shares deliverable hereunder
will be increased or decreased proportionately as the case may be. |
|
| 4. | EXERCISE OF OPTION |
|
| 4.1 | Immediately upon the completion of the
payments set out in Subsection 3.1, the issuance and delivery of the shares
set out in Subsection 3.1, the incurrence of exploration expense set out
in Subsection 3.1 and the production of and payment for the pre-feasibility
study set out in Subsection 3.1, the Option shall be immediately exercised
and the Optionee will, subject to the right of the Optionor Sub to receive
the NSR Royalty, own 100% of the right, title and interest in and to the
Claims. |
|
| 5. | TRANSFER OF TITLE |
|
| 5.1 | Upon the exercise of the Option, as provided
in Section 4.1, the Optionor Sub will deliver to the Optionee a duly executed
deed in recordable form of 100% right, title and interest in and to the
Claims in favour of the Optionee which the Optionee will be entitled to
immediately record against title to such Claims. |
|
| 6. | OPTION ONLY |
|
| 6.1 | Other than the money payments set out
in Subsections 3.1(a) and (c) of this Agreement, the share issuances set
out in Subsections 3.1(b), (d), (e) and (f), and the incurring of exploration
expense set out in Subsection 3.1(g), the Optionee is not obliged to make
any payment of money to the Optionor, issue and deliver any shares in
the capital of the Optionee or incur exploration expense on the Claims.
Subject to the foregoing firm obligations, the Optionor and the Optionor
Sub hereby agree that the Optionee may terminate the Option, subject to
the provision of Subsections 10.1(d) and (h). |
|
| 7. | OTHER ACQUISITIONS |
|
| 7.1 | The parties agree that any unpatented
or patented mining claims acquired or located by or on behalf of any party
during the currency of this Agreement which are located wholly or partially
within three miles of the Claims shall, at the option of the other party,
will form part of the Claims and be subject to the terms of the Option
provided that if the such unpatented or patented mining claims are located
by the Optionor Sub, then the Optionee will first be required to reimburse
the Optionor Sub for its acquisition costs. |
|
| 8. | RIGHT OF ENTRY |
|
| 8.1 | During the currency of this Agreement,
the Optionee, its employees, agents and independent contractors, will
have the sole and exclusive right to: |
|
| (a)
|
enter upon the Claims; |
|
| (b) |
have exclusive and quiet possession thereof, |
|
| (c) |
do such prospecting, exploration, development or
other mining work thereon and thereunder as the Optionee in its sole discretion
may consider advisable; and |
|
| (d) |
bring and erect upon the Claims such facilities
as the Optionee may consider advisable. |
|
- 8 -
| 9. | COVENANTS OF THE OPTIONOR AND THE OPTIONOR
SUB |
|
| 9.1 | During the currency of this Agreement
the Optionor and the Optionor Sub will not do any act or thing which would
or might in any way adversely affect the rights of the Optionee hereunder.
|
|
| 9.2 | The Optionor and the Optionor Sub, will
from time to time, cooperate with and assist the Optionee in obtaining
any required Federal, State and local permits. |
|
| 9.3 | The Optionor and the Optionor Sub will
use their best efforts to cause by January 31, 2005, all of the Golden
Arc Claims listed in Schedule “A” that are not recorded in
the name of the Optionor Sub, to be duly recorded in the name of the Optionor
Sub, both at the Humboldt County office and also at the office of the
Bureau of Land Management and, in the event that such claims are not recorded
in the name of the Optionor Sub by January 31, 2005, then the Optionor
and the Optionor Sub will continue to use their bests efforts to cause
such transfer as soon as possible thereafter. |
|
| 9.4 | During the currency of this Agreement
the Optionor and the Optionor Sub will make available to the Optionee
and its representatives all records and files in the possession of the
Optionor or the Optionor Sub relating to the Claims and permit the Optionee
and its representatives, at its own expense, to take abstracts therefrom
and make copies thereof. |
|
| 9.5 | The Optionor and the Optionor Sub will
cause the certificates of location and mining claim map relating to the
Underlying Additional Claims to be recorded in the office of the county
recorder or filed with the Bureau of Land Management, within 90 days after
the dates of location in accordance with applicable law. |
|
| 9.6 | During the term of the Option, the Optionor
and the Optionor Sub will promptly provide the Optionee with any and all
notices and correspondence received by the Optionor or the Optionor Sub
from government agencies in respect of the Claims. |
|
| 9.7 | The expenses associated with the Optionor
performing its obligations under Sections 9 will be paid by the Optionee.
|
|
| 10. | COVENANTS OF THE OPTIONEE |
|
| 10.1 | During the currency of this Agreement,
the Optionee will: |
|
| (a)
|
do all such things required to keep the Claims in
good standing, including, but not restricted to, paying all fees and taxes
relating to the Claims and by the doing and filing of all necessary work;
|
|
| (b) |
keep the Claims free and clear of all liens, charges
and encumbrances arising from the Optionee’s operations hereunder
and making all other payments which may be necessary in that regard, it
being understood that the Optionee may subsequently contest any such lien,
charge or encumbrance; |
|
| (c) |
permit the Optionor or the Optionor sub, or their
representatives duly authorized by it in writing, at their own risk and
expense, access to the Claims at all reasonable times and to all records
prepared by the Optionee in connection with work done on or with respect
to the Golden Arc Claims; |
|
- 9 -
| (d)
|
prepare a technical report on the Claims and deliver
that technical report to the Optionee within 90 days of each June 30 and
December 31 of the term of this Agreement and, in the event that the Optionee
terminates this Agreement, within 90 days of such termination; |
|
| (e) |
prepare an exploration expenditure report relating
to exploration on the Claims and deliver that exploration expenditure
report to the Optionee within 90 days of each June 30 and December 31
of the term of this Agreement and, in the event that the Optionee terminates
this Agreement, within 90 days of such termination; and |
|
| (f) |
conduct all work on or with respect to the Claims
in a careful and minerlike manner and in compliance with all applicable
Federal, State and local laws, rules, orders and regulations, and indemnify
and save the Optionor harmless from any and all claims, suits, actions
made or brought against it as a result of work done by the Optionee on
or with respect to the Claims; |
|
| (g) |
make all filings and disclosures as required and
within the time periods specified under all applicable securities legislation
with respect to the allotment and issuance of the Shares pursuant to this
Agreement; and |
|
| (h) |
in the event that the Optionee terminates the Option,
the Optionee will ensure that the Claims will be unencumbered with respect
to any exploration work conducted on the Claims by the Optionee or any
of its employees, agents or contractors, and that the Claims will remain
unencumbered with respect to any exploration work conducted on the Claims
by the Optionee or any of its employees, agents or contractors and in
good standing for a period of least 12 months from the date of such termination.
|
|
| 10.2 | The Optionee is currently in the process
of becoming a reporting issuer under the United States Securities and
Exchange Act of 1934 by January 1, 2005 and if the Optionee is not a reporting
issuer by that date, then the Optionee will continue to use its best efforts
thereafter to become a reporting issuer as soon as possible thereafter,
and immediately following the Optionee becoming such a reporting issuer,
the Optionee will use its best efforts to cause the shares of the Optionee
to be quoted for trading on the United States Over the Counter Bulletin
Board, commonly known as “OTCBB”, as soon as possible
thereafter and will continue to use its best efforts to have such shares
so quoted as soon as possible thereafter and, in no event, later than
July 31, 2005. |
|
| 11. | NSR ROYALTY |
|
| 11.1 | The Optionee will pay to the Optionor
Sub a royalty equal to a two percent (2.0%) in aggregate net smelter returns
royalty (as defined in Subsection 1.1), subject to Subsection 11.4. The
NSR Royalty will be payable for so long as the Optionee and/or its successors
and assigns hold any interest in the Claims. |
|
| 11.2 | Payment of the NSR Royalty will be made
quarterly within 30 days after the end of each yearly quarter based upon
a year commencing on the 1st day of January and expiring on the 31st day
of December in any year in which ore is produced or removed from the Claims.
Within 60 days after the end of each year for which the NSR Royalty is
payable, the records relating to the calculation of the NSR Royalty for
such year will be audited by the Optionee and any adjustments in the payment
of the NSR Royalty will be made forthwith after completion of the audit.
All payments of the NSR Royalty for a year will be deemed final and in
full satisfaction of all obligations of the Optionee in respect thereof
if such payments or calculations thereof are not disputed by the Optionor
within 60 days after receipt by The Optionor of the said audit statement.
|
|
- 10 -
| The Optionee will maintain accurate records
relevant to the determination of the NSR Royalty and the Optionor, or
its authorized agent, shall be permitted the right to examine such records
at all reasonable times. |
||
| 11.3 | The determination of the NSR Royalty hereunder
is based on the premise that production will be developed solely on the
Claims except that the Optionee will have the right to commingle ore mined
from the Claims with ore mined and produced from other properties provided
the Optionee will adopt and employ reasonable practices and procedures
for weighing, sampling and assaying, in order to determine the amounts
of products derived from, or attributable to ore mined and produced from
the Claims. The Optionee will maintain accurate records of the results
of such sampling, weighing and analysis with respect to any ore mined
and produced from the Claims. |
|
| The Optionor or its authorized agents
will be permitted the right to examine at all reasonable times such records
pertaining to commingling of ore or to the calculation of Net Smelter
Returns. |
||
| 11.4 | The Optionee shall have the right at any
time to purchase up to 100% of the NSR Royalty on the Golden Arc Claims
by paying to the Optionor the sum of $1,000,000 for each one of the
two percentage points of the NSR Royalty on the Golden Arc Claims. |
|
| 11.5 | The Optionee shall pay advance royalty
payments (the “Advance Royalty Payments”) as follows:
|
|
| (a)
|
$10,000 by the first anniversary of the date
of this Agreement; |
|
| (b) |
$10,000 by the second anniversary of the date
of this Agreement; |
|
| (c) |
$20,000 by the third anniversary of the date
of this Agreement; and |
|
| (d) |
$20,000 by each successive anniversary of the
date of this Agreement until production commences from the Claims and
continues uninterrupted for a period of 12 consecutive months, at which
time all further obligations to pay Advance Royalties will terminate,
except for those Advance Royalties, previously unpaid by the Optionee.
|
|
| 11.6 | All Advance Royalty Payments will be deducted
from the NSR Royalty payments otherwise needed to be made under this Agreement.
|
|
| 11.7 | It is acknowledged that the Optionor Sub
is responsible for paying a royalty to Golden Arc under the Underlying
Option Agreement relating to the Golden Arc Claims and, possibly, the
Underlying Additional Claims. Each of the Optionor, the Optionor Sub and
the Optionee will use their best efforts to make reasonable arrangements
between them from time to time to ensure that payments of royalty under
this Agreement to the Optionor Sub, will also be paid by the Optionor
Sub to Golden Arc to the extent necessary to ensure that the royalty payments
of the Optionor Sub to Golden Arc are keep in good standing. |
|
| 11.8 | The Optionor Sub hereby agrees that it
will make reasonable efforts to reduce the advance royalty payments to
be paid under the Underlying Option Agreement and, in the event that the
Underlying Optionor does agree to reduce those advance royalty payments,
then the resulting benefit will be in turn provided to the Optionee and
the Optionor, Optionor Sub and the Optionee will enter into an amending
agreement to amend Section 11.5 of this Agreement. |
|
- 11 -
| 12. | REGISTRATION OF AGREEMENT |
| 12.1 | Notwithstanding any term of this Agreement, the
Optionee will have the right at any time to register this Agreement or
a Memorandum thereof against title to the Golden Arc Claims. |
| 13. | DISPOSITION OF THE CLAIMS |
| 13.1 | Subject to Subsection 13.2, the Optionee may at
any time sell, transfer or otherwise dispose of all or any portion of
its interest in and to the Claims and this Agreement. |
| 13.2 | In the event that the Optionee intends to sell,
transfer or otherwise dispose of all of his interest in and to the Claims
and this Agreement, it will first cause the intended transferee to agree
in writing with the Optionor and the Optionor Sub to comply with the terms
of this Agreement. |
| 14. | CONFIDENTIAL NATURE OF INFORMATION |
| 14.1 | The parties agree that all information obtained
from the work carried out hereunder and under the operation of this Agreement
will be the exclusive property of the parties and will not be used other
than for the activities contemplated hereunder, it being agreed that the
Optionee may disclose information to third parties in an effort to enter
into an agreement with a third party for the further option, sale or other
transfer of part or all of the interest of the Optionee, or for the financing
or development of the Claims or the financing of the Optionee. Notwithstanding
the foregoing, it is understood and agreed that a party will not be liable
to the other party for the fraudulent or negligent disclosure of information
by any of its employees, servants or agents, provided that such party
has taken reasonable steps to ensure the preservation of the confidential
nature of such information. |
| 14.2 | During the term of the Option, the Optionee will
provide the Optionor drafts of all proposed news releases relating to
the Claims and within 24 hours the Optionor will provide comments on the
proposed news release and the parties will use their best efforts to agree
on the final text of the proposed news release. If the Optionor fails
to provide comments within such 24 hour period, then the Optionee may
proceed to issue the proposed news release. |
| 14.3 | Notwithstanding Section 14.2, the parties acknowledge
that the Optionee is a reporting issuer in the Province of British Columbia,
pursuant to the Securities Act (British Columbia) and in the Province
of Alberta, pursuant to the Securities Act (Alberta) and that the
securities laws of each province requires that the Optionee comply with
continuous disclosure requirements, including the immediate release of
news releases upon any and all material changes. In the event that the
Optionee provides a copy of any of its proposed news releases to either
of the Optionor or the Optionor Sub for review, the Optionee may issue
such news release at any time as required by applicable securities legislation,
despite the delay or failure of either of the Optionor or the Optionor
Sub to provide their comments to such news release. |
| 15. | FURTHER ASSURANCES |
| 15.1 | The parties hereto agree that they and each of them
will execute all documents and do all acts and things within their respective
powers to carry out and implement the provisions or intent of this Agreement.
|
- 12 -
| 16. | NOTICE |
| 16.1 | Any notice, direction or other instrument required
or permitted to be given under this Agreement will be in writing and will
be given by the delivery or the same or by mailing the same by prepaid
registered or certified mail in each case addressed as provided in page
1 of this Agreement. |
| 16.2 | Any notice, direction 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 tenth business day following the day of mailing, except in the
event of disruption of the postal services in which event notice will
be deemed to be received only when actually received. |
| 16.3 | 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 purpose
of giving notice hereunder. |
| 17. | HEADINGS |
| 17.1 | The headings to the respective sections herein will
not be deemed part of this Agreement but will be regarded as having been
used for convenience only. |
| 18. | DEFAULT |
| 18.1 | If any party (a "Defaulting Party") is in
default of any requirement herein set forth (including any provision of
Subsection 3.1 of this Agreement, except for Subsections 3.1 (a) to and
including (g), the party affected by such default will give written notice
to the defaulting Party specifying the default and the Defaulting Party
will not lose any rights under this Agreement, unless within 30 days after
the giving of notice of default by the affected party the Defaulting Party
has not cured or diligently commenced to cure the default by the appropriate
performance and if the Defaulting Party fails within such period to cure
or diligently commenced to cure any such default, the affected party will
be entitled to seek any remedy it may have on account of such default.
|
| 19. | PAYMENT |
| 19.1 | All references to monies hereunder will be in United
States funds except where otherwise designated. All payments to be made
to any party hereunder will be either wired to the bank account of the
intended party or mailed or delivered to such party at its address for
notice purposes as provided herein, or for the account of such party at
such bank or banks as such party may designate from time to time by written
notice. Said bank or banks will be deemed the agent of the designating
party for the purpose of receiving, collecting and receiving such payment.
|
| 20. | ENUREMENT |
| 20.1 | This Agreement will enure to the benefit of and
be binding upon the parties hereto and their respective successors and
permitted assigns. |
- 13 -
| 21. | GOVERNING LAW |
|
| 21.1 | This Agreement will be construed in accordance
with and governed by the laws in force in British Columbia. |
|
| 21.2 | The courts of British Columbia will have
exclusive jurisdiction to hear and determine all disputes arising hereunder.
This Section 21 will not be construed: |
|
| (a)
|
to affect the rights of a party to enforce a judgment
or award outside British Columbia, including the right to record or enforce
a judgment or award in a jurisdiction in which the Claims are situated;
|
|
| (b) |
to supersede the laws of Nevada applicable to the
Claims and the rights and obligations of a holder of mineral rights thereunder.
|
|
| 22. | FORCE MAJEURE |
|
| 22.1 | No party will be liable for its failure
to perform any of its obligations under this Agreement due to a cause
beyond its 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"). |
|
| 22.2 | All time limits imposed by this Agreement
will be extended by a period equivalent to the period of delay resulting
from an Intervening Event described in Subsection 22.1. |
|
| 22.3 | A party relying on the provisions of Subsection
22.1 will take all reasonable steps to eliminate an 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. |
|
| 23. | CONDITIONS PRECEDENT |
|
| 23.1 | The obligations of the Optionor and the
Optionor Sub are subject to the Optionee, (a) becoming a reporting issuer
and the shares of the Optionee becoming quoted, in accordance with Subsection
2.1(c), by July 31, 2005. If this condition is not met by the Optionee,
then the Option will immediately terminate, but the Optionee will remain
obligated to perform those things set out in Subsections 3.1(a) to and
including (g). |
|
| 24. | ENTIRE AGREEMENT |
|
| 24.1 | This Agreement constitutes the entire
agreement between the parties and replaces and supersedes all prior agreements,
memoranda, correspondence, communications, negotiations and representations.
|
|
| 25. | TIME OF ESSENCE |
|
| 25.1 | Time will be of the essence in this Agreement.
|
|
- 14 -
| 26. | EXECUTION OF AGREEMENT |
| 26.1 | This Agreement may be signed in counterpart and by fax. |
| GOLDEN SANDS EXPLORATION INC. | ) | |
| ) | ||
| ) | ||
| Per: | ) | |
| ) | ||
| Xxxxxxxxx Xxxxx Lenec, President | ) | |
| AHL HOLDINGS LTD. | ) | |
| ) | ||
| ) | ||
| Per: | ) | |
| ) | ||
| Xxxxxxxxx Xxxxx Lenec, President | ) | |
| EVOLVING GOLD CORORATION | ) | |
| ) | ||
| ) | ||
| Per: | ) | |
| ) | ||
| Xxxxxxxx Xxxx, President and CEO | ) |
Schedule “A”
This is Schedule "A" to the Option
and Royalty Agreement dated December 3, 2004
between Golden Sands Exploration Inc., as optionor, AHF Holdings Ltd., as optionor
sub
and Evolving Gold Corporation, as optionee
The Golden Arc Claims:
| Claim Name | BLM Serial No. |
Registered Owner (1) |
Location Date |
Status | Expiry Date |
| WM #1 | 733156 | Optionor Sub | 01/04/1996 | Active | September 1, 2005 |
| WM #2 | 405978 | Arctic | 04/11/1987 | Active | September 1, 2005 |
| WM #3 | 733157 | Optionor Sub | 01/04/1996 | Active | September 1, 2005 |
| WM #4 | 405980 | Arctic | 04/11/1987 | Active | September 1, 2005 |
| WM #5 | 733158 | Optionor Sub | 01/04/1996 | Active | September 1, 2005 |
| WM #6 | 405982 | Arctic | 04/11/1987 | Active | September 1, 2005 |
| WM #8 | 405983 | Arctic | 04/11/1987 | Active | September 1, 2005 |
| WM #10 | 405984 | Arctic | 04/11/1987 | Active | September 1, 2005 |
| Golden West # 6 | 733140 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 7 | 733141 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 8 | 733142 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 9 | 733143 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 10 | 733144 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 11 | 733145 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 12 | 733146 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 13 | 733147 | Optionor Sub | 01/02/1996 | Active | September 1, 2005 |
| Golden West # 14 | 733148 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Golden West # 15 | 733149 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Golden West # 16 | 733150 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Golden West # 17 | 733151 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Golden West # 18 | 733152 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Golden West # 19 | 733153 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Gold West Frac A | 733154 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| Gold West Frac B | 733155 | Optionor Sub | 01/03/1996 | Active | September 1, 2005 |
| T&C #1 | 479032 | Optionor Sub | 05/08/1988 | Active | September 1, 2005 |
| T&C #2 | 479033 | Optionor Sub | 05/08/1998 | Active | September 1, 2005 |
| T&C #3 | 479034 | Optionor Sub | 05/08/1998 | Active | September 1, 2005 |
| TJ #12 | 155540 | Optionor Sub | 04/02/1980 | Active | September 1, 2005 |
| TJ #14 | 733159 | Optionor Sub | 01/04/1996 | Active | September 1, 2005 |
| TJ #15 | 733160 | Optionor Sub | 01/04/1996 | Active | September 1, 2005 |
| TJ #16 | 155544 | Optionor Sub | 04/04/1980 | Active | September 1, 2005 |
| TJ #17 | 155545 | Optionor Sub | 04/04/1980 | Active | September 1, 2005 |
| TJ #18 | 155546 | Optionor Sub | 04/04/1980 | Active | September 1, 2005 |
| TJ #19 | 155547 | Optionor Sub | 04/02/1980 | Active | September 1, 2005 |
| TJ #29 | 155557 | Optionor Sub | 04/04/1980 | Active | September 1, 2005 |
| TJ #30 | 155558 | Optionor Sub | 04/17/1980 | Active | September 1, 2005 |
| TJ #34 | 155562 | Optionor Sub | 04/17/1980 | Active | September 1, 2005 |
(1) The acronym, “Arctic” in this column means Arctic Precious Metals Inc.
Schedule “B”
This is Schedule "B" to the Option
and Royalty Agreement dated December 3, 2004
between Golden Sands Exploration Inc., as optionor, AHL Holdings Ltd. as optionor
sub
and Evolving Gold Corporation, as optionee
The Underlying Additional Claims:
| Claim Name | BLM Serial No. |
Registered Owner |
Location Date |
Status | Expiry Date (1) |
| WM 101 to and including WM 120 |
No Serial No. Yet |
To Be Optionor Sub |
November 10, 2004 | Staked but not yet filed | September 1, 2005 |
| WM 121 | No Serial No. Yet |
To Be Optionor Sub |
November 13, 2004 | Staked but not yet filed | September 1, 2005 |
| WM 122 to and including WM 125 |
No Serial No. Yet |
To Be Optionor Sub |
November 10, 2004 | Staked but not yet filed | September 1, 2005 |
| (1) | The unpatented mining claims will become void in
90 days from the date of location if the filing and recording are not
timely. If they are timely, the claims will be in good standing until
September 1, 2005. If the federal annual maintenance fees for the assessment
year 2005 to 2006 are paid on or before September 1, 2005, the claims
will remain in good standing until September 1, 2006. Otherwise, the claims
will become void on September 1, 2005. |
Schedule “C”
This is Schedule "C" to the Option
and Royalty Agreement dated December 3, 2004
between Golden Sands Exploration Inc., as optionor, AHL Holdings Ltd. as optionor
sub
and Evolving Gold Corporation, as optionee
The Underlying Option Agreement
Schedule “D”
This is Schedule "D" to the Option
and Royalty Agreement dated December 3, 2004
between Golden Sands Exploration Inc., as optionor, AHF Holdings Ltd., as optionor
sub
and Evolving Gold Corporation, as optionee
Map of the Claims
