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Exhibit
10.22
EXPLORATION,
WORK AND SALE PROMISE CONTRACT ENTERED INTO BY “CORPORATIVO XXXXXX, X.X. DE
C.V.” (HEREINAFTER REFERRED TO AS “THE PROMISOR”), REPRESENTED BY ITS PROXY XXXX
XXXXXXX XXXXXXXX XXXX AND BY “MINERA RIO TINTO, S.A. DE C.V.” (HEREINAFTER
REFERRED TO AS “THE EXPLORATION COMPANY”) REPRESENTED BY ITS PROXY XXXXX XXXX,
PURSUANT TO THE FOLLOWING STATEMENTS AND CLAUSES:
S
T A T E
M E N T S
I.
THE
PROMISSOR states:
| a) |
To
be a mining corporation legally incorporated pursuant to the laws
of the
Mexican Republic, legally authorized to enter into this contract
and to be
the holder of mining concessions;
|
| b) |
That
its legal proxy Xxxx Xxxxxxx Xxxxxxxx Xxxx is duly authorized to
represent
it and to bind it under the terms and conditions of this
contract;
|
| c) |
To
be the legal holder of the rights derived from the working mining
concessions existing over the mining lots (“THE
LOTS”):
|
| NAME OF THE LOT | TITLE NUMBER | HAS. |
| AURÍFERO | 1963356 | 492 |
| AURÍFERO NORTE | 196153 | 60 |
| XX XXXXXXXXX | 190479 | 48 |
| AQUILÓN UNO | 208339 | 222 |
All
THE
LOTS are located at the Municipality of Urique, State of Chihuahua, within
the
district of the Mining Agency of Chihuahua, Chih.
| d) |
That,
except for the payment of rights on mining concessions, in regards
to
those mining concessions over THE LOTS, as their holder is up to
date in
the fulfillment of each and all obligations provided by the Mining
Law,
its Ordeal and any other applicable legal regulation and, likewise,
the
rights derived from the existing mining concessions over THE LOTS,
are
free of any lien, encumbrance or limitation of ownership;
and,
|
| e) |
To
be willing to award to THE EXPLORATION COMPANY the right to explore
and
work THE LOTS and also award sale promise of the rights derived from
the
existing mining concessions over THE LOTS; therefore, it is willing
to
enter into this contract pursuant to the terms and conditions provided
hereby.
|
II.
- THE
EXPLORATION COMPANY states:
| a) |
To
be a mining corporation legally incorporated pursuant to the laws
of the
Mexican Republic, legally authorized to enter into this contract
and to be
the title holder of mining
concessions;
|
| b) |
That
its legal proxy Xxxxx Xxxx, is duly authorized to represent it and
to
enter into this contract; and
|
| c) |
To
be willing to receive the right to explore and work THE LOTS and
the call
option mining work contract of the rights derived from the mining
concessions existing over the same, under the terms and conditions
provided hereby.
|
In
accordance to the above Statements, the parties agree on the
following:
C
L A U S
E S
FIRST.
Right
to explore THE LOTS.-
THE
PROMISSOR awards THE EXPLORATION COMPANY the exclusive rights to explore and,
if
applicable, work THE LOTS as long as the existing mining concessions are in
effect or until new concessions are issued over THE LOTS or one of them; thus,
THE EXPLORATION COMPANY may perform during such time, all kinds of exploration
and mining work over THE LOTS provided by the Mining Law, its Ordeal and mining
concessions allow the mining concessionaires to carry out.
If
THE
EXPLORATION COMPANY desires to maintain in effect this contract, it agrees
with
THE PROMISSOR to directly invest in exploration, development and mining work
on
THE LOTS the minimum amount of one million U. S. dollars during the first year
while this contract is in effect, and to initiate the commercial production
of
THE LOTS within one year from the signature date of this contract.
Based
on
the fact that THE PROMISSOR knows THE LOTS, and its previous operation and
production, the parties agree that THE PROMISSOR or Minera Grupo Factor, S.
A.
DE C. V. (an affiliate), shall participate and work directly together with
THE
EXPLORATION COMPANY in the exploration, development, production and mining
work
carried out in THE LOTS to obtain a higher operation efficiency.
SECOND.
Right
of early termination.
The
effective term of this contract shall be compulsory for THE PROMISSOR and
voluntary for THE EXPLORATION COMPANY, which in consequence, may terminate
it at
any time by giving THE PROMISSOR written notification thirty days prior to
the
termination date.
Nevertheless,
THE PROMISSOR shall also have the right to terminate this contract at any time
when THE EXPLORATION COMPANY should fail to comply with any of the obligations
agreed hereby.
THIRD.
Sale
Promise. THE
PROMISSOR unilaterally agrees to sell to THE EXPLORATION COMPANY, if the latter
is willing to acquire them during the effective term of this contract, the
rights derived from the existing mining concessions or once new concessions
are
issued over THE LOTS, at the lump sum amount of $2,000,000.00 dollars, United
States of America currency (TWO MILLION DOLLARS 00/100 U. S. Cy.) plus Added
Value Tax, payable in cash at the time of sale, under the terms and conditions
provided hereby; nevertheless, THE EXPLORATION COMPANY may pay such amount
by
capitalization of royalties paid as described in the following Fifth
Clause.
Based
on
the unilateral nature of this sale, this promise shall be compulsory for THE
PROMISSOR and voluntary for THE EXPLORATION COMPANY. The latter mentioned shall
have the right to decide whether it acquires the mentioned rights during the
effective term of this contract or not.
To
exercise the call option rights derived from the existing mining concessions
over THE LOTS, it shall suffice for THE EXPLORATION COMPANY to truthfully notify
its decision to THE PROMISSOR. THE PROMISSOR, at the same time, agrees to
immediately assign the rights derived from those mining concessions to THE
EXPLORATION COMPANY, provided each and all obligations derived from this
contract have been duly complied with.
FOURTH.
Consideration
to enter into this contract. The
consideration to enter into this contract, THE EXPLORATION COMPANY shall pay
to
THE PROMISSOR the following amounts in dollars of the Unites States of America
or its equivalent in Mexican currency at the payment date:
a)
At the
signature date of this contract $
150,000
U. S. Dlls.
b)
Two
months from the signature date $
200,000 U. S. Dlls.
Total $
350,000
U. S. Dlls.
To
all
the above mentioned amounts 15% corresponding to Added Value Tax shall be added
at the time payments are made.
If
THE
EXPLORATION COMPANY should terminate this contract at any time, all the amounts
paid to THE PROMISSOR as consideration pursuant to this Clause shall remain
in
benefit of THE PROMISSOR as xxxxxxx money, and THE PROMISSOR shall not be bound
to return any of said moneys to THE EXPLORATION COMPANY, nor THE EXPLORATION
COMPANY shall have any right to ask for reimbursement. THE PROMISSOR
acknowledges having received from THE EXPLORATION COMPANY, on January 13 of
this
year, the amount of $ 50,000 (FIFTY THOUSAND U. S. DOLLARS )
plus
15% Added Value Tax, amount to be applied to that payment provided herein to
be
made by THE EXPLORATION COMPANY at the signature date of this
contract.
FIFTH.
Royalties. THE
EXPLORATION COMPANY agrees to pay to THE PROMISSOR a royalty consisting of $ 20
U. S. dollars per ounce of gold produced and sold from THE LOTS, plus $ 0.10
U.
S. dollars for each dollar above $ 400.00 U. S. dollars per ounce of gold over
the price of the ounce of gold on the date the estimation of the royalties
is
made.
THE
EXPLORATION COMPANY shall pay the royalties before the 20th
day of
each month, corresponding to the month before the production and sale of mineral
ore would have taken place. THE EXPLORATION COMPANY shall designate a competent
auditor, also acceptable to THE PROMISSOR to verify the estimation of those
amounts to be paid for royalties.
In
the
event THE EXPLORATION COMPANY should buy the rights over THE LOTS from THE
PROMISSOR, THE EXPLORATION COMPANY may, totally or partially buy said rights
at
the purchase price agreed, as applicable, capitalizing the royalties paid before
the date of the sale contract. Once THE PROMISSOR has received accrued payments
for royalties for an amount equal to $2,000,000 (TWO MILLION DOLLARS), THE
PROMISSOR agrees to assign the mining rights agreed hereby to THE EXPLORATION
COMPANY.
Likewise,
THE EXPLORATION COMPANY agrees that if assigning, totally or partially, to
any
third party the exploration rights over THE LOTS, it shall cause that third
party to agree to pay THE PROMISSOR those royalties and advance amounts of
money
referred to in this Clause under the terms and conditions provided hereby,
as
well as to cause such third party to agree at the same time, if subsequently
assigning the concessions to any other third party, to cause said party to
agree
on that same commitment. In the event any of the parties assigning the rights
fail to comply with said obligation, the non-complying party shall pay to THE
PROMISSOR any corresponding royalties or amounts due.
SIXTH.
Time
to start production and sale of mineral ore.
THE
EXPLORATION COMPANY agrees to make its best efforts as a good miner to start
the
production over THE LOTS and to sell the mineral ore within one (1) year after
the signature date of this contract.
Nevertheless,
if two years after having entered into this contract, THE EXPLORATION COMPANY
has not started the production on THE LOTS, THE EXPLORATION COMPANY agrees
to
pay to THE PROMISSOR every year on the anniversary of the signature date of
this
contract, the amount of $ 120,000.00 U. S. dollars as advance payment to
royalties, until production over THE LOTS is started and royalties exceed that
amount.
If
once
production has started and suspended for any reason, THE EXPLORATION COMPANY
shall also pay to THE PROMISSOR every year the above mentioned amount until
production starts once more.
SEVENTH.
Fees,
rights, taxes and expenses. Any
fee,
expense, right and tax caused by the awarding and execution, either in regards
to this contract as to the corresponding sale contract, shall be paid by THE
EXPLORATION COMPANY, except for those taxes caused by any income obtained by
THE
PROMISSOR, taxes that shall be paid by THE PROMISSOR.
EIGHTH. Labor liability. As there is no employer-employee relationship between the employees and workers hired by each of the parties and the other parties, the parties expressly agree that each of them, in relation to their personnel or their contractors, they or the others shall be the sole labor liable according to the labor law in effect, and, therefore, agree with the other parties to hold them harmless from any claim, complaint, suit, or charge that might occur against them by employees or workers of the other parties, or by their contractors or labor or administrative authorities.
NINTH.
Additional
obligations of THE PROMISSOR.
In
addition to the obligations agreed by THE PROMISSOR on the above Clauses, during
the effective time of this Contract the following shall apply:
| a) |
Keep
in effect any and all rights derived from the existing mining concessions
or those concessions that might be issued over THE LOTS, and also,
keep
them harmless from any encumbrance or limitation of ownership, duly
complying with all the obligations provided by the Mining Law, its
Ordeal
and any other applicable provision as holder of the existing mining
concessions over THE LOTS;
|
| b) |
Allow
THE EXPLORATION COMPANY to carry out all kinds of exploration, assessment,
metallurgic tests, development, working and production set
up, as necessary, as well as to provide all kinds of information
available
over THE LOTS; and,
|
| c) |
Hold
THE EXPLORATION COMPANY harmless from any claim that might come up
against
it by acts directly imputable to THE PROMISSOR or the PROMISSOR’s
exclusive responsibility. Likewise, hold THE EXPLORATION COMPANY
free from
paying any royalty over the sale of mineral ore removed from THE
LOTS to
which any third party might have any right into, aside from any other
agreed herein.
|
TENTH.
Additional
obligations of THE EXPLORATION COMPANY.
In
addition to the obligations agreed by THE CONTRACTING PARTY on the above
Clauses, during the effective time of this Contract the following shall
apply:
| a) |
Carry
out the exploration, development, and working of THE LOTS as best
as
possible, in accordance with the most rational and adequate mining
practices and strictly in adherence to the applicable legal provisions,
performing sufficient mining work to comply with the provisions of
the
Law, and in compliance with all existing provisions to prevent
environmental pollution applicable to said
operation;
|
| b) |
Assist
THE PROMISSOR to duly comply with the obligations to prepare and
file the
verification reports of regular exploration and mining work and payment
of
any right for mining concessions, also in agreement to pay said rights
or
reimburse THE PROMISSOR any right THE PROMISSOR might pay during
the
effective term of this Contract;
|
| c) |
Keep
THE LOTS under good exploration and working conditions, with the
responsibility to comply with the provisions of the environmental
and
safety controls when working the
mines;
|
| d) |
Duly
pay THE PROMISSOR any consideration provided herein;
and,
|
| e) |
Allow
THE PROMISSOR, through its representatives, to inspect THE LOTS at
any
time, and any work performed or being performed on them, without
interfering in the performance of any of the exploration
work.
|
If,
at
any time, during the term of this Contract, THE EXPLORATION COMPANY should
fail
to comply with any of the obligations agreed hereby, and particularly with
those
obligations mentioned in this Clause, THE PROMISSOR shall have the right to
terminate this Contract under the following Eleventh Clause, regardless any
right to demand payment for damages.
ELEVENTH. Non-compliance. Non-compliance by any of the parties with the obligations agreed herein, shall entitle the other party to ask for immediate compliance of those obligations, requesting in writing to the non-compliance party to comply with those outstanding obligations, and after thirty calendars days from the date such request has been made, said non-compliance persists, the affected party may judicially request compliance with said obligations, or, terminate this Contract, and both parties may also ask for payment of damages.
TWELFTH.
Acts
of God or Force Majeure.
The
parties shall not be considered in non-compliance when by any Act of God or
force majeure
any
of
them is unable to comply with the obligations agreed herein.
The
following causes shall be considered as force majeure, in an enunciatively
but
not limited manner: earthquakes, fires, floods, landslides, collapse,
demonstrations, wars, strikes, revolutions, acts of authority, mobs, revolts,
and, in general, any other act totally out of control from the parties that
might prevent them to comply with any of their obligations, totally or
partially.
When
any
of the parties becomes affected by any force majeure, and thus unable to comply
with its obligations, a written notification should be sent to the other party,
reporting the estimated time of such incapability to comply with
them.
When
six
months have elapsed from the date a force majeure has occurred and it still
persists, the other party shall have the right to terminate this
Contract.
THIRTEENTH.
Total
agreement between the parties. This
Contract reflects the total agreement between the parties in regards to its
object; therefore, this Contract cancels and leaves without effect any other
contract, agreement or covenant entered between them before, in regards to
the
same object.
The
contract herein shall be compulsory in all its terms and conditions for the
heirs, assignees and successors of the parties.
The
parties agree to ratify this Contract before Notary Public and record it at
the
Mining Public Records Office pursuant to the provisions of the Mining Law and
its Ordeal.
FOURTEENTH.
Notices.
Each and
every notice and notification shall be delivered between the parties in
accordance with this contract. These notices shall be made either orally or
in
writing, in the understanding that whenever a truthful statement should be
made
of said notice, this shall be delivered before a Notary Public.
For
effects of this Contract, the parties designate the following
addresses:
|
THE PROMISSOR
|
THE EXPLORATION COMPANY
|
|
CORPORATIVO XXXXXX, X.X. DE X.X.
Xxxxxxxxx No. 1619
Col. Arboledas
Chihuahua, Chih. 31166
RFC: CMI010126 SKA
Tel.: 000 00 00
Fax: 000 00 00
|
MINERA RIO TINTO, S.A. DE C.V.
Xxxxxxx Xxxxxx 2117
Col. Cima
Chihuahua, Chih. 31237
RFC: NMI020829 QP1
Tel.:
000 0000
Fax: 000 00 00
|
Any
change in the above mentioned addresses shall be notified by one of the parties
to the other.
FIFTEENTH.
Applicable
laws and jurisdiction. For
all
expressly provided in this Contract, the parties submit themselves to the
applicable laws in Chihuahua, Chihuahua, particularly those provisions provided
in the Mining Law, its Ordeal, the Federal Law, the Code of Commerce and the
Civil Code for the Federal District, and agree to submit themselves in the
event
of
any controversy to the jurisdiction of the competent courts in the city of
Chihuahua, Chihuahua, waiving any other jurisdiction or court that might
correspond due to their present or future address.
This
contract is signed in four copies in the city of Chihuahua, Chihuahua, on May
6,
2004.
THE
PROMISSOR THE
EXPLORATION COMPANY
CORPORATIVO
XXXXXX, X.X. DE X.X. XXXXXX
RIO TINTO, S.A. DE C.V.
“signature” “signature”
Xxxx
Xxxxxxx Xxxxxxxx
Xxxx Xxxxx
Xxxx
=======================
NOTARIAL AFFIRMATION ========================
In
the
City of Chihuahua, Capital of the State of Chihuahua, on the sixth day of the
month of May year two thousand four, before me, Attorney XXXX X. XXXXXX
HERMOSILLO, Notary Public Number Two, in present duty for this Judicial District
of Morelos, personally appeared MARIO XXXXXXXX XXXX TOUCHE, as Sole
Administrator of the corporation called “MINERA RIO TINTO”, SOCIEDAD ANONIMA DE
CAPITAL VARIABLE (Variable Capital Corporation), and XXXX XXXXXXX XXXXXXXX
XXXX,
as Sole Administrator and legal proxy for the corporation called “CORPORATIVO
XXXXXX, SOCIEDAD ANONIMA DE CAPITAL VARIABLE, individuals whom I acknowledge
to
know, capable to my judgment to contract and bind themselves, and who
acknowledged and ratified the previous document, as well as the signatures
inserted as being theirs, with their own hand and writing and to be the
signatures used in all their business transactions.
----------------------------------------------------------------------------
================================A
U T H O R I T Y =========================
A)
MARIO
XXXXXXXX XXXX TOUCHE proves the authority he appears with and the legal
existence of his principal by public deed number 330 three hundred thirty,
volume 16 sixteen dated the first day of July nineteen hundred ninety four,
issued before the faith of Attorney XXXXXX XXXXXX XXXXXXXX XXXXXXX, Notary
Public Number Twenty Nine, in present duty for this Judicial District of
Morelos, by which “MINERA RIO TINTO”, SOCIEDAD ANONIMA DE CAPITAL VARIABLE was
incorporated and whose social purposes is: a). Buy, by request or by any other
legal title, mines, placers, and deposits containing mineral ore. B). Sell
by
any title, as well as work mines, pacers, and deposits containing mineral ore.
C). Enter into any kind of contracts related to mining funds. D). Constitute,
install, lease, or acquire by any title, plants or land for mining benefit
by
any system. E). Buy and sell, by any title, mining properties and metallurgic
plants. F). Buy and sell, by any legal title the use and benefit of falls of
water and exterior or underground currents, with the purpose of generating
electric power to operate the plants or land of metal work. G). Buy, build
or
acquire and work railroads or any other exploration and mining work system
and
metallurgic plants, as well as any other communications means necessary for
such
business purpose. h). Produce, manufacture, industrialize, buy, and sell, store,
distribute, produce in series, import, either temporarily or permanently any
article related to the business purpose. i). Manufacture, make, buy, sell
distribute, lease, store, import, either temporarily or permanently, and trade
in general, all kinds of machinery, tools, raw material and equipment related
to
the business purpose. j). Provide technical and scientific counseling to
individuals or companies in the interior or abroad, regarding the installations,
design, and financing of machinery and industrial plants related to the mining
industry. k). Buy and sell, in any legal manner, all kinds of shares or
interests in other companies or associations, either civil or mercantile. l).
Become representatives within the Mexican Republic or abroad, as commissioner,
agent, intermediary or factor, legal representative or proxy, before all kinds
of individuals or corporations. m). Enter into contracts of any kind or amount
with any individual or corporation with the purpose of promoting its business
purposes. n) Negotiate loans for any of the business purposes, without
limitation as to amounts, as well as to draw, issue, subscribe, award, accept
and endorse all kinds of credit instruments and any other documents and
vouchers, whether executive or not. ñ). Assume obligations on account of third
parties and guarantee those obligations either personally or as collateral,
as
well as endorse all kinds of credit instruments in any subject related to any
interest of the corporation or their affiliates or subsidiaries. o). In general,
enter into any kind of act and legal contracts, civil, administrative or
mercantile pursuant to the Law. The address of the corporation shall be in
this
City of Chihuahua, and my establish offices, agencies or branches at any place
in the Mexican Republic or abroad. The duration of the corporation shall be
99
ninety nine years. The nationality of the corporation is Mexican; its minimum
fixed social capital is $50,000.00 (FIFTY THOUSAND PESOS 00/100 MEXICAN
CURRENCY). The Sole Administrator or the Board of Directors shall have the
most
ample representation of the corporation with the following authorities: For
Acts
of Administration, Ownership, Suits and Collections, Subscription of Credit
Instruments, and awarding and revoking powers. The First Certified Copy
previously mentioned has been recorded before the Public Real Estate Records
Office for this Judicial District of Morelos, under number 461 four hundred
sixty one, page 18 eighteen of Book number 666 six hundred sixty six of the
Commerce Section on the fourteenth day of September nineteen ninety four;
documents that I had before me which faithfully agree with all herein inserted
and duly sealed and signed are returned to the interested party.-
----------
The
here
appearing states under oath that his authority has not been modified nor revoked
in any manner and that his principal has legal authority to contract and bind
itself. ----------------------
B).
XXXX
XXXXXXX XXXXXXXX XXXX states under oath that the authority he appears with
has
not been revoked nor modified in any manner and evidences his authority, as
well
as the legal existence of his principal, with FIRST CERTIFIED COPY of public
deed number 3,127 three thousand one hundred twenty seven issued on the
twenty-sixth day of the month of January two thousand one, by which the Variable
Capital Company called CORPORATIVO XXXXXX was incorporated, deed that contains
in the Third Transitory number 3 three and 6 six, his designation as Sole
Administrator of the Corporation and Legal Proxy, instrument duly recorded
in
the Real Estate Public Records Office of this Judicial District of Morelos
, in
regards to the corporation, under number 60 sixty, folio 101 one hundred one
of
the First Book of Commerce, and in regards to the Power of Attorney, under
number 61 sixty one, folio 104 one hundred four, volume 130 one hundred thirty,
of the first book of Commerce, same that in certified copy is attached to become
and integrating part of this instrument.
---------------------------
BY
THEIR
PERSONAL IDATA THE HERE APPEARING STATES TO BE MEXICAN AND BORN FROM MEXICAN
PARENTS.------------------------------------------------------------------------------
XXXX
XXXXXXX XXXXXXXX XXXX, native of Chihuahua and living in the same city,
addressed at Alabatros number one thousand six hundred nineteen, Fraccionamiento
Arboledas, Public Accountant, born on the twenty-seventh day of the month of
March nineteen sixty six, married, taxpayer and up to date in payment of income
tax without proving it at this moment.
-------------------------------------------------------------------------------------------------------------------
MARIO
XXXXXXXX XXXX TOUCHE, native of this City, born on the twelfth day of the month
of September nineteen fifty three, married, businessman, taxpayer, and up to
date in payment of income tax, without proving it at this time, and addressed
at
Mision de San Antonio number 2036 two thousand thirty six in this City.
--------------------------------------------------------------------------
The
parties were duly warned about the penalties incurred by taxpayers making false
statements in relation to any fiscal matter.
-----------------------------------------------------------------------
ONCE
THE
ABOVE WAS READ TO THE HERE APPEARING, AND EXPLAINED ITS LEGAL FORCE AND VALUE,
THEY ACKNOWLEDGED THIS INSTRUMENT, RATIFIED IT AND SIGNED IT AS STATEMENT
TOGETHER WITH THE UNDERSIGNED NOTARY WHO ATTESTS.-
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“signature” “signature”
XXXX
XXXXXXX XXXXXXXX XXXX XXXXX
XXXX TOUCHE
THE
NOTARY PUBLIC NUMBER TWO
“signature”
XXXX
X.
XXXXXX HERMOSILLO
Recorded
under number 27243
On
folio
152 of Book 30
In
Record
of Acts out of
Protocol,
on May 6, 2004.
Xxxx
X.
Xxxxxx Hermosillo
Notary
Public Number Two
District
of Morelos
Chihuahua,
Chih.
