EXHIBIT 1.1
ASSIGNMENT OF ROYALTY PROCEEDS
THIS ASSIGNMENT OF ROYALTY PROCEEDS ("Assignment") is made and entered
into effective as of April 1, 2001 (the "Effective Date"), regardless of the
dates upon which it actually is executed by the parties hereto, by and between
CANYON RESOURCES CORPORATION, a Delaware corporation ("Canyon"); and
FRANCO-NEVADA MINING CORPORATION, INC., a Nevada corporation ("Franco-Nevada").
RECITALS
A. Effective December 1, 1996, XX Xxxxxx Corporation, a Colorado
corporation ("XX Xxxxxx"), and Euro-Nevada Mining Corporation, Inc., a Nevada
corporation ("Euro-Nevada"), entered into a certain "Xxxxxx Project Net Smelter
Return Royalty Deed" (the "1996 Deed"), with respect to certain unpatented
mining claims in Inyo County, California, as described in Exhibit A to the 1996
Deed (the "Claims"). The 1996 Deed was recorded on February 10, 1997, in the
official records of Inyo County, California as Document No. 970382.
B. XX Xxxxxx is successor-in-interest with respect to the Claims to
First Sierra Gold Corporation, a California corporation; Camindex Resources,
Inc., an Alaska corporation; Addwest Gold, Inc., a Kentucky corporation; and
certain interests of Xxxxx X. Xxxxxx.
C. By merger, Franco-Nevada is successor-in-interest to all rights and
obligations of Euro-Nevada under the 1996 Deed.
D. Pursuant to the 1996 Deed, XX Xxxxxx is obligated to pay production
royalties ("Production Royalties") on precious metals produced from the Claims
and sold or otherwise disposed of.
E. Canyon wishes to acquire from Franco-Nevada certain of the
Production Royalties, and Franco-Nevada wishes to assign certain of those
Production Royalties to Canyon, on the terms and for the consideration specified
in this Assignment.
NOW, THEREFORE, in consideration of the mutual benefits to be enjoyed
by the parties hereto, Canyon and Franco-Nevada hereby agree as follows:
1. Assignment of Portion of Production Royalties. Franco-Nevada hereby
assigns to Canyon all Production Royalties payable under the 1996 Deed on the
first 175,000 xxxx ounces of gold on which Production Royalties are payable on
or after the Effective Date. This Assignment shall be of no force or effect as
to any and all
Production Royalties payable under the 1996 Deed in excess of said 175,000
ounces of gold. All such payments of Royalties shall be calculated and paid to
Canyon or its designee in the manner specified in the 1996 Deed. Franco-Nevada
hereby authorizes XX Xxxxxx to rely upon this Assignment in making such payments
to Canyon, provided that Franco-Nevada shall continue to receive the benefits of
the provisions of Section 4.3 of the 1996 Deed during the period this Assignment
remains effective.
2. Delivery of Stock. As partial consideration for this Assignment,
Canyon shall issue and deliver to Franco-Nevada, concurrently with the execution
of this Assignment, 1,050,000 unregistered shares of the common stock of Canyon
(the "Shares").
3. Conveyance of Net Smelter Return Royalty. As further consideration
for this Assignment, Canyon shall cause XX Xxxxxx to execute, notarize and
deliver to Franco-Nevada, concurrently with the execution of this Assignment, a
Deed of Net Smelter Return Royalty (the "1% Royalty Deed") in the form attached
as Exhibit B hereto. The 1% Royalty Deed shall provide for the payment of a 1%
Production Royalty, as defined in Exhibit B hereto ("1% Production Royalty"), on
any and all production on which Production Royalties are payable after the
Effective Date to Franco-Nevada under the 1996 Deed which are not assigned to
Canyon pursuant to Section 1 of this Assignment. The 1% Production Royalty is in
addition to the Production Royalties payable to Franco-Nevada under the 1996
Deed.
4. Registration of the Shares; Effect of Failure to Register. The
parties hereby agree that this Assignment was executed on September 27, 2001
("Commencement Date"). As soon as practicable after the Commencement Date,
Canyon shall file with the United States Securities and Exchange Commission
("SEC") and any other appropriate agency or stock exchange documentation for
registration of the Shares as unrestricted and free trading Shares. Canyon
thereafter shall diligently work to complete the registration of the Shares. If
Canyon is unable to complete that registration by March 31, 2002, Franco-Nevada
shall have the right to elect by written notice (the "10 Day Notice") delivered
to Canyon within ten (10) days after March 31, 2002, or any extension of that
date agreed to in writing by Franco-Nevada, to rescind this entire transaction.
If Franco-Nevada does not timely deliver the 10 Day Notice , Canyon shall
continue diligently to register the Shares, and Franco-Nevada shall be deemed
conclusively to have elected not to rescind this transaction. Following
registration of the Shares, the Shares shall be unrestricted and free trading,
and not subject to any legend or the provisions thereof. If Franco-Nevada timely
delivers the 10 Day Notice , the following shall occur:
A. Within ten (10) days after receipt of that notice, Canyon
shall execute a written release, which shall be in a recordable form
reasonably
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acceptable to Franco-Nevada, pursuant to which Canyon shall surrender
and release to Franco-Nevada all of Canyon's rights under this
Assignment, free and clear of all liens and encumbrances.
B. Within sixty (60) days after receipt of that notice, Canyon
shall repay to Franco-Nevada all Production Royalties received by
Canyon pursuant to this Assignment.
C. Upon receipt of Canyon's repayment pursuant to section 4.B
of this Assignment, Franco-Nevada shall:
(i) return the certificates representing the Shares
to Canyon, free and clear of all liens and encumbrances; and
(ii) reconvey to XX Xxxxxx the 1% Production Royalty
conveyed to Franco-Nevada pursuant to the 1% Royalty Deed,
free and clear of all liens and encumbrances. This
reconveyance shall be by a document in the same form of
conveyance as the 1% Royalty Deed.
5. Franco-Nevada Securities Agreements and Representations.
X. Xxxxxx-Nevada shall file a Form 13d with the SEC within ten
(10) days of its receipt of the Shares.
X. Xxxxxx-Nevada understands that Franco-Nevada's acquisition
of the Shares will be a highly speculative investment. Franco-Nevada
has such knowledge and experience in financial and business matters
that Franco-Nevada hereby acknowledges that, to Franco-Nevada's
satisfaction, (i) Franco-Nevada has either had access to or has been
furnished with all the information regarding Canyon and the terms of
this investment transaction to Franco-Nevada's satisfaction (ii)
Franco-Nevada has discussed the entire investment transaction and the
information described in clause (i) above with representatives of
Canyon, (iii) Franco-Nevada has been provided the opportunity to ask
questions concerning this investment transaction and the terms and
conditions thereof and all such questions have been answered to
Franco-Nevada's satisfaction, (iv) Franco-Nevada has obtained all
additional information which Franco-Nevada deems necessary to verify
the accuracy of the information previously disclosed or provided to
Franco-Nevada, and (v) Franco-Nevada has had ready access to and an
opportunity to review any and all documents which Franco-Nevada deems
relevant to this transaction, and no information, oral or written, that
Franco-Nevada has requested has been withheld by Canyon.
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C. (i) Franco-Nevada qualifies as an accredited investor as
that term is defined under Rule 501 of Regulation D promulgated under
the United States Securities Act of 1933, as amended (the "1933 Act"),
(ii) Franco-Nevada is acquiring the Shares solely for Franco-Nevada's
own account for investment and not with a view to or for sale or
distribution of the Shares or any portion thereof and not with any
present intention of selling, offering to sell or otherwise disposing
of or distributing the Shares or any portion thereof in any transaction
other than a transaction registered, or exempt from registration, under
the 1933 Act, (iii) the entire legal and beneficial interest in the
Shares that Franco-Nevada is acquiring is being acquired for, and will
be held for the account of Franco-Nevada only and neither in whole nor
in part for any other person, and (iv) Franco-Nevada understands that:
subject to the provisions of Section 4 of this Assignment, (A) neither
the sale of the Shares which Franco-Nevada is acquiring nor the Shares
themselves have been registered under the 1933 Act or any state
securities laws, and the Shares must be held indefinitely unless
subsequently registered under the 1933 Act or an exemption from such
registration is available and (B) the share certificate representing
the Shares will be stamped with the following legend (or substantially
equivalent language) restricting transfer:
"The securities represented by this certificate have not been
registered under the Securities Act of 1933 or the laws of any state
and have been issued pursuant to an exemption from registration
pertaining to such securities and pursuant to a representation by the
security holder named hereon that said securities have been acquired
for purposes of investment and not for purposes of distribution. These
securities may not be offered, sold, transferred, pledged or
hypothecated in the absence of registration, or the availability of an
exemption from such registration."
6. Canyon's Representations. Canyon represents and warrants the
following:
A. Accuracy of Public Disclosure Record.
(i) Since December 1, 2000, Canyon has filed with the
applicable regulatory authorities in the United
States and all other applicable jurisdictions all
documents required to be filed by it under United
States securities laws and the securities laws of
such other applicable jurisdictions.
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(ii) As at their respective dates, the documents filed in
2001 by Canyon as required by applicable regulatory
authorities in the United States complied in all
material respects with the then applicable
requirements of United States securities laws and
other applicable securities laws and no statement
contained therein is false in any material particular
or materially misleading or made without caring
whether it is true or false, nor did Canyon know or
should it reasonably have known that any statement
contained therein was false in a material particular
or materially misleading.
(iii) Without limiting the generality of Sections 6.A(i)
and (ii) of this Assignment, the financial statements
contained in the documents described in those
Sections of this Assignment (a) were prepared in
accordance with United States GAAP applied on a
consistent basis during the periods involved (except
as may be indicated therein or in the notes thereto)
and (b) fairly presented the consolidated financial
position of Canyon as of the respective dates thereof
and the consolidated results of operations and
consolidated cash flows for the periods then ended
(subject to normal year-end audit adjustments and to
any other adjustments described therein). Except as
disclosed in such financial statements, Canyon has
not made any change in the accounting practices or
policies applied in the preparation of its financial
statements.
B. Full Disclosure. In negotiating this Assignment with
Franco-Nevada, (i) Canyon made no statement which was or
remains materially false or misleading or which was made
without caring whether it is true or false, and (ii) Canyon
disclosed all material information and its plans or other
intentions which would have a material effect on the
decision of a prudent investor to enter into this
Assignment.
C. Limitation on Canyon Equity Distributions. For the period
(the "Limitation Period") from the Commencement Date, as
defined
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in Section 4 above, through the earlier of: (i) thirty (30)
days after completion of the registration of the Shares
pursuant to Section 4, or (ii) July 1, 2002; Canyon shall
not issue additional Canyon stock that, in the aggregate,
exceeds fifteen percent (15%) of the total number of issued
and outstanding shares of Canyon stock as of the
Commencement Date. The Shares shall be included in
calculating that total, even if they have not yet been
delivered to Franco-Nevada as of the Commencement Date.
Canyon stock issued pursuant to Canyon's current qualified
stock option plans shall not be included in calculating the
fifteen percent (15%) limitation. If Canyon issues stock
during the Limitation Period in a quantity that exceeds the
fifteen percent (15%) limitation, Franco-Nevada shall have
the right to rescind this transaction, with the
consequences described in Sections 4.A, 4.B and 4.C above.
If Franco-Nevada does not exercise this right by written
notice to Canyon within thirty (30) days after the end of
the Limitation Period, it shall be deemed conclusively to
have elected not to rescind this transaction. This
rescission right shall be Franco-Nevada's exclusive remedy
for Canyon's exceeding the fifteen percent (15%)
limitation.
7. Entire Agreement. This Assignment supercedes, entirely replaces and
terminates all prior oral and written agreements, if any, between the parties
regarding the subject matter hereof, including without limitation, the letter
proposal dated July 20, 2001 from Canyon to Franco-Nevada, but excluding the
1996 Deed and the 1% Royalty Deed except as modified by the express provisions
of this Assignment. This Assignment, the 1996 Deed, and the 1% Royalty Deed
contain the entire agreement between Canyon and Franco-Nevada and XX Xxxxxx
pertaining to the subject matter hereof, and no oral agreement, promise,
statement or representation which is not contained herein or therein shall be
binding upon any of the parties unless subsequently reduced to writing and
signed by the parties thereto.
8. Additional Documents. Canyon and Franco-Nevada shall from
time-to-time execute all such further instruments and documents and do all such
further actions as may be necessary to effectuate the purposes of this
Assignment.
9. Covenant Running with Land; Binding Effect. All of the covenants,
conditions and terms of this Assignment shall (i) run as a covenant with the
Claims; and (ii) bind and inure to the benefit of the respective parties hereto.
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10. No Partnership. Nothing in this Assignment shall be construed to
create, expressly or by implication, a joint venture, mining partnership,
commercial partnership, or other partnership relationship between Canyon and
Franco-Nevada.
11. Governing Law. This Assignment shall be governed by and construed
under the laws of the State of California.
12. Notices. Unless otherwise provided in this Assignment, any notice
or other correspondence required or permitted by this Assignment shall be in
writing and shall be deemed to have been properly given or delivered (i) on the
day of hand delivery if hand-delivered to the party to which directed; (ii) on
the third day following deposit in the United States mail, certified, with all
necessary postage or charges fully prepaid, return receipt requested; or (iii)
on the day after transmission by electronic facsimile transmission, with written
confirmation of delivery, and addressed to the party to whom directed at the
following addresses:
Canyon: Canyon Resources Corporation
00000 Xxxxxx Xxxx Xxxxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Facsimile No.: (000) 000-0000
Franco-Nevada: Franco-Nevada Mining Corporation, Inc.
000X Xxxxxx Xxxx Xxxxx
Xxxx, Xxxxxx 00000-0000
Facsimile No.: (000) 000-0000
Either party may change its address for the purpose of notices or communications
by furnishing notice thereof to the other party in the manner provided in this
Section 12.
IN WITNESS WHEREOF, this Assignment is executed as of the Effective
Date.
CANYON RESOURCES CORPORATION, a
Delaware corporation
By: /s/ Xxxxxxx X. Xx Xxxx
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Name: Xxxxxxx X. XxXxxx
Title: President
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FRANCO-NEVADA MINING CORPORATION,
INC., a Nevada corporation
By: /s/ M. Xxxxx Xxxxx
-----------------------------------------
Name: M. Xxxxx Xxxxx
Title: Vice Chairman
STATE OF COLORADO )
) ss:
COUNTY OF JEFFERSON )
This instrument was acknowledged before me on September 28, 2001, by
Xxxxxxx X. XxXxxx, as President of Canyon Resources Corporation, a Delaware
corporation.
Witness my hand and official seal.
My commission expires: August 9, 2002
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/s/ Xxx X. Xxxxxxx
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Notary Public
STATE OF NEVADA )
) ss:
COUNTY OF WASHOE )
This instrument was acknowledged before me on September 27, 2001, by M.
Xxxxx Xxxxx, as Vice Chairman of Franco-Nevada Mining Corporation, Inc., a
Nevada corporation.
Witness my hand and official seal.
My commission expires: February 28, 2004
------------------------------
/s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Notary Public
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