EXHIBIT 10.02
MANAGEMENT SERVICES AGREEMENT
THIS AGREEMENT made as of the 10th day of January, 2001
BETWEEN:
IDAHO CONSOLIDATED METALS CORP., a body corporate, having an office and
chief place of business at 000 Xxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, Xxxxx,
XXX 00000
(hereinafter called "Idaho")
OF THE FIRST PART
AND:
CRYSTALLEX INTERNATIONAL CORPORATION., a body corporate, having an
office and chief place of business at Xxxxx 000, 000 Xxxx Xxxxxx
Xxxxxx, Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxx X0X 0X0
(hereinafter called "Crystallex")
OF THE SECOND PART
WITNESSES WHEREAS
A. Idaho is a mining and exploration company focussed on exploring
platinum group mineral ("PGM") properties. Idaho has assembled an
extensive land position of approximately 30,000 acres in one of the
world's highest-grade PGM areas, the Stillwater Complex in Montana,
USA.
B. Crystallex is a successful mining company with experience in exploring
and developing mining properties and taking mining projects through to
successful commercial production and has assembled a management team
experienced in all aspects of the mining industry. Crystallex has
successfully financed its operations in excess of CDN$100,000,000 over
the past five years and recently has secured non-recourse financings in
the amount of CDN$90,000,00 for future expansion, debt restructuring
and a precious metals trading facility.
C. Idaho intends to accelerate the exploration and development of its
Stillwater Complex mineral claims with the goal of achieving commercial
production of PGMs from one or more of its exploration targets in the
Stillwater Complex (the "Idaho goal"). These targets include extensions
and off-sets of the X X Reef, which hosts the world's richest PGM ore
body and is currently being mined by Stillwater Mining Company. The JM
Reef potential is only one of Idaho's PGM exploration targets, but
exploitation of this target alone would be a significant event for
Idaho and the mining industry.
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D. To assure maximum exploitation of Idaho's PGM properties, Idaho has
agreed to engage Crystallex to provide Idaho with a broad range of
management services and Crystallex has agreed to provide such services
to Idaho, all on the terms and conditions set out herein.
IN CONSIDERATION of the mutual covenants and agreements and the sum of TEN
($10.00) DOLLARS now paid by Idaho to Crystallex (receipt of which Crystallex
hereby acknowledges) the parties hereto covenant and agree, each with the other,
as follows:
IDAHO'S MILESTONES
1. Idaho has established certain milestones which it wishes to meet in
order to achieve its goal. These milestones, together with the budgeted
costs of achieving same are set out in a five-year plan and budget
projection attached as Schedule "A" to this agreement. The particulars
of some of the milestones referred to in the five-year budget are as
follows:
(a) The securing of a minimum US$4,000,000 financing for Idaho in
the spring of 2001 from the sale of Idaho's equities in order
to fund the projected expansion drilling program;
(b) The implementation and execution of an extensive expansion
drilling program in the field season of 2001, commencing no
later than April 30, 2001 and continuing into the fourth
quarter 2001. The program is planned to employ two to three
drills working around the clock, seven days a week;
(c) The obtaining of full registration of its shares in the United
States of America under the American securities laws;
(d) The preparation of a plan to systematically map and sample
Idaho's Stillwater Complex mineral claims and to carry out
this program over field seasons in the years 2001, 2002 and
2003, by employing two field crews, each comprising one
geologist and one helper;
(e) The conversion of paper based data to digital format of the
extensive geological data generated by Anaconda and others on
the Stillwater Complex at a reported cost of US$57,000,000.
Potentially relevant information has been generated from the
1930's to the present time.
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(f) The reassaying of selected intervals of approximately 140,000
feet of diamond drill core acquired as a result of Idaho's
joint venture agreement with Chrome Corp. of America;
(g) The establishing of base lines in the field season of year
2001 on Idaho's Stillwater Complex mineral claims to lay the
groundwork for filing an environmental impact statement
("EIS").
CRYSTALLEX'S MANAGEMENT SERVICES
2. During the term of this Agreement, Crystallex agrees to provide to
Idaho management, technical and financial services on an ongoing basis
and as determined by a management committee (the "Management
Committee") to be immediately constituted between the parties. The
management services to be made available to Idaho are as follows:
(a) review of geological data and assistance in planning the
expansion drill program and prioritizing exploration drilling;
(b) assistance in reviewing and negotiating any third party
proposals that are submitted to Idaho;
(c) assistance in securing funding on an ongoing basis to enable
Idaho to meet its five year budget set out on Schedule "A";
(d) assistance in developing an improved communications package
for its shareholders, and brokerage firms and mining analysts
commensurate with the potential of its PGM properties;
(e) assistance in developing computer programs to achieve the goal
of digitizing and utilizing the historical geological
information relative to Idaho's Stillwater Complex mining
claims.
MANAGEMENT COMMITTEE
3. Upon execution of this Agreement, the parties shall immediately
constitute a management committee comprised of two nominees of Idaho
and one nominee of Crystallex to review overall policies and objectives
for the achieving of Idaho's milestones, to oversee operations and to
scrutinize programs and budgets and provide direction to the employees
of Idaho carrying out the programs. The initial appointees to the
Management Committee shall be the following persons:
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Representing Idaho - Del Xxxxxxx President
- Wilf Struck Vice-President of
Exploration
Representing Crystallex - Dr. Luca X. Xxxxxx Vice-President of
Exploration
4. The Management Committee shall be responsible for identifying and
quantifying the management, technical and financial services needed by
Idaho and to be supplied by Crystallex in order to enable Idaho to
achieve the milestones set out herein. The Management Committee shall
also be responsible for the monitoring of the delivery of the services
by Crystallex and a majority report by the Management Committee as to
the delivery of the management services by Crystallex shall be
determinative of the fact as to the performance or non-performance of
Crystallex in accordance with the spirit and intent of this Agreement.
5. The Management Committee shall hold regular meetings at least quarterly
in Vancouver, British Columbia or at other mutually agreed place. The
President of Idaho shall be responsible for calling the meetings and
shall give 30 days notice to the members of the Management Committee of
such regular meetings. Additionally, any party may call a special
meeting upon 14 days notice to the other members of the Management
Committee. There shall be a quorum if notice has been given as provided
in this Agreement and at least two members of the Management Committee
are present.
6. Where decisions are required to be made by the Management Committee,
each member of the Management Committee shall have one vote and all
decisions of the Management Committee shall be decided by a simple
majority vote of the members. In lieu of meetings, the Management
Committee may make decisions in writing signed by all members of the
Management Committee.
7. A notice of meeting of the Management Committee shall include an
itemized agenda prepared by the President of Idaho, but any matters may
be considered with the consent of all members of the Management
Committee. The President of Idaho shall arrange for the preparation of
the minutes of all meetings and shall distribute copies of such minutes
to the parties within thirty (30) days after the meeting. Once
approved, the minutes shall be the official record of the decisions
made by the Management Committee and shall be binding on the parties.
The President of Idaho shall chair the Management Committee meetings.
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CONSIDERATION
8. During the term of this Agreement, Idaho shall pay to Crystallex the
sum of FIFTEEN THOUSAND (CDN$15,000.00) DOLLARS Canadian per month
payable on the last day of each month in which the services were
provided.
9. In addition to the monthly payment, Idaho shall grant an incentive
stock option of Two Million Two Hundred and Fifty Thousand (2,250,000)
shares to Crystallex at the price of CDN$1.08 per share being the price
announced by the news release following the entering into of the
Memorandum of Understanding between the parties dated the 10th day of
January, 2001. The term of incentive stock option shall be five (5)
years and concurrent with the term of this Agreement, provided that in
the event this agreement is terminated pursuant to the provisions set
out herein, then the option period shall expire 90 days after the
termination of the Agreement.
10. In the event this Agreement is in full force and effect at a date that
is three (3) years from the date of this Agreement, then Crystallex
shall be required to exercise thirty per cent (30%) of the options held
by it if the shares of Idaho should at that time or any time thereafter
during the term of this Agreement, be trading at a price equal to or
greater than 3 times the option price for a period of ten (10)
continuous days of trading on CDNX, such exercise to be within three
(3) days of being notified in writing of such event by Idaho and
failing the exercise by Crystallex following such notification, then
thirty per cent (30%) of the incentive stock options held by Crystallex
shall immediately be cancelled.
11. If at any time during the term of this Agreement there shall be a
change of control of Idaho then Crystallex shall have the option of
cancelling this Agreement and in such event Crystallex shall have one
year in which to exercise the options granted hereunder. For the
purposes of this Agreement a change of control shall mean the acquiring
of such number of shares of Idaho by any entity that gives the
acquiring entity the ability to elect a majority of the directors of
Idaho at a meeting duly called for that purpose.
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TERMINATION
12. This Agreement may be terminated as follows:
(a) If in any year of the term of this Agreement Idaho has not
been successful in reaching the minimum funding set out below
by June 30th of the applicable year then Idaho shall have the
option to terminate this Agreement:
(i) year 2001 - USD$3,000,000;
(ii) year 2002 - USD$4,000,000;
(iii) year 2003 - USD$5,000,000;
(iv) year 2004 - USD$6,000,000; and
(v) year 2005 - USD$7,000,000;
(b) Crystallex may terminate this Agreement at any time by giving three (3)
months notice in writing to Idaho.
NOTICES
13. All notices, and other required communications to the parties shall be
in writing and shall be personally delivered to or given by registered
certified mail, receipt requested, or by overnight delivery or by
telecopy at the following addresses:
to Idaho:
000 Xxxx Xxxxxx,
Xxxxx 000,
Xxxxxxxx, Xxxxx, XXX 00000
Facsimile No.: 000-000-0000
to Crystallex:
Xxxxx 000
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxx Xxxxxxxx
Xxxxxx X0X 0X0
Facsimile No.: 000-000-0000
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or such other address as a party may advise by giving written notice as
required under this Agreement. Any notice given under this Agreement
shall be deemed received on the day it was personally delivered or sent
by telecopy and ten (10) business days after it was mailed, if sent by
mail.
ARBITRATION
14. Any dispute which may arise in respect of this Agreement may, failing
settlement by mutual agreement thereof, be referred by any party, upon
the expiration of thirty (30) days from the date of giving the other
party notice of its intention to do so, for determination to a single
arbitrator appointed pursuant to the Commercial Arbitration Act of
British Columbia. The determination of such single arbitrator in
respect of such dispute shall be final and binding upon the parties
hereto.
GENERAL
15. This Agreement shall supersede any and all prior agreements, oral or
written, entered into between the parties hereto in connection with
this Agreement. This Agreement represents the entire agreement between
the parties and no modifications or amendments of its terms shall be
binding unless evidenced in writing and signed by authorized
representatives of the parties.
16. This Agreement shall be governed by and interpreted in accordance with
the laws of British Columbia and the laws of Canada applicable therein.
17. Time is of the essence of this Agreement.
18. This Agreement shall not be assignable by either party without the
written consent of the other party hereto.
19. This Agreement shall enure to the benefit and be binding upon the
parties hereto and their respective successors and permitted assigns.
20. Each of the parties agrees that it shall take from time to time such
actions and execute such additional instruments as may be reasonably
necessary or convenient to implement and carry out the intent and
purpose of this Agreement or any provision thereof.
21. This Agreement is subject to acceptance of same by the Canadian Venture
Exchange.
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IN WITNESS WHEREOF the parties have executed this Agreement as of the day and
year first above written.
IDAHO CONSOLIDATED METALS CORP
---------------------------------------
Authorized Signatory
CRYSTALLEX INTERNATIONAL CORPORATION
---------------------------------------
Authorized Signatory
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SCHEDULE "A"
Idaho Consolidated Metals
5 year Plan and Budget Projection
File: SW_5yr
Date: 02/07/01
All budget estimates in US$million's
--------------------------------------------------------------------------------------------------------------
Year 1 2 3 4 5 Subtotals
==============================================================================================================
Exploration Drilling
$4.0 $7.0 $9.0 $20.0
--------------------------------------------------------------------------------------------------------------
Background data collection
$1.0 $1.0 $1.0 $3.0
--------------------------------------------------------------------------------------------------------------
Development Drilling
$2.0 $5.0 $7.0 $14.0
--------------------------------------------------------------------------------------------------------------
Feasibility
$1.0 $2.0 $3.0
--------------------------------------------------------------------------------------------------------------
Mine Permitting
$2.0 $4.0 $5.0 $11.0
--------------------------------------------------------------------------------------------------------------
G&A, Corporate Development $0.8 $0.8 $0.8 $1.0 $1.0 $4.4
Legal $0.2 $0.2 $0.2 $0.2 $0.2 $1.0
Data Conversion $0.2 $0.2 $0.1 $0.5
--------------------------------------------------------------------------------------------------------------
Project Construction *
==============================================================================================================
Grand Totals $5.2 $9.2 $16.1 $13.2 $13.2 $56.9
--------------------------------------------------------------------------------------------------------------
* Project Financing for mine construction is not included as it is planned to be
debt financing.
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SCHEDULE "A"
(continued)
Idaho Consolidated Metals Corporation
2001 Field Season Stillwater Exploration Detail Budget
File: swbud_y2001
Created: 12/12/00
Revised: 2/1/01
Xxxxxxx CCA Crescent Fishtail Lost Mtn
Creek Creek Creek VEZ
Description Quantity Unit Unit Rate
Prefeasibility Study review 2 days $500 $0 $1,000 $0 $0 $0
Map Preparation 49 days $500 $3,000 $2,000 $4,000 $5,000 $3,000
Mapping Equip. (GPS, 320 days $400 $6,000 $10,000 $36,000 $42,000 $8,000
datalogger, phone link,
computer)
Geologic Mapping (includes 2 320 days $1,100 $16,500 $27,500 $99,000 $115,500 $22,000
geo and 2 assistant)
Soil Sampling 320 sample $15 $0 $3,000 $0 $300 $0
Hand Sample Assays 2338 sample $20 $5,400 $6,000 $6,200 $6,560 $6,200
Sampling Supplies (bags, field 7035 sample $10 $2,550 $8,200 $2,850 $47,050 $2,250
books, etc)
Drill hole survey 20 days $800 $1,600 $1,600 $4,000 $4,800 $0
Claim survey and remonumenting 206 days $350 $5,250 $1,750 $10,500 $12,600 $8,750
Permitting 47 days $500 $1,000 $3,000 $3,000 $9,000 $1,500
Geophysics 82 days $1,500 $9,000 $13,500 $27,000 $28,500 $13,500
Trenching 1000 feet $10 $0 $10,000 $0 $0 $0
Trench sample assays 250 sample $17 $0 $4,250 $0 $0 $0
Core Drilling 40800 Feet $45 $45,000 $180,000 $567,000 $720,000 $90,000
Core Sample Assays 10200 sample $20 $5,000 $20,000 $63,000 $80,000 $10,000
Camp (includes xxxx, camp and 320 day $350 $5,250 $8,750 $31,500 $36,750 $7,000
food)
Transportation (pickups and 320 day $150 $2,250 $3,750 $13,500 $15,750 $3,000
fourwheelers)
Data Analysis and report 77 day $300 $1,500 $3,000 $3,600 $5,400 $2,700
Metallurgical 3 test $1,500 $0 $4,500 $0 $0 $0
Environmental Backgrd Data 3 day $400 $0 $1,200 $0 $0 $0
Helicopter Support 653 hours $550 $8,250 $27,500 $132,000 $167,200 $2,200
Claim Fees 1900 claim $100 $10,000 $13,000 $26,600 $25,000 $10,000
Contingency (10%) $11,755 $34,050 $100,315 $129,641 $18,010
Totals $139,305 $387,550 $1,130,065 $1,451,051 $208,110
Xxx Basin Picket Pin Platinum Subtotals
Fox
Description Quantity Unit Unit Rate
Prefeasibility Study review 2 days $500 $0 $0 $0 $1,000
Map Preparation 49 days $500 $2,000 $3,000 $2,500 $24,500
Mapping Equip. (GPS, 320 days $400 $7,200 $10,800 $8,000 $128,000
datalogger, phone link,
computer)
Geologic Mapping (includes 2 320 days $1,100 $19,800 $29,700 $22,000 $352,000
geo and 2 assistant)
Soil Sampling 320 sample $15 $0 $1,500 $0 $4,800
Hand Sample Assays 2338 sample $20 $5,200 $6,200 $5,000 $46,760
Sampling Supplies (bags, field 7035 sample $10 $2,050 $3,200 $2,200 $70,350
books, etc)
Drill hole survey 20 days $800 $1,600 $700 $1,600 $15,900
Claim survey and remonumenting 206 days $350 $8,050 $21,600 $3,500 $72,000
Permitting 47 days $500 $1,500 $3,000 $1,500 $23,500
Geophysics 82 days $1,500 $15,000 $13,500 $3,000 $123,000
Trenching 1000 feet $10 $0 $0 $0 $10,000
Trench sample assays 250 sample $17 $0 $0 $0 $4,250
Core Drilling 40800 Feet $45 $90,000 $72,000 $72,000 $1,836,000
Core Sample Assays 10200 sample $20 $10,000 $8,000 $8,000 $204,000
Camp (includes xxxx, camp and 320 day $350 $6,300 $9,450 $7,000 $112,000
food)
Transportation (pickups and 320 day $150 $2,700 $4,050 $3,000 $48,000
fourwheelers)
Data Analysis and report 77 day $300 $2,400 $2,700 $1,800 $23,100
Metallurgical 3 test $1,500 $0 $0 $0 $4,500
Environmental Backgrd Data 3 day $400 $0 $0 $0 $1,200
Helicopter Support 653 hours $550 $11,000 $5,500 $5,500 $359,150
Claim Fees 1900 claim $100 $10,000 $90,000 $5,400 $190,000
Contingency (10%) $18,480 $19,490 $14,660 $346,401
Totals $213,280 $304,390 $166,660 $4,000,411
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Totals for each Property
Xxxxxxx Creek $139,305
CCA $387,550
Crescent Creek $1,130,065
Fishtail $1,451,051
Lost Mtn VEZ $208,110
Xxx Basin $213,280
Picket Pin $304,390
Platinum Fox $166,660
Geological Total $4,000,411
G and A (includes Vancouver, Lewiston closure, Montana $800,000
office and Elk City Maintenance) 12mo@$66.67k/mo
Legal $200,000
Data Conversion $200,000
Grand Total $5,200,411
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