PROPERTY OPTION AGREEMENT
THIS AGREEMENT made and entered into as of the 22nd day of October, 2004
BETWEEN: MinQuest Inc., a company having a mailing address at 0000 Xxxxxxx
Xxx, Xxxx, Xxxxxx, 00000, X.X.X.
(herein called the "Optionor")
OF THE FIRST PART
AND: American Goldfields Corporation, a company having an office at #000
0000 Xxxxx Xxxxx Xxxxx Xxxxxxx, X.X., Xxxxxx X0X 0X0
(herein called the "Optionee")
OF THE SECOND PART
WHERAS the Optionor has represented that it is the sole recorded and beneficial
owner in and to properties called the Hercules Project. (the "Property)
described in Schedule "A" attached hereto;
AND WHEREAS the Optionor, subject to the Net Smelter Royalty reserved to the
Optionor, now wishes to grant to the Optionee the exclusive right and option to
acquire an undivided 100% right, title and interest in and to the Property on
the terms and conditions hereinafter set forth;
NOW THEREFORE THIS AGREEMENT WITNESSETH THAT in consideration of
the premises, the mutual covenants herein set forth and the sum of One Dollar
($1.00) of lawful money of U.S. currency now paid by the Optionee to the
Optionor (the receipt whereof is hereby acknowledged), the Parties hereto do
hereby mutually covenant and agree as follows:
1. DEFINITIONS
The following words, phrases and expressions shall have the following meanings:
(a) "After Acquired Properties" means any and all mineral
interests staked, located, granted or acquired by or on behalf
of either of the parties hereto during the currency of this
Agreement which are located, in the whole or in part, within
two miles of the existing perimeter of the Property;
(b) "Exchange" means OTCBB Venture Exchange;
(c) "Expenditures" includes all direct or indirect expenses [net
of government incentives and not including payments to the
Optionor pursuant to section 4, paragraphs (a), (b)(i)(ii),
(c)(i)(ii), (d)(i)(ii), (e)(i)(ii), (f)(i)(ii), (g)(i)(ii),
(h)(i)(ii), (i)(i)(ii), (j)(i)(ii), (k)(i)(ii) hereof ] of or
incidental to Mining Operations. The certificate of the
Controller or other financial officer of the Optionee,
together with a statement of Expenditures in reasonable detail
shall be prima facie evidence of such Expenditures; the
parties hereto agree that Property payments and Property
expenditures are separate payments as outlined in paragraph 4;
(d) "Facilities" means all mines and plants, including without
limitation, all pits, shafts, adits, haulageways, raises and
other underground workings, and all buildings, plants,
facilities and other structures, fixtures and improvements,
and all other property, whether fixed or moveable, as the same
may exist at any time in, or on the Property and relating to
the operator of the Property as a mine or outside the Property
if for the exclusive benefit of the Property only;
(e) "Force Majeure" means an event beyond the reasonable control
of the Opionee that prevents or delays it from conducting the
activities contemplated by this Agreement other than the
making of payments referred to in Section 4 herein. Such
events shall include but not be limited to acts of God, war,
insurrection, action of governmental agencies reflecting an
instability in government procedures, or delay in permitting
unacceptable to both Optionor and Optionee;
(f) "Mineral Products" means the commercial end products derived
from operating the Property as a mine:
(g) "Mining Operations" includes:
(i) every kind of work done on or with respect to the
Property by or under the direction of the Optionee
during the Option Period or pursuant to an approved
Work Program; and
(ii) without limiting the generality of the foregoing,
including all work capable of receiving assessment
credits pursuant to the Mines and Minerals act of
Nevada and the work of assessment, geophysical,
geochemical and geological surveys, studies and
mapping, investigating, drilling, designing,
examining equipping, improving, surveying, shaft
sinking, raising, cross-cutting and drifting,
searching for, digging, trucking, sampling, working
and procuring minerals, ores and metals, in surveying
and bringing any mineral claims to lease or patent,
in doing all other work usually considered to be
prospecting, exploration, development, a feasibility
study, mining work, milling concentration,
beneficiation or ores and concentrates, as well as
the separation and extraction of Mineral Products and
all reclamation, restoration and permitting
activities;
(h) "Net Smelter Royalty" means that Net Smelter Royalty as
defined in Schedule "B" attached hereto ("NSR");
(i) "Option" means the option granted by the Optionor to the
Optionee to acquire, subject to the NSR reserved to the
Optionor, an undivided 100% right, title and interest in and
to the Property as more particularly set forth in Section 4;
(j) "Option Period" means the period from the date hereof to the
date at which the Optionee has performed its obligations to
acquire its 100% interest in the Property as set out in
Section 4 hereof, which ever shall be the lesser period;
(k) "Property" means the mineral claims described in Schedule "A";
(l) "Work Program" means a program of work reasonably acceptable
to both parties in respect of a particular Property, contained
in a written document setting out in reasonable detail;
(i) An outline of the Mining Operations proposed to be
undertaken and conducted on the Property,
specifically stating the period of time during which
the work contemplated by the proposed program is to
be done and performed
(ii) The estimated cost of such Mining Operations
including a proposed budget providing for estimated
monthly cash requirements in advance and giving
reasonable details; and
(iii) The identity and credentials of the person or persons
undertaking the Mining Operations so proposed if not
the Optionor,
reasonably acceptable to both parties hereto.
2. HEADINGS
Any heading, caption or index hereto shall not be used in any way in
construing or interpreting any provision hereof.
3. SINGULAR, PLURAL
Whenever the singular or masculine or neuter is used in this Agreement,
the same shall be construed as meaning plural or feminine or body politic or
corporate or vice versa, as the context so requires.
4. OPTION
The Optionor hereby grants to the Optionee the sole and exclusive right
and option (the "Option") to earn a 100% interest in the Property exercisable as
follows:
(a) The Optionee paying the sum of $20,000 USD to the Optionor by way of cash;
(b) On or before Nov. 25th, 2005
(i) The Optionee incurring Expenditures of $150,000 USD
on the property;
(ii) The Optionee paying $20,000 USD to the Optionor;
(c) On or before Nov 25th, 2006
(i) The Optionee incurring Expenditures of $200,000 USD
on the Property in addition to the expenditures
referred to in clause (b)(i);
(ii) The Optionee paying $20,000 U.S to the Optionor;
(d) On or before Nov.25th, 2007
(i) The Optionee incurring Expenditures of $300.000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i) and (c)(i) hereof; and
(ii) The Optionee paying $20,000 USD to the Optionor;
(e) On or before Nov 25th, 2008
(i) The Optionee incurring Expenditures of $400,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i) and (d)(i)
hereof; and
(ii) The Optionee paying $20,000 USD to the Optionor; and
(f) On or before Nov. 25th, 2009
(i) The Optionee incurring Expenditures of $500,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i), (d)(i) and
(e)(i) hereof;
(ii) The Optionee paying $20,000 USD to the Optionor.
(g) On or before Nov. 25th, 2010
(i) The Optionee incurring Expenditures of $500,000 USD on the
Property in addition to the expenditures referred to in clauses (b)(i),
(c)(i), (d)(i) and (e)(i) and (f)(i) hereof
(ii) The Optionee paying $20,000 USD to the Optionor; and
(h) On or before Nov. 25th, 2011
(i) The Optionee incurring Expenditures of $500,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i), (d)(i),
(e)(i), (f)(i) and (g)(i) hereof;
(ii) The Optionee paying $20,000 USD to the Optionor; and
(i) On or before Nov. 25th, 2012
(i) The Optionee incurring Expenditures of $500,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i), (d)(i),
(e)(i), (f)(i), (g)(i) and (h)(i) hereof;
(ii) The Optionee paying $20,000 USD to the Optionor; and
(j) On or before Nov. 25th, 2013
(i) The Optionee incurring Expenditures of $500,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i), (d)(i),
(e)(i), (f)(i), (g)(i), (h)(i) and (i)(i) hereof;
(ii) The Optionee paying $20,000 USD to the Optionor; and
(k) On or before Nov. 25th, 2014
(i) The Optionee incurring Expenditures of $500,000 USD
on the Property in addition to the expenditures
referred to in clauses (b)(i), (c)(i), (d)(i),
(e)(i), (f)(i), (g)(i), (h)(i) and (i)(i) hereof;
(ii) Optionee paying $20,000 USD to the Optionor; and
Following which the Optionee shall be deemed to have exercised the Option (the
"Exercise Date") and shall be entitled to an undivided 100% right, title and
interest in and to the Property with the full right and authority to equip the
Property for production and operate the Property as a mine subject to the rights
of the Optionor to receive the NSR.
The Property individually known as Hercules as more particularly described in
Schedule "A". The Optionee has the one time right exercisable for 90 days
following completion of a bankable feasibility study to buy up to two thirds
(66.7%) of the Optionor NSR interest (i.e. an amount equal to 2% NSR interest)
for $3,000,000 USD. The right to purchase the said NSR interest shall be
exercised by the Optionee providing the Optionor with notice of the purchase
accompanied by payment in the amount of $2,000,000 USD.
The Optionor and Optionee understand and confirm that all Expenditures incurred
in a particular period, including any excess in the amount of Expenditures
required to be incurred to maintain the Option during such period, shall be
carried over and included in the aggregate amount of Expenditures for the
subsequent period.
Notwithstanding paragraphs (c)(i), (d)(i), (e)(i), (f)(i), (g)(i), (h)(i),
(j)(i) and (k)(i) if the Optionee has not incurred the requisite Expenditures to
maintain its option in good standing prior to November 25th of any given year,
the Optionee may pay to the Optionor within 60 days following the expiry of such
period, the amount of the deficiency and such amount shall thereupon be deemed
to have been Expenditures incurred by the Optionee during such period.
(g) The doing of any act or the incurrence of any cash payments by
the Optionee shall not obligate the Optionee to do any further
acts or make any further payments
(h) The Property individually know as Hercules as more
particularly described in Schedule "A". The cash consideration
referred to in this Section 4 will not change if project is
terminated.
5. TRANSFER OF TITLE
Upon Optionee's completion of all requirements to earn a 100 percent
interest in the Property, the Optionor will deliver or cause to be delivered to
the Optionee's solicitors a duly executed transfer of Property in favor of the
Optionee (the "Optionee Transfer"). The Optionee shall be entitled to record the
Optionee Transfer with the appropriate government offices to effect transfer of
legal title of the Property into its own name upon the full and complete
exercise of the Option by the Optionee. In the event the Optionee Transfer is
recorded the Optionor shall be entitled to record notice of its NSR interest.
6. MINING OPERATIONS DURING OPTION
During the Option Period, the Optionor may provide its mineral
exploration expertise on the Property, on a consultation basis for and on behalf
of the Optionee, at the election of the Optionee. However, the Optionee has the
exclusive right to determine what Expenditures and Mining Operations it will
perform, when they will be performed, and by whom. If the Optionee elects to use
the mineral expertise and consulting services of the Optionor, then the Optionor
shall invoice for time for consulting services and related travel expenses from
time to time and the prompt payment of such invoices when due shall constitute a
portion of Expenditures by the Optionee as contemplated under Section 4 hereof.
During the currency of this Agreement, the Optionee, its servants,
agents and workmen and any persons duly authorized by the Optionee, shall have
the right of access to and from and to enter upon and take possession of and
prospect, explore and develop the Property in such manner as the Optionee in its
sole discretion may deem advisable and shall have the right to remove and ship
therefrom ores, minerals, metals, or other products recovered in any manner
therefrom.
7. ASSIGNMENT
During the Option Term, both parties shall have the right to sell,
transfer, assign, mortgage, pledge its interest in this Agreement or its right
or interest in the Property. It will be a condition of any assignment under this
Agreement that such assignee shall agree in writing to be bound by the terms of
this Agreement applicable to the assignor.
8. TERMINATION
This Agreement shall forthwith terminate in circumstances where:
(a) The Optionee shall fail to comply with any of its obligations
hereunder,
subject to Force Majeure, and within 30 days of receipt by the
Optionee of written notice from the Optionor of such default,
the Optionee has not:
(i) cured such default, or commenced proceedings
to cure such default and prosecuted same to
completion without undue delay; or
(ii) given the Optionor notice that it denies
that such default has occurred.
In the event that the Optionee gives notice that it denies that a default has
occurred, the Opionee shall not be deemed to be in default until the matter
shall have been determined finally through such means of dispute resolution as
such matter has been subjected to by either party; or
(b) The Optionee gives notice of termination to the Optionor,
which it shall be at liberty to do at any timeafter the
execution of this Agreement. If and when the Optionee elects
to terminate this Agreement, or terminate one of the projects
comprising the Property, at such time the Property or the
specific project will be returned to the Optionor.
Upon the termination of this Agreement under this Section 8, the Optionee shall
cease to be liable to the Optionor in debt, damages, claim fees or otherwise,
other than to pay the claim fees as described in paragraph (b) of this Section 8
and all liabilities referred to in Section 11
Upon termination of this Agreement under this Section 8, the Optionee shall
return the property, including all property within the designated boundary of
the area of interest, to the Optionor. The Optionee shall vacate the Property
within a reasonable time after such termination and relinquishment, but shall
have the right of access to the Property for a period of six months thereafter
for the purpose of removing its chattels, machinery, equipment and fixtures.
9. REPRESENTATIONS, OPTIONIES AND COVENANTS OF THE OPTIONOR
The Optionor represents, Options and covenants to and with the Optionee
as follows:
(a) The Optionor is a company duly organized validly existing and
in good standing under the laws of Nevada;
(b) The Optionor 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;
(c) 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
hereby, nor the consummation of the transactions hereby
contemplated conflict with, result in the breach of or
accelerate the performance required by, any agreement to which
it is a party;
(d) 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 or of its constating documents;
(e) The Agreement constitutes a legal, valid and binding
obligation of the Optionor;
(f) The Property is accurately described in Schedule "A", is in
good standing under the laws of the jurisdiction in which it
is located and is free and clear of all liens, charges and
encumbrances;
(g) The Optionor is the sole recorded and beneficial owner of the
Property and has the exclusive right to enter into this
Agreement and all necessary authority to transfer its interest
in the Property in accordance with the terms of this
Agreement;
(h) No Person, firm or corporation has any proprietary or
possessorty interest in the Property other than the Optionor,
and no person, firm or corporation is entitled to any royalty
or other payment in the nature of rent or royalty on any
minerals, ores, metals or concentrates or any other such
products removed from the Property other than the government
of the state of Nevada pursuant to statute; notwithstanding
any Federal, State or County royalties or net proceeds tax
derived from mining operations.
(i) Upon request by the Optionee, and at the sole cost of the
Optionee, the Optionor shall deliver or cause to be delivered
to the Optionee copies of all available maps and other
documents and data in its possession respecting the Property.
Nothing will be withheld, hidden, or kept from the Optionee,
whether the data or information is held or not by the
Optionor; and
(j) Subject to performance by the Optionee of its obligations
under Section 4, during the Option Period, the Optionor will
keep the Property in good standing, free and clear of all
liens, charges and encumbrances, will carry out all Mining
Operations on the Property in a miner-like fashion if the
Optionee elects to use the mining expertise and consulting
services of the Optionor, will obtain all necessary licenses
and permits as shall be necessary and will file all applicable
work up to the legal limits as assessment work under the Mines
and Mineral Act (Nevada)
10. REPRESENTATIONS, OPTIONIES AND COVENANTS OF THE OPTIONEE
The Optionee represents, Options and covenants to and with the Optionor that:
(a) The Optionee is a company duly organized validly existing and
in good standing under the laws of the United States;
(b) The Optionee 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;
(c) 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
conflict with, result in the breach of or accelerate the
performance required by, any agreement to which it is a party;
(d) 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 or of its constating documents; and
(e) This Agreement constitutes a legal, valid and binding
obligation of the Optionee.
11. INDEMNITY AND SURVIVAL OF REPRESENTATION
The representation and Optionies hereinbefore set out are conditions on
which the parties have relied in entering into this Agreement and shall survive
the acquisition of any interest in the Property by the Optionee and each of the
parties will indemnify and save the other harmless from all loss, damage, costs,
actions and suits arising out of or in connection with any breach of any
representation, Optiony, covenant, agreement or condition made by them and
contained in this Agreement.
The Optionor agrees to indemnify and save harmless the Optionee from
any liability to which it may be subject arising from any Mining Operations
carried out by the Optionor or at its direction on the Property. The Optionee
agrees to indemnify and save harmless the Optionor from any liability to which
it may be subject arising from any Mining Operations carried out by the Optionee
or at its direction on the Property.
The Optionor agrees to indemnify and save harmless the Optionee from
any liability arising form any and every kind of work done on or with respect to
the Property prior to the signing of this Agreement (the "Prior Operations").
Without limiting the generality of the foregoing, Prior Operations includes all
work capable of receiving assessment credits pursuant to The Mines and Minerals
Act of Nevada and the work of assessment, geophysical, geochemical and
geological surveys, studies and mapping, investigating, drilling, designing,
examining equipping, improving, surveying, shaft sinking, raising, cross-cutting
and drifting, searching for, digging, trucking, sampling, working and procuring
minerals, ores and metals, in surveying and bringing any mineral claims to lease
or patent, in doing all other work usually considered to be prospecting,
exploration, development, a feasibility study, mining work, milling,
concentration, beneficiation of ores and concentrates, as well as the separation
and extraction of Mineral Products and all reclamation, restoration and
permitting activities.
12. CONFIDENTIALITY
The parties hereto agree to hold in confidence all information obtained
in confidence in respect of the Property or otherwise in connection with this
Agreement other than in circumstances where a party has an obligation to
disclose such information in accordance with applicable securities legislation,
in which case such disclosure shall only be made after consultation with the
other party.
13. NOTICE
All notices, consents, demands and requests ( in this Section 13 called
the "Communication") required or permitted to be given under this Agreement
shall be in writing and may be delivered personally sent by telegram, by telex
or telecopier or other electronic means or may be forwarded by first class
prepaid registered mail to the parties at their addresses first above written.
Any Communication delivered personally or sent by telegram, telex or telecopier
or other electronic means including email shall be deemed to have been given and
received on the second business day next following the date of sending. Any
Communication mailed as aforesaid shall be deemed to have been given and
received on the fifth business day following the date it is posted, addressed to
the parties at their addresses first above written or to such other address or
addresses as either party may from time to time specify by notice to the other;
provided, however, that if there shall be a mail strike, slowdown or other labor
dispute which might effect delivery of the Communication by mail, then the
Communication shall be effective only if actually delivered. For purposes of
this agreement and as a definition of address the Optionor's email shall be
defined as xxxxxx@xxxxxx.xxx and the Optionor's telecopier number is
000-000-0000. The Optionee's email shall be defined as
xxxx@xxxxxxxxxxxxxxxxxx.xxx and the Optionee's telecopier number is
000-000-0000. Notice will be provided to each party should their respective
email address change.
14. FURTHER ASSURANCES
Each of the parties to this Agreement shall from time to time and at
all times do all such further acts and execute and deliver all further. deeds
and documents as shall be reasonably required in order to fully perform and
carry out the terms of this Agreement
15. ENTIRE AGREEMENT
The parties hereto acknowledge that they have expressed herein the
entire understanding and obligation of this Agreement and it is expressly
understood and agreed that no implied covenant, condition, term or reservation,
shall be read into this Agreement relating to or concerning any matter or
operation provided for herein
16. PROPER LAW AND ARBITRATION
This Agreement will be governed by and construed in accordance with the laws of
the State of Nevada and the laws of the United States of America. The parties
hereto hereby irrevocably attorn to the jurisdiction of the Courts of Nevada.
All disputes arising out of or in connection with this Agreement, or in respect
of any defined legal relationship associated therewith or derived therefrom,
shall be referred to and finally resolved by a sole arbitrator by arbitration
under the rules of The Arbitration Act of Nevada.
17. ENUREMENT
This Agreement will ensure to the benefit of and be binding upon the
parties hereto and their respective successors and permitted assigns.
18. AFTER ACQUIRED PROPERTIES
(i) The parties covenant and agree, each with the other, that any
and all After Acquired Properties shall be subject to the
terms and conditions of this Agreement and shall be added to
and deemed, for the purposes hereof, to be included in the
Property. Any costs incurred by the Optionor in staking,
locating, recording or otherwise acquiring any "After Acquired
Properties" will be deemed to be Mining Operations for which
the Optionor will be entitled to reimbursements as part of the
Expenditures payable by the Optionee hereunder.
(ii) Any additional claims agreed by the Optionee to be staked by
the Optionor within 2 miles from the existing perimeter of the
Property boundaries shall form party of this Agreement. The
Optionee will reimburse the Optionor for the costs of staking
the additional claims, unless the Optionee does not elect to
have the additional claims subject to this Agreement.
20. DEFAULT
Notwithstanding anything in this Agreement to the contrary if any party
(a "Defaulting Party") is in default of any requirement herein set forth the
party affected by such default shall give written notice to the Defaulting Party
specifying the default and the Defaulting Party shall not lose any rights under
this Agreement, unless thirty (30) days after the giving of notice of default by
the affected party the Defaulting Party has failed to take reasonable steps to
cure the default by the appropriate performance and if the Defaulting Party
fails within such period to take reasonable steps to cure any such default, the
affected party shall be entitled to seek any remedy it may have on account of
such default including, without limiting, termination of this Agreement.
21. PAYMENT
All references to monies herein shall be in US funds unless otherwise
specified. The Optionee shall make payments for the Expenditures incurred by the
Optionor no later than 15 days after the receipt of invoices delivered by the
Optionee to do any acts or make any payments hereunder, and any act or payment
or payments as shall be made hereunder shall not be construed as obligating the
Optionee to do any further act or make any further payment or payments.
22. SUPERSEDES PREVIOUS AGREEMENTS
This Agreement supersedes and replaces all previous oral or written
agreements, memoranda, correspondence or other communications between the
parties hereto relating to the subject matter hereof.
IN WITNESS WHEREOF the Parties hereto have duly executed this Agreement
effective as of the 22nd day of November, 2004
MinQuest Inc.
Per:___________________________
Xxxxxxx X. Xxxx, President
American Goldfields Corp.
Per:___________________________
Xxxxxx Xxxx, President
SCHEDULE "A"
Sections 13, 24, 25, T16N, R22E and Xxxxxxxx 0, 00, X00X, X00X, XXX&X, Xxxx
Xxxxxx, Xxxxxx
CLAIM NAME NMC NUMBER
---------- ----------
Apollo 7 804993
Apollo 16 804994
Apollo 17 804995
Apollo 19 804996
Apollo 21 804997
Apollo 24 804998
Hercules 2 804978
Hercules 3 804979
Hercules 48 804984
Hercules 49 804985
Hercules 52 804987
Hercules 53 804988
Apollo 1,3, 5, 9, 11, 18, 20, 22, 23, 25 832280-832289
Hercules 1, 4-8,12-14,19, 44-47, 50, 51, 54, 55 832290-832307
SCHEDULE "B"
"Net Smelter Return" shall mean the aggregate proceeds received by the Optionee
from time to time from any smelter or other purchaser from the sale of any ores,
concentrates, metals or any other material of commercial value produced by and
from the Property 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:
(a) The cost of transportation of the ores, concentrates or metals from the
Property to such smelter or other purchaser, including related
insurance;
(b) Smelting and refining charges including penalties; and
The Optionee shall reserve and pay to the Optionor a NSR equal to three (3%)
percent of Net Smelter Return.
Payment of NSR payable to the Optionor hereunder shall be made quarterly within
thirty (30) days after the end of each calendar quarter during which the
Optionee receives Net Smelter Returns in USD dollars or in kind bullion at the
discretion of the Optionor. Within (60) days after the end of each calendar
quarter for which the NSR for such year shall be audited by the Optionee and any
adjustments in the payments of NSR to the Optionor shall be made forthwith after
completion of the audit. All payments of NSR to the Optionor for a calendar year
shall be deemed final and in full satisfaction of all obligations of the
Optionee in respect thereof if such payments or the calculations thereof are not
disputed by the Optionor of the same audited statement. The Optionee shall
maintain accurate records relevant to the determination of the NSR and the
Optionor or its authorized agent, shall be permitted the right to examine such
records at all reasonable times.
