Exhibit 10.1
LEASE AGREEMENT
Xxxxx Xxxxxxxxxx (Lessor) agrees to lease to Prelude Ventures, Inc. (Lessee) the
lode mining claims attach as Exhibit "A", located in portions of sections 13,
14, 23, 24, 25, and 26, T28N, R60E, MDB&M in Elko County, Nevada (referred to as
property), subject to the following conditions:
RECITALS:
A. "Effective Date" means March 9, 2001.
B. "Lease Year" means each one (1) year period following the Effective Date
and each anniversary of the Effective Date.
C. WARRANTIES. The Lessor warrants that he is the owner of the lode mining
claims more particularly described in Exhibit A and said claims are free
from all liens and encumbrances.
D. EXPLORATION AND DEVELOPMENT RIGHTS. Lessor will grant the Property to
Lessee for the Lease period with the exclusive right to explore, develop,
and mine the Property for gold, silver, and other valuable minerals.
E. PERFORMANCE REQUIREMENTS / ASSUMPTION OF CLAIM MAINTENANCE. Under
applicable Federal, State and County laws and regulations, Federal,
State, and County annual mining claim maintenance or rental fees are
required to be paid for the unpatented mining claims which constitute all
or part of the Property, beginning with the annual assessment work period
of September 1, 2001 to September 1, 2002. Prelude shall timely and
properly pay the Federal, State, and County annual mining claim
maintenance or rental fees, and shall execute and record or file, as
applicable, proof of payment of the Federal, State, and County annual
mining maintenance or rental fees and of Lessor's intention to hold the
unpatented mining claims which constitute the Property. If Prelude does
not terminate this Lease before June 1 or any subsequent Lease Year,
Prelude will be obligated either to pay the Federal, State, and Local
annual mining claim maintenance or rental fees for the Property due that
year or to reimburse Lessor for same.
F. AREA OF INTEREST. Any additional claims located or acquired by the Lessee
within one (1) mile from the exterior boundaries of the mining claims
described in Exhibit "A" shall become a part of the leased property and
shall be subject to the terms of this lease as of the Effective Date.
G. SCHEDULE OF MINIMUM PAYMENTS. The Lessee shall pay to the Lessor minimum
payments, which shall be advance payments of the Royalty, of US$5000.00
1
(five thousand dollars) upon execution of this lease. The Lessee may
extend this lease upon payment of the following:
1. Pay Lessor US$7,500.00 on or before the first anniversary of the
execution of this lease.
2. Pay Lessor US$10,000.00 on or before the second anniversary of the
execution of this lease.
3. Pay Lessor US$20,000.00 on or before the third anniversary of the
execution of this lease.
4. Pay Lessor US$50,000.00 on or before the fourth anniversary of the
execution of this lease.
5. Each annual payment thereafter shall be US$50,000.00 plus an
annual increase or decrease equivalent to the rate of inflation
designated by the Consumer's Price Index (CPI) for that year with
execution year as base year. Each such payment shall be made on or
before the successive anniversary of the execution of this lease.
H. BUYOUT. Buyout price is US$5,000,000 (five million dollars) from which
advance royalty payments, made up to the day of the buyout, may be
subtracted from the Buyout price. Lessee will pay Lessor a perpetual
one-half per cent (0.5%) royalty on Net Smelter Returns (as defined below
in Section I. of this document) thereafter.
I. DEFINITION OF NET SMELTER RETURNS. During the term of this Agreement,
Lessee shall pay to Lessor, as a land owner's Production Royalty, a
percentage of the Net Smelter Returns (as defined below) from the sale of
any Valuable Minerals, Ore, and Product mined and sold from the Property.
"Net Smelter Returns" are defined as the gross revenues actually received
by the Lessee from the sales of any Valuable Minerals extracted and
produced from the Property less the following charges:
1. All costs to Lessee of weighing, sampling, determining moisture
content and packaging such material and of loading and
transporting it to the point of sale, including insurance and
in-transit security costs.
2. All smelter costs and all charges and penalties imposed by the
smelter, refinery, or purchaser.
3. Marketing costs and commissions.
4. Not withstanding the foregoing, for purposes of determining the
royalty payable to Lessor on any gold and/or silver produced from
the Property, the price attributed to such gold and/or silver
shall be the price per ounce
2
of gold and/or silver on which the royalty is to be paid (as the
case may be) as quoted on the London Metals Exchange at the PM
fix on the day prior to the date of final settlement from the
smelter, refinery or other buyer of the gold and/or silver on
which the royalty is to be paid (the "Quoted Price"). For
purposes of determining the gross revenues, in the event the
Lessee elects not to sell any portion of the gold and/or silver
mined from the Property, but instead elects to have the final
product of any such gold and/or silver credited to be held for
its account with any smelter, refiner, or broker, such gold
and/or silver shall be deemed to have been sold at the Quoted
Price on the day such gold and/or silver is actually credited to
or placed in Lessee's account. The percentage for this
Production Royalty shall be three per cent (3%).
5. Lessor shall be paid the Production Royalty quarterly by certified
check by the Lessee.
J. CONDITIONS OF TERMINATION BY LESSOR. This Lease may be terminated at any
time by the Lessor subject to the following:
1. If Lessee fails to meet the above lease payments, Lessor
must give written notice to Lessee of such default. After
receipt of default, Lessee has 15 days to cure the default.
2. If Lessee fails to make Federal, State, and County
maintenance payments or filing fees at least 15 days prior
to due date, Lessee shall notify Lessor of a possible
default. After 10 days, if the default is not cured Lessor
may initiate payment on the claims. Lessee will be able to
cure this default by reimbursing all Federal, State, and
County Payments made by the Lessor plus a 20% penalty within
30 days.
K. CONDITIONS OF TERMINATION BY LESSEE. This Lease may be terminated at any
time by the Lessee subject to the following:
1. Lessee must give written notice 30 days prior to
relinquishing the leased property.
2. In the event Lessee desires to terminate the agreement
after June 1 of any year, Lessee shall be responsible
for all Federal, State, and County maintenance and
filing fees for the next assessment year regarding the
leased property.
3. Lessee shall deliver to Lessor, in reproducible form,
all data generated or obtained for the leased property,
whether factual or interpretive as defined in section P.
3
4. Lessee shall quitclaim to Lessors all claims located or
acquired by Lessee within one (1) mile area of interest
described in section F.
L. RECLAMATION, COMPLIANCE WITH THE LAW. All exploration and development
work performed by the Lessee during the term of this Agreement shall
conform with the applicable laws and regulations of the state in which
the Property is situated and of the United States of America. Lessee
shall be fully responsible for compliance with all applicable Federal,
State, and local reclamation statutes, regulations, and ordinances
relating to such work, at Lessee's cost, and Lessee shall indemnify and
hold harmless Lessor from any and all claims, assessments, fines, and
actions arising from Lessee's failure to perform the foregoing
obligations. Lessee's reclamation obligation shall survive termination of
the Agreement. Lessor agrees to cooperate with Lessee in Lessee's
application for governmental licenses, permits, and approvals, the costs
of which shall be borne by Lessee. Lessee shall own all governmental
licenses, permits, and approvals.
M. LIENS. Lessee shall keep the property free from any and all liens and
encumbrances.
N. TRANSFER, ASSIGNMENT, RIGHT OF FIRST REFUSAL. Either party shall be free
to assign its rights under the detailed agreement to an affiliate
company. They also shall have the right to transfer all or part of their
interest in the Agreement to a third party, but transfers to a third
party shall be subject to a right of first refusal by the Lessor.
Assignments permitted under this paragraph shall not be effective unless
and until the permitted assignee agrees in writing in form and substance
acceptable to the remaining party assuming all of the assigning party's
obligations under this Lease Agreement. The party assigning interest in
this lease shall notify the other party within 15 days of such assignment
and all parts of this agreement will remain in effect.
O. LEASE TERM. The term of this lease is for twenty (20) years, renewable
for an additional twenty (20) years so long as conditions of the lease
are met.
P. DATA AND REPORTS. Upon and after execution of the detailed agreement,
Lessor will make available to Lessee all technical data, survey notes or
maps, samples, drilling results including drill logs and reports
concerning the Property which Lessor possesses, or to which it has
access, of which it acquires in the future. Within 60 days after
termination of the detailed agreement, Lessee shall return to Lessor all
information of a nature similar to that described above and developed by
Lessee during the term of the Mining Lease. If requested by Lessor not
more than once in any 12 calendar months, Lessee shall submit to Lessor,
within 60 days of Lessee's receipt of such request, an annual progress
report describing Lessee's work upon the Property, the results of such
work, and the amounts expended by Lessee in furtherance thereof to the
date of such report.
4
Q. NOTIFICATION TO LESSOR. All notices and payments from Lessee to Lessor
shall be sent to:
Mr. Xxxxx Xxxxxxxxxx
P. O. Box 5114
Reno, NV 89513 U. S. A.
or any other person Lessor shall designate. If Lessor designates an
alternative person to receive notices and payment, they shall provide
written notice of such to Lessee. All lease payments shall be made in the
form of a check payable to Xxxxx Xxxxxxxxxx.
R. NOTIFICATION TO LESSEE. All notices from Lessor to Lessee shall be sent to:
Xx. Xxxxxxx Xxxxxxx, President
Prelude Ventures, Inc.
000 - 0000 Xxxxxxx Xx.
Xxxxxxxxx, XX X0X 0X0
Xxxxxx
or any other person Lessee shall designate. If Lessee designates an
alternative person to receive notices, they shall provide written notice of
such to Lessor.
5
The parties have executed this Lease Agreement effective as of the Effective
Date.
XXXXX XXXXXXXXXX
/s/Xxxxx Xxxxxxxxxx
LESSEE: PRELUDE VENTURES, INC.
By /s/ Xxxxxxx Xxxxxxx
Title: President
EXHIBIT "A"
CLAIM NAMES BLM SERIAL NUMBERS
----------- ------------------
Medicine #6, 8, 10, 12, 14, NMC 821777 - 821800
39, 41-44, 62, 64-67, 111,
113-118, 125, 126.
6
