MINERALS LEASE AND AGREEMENT
MINERALS
LEASE AND AGREEMENT
THIS
MINERALS LEASE AND AGREEMENT (“Agreement”) is dated and effective this 18th day
of May, 2010 (“Effective Date”), by and between MinQuest, Inc., a Nevada S
corporation (“Lessor”), and Tundra Gold Corp., a Nevada C corporation
(“Lessee”).
RECITALS
A. Lessor
owns unpatented mining claims that comprise the property described in Schedule
A, collectively referred to herein as the “Property.”
X. Xxxxxx
desires to lease to Lessee, and Lessee desires to lease from Lessor, the right
to conduct mineral exploration activities on and in the Property with the
subsequent right to participate in the development of minerals from the Property
subject to the terms and conditions of this Agreement.
THEREFORE,
for good and valuable consideration, the receipt of which is hereby
acknowledged, Lessor and Lessee agree as follows:
AGREEMENT
1. Grant.
(a) Lessor
leases exclusively to Lessee, for a period of twenty (20) years with the right
to renew, the right to prospect, explore and mine for Minerals, including the
right to develop, mine, process, mill, prepare for market, store, market, sell,
and dispose of Minerals, any easement rights across the property, and the right
to erect, construct, maintain or operate buildings, structures, waste storage,
ore impoundments or facilities on or in on and beneath the Property, and to use,
occupy, excavate and disturb so much of the surface and subsurface of the
Property as is reasonably necessary and convenient in exploring for and mining
such Minerals, subject to the terms of this Agreement.
2. Term
(a) The
term of this agreement shall commence on the effective date set forth above and
shall continue for a term of twenty (20) years with the right to renew unless
sooner terminated, forfeited or surrendered as provided in section 9
below.
3. Lease
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The
Lessor hereby grants to the Lessee the sole and exclusive right to lease
(“Lease”) the
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Property
under the terms as follows:
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(a)
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At
signing, the Lessee paying the sum of $5,000 USD to the Lessor by way of
cash and reimburse all holding costs and expenses of location of mining
claims, such expenses to be identified in Schedule
“C”;
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(b)
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Annually,
on or before May 15 of each year of the
Lease:
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(i)
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The
Lessee paying $5,000 USD to the
Lessor;
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(ii)
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Following
which the Lessee shall have the right to enter into an additional 10 year
contract with the Lessor. The renewal of the contract will be
based on payments and expenditures identified in 3(a) and will be adjusted
for inflation from year 2020 onward in accordance with change in the BLS
index for industrial Commodities (Producer Price Index). The
base index will be the index for the month that is three months prior to
the effective date of the lease.
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All of
the above Payments to Lessor are considered advance minimum royalty payments and
will be an offset to production royalty due until the total amount paid to
Lessor has been recouped. This Lease does not have minimum annual
exploration expenditure requirements. However, any exploration
programs undertaken by the Lessee during the Lease shall carryforward and be
credited against any future property option agreement should such a property
option agreement be executed between the Lessor and Lessee.
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(c)
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The
doing of any act or the incurrence of any cash payments by
the
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Lessee
shall not obligate the Lessee to do any further acts or make any further
payments with the exception of fees and expenses to keep said property in
good standing as per paragraph 7.
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(d) For
purposes of this Agreement, “Minerals” shall mean any and all metals, materials,
minerals and mineral rights of whatever kind and nature, which are included in
the Property. A 3% NSR royalty includes all Mineral production from
the Property. For definition purposes, the NSR royalty includes any benefit
derived from the sale of or beneficial use of material from the property and is
further defined in Schedule B.
4. Representations and
Warranties.
(a) Lessor
represents and warrants that it has not encumbered, mortgaged or conveyed its
interest in the Property, including but not limited to conveying any royalty
interest therein; and it has no knowledge of any pending litigation or other
claims challenging its rights and title to the Property.
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(b) Lessee
represents and warrants to Lessor that it is in good standing under the laws of
the jurisdiction in which it is incorporated, and that it has all the requisite
power, right and authority to enter into this Agreement, to perform its
obligations under this Agreement, and to commit to this
Agreement. The execution and delivery of this Agreement and the
consummation of the obligations, indemnities and payments provided herein have
been duly and validly authorized by all necessary corporate or company action on
the part of each party.
5. Area of
Interest. For purposes of this Agreement, the Area of Interest
is defined as the property description as defined in Schedule A plus one
claim.
6. Construction and Mining
Activities. Subject to the terms of this section 6,
if Lessee determines that it desires to commence mine construction
activities for the production of Minerals from any part of the Property,
building of access roads to other portions of the property or adjacent
properties, storage of waste materials, tailings or ore products upon the
property or otherwise cause devaluation to the property, Lessee shall use
industry standard industry practices to ensure that any area contemplated for
construction of processing facilities or storage of waste upon the Property has
been substantially tested to determine the lack of ore or sub-ore grade
material, and will be required to secure all permits, obtain insurance and
provide adequate bond with appropriate government agencies to cover any and all
reclamation costs before commencement of any of the aforementioned construction
activities.
7. Property
Maintenance.
(a) Subject
to the additional requirements under Section 11 below, for so long as this
Agreement is in effect, Lessee shall make such payments as are necessary to keep
the Lessor’s Property in good standing, including, but not limited to payment of
any government filings, fees or taxes relating to Lessee’s operations on the
Property, and satisfying any federal and state filing and bonding requirements
for maintaining the Property in good standing.
(b) Upon
making any payment or filing to maintain the Property, Lessee shall promptly
deliver to Lessor a copy of the documents that were filed and written evidence
of any payment that was made. Lessee shall satisfy all county, state
and federal requirements to maintain the Lessor Property in good standing and
deliver to Lessor written documentation of such satisfaction at least 30 days
prior to the legal deadline (whether required by statute, regulation, contract
or otherwise) for satisfying such requirement. If Lessor has not
received the documentation required under this Section 9(c) within the
prescribed time, Lessor may, but has no obligation to, satisfy such
requirement(s), and Lessee shall promptly reimburse Lessor for the amount of any
payment made by Lessor, and any related costs, plus twenty (20%) of the amount
of those payments and costs. Lessor’s rights under this Section 9(c)
shall not affect Lessor’s right to any other remedy for Lessee’s failure to
maintain the Lessor Property in accordance with this Agreement.
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8. Reporting. Lessee
shall provide to Lessor annual reports of all activities and operations
conducted on or in connection within the Lessor Property Area of Interest
pursuant to this Agreement, together with copies of all factual data generated
as a result of those activities or operations. Those reports shall be
provided to Lessor by August 1 of each calendar year. Each annual
report shall include details of: (i) the preceding year’s activities,
operations and expenditures with respect to the Lessor Property Area of
Interest; (ii) exploration and ore reserve data for the previous year; and (iii)
a summary of anticipated activities for the upcoming year. The annual
report required to be delivered by August 1 of each year shall be accompanied by
digital factual data generated during the previous calendar year, to the extent
the data exists in such format. Reports due pursuant to this Section
8 shall be sent to:
MinQuest,
Inc.,
0000
Xxxxxxx Xxx
Xxxx,
Xxxxxx 00000
Lessor
may change such address from time to time by written notice to
Lessee.
9. Termination.
(a) Subject
to the terms of this Section 9, at any time after completion of five thousand
dollars ($5,000.00) in Lease fees, and payment of fees for federal and County
filing for 2010-2011, Lessee may terminate this Agreement upon providing Lessor
60 days advance written notice. Upon termination, Lessee will have no
further obligations, except for reclamation obligations and environmental
responsibilities that accrued as determined by local, state and federal
entities.
(b) If
Lessee defaults on any of its obligations under this Agreement, including, but
not limited to its obligations under Sections 3, 4, 7, 11 and 12, Lessor may
give Lessee written notice of the default or defaults. If Lessee has
not begun to cure any such default, other than a default that may be satisfied
by cash payment, within 30 days from the date of delivery of such notice and
completely cured such default within a reasonable time thereafter, Lessor may
terminate this Agreement by written notice to Lessee. Such
termination by Lessor shall not affect Lessor’s rights to seek any other
available remedies.
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(c) Upon
any termination of this Agreement, Lessee shall, within 30 days after the
effective date of termination, (i) surrender the Property to Lessor free and
clear of any encumbrances, and deliver to Lessor a written instrument or
instruments, in a form appropriate for recording and acceptable to Lessor,
further evidencing termination of this Agreement and reconveyance of the
Property; (ii) satisfy all requirements to maintain the Property in good
standing through 90 days after the effective date of termination, including, but
not limited to payment of any taxes, and making any filings and payments
necessary to maintain the Property that would become due during that period; and
(iii) deliver to Lessor copies of all factual data including all available
digital data obtained by Lessee in conducting activities or operations on the
Property, not already provided to Lessor. Upon any termination of
this Agreement, Lessee shall promptly reclaim all disturbance caused by its
activities on the Property in accordance with applicable statutory and
regulatory requirements, unless Lessor agrees in writing to assume such
reclamation obligations and relieve Lessee of the performance
thereof.
10. Transfer of Interests,
Assignments.
(a) Lessee
and Lessor may assign or sell all or parts of their interest under this
Agreement to any third party (the “Assignee”) without consent of either party
(but upon notice) provided that the Assignee agrees to execute an
acknowledgement to be bound by the terms hereof insofar as each party’s rights
hereunder are concerned.
11. Standard of Conduct;
Environmental Compliance.
(a) Lessee
shall ensure that all activities conducted by, or on its behalf on the Property,
is in compliance with the laws and regulations of the United States, the State
of Nevada, and any local governmental entity with jurisdiction over the Property
or activities thereon, including, but not limited to any laws or regulations
regarding environmental protection or reclamation of the
Property. Lessee shall provide Lessor with satisfactory evidence of
such compliance upon lessee’s receipt of such document. All
operations under this Agreement shall be conducted in a good and workmanlike
manner in accordance with generally accepted mining practices.
(b) Lessee
shall provide to Lessor a copy of any permit application or other permitting
documents relating to activities or operations on the Property after submission
to the applicable government entity.
(c) Should
any unpermitted discharge, leakage, spillage, release, emission or pollution of
any type occur upon, to or from the Property or overlying surface due to
Lessee’s activities or possession, Lessee, at its sole expense, shall promptly
clean and restore the Property and overlying surface to standards equal to or
exceeding all standards adopted or required by any governmental body having
jurisdiction over the affected property.
12. Audit and
Inspection.
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(a) Lessor
shall be entitled to enter the Property for purposes of inspecting any of
Lessee’s operations, facilities or structures at reasonable times, upon
reasonable advance notice, provided that Lessor or its agents shall so enter at
its own risk and shall indemnify and hold Lessee and its Affiliates harmless
against and from any and all loss, cost, damage, liability and expense
(including but not limited to reasonable attorneys fees and costs) by reason of
injury to Lessor or its agents or representatives, or damage to or destruction
of any property of Lessor or its agents or representatives while on the
Property, or in such workings, facilities and structures, except to the extent
that such injury, damage, or destruction is a result, in whole or in part, of
the negligence of Lessee. Lessor shall have the right during regular
business hours to review and copy all of Lessee’s files and documents relating
to activities on the Property.
(b) If
Lessor determines that activities or operations being conducted on the Property
or overlying surface are in material non-compliance with applicable laws,
regulations, ordinances or permits, Lessor may provide notice to Lessee, and
Lessee shall immediately begin and promptly complete corrective action to bring
such activities or operations into compliance. If, after receiving
such notice, Lessee does not promptly take corrective actions to Lessor’s
reasonable satisfaction, Lessor may, but has no obligation to, take such actions
as it deems necessary to bring Lessee’s operations into compliance, including,
but not limited to taking over operational control of Lessee’s
operations. Lessee shall thereafter pay to Lessor one hundred fifty
percent (150%) of Lessor’s costs for an
amount equal to the costs reasonably incurred by Lessor
in connection with such actions. Lessor’s rights under this
Section 12(b) shall not affect Lessor’s right to any other remedy for Lessee’s
failure to comply with Section 12.
13. Property As
Is. Lessee acknowledges that it has been given full access to
the Property for its due diligence review. Lessee acknowledges that
the Property may have environmental and physical conditions related to prior
mineral exploration or mining activities, including, but not limited to pits,
adits, shafts and roads. Prior to entering into this Agreement,
Lessee has investigated the Property, including the environmental conditions on
that property and the overlying surface, to its satisfaction. Lessee
is acquiring the interests in the Property hereunder “as is” without warranty of
any kind as to the condition, suitability or usability of the Property for any
purpose, or the ability to obtain any necessary permits or authorizations to
access or mine the Property. The parties intend that this “as is”
provision shall be effective specifically with respect to environmental
conditions, and any and all common law or statutory claims with respect
thereto. Lessee assumes the risk of any environmental contamination,
hazardous substances and other conditions on or related to the Property and
overlying surface. Lessor makes no representation or warranty as to
the accuracy or completeness of any environmental, geological, financial,
operating or other information it has provided relating to the Property, and
Lessee agrees that Lessor shall have no liability for any damages relating to
any inaccuracies or incompleteness of such information.
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14. Indemnities. Lessee
shall fully indemnify, defend, release and hold harmless Lessor, its Affiliates
and successors, and their agents, and employees from and against all loss,
costs, penalties, expense, damage and liability (including without limitation,
loss due to injury or death, reasonable attorneys fees, expert fees and other
expenses incurred in defending against litigation or administrative enforcement
actions, either pending or threatened), arising out of or relating to any claim
or cause of action relating in any way to conditions, operations or other
activities, whether known or unknown, at, or in connection with, the Property
(including, but not limited to, any environmental conditions) created, existing
or occurring prior to the date of this Agreement or while this Agreement is in
effect, or arising out of or resulting from activities conducted by or on behalf
of Lessee, its Affiliates or Assigns, which arise in whole or in part under any
federal, state or local law, now existing or hereafter enacted, adopted or
amended, including, without limitation, any statutory or common law governing
liability to third parties for personal injury or property
damage. This indemnity shall survive termination of this
Agreement.
15. Liens. Lessee
shall keep the Property free of all encumbrances, adverse claims and liens,
including, but not limited to, any mortgages, deeds of trust or liens for labor
or materials furnished to it in its operations hereunder.
16. General
Provisions.
(a) Notice. All
notices or other communications to either party shall be in writing and shall be
sufficiently given if (i) delivered in person, (ii) sent by electronic
communication, with confirmation sent by registered or certified mail, return
receipt requested, (iii) sent by registered or certified mail, return receipt
requested, or (iv) sent by overnight mail by a courier that maintains a delivery
tracking system. Subject to the following sentence, all notices shall
be effective and shall be deemed delivered (i) if by personal delivery, on the
date of delivery, (ii) if by electronic communication, on the date of receipt of
the electronic communication, (iii) if by mail, on the date of delivery as shown
on the actual receipt, and (iv) if by overnight courier, as documented by the
courier’s tracking system. If the date of such delivery or receipt is
not a business day, the notice or other communication delivered or received
shall be effective on the next business day (“business day” means a day, other
than a Saturday, Sunday or statutory holiday observed by banks in the
jurisdiction in which the intended recipient of a notice or other communication
is situated.) A party may change its address from time to time by
notice to the other party as indicated above. All notices to Lessor
shall be addressed to:
MinQuest,
Inc.
0000 Xxxxxxx Xxx
Xxxx, Xxxxxx 00000
All
notices to Lessee shall be addressed to:
000 X. Xxxxxxxx
0xx
Xxxxx
Xxxx, Xxxxxx, 00000
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(b) Inurement. All
covenants, conditions, indemnities, limitations and provisions contained in this
Agreement apply to, and are binding upon, the parties to this Agreement, their
heirs, representatives, successors and assigns.
(c) Implied
Covenants. The only implied covenants in this Agreement are
those of good faith and fair dealing.
(d) Waiver. No
waiver of any provision of this Agreement, or waiver of any breach of this
Agreement, shall be effective unless the waiver is in writing and is signed by
the party against whom the waiver is claimed. No waiver of any breach
shall be deemed to be a waiver of any other subsequent breach.
(e) Modification. No
modification, variation or amendment of this Agreement shall be effective unless
it is in writing and signed by all parties to this Agreement.
(f) Entire
Agreement. This Agreement sets forth the entire agreement of
the parties with respect to the transactions contemplated herein and supercede
any other agreement, representation, warranty or undertaking, written or oral,
between Lessor and Lessee.
(g) Memorandum. A
memorandum of this Agreement shall be recorded in the records of Grant County,
New Mexico, promptly after execution of this Agreement.
(i) Force
Majeure. If a party is prevented from completing any
obligation under this Agreement, other than an obligation that may be satisfied
by the payment of money, by a force majeure (the “Affected Obligation”), the
Affected Obligation shall be suspended and that party shall not be deemed in
default or liable for damages or other remedies as a result thereof for so long
as that party is prevented from complying with the Affected Obligation by the
force majeure. For purposes of this Agreement, “force majeure” shall
mean any matter (whether foreseeable or unforeseeable) beyond a party’s
reasonable control, including but not limited to: acts of God, unusually
inclement weather, acts of war, insurrection, riots or terrorism, lock-outs;
inability to obtain necessary materials; damage to, destruction of, or
unavoidable shut-down of necessary facilities or equipment; any government
permitting delays lasting over six (6) months in duration; provided, that that
party shall promptly notify the other party in writing of the existence of any
event of force majeure, and shall exercise diligence and reasonable efforts to
remove or overcome the cause of such inability to undertake the Affected
Obligation, and shall recommence performance thereof as soon as reasonably
possible. The affected party shall thereafter have an additional
period of time equal to the duration of the force majeure to complete the
Affected Obligation. Lessee shall remain obligated to meet the lease
payment schedule under Section 3.
(j) Further
Assurances. 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.
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(k) Attorneys
Fees. In any litigation between the parties to this Agreement
or persons claiming under them resulting from, arising out of, or in connection
with this Agreement or the construction or enforcement thereof, the
substantially prevailing party or parties shall be entitled to recover from the
defaulting party or parties, all reasonable costs, expenses, attorneys fees,
expert fees, and other costs of suit incurred by it in connection with such
litigation, including such costs, expenses and fees incurred prior to the
commencement of the litigation, in connection with any appeals, and collecting
any final judgment entered therein. If a party or parties
substantially prevails on some aspects of such action, but not on others, the
court may apportion any award of costs and attorneys fees in such manner as it
deems equitable.
(l) Construction. The
section and paragraph headings contained in this Agreement are for convenience
only, and shall not be used in the construction of this
Agreement. The invalidity of any provision of this Agreement shall
not affect the enforceability of any other provision of this
Agreement.
(m) Currency. All
references to dollars herein shall mean United States dollars.
(n) Governing
Law. This Agreement shall be governed by, interpreted and
enforced in accordance with the laws of the State of Nevada, without regard to
its conflicts of laws and provisions.
IN
WITNESS WHEREOF, the parties have executed this Agreement as of the 18th day
of May, 2010.
MinQuest,
Inc.
By:______________________________________________________________
Name:
Xxxxxxx Xxxx
Title: President
By:________________________
Name: Xxxxxxxxx
Xxxxx Basrai
Title: President
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EXHIBIT
A
MinQuest,
Inc. owns an undivided 100% interest in certain unpatented mining claims
situated in Mineral County, Nevada, more particularly described as
follows;
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CLAIM
NAME CLAIMANT’S
NAME NMC NUMBER
HP
1 MinQuest
Inc 799825
HP
2 MinQuest
Inc 799826
HP
3 MinQuest
Inc 799827
HP
4 MinQuest
Inc 799828
HP
6 MinQuest
Inc 799830
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SCHEDULE
“B”
“Net
Smelter Return” shall mean the aggregate proceeds received by the Lessee 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:
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(a)
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The
cost of transportation of the ores, concentrates or metals from the
Property to such smelter or other purchaser, including related
insurance;
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(b) Smelting
and refining charges including penalties; and
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The
Lessee shall reserve and pay to the Lessor a NSR equal to three (3%)
percent
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of
Net Smelter Return.
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Payment
of NSR payable to the Lessor hereunder shall be made monthly within
thirty
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(30) days
after the end of each calendar month during which the Lessee receives payments
on all products produced and used from the property and will be paid in US
dollars or in kind bullion at the discretion of the Lessor.
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Within
(60) days after the end of each calendar year for which the NSR for
such
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year
shall be audited by the Lessee, any adjustments in the payments of
NSR
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to the
Lessor shall be made forthwith after completion of the audit. Lessor shall have
the right, but not the obligation to audit and give written dispute of Lessee’s
records within 180 days after the Lessee’s yearly audits. All
payments of NSR to the Lessor for a calendar year shall be deemed final and in
full satisfaction of all obligations of the Lessee in respect thereof if such
payments or the calculations thereof are not disputed by the Lessor of the same
audited statement unless and until any new information is revealed after the
time frames stated above. The Lessee
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shall
maintain accurate records relevant to the determination of the NSR and the
Lessor
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or
its authorized agent, shall be permitted the right to examine such records
at all
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reasonable
times.
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SCHEDULE
“C”
BLM
Annual Claim Filing 2009: $140/claim x
5
$700.00
County
Annual Filing
2009: $56.50
Total
$756.50
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